By: Shauna LaMagna
The Delaware Supreme Court has given the New York Times it’s evidentiary blessing and designated it (and its anonymous sources) as a “trustworthy” news source. Recently, a seemingly understated §220 books and record request from the Employees’ Retirement System of Rhode Island (“Rhode Island”), a minority stockholder of Paramount Global, brought to the Court the question of whether hearsay statements in news reports were sufficiently reliable to be admissible and assist the requestor in establishing a “credible basis” to investigate wrongdoing.[1]
In 2023, Shari Redstone, through her control of National Amusements, owned the majority of voting shares of Paramount Global.[2] In 2023, Redstone considered selling National Amusements.[3] The Employees’ Retirement System of Rhode Island, a Paramount stockholder, served a demand on Paramount to inspect books and records under Section 220 of Delaware General Corporation Law.[4] This demand was rejected by Paramount and litigation ensued.[5] In its complaint, Rhode Island alleged that it had a proper purpose for its inspection of Paramount records and there was a “credible basis” to infer that Shari Redstone had scuttled a potential full entity sale of Paramount (and instead pushed to only sell National Amusement’s ownership interest in Paramount), as well as a breach of fiduciary duty by Redstone and National Amusements.[6] After the service of the demand, but before the books-and-records trial took place, there was newspaper reporting on transaction-related developments.[7] On an interlocutory appeal, the Delaware Supreme Court was left to decide, inter alia, whether hearsay was sufficiently reliable to be considered in determining whether there was a “credible basis” to suspect wrongdoing in support of a § 220 books-and-records request.[8] “Credible basis” can be satisfied by “… a credible showing, through documents, logic, testimony or otherwise, that there are legitimate issues of wrongdoing.[9]
In determining whether the hearsay (presented by way of anonymous sources in various newspaper articles) was “sufficiently reliable and worthy of consideration”, the Chancery Court had conducted a fact-based analysis and weighed a number of factors, including: 1) the number of articles (47) published on the topic; 2) instances when the Paramount’s public filings confirmed the assertions made in news reports; 3) the reputations of the news outlets; 4) the stature of the reporting journalists; 5) the level of specificity in the assertions; 6) the absence of indica of unreliability or conspiratorial undertones; and 7) Paramount’s own reliance on news articles bearing the same characteristics as the articles proffered by Rhode Island. The Supreme Court found it was not an abuse of the Chancery Court’s discretion to do so and held that judicial officers should exercise their discretion to admit hearsay evidence for this purpose on a case-by-case basis.[10]
Shortly after this decision was issued, another Paramount books and records action was resolved by a Court of Chancery magistrate who also held that stockholders may use a New York Times article as admissible hearsay evidence.[11] The magistrate in that case dismissed any concerns surrounding the use of anonymous sources as “routine and unremarkable”[12] It is critical to note that the holding allows the Court to consider corroborating information surrounding any anonymous statements and the Supreme Court did not hold that journalism is sufficient to establish “credible basis” in and of itself.
Although Paramount Global appropriately recognizes that hearsay and confidential-source reporting may help establish the “credible basis” required for a Section 220 books-and-records inspection, its reliance on journalism-specific indicia of reliability raises questions about whether Delaware courts will evaluate anonymous evidence consistently when arising from non-journalism sources. By comparing Paramount with NVIDIA Corp. v. City of Westland Police & Fire Retirement System, this article argues the reliability of hearsay should turn on the substance of the information, the source’s basis of knowledge, and independent corroboration—not on whether the information was first reported by a reputable journalist.
The issue of whether to allow hearsay in establishing the “credible basis” of a Section 220 proceeding was novel to the Paramount case. On the contrary, it was examined quite thoroughly in NVIDIA Corp. v. City of Westland Police and Fire Retirement System.[13] In NVIDIA, the Court found hearsay is admissible in a Section 220 proceeding when that hearsay is sufficiently reliable.[14] In NVIDIA, the Court outlined a spectrum of hearsay evidence. On the permissible end sits detailed, factually dense information from known or corroborated sources. On the impermissible end sits “hearsay that is anonymous, uncorroborated, or contradicted by other evidence.”[15] If a rumor is entirely anonymous and stands completely alone without outside factual anchors (such as SEC filings, regulatory warnings, or separate litigation), the court may reject it as unreliable.[16] Would the Court respond the same way when faced with an anonymous witness in a complaint or affidavit?
Justice Traynor’s concurrence attempts to answer this question with an always welcome review of what does and does not constitute hearsay. He specifies “the fact to be proved [in a §220 proceeding] is not the suspected wrongdoing but rather the reasonableness of the [stockholder’s] suspicion. Seen in this light . . . [the statements] are not offered to prove their truth. Thus, they are not hearsay.”[17]
Ultimately, the intersecting concern to the hearsay discussion lies in the hearsay’s ability to be considered “reliable” by the Court. This is especially difficult when the source is anonymous. An anonymous allegation can be difficult to test. The opposing party and Court cannot assess the source’s identity or potential bias. The Court cannot directly evaluate the source’s personal knowledge. The source may have misunderstood the events in question or may possess an ulterior motive. While the “credible basis” test is the lowest possible burden of proof under Delaware law,[18] the Court seems to want to balance its need for reliable information against the reality of obtaining evidence about concealed corporate conduct. Using journalism as an investigative intermediary places the Court’s faith not only in the journalist’s reporting process but ultimately, in the underlying source. It could be argued that the framework the Court of Chancery employed in Paramount is entirely consistent with the spectrum provided in NVIDIA, all while introducing new, somewhat generous, journalism-specific factors. Ultimately, what the Court is examining when deciding whether to consider hearsay evidence is the statement’s specificity, a firsthand knowledge account, corroboration, and any other indication that the “credible basis” for investigating wrongdoing is rationally rooted in fact.
The fact-specific approach the Court establishes in Paramount neither categorically includes or excludes newspaper reporting or anonymous-sourced evidence. It remains to be seen how much the latitude and/or the Court will employ these generous factors when examining anonymous-source evidence from a non-journalist source. The Paramount decision recognizes that credible evidence in Section 220 actions does not have to come from traditional firsthand testimony or corporate documents. Moving forward Delaware courts should continue to assess hearsay and anonymous-source evidence using consistent reliability-based criteria. While journalism can be a valuable investigative intermediary, the fact that journalism is the source of information, should not be the sole determinate of its reliability in Court. Hopefully, this is a signal that Delaware courts will continue to evaluate the reliability of hearsay evidence according to its substance and/or ability to be corroborated, not based on the identity of the person who first reported it.
About the Author
Shauna LaMagna is a Third Year, extended division student at Widener University Delaware Law School and has been named Lead Articles Editor for Volume 52 of the Delaware Journal of Corporate Law. While in law school, Shauna works full time as a Program Coordinator and Associate Professor in the Health Sciences Division at Montgomery County Community College in Pennsylvania. She is excited to continue to incorporate her experience in health care delivery and education into her future civil litigation practice.
[1] Paramount Glob. v. Rhode Island Off. of Gen. Treasurer on Behalf of Emp. Ret. Sys. of Rhode Island, 361 A.3d 900, 903 (Del. 2026).
[2] Id. at 903.
[3] Id.
[4] Dᴇʟ. Cᴏᴅᴇ Aɴɴ. tit. 8, § 220 (West 2024).
[5] Paramount Glob., 361 A.3d at 903.
[6] Id.
[7] Id.
[8] Id.; tit. 8, § 220; Seinfeld v. Verizon Commc’ns, Inc., 909 A.2d 117, 123 (Del. 2006).
[9] Seinfeld, 909 A.2d at 123.
[10] Lauren Rosenello & Tanisha Brown, The Delaware Supreme Court Issues a 3-2 Split Decision Allowing Post-Demand Evidence to Be Admissible in Section 220 Actions, Harv. L. Sch. F. on Corp. Governance (July 28, 2026), https://corpgov.law.harvard.edu/2026/07/28/the-delaware-supreme-court-issues-a-3-2-split-decision-allowing-post-demand-evidence-to-be-admissible-in-section-220-actions/.
[11] Id. (referencing Metro. Water Reclamation Dist. Ret. Fund v. Paramount Glob., No. 2025-0377, 2026 WL 1623142, at *9 (Del. Ch. June 5, 2026).
[12] Metro. Water Reclamation Dist. Ret. Fund v. Paramount Glob., No. 2025-0377, 2026 WL 1623142, at *9 (Del. Ch. June 5, 2026).
[13] NVIDIA Corp. v. City of Westland Police & Fire Ret. Sys., 282 A.3d 1 (Del. 2022), as revised (July 25, 2022).
[14] NVIDIA Corp., 282 A.3d at 22 (the Court reaches this conclusion conducting an extensive analysis of Thomas & Betts Corp. v. Leviton Mfg. Co., 681 A.2d 1026 (Del. 1996)).
[15] Id.
[16] Id.
[17] NVIDIA Corp. v. City of Westland Police & Fire Ret. Sys., 282 A.3d 1 (Del. 2022), as revised (July 25, 2022).
[18] Seinfeld v. Verizon Commc’ns, Inc., 909 A.2d 117, 123 (Del. 2006).
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