Section 220(d) of the Delaware General Corporation Law permits a director to inspect a company’s books and records for purposes reasonably related to the director’s position as a director. It is well-settled under Section 220 jurisprudence that a director’s right to access corporate books and records is broader than that of stockholders. A director who has a proper purpose for inspection (i.e., one that is reasonably related to his or her position as a director) has virtually unfettered access to the company’s books and records. In a recent ruling, Schnatter v. Papa John’s International, C.A. No. 2018-0542-AGB, Chancellor Andre G. Bouchard reaffirmed that longstanding rule and expounded on its application when the director may also have an additional, personal reason for seeking the books and records.

Background

John Schnatter, the founder of Papa John’s and the company’s longtime chairman and public spokesman, came under fire in 2017-2018 for his public criticism of the National Football League’s handling of player protests and a report that he had used a racial slur during a company training call. Following widespread coverage of the slur incident, Schnatter resigned as the company’s chairman and was not allowed to publicly appear on behalf of the company. The Papa John’s board also formed a special committee to evaluate the company’s relationships with Schnatter. After deliberating for approximately three hours, the special committee decided to terminate two agreements the company had with Schnatter.