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Shawe v. Transperfect Global, Inc.

Court of Chancery of Delaware

September 5, 2017

SHIRLEY SHAWE, Plaintiff,
v.
TRANSPERFECT GLOBAL, INC., Defendant.

          ORDER DENYING APPLICATION FOR INTERLOCUTORY APPEAL

         WHEREAS:

         A. This action is the latest installment in a long-running dispute between the co-founders of TransPerfect Global, Inc. ("TPG" or the "Company"): Elizabeth Elting and Philip Shawe ("Shawe"). Elting owns fifty shares of TPG. Shawe and his mother, Shirley Shawe ("Ms. Shawe"), together own the remaining fifty outstanding shares of TPG, with Ms. Shawe owning one share.

         B. On August 13, 2015, the Court granted Elting's petition to appoint a custodian ("the Custodian") to sell TPG under 8 Del. C. § 226 in order to remedy the dysfunction in the co-founders' management of the Company and the deadlocks at the board and stockholder level that were proven at trial.[1]

         C. On June 21, 2016, the Court accepted, with certain modifications, the Custodian's recommendation for a proposed plan of sale for the Company.[2] An implementing order was entered on July 18, 2016 (the "Sale Order"). On February 13, 2017, the Supreme Court affirmed the post-trial decision and the Sale Order.[3]

         D. On March 12 and April 18, 2017, Ms. Shawe made two different proposals that contemplated providing Elting with a proxy to vote Ms. Shawe's single share of TPG to elect directors of the Company as part of a purported effort to break the stockholder deadlock at TPG. Both proposals, however, were subject to various conditions involving changes to the governance and/or capital structure of TPG.[4]

         E. On April 20, 2017, after Elting had rejected both proposals, Ms. Shawe filed this action, asserting a single claim under 8 Del. C. § 211(c) to compel TPG to hold an annual meeting of its stockholders (the "Section 211 Action"). Simultaneous with filing her complaint, Ms. Shawe filed a motion for expedited proceedings. As part of her Section 211 Action, Ms. Shawe sought highly unusual relief, namely entry of an order to change the Company's capital structure by requiring it to issue the remaining authorized, but unissued, shares of the Company's stock pro rata to the current stockholders before the annual meeting.[5]

         F. On April 25, 2017, Elting filed a motion to enforce the Sale Order and for sanctions in C.A. Nos. 9700-CB and 10449-CB.

         G. On April 26, 2017, the Custodian filed a letter in response to the filing of the Section 211 Action and Elting's motion, expressing his belief that Ms. Shawe's proposal was inconsistent with the Sale Order and seemed to be futile, and that convening a stockholders' meeting now may inject uncertainty into the sale process given "the Shawes' prior conduct and stated intent to upend the sale process."[6]

         H. On June 2, 2017, at the conclusion of a hearing on the outstanding motions, the Court ordered the parties to engage in mediation with former Chancellor Chandler.

         I. On August 4, 2017, after the mediation reached an impasse, the Court issued a letter decision granting Elting's motion to enforce the Sale Order, denying Elting's motion for sanctions, and denying Ms. Shawe's motion to expedite (the "August 4 Ruling").[7] In the letter decision, I found, among other things, that:

(a)the "clear and admitted objective of the Section 211 Action is to remove the Custodian and to end the sale process, which is inconsistent with the Sale Order's directive to cooperate fully with the Custodian and to not impede or undermine, or intend to impede or undermine, the sale process;"
(b)ordering a stockholders' meeting "would be a futile exercise" in any event, particularly given Ms. Shawe's insistence on conditioning her grant of a proxy on the implementation of changes to the Company's governance and/or capital structure that Elting already had rejected; and
(c)convening a stockholders' meeting at this juncture could jeopardize the sale process, which is expected to conclude in the near future.[8]

         Based on these findings, I concluded that TPG did not need to respond to the Section 211 Action at that time.

         J. On August 14, 2017, Ms. Shawe applied for an interlocutory appeal of the part of the August 4 Ruling denying her motion to expedite the Section 211 Action. Ms. Shawe has not sought to appeal the part of the August 4 Ruling granting Elting's motion to enforce the Sale Order. On August 24, 2017, the ...


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