Delaware Supreme Court Revives Amazon Sec. 220 Suit

Corporate law doesn’t usually trend on social media. It’s more of a “quietly rearranging the furniture in the universe”
kind of thing. But every so often, a decision drops that matters to investors, boards, and anyone who has ever
wondered: How do shareholders get the receipts?

That’s what happened when the Delaware Supreme Court revived a stockholder’s Section 220 “books and records” case
involving Amazon. The ruling didn’t decide whether Amazon actually did anything wrong. Instead, it clarified
something more practical (and more Delaware): what a stockholder has to show to peek behind the curtain and
investigate possible wrongdoingwithout turning the process into an all-you-can-eat fishing expedition.

Below is a plain-English breakdown of what the case was about, what the Court changed, why “credible basis” is the
phrase doing the heavy lifting, and what the decision may signal for future Section 220 demandsespecially now that
Delaware has tightened some of the rules around inspections.

Section 220, Explained Without the Legal Fog Machine

Books and records: the shareholder flashlight

Section 220 of the Delaware General Corporation Law (DGCL) is basically a flashlight for stockholders. When a
stockholder has a proper purposelike investigating potential mismanagement or wrongdoingthey can
demand access to certain corporate “books and records.”

It’s not full-blown discovery. It’s not “hand over every email since dial-up internet.” It’s a targeted tool meant
to help stockholders gather enough information to evaluate next steps, which might include a derivative lawsuit,
governance proposals, or simply making smarter decisions as owners.

The two gatekeepers: proper purpose and credible basis

Delaware courts typically look at two key requirements:

• Proper purpose: A legitimate stockholder interestlike investigating potential wrongdoing.
• Credible basis: “Some evidence” that supports an inference of possible wrongdoing (not proof of guilt).

If proper purpose is the “why,” credible basis is the “show me you’re not just curious.” Delaware loves curiosity in
museums. In litigation, it prefers receipts.

What Happened in the Amazon Section 220 Dispute

The short version: a demand tied to antitrust scrutiny

An Amazon stockholder (a trust) sent a Section 220 demand seeking records to investigate potential wrongdoing and
mismanagement related to alleged anticompetitive conduct. The demand pointed to public developments such as
government actions and regulatory outcomes touching Amazon’s business practices.

In normal people terms: the stockholder said, “There’s a lot of smoke from regulators and lawsuits. We want to
see board-level materials and compliance information to understand whether the company’s fiduciaries handled this
appropriately.”

Timeline: how the case got benched, then revived

• October 2023: Stockholder sends the books-and-records demand.
• May 1, 2024: After a one-day trial, a magistrate recommends denying inspection for lack of credible basis.
• October 24, 2024: The Court of Chancery denies inspection on a different ground: the purpose is “facially improper” and not “lucid.”
• July 28, 2025: Delaware Supreme Court reversesreviving the Section 220 case and clarifying the analysis.
• November 5, 2025: On remand, the Court of Chancery addresses scope and conditionswhat Amazon must produce and under what limits.

Why the Court of Chancery Initially Said “No”

“Facially improper” and “not lucid” (translation: too broad?)

The Court of Chancery didn’t ultimately deny the demand by saying, “Your evidence isn’t enough.” Instead, it
focused on how the purpose was framed, describing it as too broadbasically suggesting the demand read like
“any anticompetitive conduct anywhere, ever,” which starts to look like an impermissible fishing expedition.

The practical fear behind that reasoning is real: if a stockholder can demand sprawling records just because a big
company has been sued or investigated, then every major corporation becomes a permanent open-file cabinet.

But Delaware also doesn’t want the opposite outcome: a system where credible public indicators of possible
wrongdoing exist, yet stockholders can’t obtain the limited records needed to investigate fiduciary oversight.

What the Delaware Supreme Court Clarified

1) Don’t end the analysis at “your purpose is broad”

The Supreme Court said that denying a Section 220 demand solely because the purpose sounds broadwithout engaging
with the credible-basis evidenceis not the right framework.

In other words, Delaware’s inspection analysis isn’t supposed to be a vibe check. It’s a structured inquiry:
interpret the demand fairly, and then assess whether the stockholder offered some evidence supporting the
stated investigative purpose.

2) “Credible basis” is a low bar, not a full trial preview

The Supreme Court emphasized what Delaware has said for years: the credible basis standard is the
lowest burden of proof under Delaware law. It doesn’t require proving actual wrongdoing. It asks
whether there is enough to infer the possibility of wrongdoing that warrants further investigation.

Think of it like airport security for lawsuits: you don’t have to show you’re definitely flying to Parisyou just
need a boarding pass that isn’t made with crayons.

3) Government actions and litigation can be meaningful evidenceespecially when they move past allegations

The Court explained that when the evidence includes ongoing investigations and lawsuits that have advanced beyond
untested allegations, that can satisfy credible basis. The key idea is not “a complaint exists,” but that the
public record indicates the claims have traction (for example, surviving a motion to dismiss).

This matters because Section 220 is often used as a pre-suit tool: stockholders want to understand what the board
knew, what it did, and whether compliance systems workedor whether the company sleepwalked into expensive problems.

What Evidence Mattered in the Amazon Decision

The Supreme Court treated the evidence as a package deal, not a single golden ticket. It pointed to a combination
of public developments thattogethersupported an inference of possible wrongdoing tied to alleged anticompetitive
activity.

FTC antitrust case: a big factor

A centerpiece was the Federal Trade Commission’s antitrust lawsuit against Amazonfiled after a multi-year
investigationwith many claims surviving Amazon’s motion to dismiss. The Court’s reasoning was straightforward:
if allegations can survive a tougher federal pleading standard, that can be strong “some evidence” for Delaware’s
credible basis threshold.

State actions and consent-based resolutions

The Court also pointed to state-level developments, including a California action and a Washington consent decree.
Consent decrees are especially interesting in the Section 220 context because they can reflect more than mere
accusationsoften involving agreed changes and ongoing compliance reporting.

International enforcement and fines

The record also included an Italian Competition Authority fine relating to Amazon conduct. While the Court was
careful not to treat every foreign regulatory development as equally probative, it treated this specific fine
together with the U.S. enforcement actionsas part of the credible basis mosaic.

A real-world note: antitrust enforcement can evolve after the fact. For example, Italy’s antitrust authority later
announced it reduced the size of a previously imposed Amazon fine after court review. That doesn’t erase scrutiny.
It just showsx-rays how fluid “regulatory risk” can beand why boards and investors obsess over oversight records.

So What Happens After the Case Is “Revived”?

Reviving a Section 220 suit doesn’t mean “Amazon loses.” It means the stockholder cleared the threshold to inspect
some records, and the Delaware Court of Chancery then has to decide scope (what documents) and
conditions (how they can be used).

On remand, the Court tailored the inspection

After the Supreme Court’s reversal, the Court of Chancery issued a decision addressing the remaining fight: what
exactly Amazon must produce, what the date range is, and how the process gets controlled.

A few practical highlights from the remand approach (which is typical Delaware style: “Yes, but with guardrails”):

• Timeframe: The inspection period was tailored, beginning in mid-2021 and running through the present,
  rather than reaching back indefinitely.
• Start with formal board materials: The Court emphasized that inspection generally begins (and often
  ends) with formal board-level documentsminutes, presentations, board packets, and similar materials.
• Informal materials later, if needed: Emails and informal communications aren’t the default. They may
  become available only if formal materials are insufficient for the stated purpose.
• Targeted categories granted: The Court ordered production of materials tied to antitrust compliance,
  internal controls and reporting, certain formal communications with government agencies, and director questionnaires
  relevant to independence.
• Overbroad “catch-all” requests denied: Requests that lacked “rifled precision” or tried to scoop up
  documents produced in other Section 220 matters were curtailed.

The theme is consistent: Delaware will let stockholders investigate, but it expects a demand to be tailored and the
production to be practical.

Why This Decision Matters Beyond Amazon

For stockholders: a roadmap for building credible basis

The decision reinforces that credible basis can be satisfied by a well-supported public recordespecially where
government litigation has progressed beyond bare allegations. Stockholders don’t have to win the whole movie; they
just need enough of the trailer to justify looking at the script.

For boards: oversight is not just a dutyit’s a paper trail

Section 220 is where governance and documentation collide. Boards can do the right things, but if oversight is
poorly documented, a company may struggle to show that fiduciaries were engaged. Conversely, clear board-level
materials can narrow disputes and reduce pressure to produce informal communications.

For companies: negotiation strategy matters

Many Section 220 cases live (or die) in the gap between “we’ll produce something” and “we’ll produce the right thing
under reasonable protections.” Confidentiality agreements, defined categories, and staged production can prevent a
demand from becoming disruptivewithout turning the company into Fort Knox with a “no flashlights allowed” sign.

How Delaware’s 2025 Section 220 Amendments Fit Into the Story

This Amazon demand was made before Delaware’s 2025 amendments to Section 220 took effect for newer demands. But the
timing matters for everyone drafting demands today.

In general, the amendments emphasize:

• Demands must be in good faith and for a proper purpose.
• The purpose and requested records must be described with reasonable particularity.
• Records sought must be specifically related to the stated purpose.

The big-picture trend is clear: Delaware is aiming to keep Section 220 useful while reducing the sense that it’s
become “discovery before discovery.” If you’re making a demand now, precision isn’t just politeit’s strategic.

Practical Takeaways (So You Don’t Write a Demand Like a Treasure Map)

• Write the purpose like you mean it: “Investigate wrongdoing” is fine, but explain what kind and why
  the public record points there.
• Bring evidence, not vibes: Government filings, consent decrees, court rulings, and verified regulatory
  outcomes are stronger than rumor.
• Ask for the “board packet” first: Delaware generally prefers formal board materials before emails.
• Expect guardrails: Confidentiality terms and tailored scope are normal, not an insult.
• Remember the endgame: Section 220 is a tool for understanding and deciding next stepsnot a substitute
  for litigating the merits.

Experience: What Section 220 Disputes Feel Like in Practice (and Why the Amazon Ruling Rings True)

In the real world, Section 220 disputes don’t start in a courtroomthey start in a conference room where someone
says, “Do we have to produce emails?” and someone else responds, “Let’s not manifest that energy.”

From a stockholder’s perspective, building a credible basis often looks less like dramatic legal theater and more
like careful, boring collection: regulatory complaints, court orders, consent decrees, and enforcement announcements
arranged into a coherent story. The Amazon decision reflects a practical truth practitioners see repeatedly:
the most effective demands read like a memo, not a rant. They identify a specific governance concern,
explain why it matters to stockholders, and show that the concern is grounded in observable eventsnot imagination.

On the company side, the experience is usually triage. In-house counsel and outside counsel quickly map three things:
(1) what the demand actually asks for, (2) what records likely exist at the board level, and (3) what “normal”
Delaware limitations will apply. The Amazon remand approachstart with formal board materialsmatches how many
companies try to resolve these matters early. If the board has meeting minutes, presentations, or compliance reports
that address the topic, producing those first can satisfy a proper investigative purpose while avoiding the chaos of
searching every executive inbox for messages from two summers ago that say “FYI” and nothing else.

There’s also a negotiation rhythm that shows up again and again. Stockholders want enough to understand oversight:
did the board receive warnings, did it discuss risk, did it adjust policies, did it track compliance? Companies want
guardrails: confidentiality, limited use, staged production, and clear date ranges. When both sides treat Section 220
as a precision toolrather than a weapondisputes can narrow quickly. When either side treats it like a morality play,
the litigation grows teeth.

Another recurring experience: Section 220 fights frequently revolve around “just one more category.” A demand starts
with board materials, then expands to informal communications “because we think the board wasn’t told the full story,”
then inches toward officer-level documents “because wrongdoing happened in operations.” Delaware courts often respond
with a structured approach: show that formal materials are insufficient, then we’ll consider more.
That staged logic is visible in the Amazon remand decision and aligns with what many litigators describe as the
court’s pragmatic instinctgive the stockholder a meaningful investigation path without turning the inspection into
discovery by another name.

Finally, there’s the human factor. Boards and executives know that what they write can someday be read in a legal
settingeven if the writing was casual. That awareness can push organizations to document oversight more carefully,
which is good governance when done sincerely and not as theater. The Amazon ruling is a reminder that compliance and
oversight aren’t only about policies; they’re also about how the board receives information, asks questions, and
records its deliberations. When regulators circleantitrust or otherwisethose records become the company’s
governance autobiography. And like any autobiography, it’s better when it has dates, facts, and chapters… not just
“we totally had a plan, trust us.”

Conclusion

The Delaware Supreme Court’s decision to revive the Amazon Section 220 suit is less about Amazon and more about the
rules of the road. It reinforces that “credible basis” is a lowbut realthreshold, and that courts shouldn’t dodge
the evidence by dismissing a demand as too broad if the public record supports a focused investigative purpose.

At the same time, the remand process shows Delaware’s balancing act: yes, stockholders can investigate, but the
inspection is tailoredoften beginning with formal board materials, with confidentiality and precision baked in.
For companies, the message is clear: governance documentation matters. For stockholders, so does discipline. A good
Section 220 demand is not a harpoon; it’s a scalpel.