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TransPerfect Co-CEOs Warned To Make Peace Or Else June 8, 2015

Posted by Jill (@bonnjill) in Business practices, Translation.

This makes me want to pop some popcorn…

TransPerfect Co-CEOs Warned To Make Peace Or Else

By Matt Chiappardi

Law360, Wilmington (June 03, 2015, 10:01 PM ET) — A Delaware Chancery judge Wednesday warned the co-CEOs warring over translation services firm TransPerfect Global Inc. to settle because he is prepared to write an opinion neither side will like in an ugly battle that features sanction bids from both sides, including one lodged against Kramer Levin Naftalis & Frankel LLP.

At the end of oral arguments in Wilmington, Chancellor Andre G. Bouchard said Co-CEOs Elizabeth Elting and Philip Shawe have until roughly the end of the month to independently come to some sort of resolution to their web of litigation over the future of the company, or the court record will feature an opinion neither party will be happy with.

“The opinion is not going to be pretty,” the chancellor said from the bench. “There’s a lot of evidence that makes both parties look small-minded, petty and vindictive. You’ll have to live with it forever … available to anyone who does a Google search.”

The fight — essentially a business divorce between Elting and Shawe who both own roughly 50 percent stakes in the business, which has been raging for more than a year in courts in Delaware and New York —- has taken a bitter tone with Elting saying in court papers that Shawe has “stalked and bullied” her for years and is seeking sanctions against him for alleged conduct that includes breaking into her office and acquiring 12,000 privileged emails.

Shawe has accused Elting of her own misconduct, such as what his court papers called “outright sabotage” of the company by allegedly getting customers to withhold business and blocking needed hires. He has also moved to have her Kramer Levin counsel disqualified from the case, arguing that one of the attorneys representing her should actually be a witness in the case because he has been a “central figure” in past disputes, and asked for monetary sanctions, accusing a lawyer from the firm of acting improperly during a deposition.

In court Wednesday, Chancellor Bouchard went on to say that both sides would be “naive” in what appears to be their expectations from the litigation — Shawe for thinking that the current situation at the company is tenable, and Elting for thinking his driving concern would be the maximization of her stake.

The chancellor said there are other factors that greatly concerned him, including the future of the enterprise itself and the livelihood of its roughly 4,000 employees, and went as far as suggesting a mediator to allow “cooler heads” to prevail.

“You would be wise to use his skills to cut a deal,” Chancellor Bouchard said. “If you don’t, I will do what I have to do.”

The battle centers on a business Elting and Shawe created together in 1992 that has grown into “the world’s largest privately held provider of language and technology solutions for global business” with annual revenues of $470 million, according to its website.

In court papers for the myriad lawsuits the partners have thrown at each other, much of it redacted because the company is privately held, it is clear their relationship has deteriorated.

Shawe has accused Elting of a series of fiduciary duty breaches, including diverting funds for her own personal use and causing business harm to the company.

Elting has said in court papers that she and Shawe are hopelessly deadlocked in every facet of the business, and has requested the court equitably dissolve the company. Shawe has resisted that outcome, arguing he does not want to cash out, and Elting has requested the court bar him from bidding if the company goes up for auction or from competing for several years.

In a related dispute in New York over control of the company’s payroll system, Shawe was successful in a bid to have the court sanction Kramer Levin for not moving fast enough to correct a complaint that identified them as co-owners of affiliate TransPerfect Translations International Inc., which is actually owned by parent company TransPerfect Global Inc.

Kramer Levin has said it believes the New York judge’s decision was incorrect and have moved to have it stayed or vacated. The docket in the case indicates Elting and the firm have appealed the decision.

In the Delaware cases, Shawe has tried to have Kramer Levin attorney Ronald S. Greenberg thrown off the case arguing that he “often crossed the line between acting as a legal adviser to Elting and directly interfering in the affairs of TransPerfect, its management and its personnel.”

Shawe has also moved for monetary sanctions against Elting and Kramer Levin, arguing that during Greenberg’s deposition, attorney Phillip Kaufman essentially wasted everyone’s time by directing Greenberg not to answer more than 70 questions and then abruptly terminating the proceeding.

In court Wednesday, Elting’s attorney Gerard E. Harper of Paul Weiss Rifkind Wharton & Garrison LLP said Shawe was trying to drag Greenberg’s name “through the mud” for his own gain.

Kramer Levin’s general counsel Charlotte Moses Fischman told Chancellor Bouchard that the questions Kaufman directed Greenberg not to answer were either on information Shawe’s counsel already knew or to protect attorney-client privilege, and argued that no prejudice or injury resulted from the deposition.

Shawe’s motion was “a counterweight” to Elting’s sanctions request and it would be “a travesty of justice for Kramer Levin to be the only law firm sanctioned in these proceedings,” Fischman said.

For her part, Elting has lobbed sanctions of her own at Shawe, accusing him of not only gaining unauthorized access to thousands of her emails, many of which were communiques with her lawyers, but other misconduct including spoiling evidence by deleting files from his laptop the court ordered be turned over for forensic analysis.

Shawe’s attorneys refuted accusations of wrongdoing in court Wednesday, arguing that he believed he had authorization to see the emails per company policy, and the files deleted from the laptop were programs automatically generated when a computer performs functions with the relevant information preserved.

Elting is represented by Gerard E. Harper and Robert N. Kravitz of Paul Weiss Rifkind Wharton & Garrison LLP, Philip S. Kaufman, Ronald S. Greenberg, Marjorie E. Sheldon, Jared I. Heller and Theodore S. Hertzberg of Kramer Levin Naftalis & Frankel LLP, and Kevin R. Shannon, Berton W. Ashman Jr., Christopher N. Kelly and Jaclyn C. Levy of Potter Anderson & Corroon LLP.

Shawe is represented by Ronald C. Minkoff, Richard M. Maltz and Andrew J. Ungberg of Frankfurt Kurnit Klein & Selz LLP, Philip L. Graham Jr. and Penny Shane of Sullivan & Cromwell LLP, Howard J. Kaplan, Joseph A. Matteo and Joshua MacLeod of Kaplan Rice LLP, and Gregory P. Williams, Lisa A. Schmidt and Robert L. Burns of Richards Layton & Finger PA.

The Delaware cases are In re: TransPerfect Global Inc, case numbers 9661, 9686 and 9700, in the Delaware Court of Chancery.

The New York case is Elizabeth Elting v. Philip Shawe et al., case number 651423/14, in the Supreme Court of the State of New York.

–Additional reporting by Lisa Ryan. Editing by Chris Yates.



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