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In battle over TransPerfect, defense tries to nullify Chancery’s jurisdiction

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DOVER – In the much-ballyhooed “War of the Roses” case over the $500 million TransPerfect Group, the defense Wednesday made a move to minimize, if not nullify, the Court of Chancery’s jurisdiction and discretion in the case.

If successful, the filing will relieve the pressure on the Court of Chancery to force the sale of the company.

The TransPerfect case pits former partners and college roommates against each other in a legal battle for control of the prosperous company, which earns about $75 million in profits annually on some $500 million in billings in legal translation services.

The rift has been likened to that of Michael Douglas and Kathleen Turner’s characters in the film “The War of the Roses.”

Plaintiff Elizabeth Elting, who broke off an engagement to Phil Shawe and subsequently married another man, owns 50 percent of TransPerfect. Mr. Shawe owns 49 percent, and his mother Shirley Shawe was given a one percent share at the founding, so the owners could qualify as a “woman-owned company.”

Ms. Shawe’s interests have been litigated in parallel with Mr. Shawe’s, albeit with separate legal counsel.

Since the couple became estranged, there has been a lack of cooperation and agreement between Ms. Elting and Mr. Shawe in running the company, devolving to what Chancellor Andre Bouchard called “mutual hostage-taking,” with every decision being a “quid pro quo” trade-off between the partners.

Ms. Elting had taken the case to Court of Chancery under Delaware corporate law, asking the court to order the sale of the New York City-headquartered company incorporated in Delaware. (Without Shawe’s cooperation, she couldn’t do this outside the courts.)

Now the case has taken yet another turn.

“TransPerfect minority owner Shirley Shawe has elected to vote her 1 percent ownership interest with co-owner Elizabeth Elting to break the board deadlock and effectively permit Ms. Elting to elect her own slate of candidates to the board of director of TransPerfect Global,” representatives of Mr. Shawe announced Monday afternoon.

“Ms. Shawe has simultaneously proposed changes to the director election process which permanently eliminate the possibility of board deadlock and render a sale of the company unnecessary, thereby protecting 4,000 jobs,” Mr. Shawe’s representatives said. “The process supported by Ms. Shawe will enable Ms. Elting to elect five new board members with staggered terms and the ability to break shareholder deadlock in future elections. Not only will current deadlock be defeated, but there will never be any potential for future deadlock.”

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