Reminder: This is what Delawareans need to know about the TransPerfect case
By Mary F. Dugan, Richard D. Kirk and Steve A. Spence
(submitted to the Delaware NewsJournal and published Jan. 26, 2024
See published article here: https://www.delawareonline.com/story/opinion/2024/01/26/transperfect-delaware-chancery-court-what-you-need-to-know/72257967007/
Regular readers of The News Journal may have noticed a series of paid advertisements this fall sponsored by a group calling itself “Citizens for Judicial Fairness.” These ads are the latest part of a years-long campaign waged by a disgruntled Chancery Court litigant, Philip Shawe. Shawe and his former business partner and fiancée, Elizabeth Elting, founded a company called TransPerfect in the 1990s when they were business school students. It grew into a large and valuable company owned equally by them. The once-engaged couple broke up, thus beginning the long saga that has played out, in large part, in the Delaware courts.
TransPerfect’s equal co-owners managed to run the business despite being deadlocked as the corporation’s two lone directors. They refused inside and outside efforts to break the deadlock. Evidently neither Shawe nor Elting could stand the thought of the other being sole owner of their corporate progeny.
In 2014, Elting filed a lawsuit in Delaware Chancery Court seeking the appointment of a custodian to sell TransPerfect. After many pretrial skirmishes, and after a six-day trial, former Chancellor Andre Bouchard issued an order finding that the facts and law supported the appointment of a custodian who would be authorized to sell TransPerfect “so that Shawe and Elting can be separated and [TransPerfect] can be protected from their dysfunctional relationship.” The Delaware Supreme Court affirmed the Chancellor’s decision 4-1 on Feb. 13, 2017.
Shawe had opposed the appointment of a custodian from the outset. While the matter was pending before the former chancellor and then while it was pending on appeal, Shawe conducted a public relations campaign in print and social media railing against the chancellor for even considering the appointment of a custodian to sell TransPerfect as a going concern. He even tried unsuccessfully to get Delaware law changed to prevent such a sale.
The custodian appointed by the former chancellor undertook the task of arranging an auction for the sale of TransPerfect’s stock. Elting filed an unsuccessful motion seeking to prevent Shawe from participating in the auction. Ultimately, Shawe won the auction and bought Elting’s shares, becoming the corporation’s sole owner. Despite obtaining the one result he truly wanted, sole ownership of TransPerfect, Shawe continued his negative campaign against the former chancellor and, after Chancellor Bouchard resigned, against current Chancellor Kathaleen McCormick. You could say he is the ultimate “sore winner.”
In the latest paid ad, the Shawe-aligned group paints McCormick as the Grinch who is “stealing Christmas,” allegedly at the expense of “workers and their families.” But after Shawe bought out Elting’s interests, he launched a multi-jurisdictional litigation campaign against the court-appointed custodian and others. Pursuant to Delaware law, the chancellor has approved payment of attorney’s fees and expenses incurred by the custodian in those actions. Shawe’s company has opposed the fees, balked at paying them generating multiple motions for contempt, pursued an interlocutory appeal of one of the court’s fee orders, which was affirmed, and sought interlocutory appeals of the later orders, for which requests to appeal were denied, thus prolonging the Delaware litigation and causing even more fees to be incurred. To be clear, the fees came and will continue to come from Shawe’s company, of which he is sole owner, not “workers and their families.”
The members of Delaware’s judiciary have a well-earned reputation for excellence and diligence. Those qualities have been and continue to be shown by the judges in the TransPerfect case. Judges are not permitted to comment on the cases before them, even to defend themselves. It is incumbent on the bar to step up and speak for them, as we are proud to do here. Bouchard and McCormick deserve kudos, not criticism, and certainly not the misleading and intemperate PR campaign waged by Shawe.
Anyone interested in seeing a clear and objective history of the TransPerfect case leading up to the appointment of a custodian, and especially Shawe’s behavior therein, should review the Supreme Court’s 2017 decision which is available, among a few other decisions, on the Bar Association’s website, www.dsba.org/tp. You can judge for yourselves.
Mary F. Dugan, Richard D. Kirk and Steve A. Spence are co-chairs of the Delaware State Bar Association Committee on Response to Public Comment.