Richard Scarantino v. The Trade Desk, Inc.

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
LORI W. WILL LEONARD L. WILLIAMS JUSTICE CENTER
VICE CHANCELLOR 500 N. KING STREET, SUITE 11400
WILMINGTON, DELAWARE 19801-3734

December 5, 2025

Sarah E. Delia, Esquire Brad D. Sorrels, Esquire
McCarter & English, LLP Andrew D. Cordo, Esquire
405 North King Street, 8th Floor Nora M. Crawford, Esquire
Wilmington, Delaware 19801 Joshua A. Manning, Esquire
Amanda L. Day, Esquire
Jacqueline G. Conner, Esquire
Wilson Sonsini Goodrich & Rosati P.C.
222 Delaware Avenue, Suite 800
Wilmington, Delaware 19801

RE: Richard Scarantino v. The Trade Desk, Inc.
C.A. No. 2025-0442-LM

Dear Counsel:

This decision resolves exceptions to a Magistrate’s final report in a Section

220 suit. The Magistrate held that the plaintiff established a proper purpose to

investigate the defendant’s reincorporation to Nevada and ordered the production of

formal board materials on that and other subjects. The plaintiff takes exception to

the Magistrate’s rejection of his request for informal materials. For the reasons

below, the exception is overruled.
C.A. No. 2025-0442-LM
December 5, 2025
Page 2 of 14

I. BACKGROUND

The relevant facts are in the Magistrate’s July 31, 2025 final report (the

“Report”).1 Unless otherwise noted, the following background draws from that

Report and the trial record.

A. The Trade Desk’s Reincorporation

The Trade Desk, Inc. is a cloud-based advertising company cofounded by Jeff

T. Green.2 It uses a dual-class capital structure. The Trade Desk’s Class A common

stock is publicly traded and carries one vote per share.3 Its Class B common stock

is non-publicly traded and carries ten votes per share.4 Green—The Trade Desk’s

CEO and Chairman—is the primary owner of the Class B shares.5

At the time of its 2016 initial public offering, The Trade Desk’s certificate of

incorporation stated that if the number of outstanding Class B shares fell below 10%

of the total Class A and Class B shares outstanding, each Class B share would

1
Magistrate’s Final Report (Dkt. 39) (“Report”). Joint exhibits submitted by the parties
are cited as “JX __.”
2
Report 2 (citing Pre-trial Order (Dkt. 29) (“PTO”) ¶¶ 1, 3-5).
3
Id. at 3 (citing PTO ¶ 4).
4
Id.
5
Id. (citing JX 26 at 46).
C.A. No. 2025-0442-LM
December 5, 2025
Page 3 of 14

convert into one Class A share.6 Four years later, in 2020, The Trade Desk amended

its certificate of incorporation to extend the expiration of the company’s dual-class

structure to December 2025.7 The Trade Desk’s stockholders unaffiliated with

Green approved the amendment.8

After another four years, in April 2024, The Trade Desk’s Board of Directors

began to discuss reincorporating the company from Delaware to another state. The

Board and its advisors explored reincorporation over the ensuing months. Minutes

reflect that the Board considered, among other things, the need for “more

predictability around decision making”9 and the distracting, “increasingly litigious

environment facing corporations, particularly those with controlling stockholders, in

Delaware.”10 In September 2024, citing these reasons and a desire to “support the

6
PTO ¶ 8.
7
Report 4 (citing PTO ¶¶ 10-12).
8
Id.; see also City Pension Fund for Firefighters & Police Officers v. The Trade Desk,
Inc., 2022 WL 3009959, at *4-5, *23 (Del. Ch. July 29, 2022) (dismissing a challenge to
the 2020 amendment and holding that The Trade Desk complied with the MFW
framework).
9
JX 24 at 1.
10
JX 23 at 2.
C.A. No. 2025-0442-LM
December 5, 2025
Page 4 of 14

long-term success and mission of the Company, to the benefit of stockholder value,”

the Board approved resolutions to reincorporate The Trade Desk in Nevada.11

The Trade Desk filed a proxy statement on October 3, 2024 requesting that

stockholders approve the reincorporation. At a November 14 special meeting, The

Trade Desk stockholders voted for the reincorporation.12 The reincorporation

became effective on November 15.13

B. The Demand and 220 Suit
On October 21, 2024, Richard Scarantino—a beneficial owner of The Trade

Desk Class A common stock—served The Trade Desk with a demand to inspect

books and records under 8 Del. C. § 220 (the “Demand”).14 His stated purpose was

to investigate suspected misconduct concerning the reincorporation to Nevada and

its effect on the company’s dual-class capitalization structure.15 He sought materials

including “[d]ocuments and communications between or among the [eight] directors

of the Company” about four topics: the reincorporation, the Class B conversion or

11
JX 24 at 1-2.
12
Report 6 (citing PTO ¶ 23).
13
JX 33.
14
Report 7; JX 28.
15
JX 28 at 1.
C.A. No. 2025-0442-LM
December 5, 2025
Page 5 of 14

any other dual-class sunset, any director conflict of interest, and the October 3 proxy

statement.16

In response, The Trade Desk produced 521 pages of documents consisting of

Board and committee minutes, meeting materials, and director questionnaires.17 It

also made a second production that included an expert advisor’s engagement letter,

ratified minutes, and a privilege log.18 The Trade Desk certified that its production

was complete “with respect to every category of documents that [it] had agreed to

produce.”19

Dissatisfied, the plaintiff filed a books and records action in the Court of

Chancery on April 24, 2025.20 He sought “all of the books and records identified in

[his] Demand.”21

On July 14, The Trade Desk filed a preliminary proxy statement proposing an

extension of the dual-class sunset.22 The proxy described a special committee

16
JX 28 at 6.
17
Report 7-8.
18
Id.
19
PTO ¶ 30.
20
Verified Compl. for Relief Pursuant to 8 Del. C. § 220 (Dkt. 1) (“Compl.”).
21
Id. at Prayer for Relief.
22
JX 68 at 23-25; see Report 9.
C.A. No. 2025-0442-LM
December 5, 2025
Page 6 of 14

process to explore the extension and the special committee’s reasons for supporting

it.23

Two days later, on July 16, a Section 220 trial on a paper record was held

before Magistrate Mitchell.24

C. The Final Report

On July 31, 2025, the Magistrate issued her Report. She held that the plaintiff

had shown a proper purpose for inspection, finding a “credible basis” to suspect that

the reincorporation was part of a plan to “perpetuate [] Green’s [voting] control.”25

She ordered the production of additional formal Board materials relating to

“consideration of [] Green’s Class B ownership” and “the sunsetting of the dual class

capitalization.”26 But she denied the plaintiff’s request for informal Board materials

(email) and privileged documents, reasoning that the plaintiff failed to present

evidence justifying a broader inspection.27

23
JX 68 at 23-25.
24
Report 10.
25
Id. at 8, 13-14, 16.
26
Id. at 16, 27-28.
27
Id. at 14, 17-19, 20-25.
C.A. No. 2025-0442-LM
December 5, 2025
Page 7 of 14

The plaintiff timely took exception to the Report only as to the denial of

informal materials.28 The Trade Desk opposed the plaintiff’s exception but filed

none of its own.29 The case was reassigned to me for the limited purpose of resolving

the exception, which was fully briefed as of September 26.

II. ANALYSIS

The Court of Chancery reviews a Magistrate’s final report de novo.30

Exceptions are considered “on the record before the Magistrate in Chancery, unless

the [court] determines [otherwise] for good cause shown.”31 The existing record is

adequate to resolve the pending exceptions.32

Section 220 of the Delaware General Corporation Law provides a “qualified”

right for stockholders to inspect corporate books and records.33 Once a proper

28
Pl.’s Notice of Exception (Dkt. 40); Pl.’s Corrected Opening Br. in Supp. of Exception
to Magistrate’s Final Report (Dkt. 46) (“Pl.’s Opening Br.”); see also Pl.’s Reply Br. in
Supp. of Exception to Magistrate’s Final Report (Dkt. 53) (“Pl.’s Reply Br.”).
29
Def.’s Answering Br. in Opp’n to Pl.’s Exception to Magistrate’s Final Report (Dkt. 51)
(“Def.’s Opp’n Br.”).
30
See Ct. Ch. R. 144(b)(2); DiGiacobbe v. Sestak, 743 A.2d 180, 184 (Del. 1999).
31
Ct. Ch. R. 144(e).
32
See DiGiacobbe, 743 A.2d at 184.
33
Seinfeld v. Verizon Commc’ns, Inc., 909 A.2d 117, 119 (Del. 2006); see 8 Del. C. § 220.
Section 220 was amended in March 2025. Because the Demand predates
February 17, 2025, the prior version of the statute applies. See Del. S.B. 21 syn., 153d
Gen. Assem. (2025); supra note 14 and accompanying text.
C.A. No. 2025-0442-LM
December 5, 2025
Page 8 of 14

purpose is established, the stockholder must demonstrate that “each category of the

books and records requested is essential and sufficient to the stockholder’s stated

purpose.”34 Documents are “necessary and essential” if they address the “crux of

the shareholder’s purpose” and cannot be obtained from another source.35

A. The Sufficiency of Formal Board Minutes

“Formal board-level documents,” such as meeting minutes, resolutions, and

presentations, “are often the beginning and end of a Section 220 production.”36 The

court will not order the production of email or other informal communications when

“traditional board-level materials” accomplish a plaintiff’s purpose.37 A broader

inspection is warranted only in extreme and “atypical circumstances,” such as where

34
Jacob v. Bloom Energy Corp., 2021 WL 733438, at *4 (Del. Ch. Feb. 25, 2021) (citing
Thomas & Betts Corp. v. Leviton Mfg. Co., 681 A.2d 1026, 1035 (Del. 1996)).
35
Espinoza v. Hewlett-Packard Co., 32 A.3d 365, 370-72 (Del. 2011).
36
Okla. Firefighters Pension & Ret. Sys. v. Amazon.com, Inc., 2022 WL 1760618, at *12
(Del. Ch. June 1, 2022).
37
KT4 P’rs LLC v. Palantir Techs. Inc., 203 A.3d 738, 752-53 (Del. 2019); see also
UnitedHealth Gp., Inc. Section 220 Litig., 2018 WL 1110849, at *9 (Del. Ch.
Feb. 28, 2018) (explaining that “email communications are generally the exception rather
than the rule” in Section 220 actions (citation omitted)), aff’d sub nom., UnitedHealth Gp.,
Inc. v. Amalgamated Bank, 196 A.3d 885 (Del. 2018).
C.A. No. 2025-0442-LM
December 5, 2025
Page 9 of 14

a board neglects corporate formalities or conducts formal business through informal

channels.38

No such atypical circumstances are present here. As the Magistrate observed,

The Trade Desk’s Board honored corporate formalities and kept formal records of

its decision to reincorporate.39 None of the plaintiff’s arguments shows that The

Trade Desk’s formal Board materials fail to satisfy the Demand.

First, the plaintiff insists that email must be produced because the formal

Board materials are inadequate. He describes the minutes produced to date as “short-

form,” “vague at best,” and “reflect[ing] virtually nothing” from the Board’s

deliberations.40 These characterizations are refuted by the record.

Although the Board’s discussions in April and July 2024 were preliminary,

the minutes reflect a process that deepened over time.41 By August and September,

the Board was receiving detailed presentations from legal counsel and a subject

38
Amazon.com, 2022 WL 1760618, at *5, *12; see Palantir, 203 A.3d at 756, 758.
39
Report 19 (“[N]o further production is necessary at this books and records stage because
formal board level documents satisfy those necessary and essential to the Plaintiff’s stated
purpose and no evidence was presented by the Plaintiff that support the necessity for a
broader inspection.”).
40
Pl.’s Opening Br. 1, 2, 21; Pl.’s Reply Br. 4-5.
41
JX 13; JX 15.
C.A. No. 2025-0442-LM
December 5, 2025
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matter expert, and exploring the merits of reincorporation.42 The minutes apprise

the plaintiff of the Board’s decision-making, explaining what the Board discussed,

what it decided, and why.43 The plaintiff’s wish for minutes that approximate a

transcript—or advance his litigation narrative—is not a valid ground to order the

production of informal communications.44

Second, the plaintiff contends that the formal materials are inadequate because

the Board has conducted business by email. This argument rests on a misapplication

of KT4 Partners LLC v. Palantir Technologies Inc. In Palantir, the court ordered

the production of email because the company had a history of ignoring corporate

formalities and had no responsive board-level documents.45 The Trade Desk’s

Board, by contrast, maintained regular minutes about the reincorporation process.46

42
JX 19; JXs 21-24.
43
Report 19 (“Formal board level documents sufficient ‘to effectively address the problem’
have been provided to the Plaintiff and no further evidence has been presented to justify
the Court to order the production of informal board materials.” (quoting Saito v. McKesson
HBOC, Inc., 806 A.2d 113, 115 (Del. 2002))); see infra note 46.
44
See Pl.’s Opening Br. 20; In re Zendesk, Inc. Section 220 Litig., 2023 WL 5496485,
at *12 (Del. Ch. Aug. 25, 2023) (“[M]inutes are not transcripts—they do not need to
be[.]”).
45
Palantir, 203 A.3d at 742, 752-53, 756.
46
E.g., JX 13; JXs 15-16; JX 19; JX 21; JXs 23-24; JX 29.
C.A. No. 2025-0442-LM
December 5, 2025
Page 11 of 14

Palantir does not support a production of email where, as here, a formal record on

the subject to be investigated exists.

The plaintiff attempts to salvage this argument by pointing to a single email

Green sent to the Board five years ago about a separate matter (the 2020 charter

amendment).47 This evidence is inconsequential. A director’s use of email in 2020

does not support a finding that the Board abandoned corporate formalities in 2024.48

Thus, the formal Board materials are sufficient. The plaintiff has (or will soon

have) records of Board meetings, presentations the directors received, and

resolutions they adopted about not only the reincorporation but also the dual-class

structure and Green’s Class B ownership.49 Section 220 requires nothing more.

47
Pl.’s Opening Br. 20-21 (citing The Trade Desk, 2022 WL 3009959, at *4).
48
See Operating Eng’rs Constr. Indus. & Misc. Pension Fund v. Pioneer Nat. Res. Co.,
2025 WL 2106580, at *4 (Del. Ch. July 28, 2025) (observing that sending texts “in one
context does not entitle a stockholder to inspect that fiduciary’s text[s] for all purposes”).
49
In fact, the plaintiff obtained more than it was entitled to. The Magistrate ordered the
production of “formal board materials relating to . . . the dual class capitalization structure
. . . and Mr. Green’s Class B shares.” Report 27-28. Neither category of documents was
sought in the Demand. JX 28 at 6; see Durham v. Grapetree, LLC, 2019 WL 413589, at
*3 (Del. Ch. Jan. 31, 2019) (“A plaintiff seeking books and records must first afford the
company the opportunity to avoid litigation by making a written demand and allowing the
company to comply; accordingly, she may not add new requests for documents, absent a
demand, by pleading during the course of the litigation.”).
C.A. No. 2025-0442-LM
December 5, 2025
Page 12 of 14

B. Disagreement with the Board’s Rationale

The plaintiff next argues that he is entitled to inspect informal

communications because some of the Board’s stated reasons for the

reincorporation—corporate “long-term vision” and the predictability of Nevada

law—are “[d]emonstrably [p]retextual.”50 He asserts that, consequently, the minutes

do not satisfy his purpose, necessitating an inspection of email to discover the

Board’s “true” motivations.51

This is a legally untenable contention. A Section 220 action is not the proper

posture to litigate the merits of a board action.52 If a stockholder could access

informal communications simply by calling a decision “pretextual,” books and

records inspections would devolve into plenary discovery.53 Such a rule would

50
Pl.’s Opening Br. 23. He argues that the “only credible reason identified by the Board
for the [r]eincorporation” is “insulating directors from liability with th[e] dual-class
extension.” Id. at 24.
51
Id. at 19, 25.
52
See Report 18 (explaining that a stockholder’s disagreement with a board’s conclusions
or fears regarding the litigation environment is “not a justifiable reason to order the
inspection of informal board materials”); cf. Teamsters Loc. 677 Health Servs. & Ins. Plan
v. Martell, 2023 WL 1370852, at *24 (Del. Ch. Jan. 31, 2023) (rejecting the “extreme
inference” that board minutes were false, absent pled facts to the contrary).
53
Palantir, 203 A.3d at 754-55 (“Books and records actions are not supposed to be
sprawling, oxymoronic lawsuits with extensive discovery. . . . After all, the point of a
summary § 220 action is to give the stockholder access to a discrete set of books and
C.A. No. 2025-0442-LM
December 5, 2025
Page 13 of 14

invite fishing expeditions based on a stockholder’s subjective views. Mere

disagreement with a board’s reasoning does not warrant the production of email.54

Neither of the plaintiff’s specific arguments alter this conclusion.

The plaintiff dismisses the Board’s reference to “long-term vision” as

“boilerplate” because it has used the same term across many years in other

contexts.55 But the Board’s consistent use of language to describe its strategy does

not necessitate a search for contradictory informal communications. If anything, the

repetition suggests a consistent corporate philosophy rather than a cover-up.

The plaintiff also contends that the Board’s view of Nevada law as “more

predictable” is “demonstrably false.”56 This is a dispute on legal theory—not

records that are necessary for its purpose—a set that is much less extensive than would
likely be produced in discovery . . . in a plenary suit.”).
54
Lebanon Cnty. Empls.’ Ret. Fund v. AmerisourceBergen Corp., 2020 WL 132752, at *9
(Del. Ch. Jan. 13, 2020) (“A stockholder cannot obtain books and records simply because
the stockholder disagrees with a board decision . . . .”), aff’d sub nom., AmerisourceBergen
Corp. v. Lebanon Cnty. Empls.’ Ret’ Fund, 243 A.3d 417 (Del. 2020).
55
Pl.’s Opening Br. 25.
56
Id. at 23, 25-26.
C.A. No. 2025-0442-LM
December 5, 2025
Page 14 of 14

evidence of a failure to document deliberations. There are “competing

considerations” in the relative merits of different states’ corporate law.57

If the plaintiff believes the Board’s stated reasons for supporting

reincorporation are pretextual, then he can make that argument in a plenary lawsuit.

For now, he has the necessary and essential documents to complete his pre-suit

investigation. He is not entitled to email to test that theory before filing suit.58

III. CONCLUSION

The exception is overruled. The Report is adopted. IT IS SO ORDERED.

Sincerely yours,

/s/ Lori W. Will

Lori W. Will
Vice Chancellor

57
Maffei v. Palkon, 339 A.3d 705, 743 (Del. 2025) (cautioning against “second-guessing
the judgments of the directors as to how best [to] evaluate and weigh the various competing
considerations” of different corporate law regimes).
58
Saito, 806 A.2d at 115 (providing that “[a] stockholder who demands inspection for a
proper purpose” must be given access only to documents “necessary to satisfy” that
purpose).