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July 20 — The co-owner of TransPerfect Global Inc., a New York-based translation company being sold due to irreconcilable management conflicts, must pay his co-founder's legal fees because his “unusually deplorable behavior” during litigation “obstructed discovery, concealed the truth, and impeded the administration of justice” ( Shawe v. Elting , 2016 BL 232452, Del. Ch., No. 9661-CB, 7/20/16 ).
Chancellor Andre Bouchard of the Delaware Chancery Court July 20 ordered Philip R. Shawe, TransPerfect's co-founder and co-chief executive officer, to pay the legal fees accrued by co-CEO Elizabeth Elting in a trial and a sanctions hearing earlier this year.
Shawe told Bloomberg BNA that he will appeal the decision. Bouchard “again decided against the weight of actual witness testimony and genuine evidence and relied solely on the statements of Elting's attorneys,” he said in a July 20 e-mail.
“TransPerfect has never been either dysfunctional nor faced with irreparable harm as Bouchard ruled,” Shawe added. “I am beyond confident that both I and TransPerfect will be completely vindicated on appeal.”
The July 20 ruling is the latest in a series of lawsuits the co-owners have filed against each other as they vie for company control. In August 2015, the court appointed a custodian to sell TransPerfect because Shawe and Elting's conflicts threatened the well-being of the company. The court affirmed a plan of sale June 20 (119 CARE, 6/21/16).
The pending sale sparked a backlash among a group of TransPerfect employees, who are now pushing to change Delaware law to prevent the court from ordering such sales in the future (134 CARE, 7/13/16) (128 CARE, 7/5/16).
The court issued its July 20 decision in response to a motion for sanctions that Elting filed against Shawe after an evidentiary hearing held in January. At the hearing, Elting alleged that during their litigation, Shawe deleted files from his laptop computer, failed to safeguard evidence on his phone, and repeatedly lied under oath to cover up his actions.
Shawe “needlessly complicated and protracted these proceedings to Elting's prejudice, all while wasting scarce resources of the Court,” Bouchard wrote in his 58-page opinion.
According to the opinion, Shawe's “unusually deplorable behavior” began in 2013, after conflicts between the co-owners led Elting to hire a lawyer. Shawe broke into Elting's office and tampered with her computer, extracting e-mails off her hard drive without her permission. He found a way to access her computer remotely, and between March and July 2014 accessed Elting's computer at least 44 times. In all, Shawe gained access to thousands of Elting's private e-mails, including 12,000 private conversations with her lawyers, the opinion said.
Shawe also destroyed evidence on his laptop even though the court ordered documents to be preserved in anticipation of the trial, the opinion said. It added that an iPhone of Shawe's that might have had more evidence inexplicably went missing. When asked about all these things, Shawe repeatedly lied to the court.
Shawe will pay 33 percent of Elting's attorneys' fees and expenses surrounding the trial and all of her attorneys' fees for the sanctions hearing, Bouchard wrote. The judge also directed Elting to file an order within 10 days stating the amount of reasonable attorneys' fees and expenses she incurred.
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