Slack Technologies Inc.'s directors were hit with a Delaware records lawsuit Thursday seeking to probe claims that they overstated the encrypted messaging platform’s capacity and reliability to inflate its stock before taking it public last year.
The suit targets the wave of app outages that plagued Slack after its 2019 New York Stock Exchange debut. The outages led Slack’s shares to tank when it emerged in September that the company had paid out $8.2 million in credits after failing to keep its pledge to offer “uninterrupted” service 99.99% of the time.
The stock was down about 60% in mid-March, but it has recovered in recent months, as the Slack app—long relied on by journalists and corporate executives—enjoys a boom related to widespread telecommuting during the Covid-19 pandemic.
The relatively sparse Chancery Court complaint invokes a state law giving corporate shareholders expansive inspection rights if they credibly suspect board wrongdoing.
Cause of Action: Section 220 of the Delaware General Corporation Law.
Relief: An order requiring Slack to turn over relevant books and records.
Response: Slack had no comment Thursday.
Attorneys: The plaintiff is represented by Rigrodsky & Long PA.
The case is Gillespie v. Slack Techs. Inc., Del. Ch., No. 2020-0483, complaint filed 6/18/20.