Thomas & Betts Corporation v. Leviton Manufacturing Co., Inc.

681 A.2d 1026 (1996)

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Nature of the Case

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Facts

Thomas Betts Corporation (P) is a publicly traded company engaged in the electronics business. Leviton (D) is a closely held Delaware corporation engaged in the business of manufacturing electronic components and residential wiring devices. P was interested in buying D for a number of years. No agreement was ever reached. P then decided to seek a minority position in D to force a sale of the company. P negotiated with D's former vice president, Lumburg, and Lumburg's his wife, who was Harold Leviton's niece and owner of 29.1% of the stock. Harold owned 76.45%. P paid $50 million for the 29.1%, all negotiations were conducted in secret, and P was provided with confidential internal information regarding D's internal strategies and accounting figures. P also promised another $20 million in compensation if P acquired all of D. D was informed of the transaction, and Lumburg was immediately fired, rehired, and then fired again. D embarked upon a campaign to buy P. P served D with a formal demand seeking inspection of corporate documents. A few days later P offered to buy Harold's shares for $250 million. D refused the buyout offer and refused inspection of any corporate records. P sued D in Chancery to compel inspection pursuant to the state codes. The court ruled that P's motives were to gain leverage in a buyout but that P could inspect so that it could value the shares that it had acquired. P appealed based on the lower courts improper burden of proof; to adduce evidence from which a credible possibility of mismanagement and waste may be inferred and to adduce specific evidence of waste and mismanagement.