TransPerfect co-founder and CEO Philip Shawe will not face fines for contempt by the Delaware Chancery Court following a decision by the state Supreme Court over a multi-year flurry of litigation related to the sale of the company.
The Chancery action was issued after TransPerfect filed suit in Nevada over what the high court described as “seemingly endless litigation” that included filings in New York State. TransPerfect also moved its state of incorporation from Delaware to Nevada.
The litigation came over actions by TransPerfect custodian Robert Pincus, who was charged with handling the sale after co-founders Shawe and former fiance Elizabeth Elting could not reach an agreement on selling their 50-50 stakes in the company.
Pincus sides with Shawe’s bid despite a slightly higher bid from a private equity company that owned a rival of TransPerfect.
However, TransPerfect and Shawe were not happy with the fees charged by Pincus for post-sale matters and what they viewed as a lack of specifics on billing.
The contempt fine remains in effect for TransPerfect, but not for Shawe. The ruling stated that despite Shawe owning 99% of TransPerfect shares, he could not be named, since he was not listed in the Nevada action.
The court went on to uphold actions by Pincus following the sale, including the payment of $3,242,251 in fees and expenses incurred from the period after the sale.
“The Supreme Court vacated the sanctions and suggested the chancellor overreacted. It’s not often the Delaware courts find in our favor and this ruling is important in making the case that TransPerfect and Shawe have been dealt a heavy, uneven hand in its legal challenges for equity and fairness,” said TransPerfect attorney Martin Russo.
The TransPerfect case also spawned an advocacy group known as Citizens for a Pro-Business Delaware. The organization said to be comprised of TransPerfect staff and others was recently rebranded as Citizens for Judicial Fairness.
The group has spent millions of dollars in advertising attacking Chancery Court, Delaware’s legal climate and the law firm of Skadden Arps. More recently it has made the case for a Black vice chancellor to replace a retiring member of the court. Chancery handles shareholder suits, guardianships, and homeowner-condo associates disputes, rather than criminal and civil cases that affect a wider segment of the population.
Former custodian Pincus has been an attorney for Skadden Arps, an international law firm.
Click here for a link to the decision.
