CORRECTED: Chancery Sanctions Kramer Levin In TransPerfect Case - Law360

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CORRECTED: Chancery Sanctions Kramer LevinIn TransPerfect CaseShare us on: By Maya Rajamani

Law360, Wilmington (August 14, 2015, 9:47 PM ET) -- A Delaware Chancery judge on Friday sanctionedKramer Levin Naftalis & Frankel LLP for the conduct of one of Kramer Levin’s attorneys, ruling that heviolated Court of Chancery rules during a February deposition.

Chancellor Andre G. Bouchard determined that Kramer Levin must pay the legal costs surrounding thedeposition of its attorney Ronald Greenberg in the highly tumultuous business divorce between Elting andPhillip Shawe, co-CEOs of translation services company TransPerfect Global Inc., after finding attorneyPhilip Kaufman “inappropriately” instructed Greenberg not to answer many of the 75 questions asked andended the deposition prematurely.

“The litigation of these actions has been a heated affair to be sure, but that does not excuse unprofessionalconduct,” Chancellor Bouchard wrote in his opinion. “Mr. Kaufman’s defense of this deposition crossed theline between zealous advocacy and unprofessional conduct, and frustrated the fair examination of Mr.Greenberg.”

The ruling stems from what is essentially a business divorce between Elting and Shawe, who startedTransPerfect out of a dorm room at New York University in 1992, and were at one point engaged to bemarried before breaking up in 1997, according to court records.

CORRECTED: Chancery Sanctions Kramer Levin In TransPerfect Case - Law360

http://www.law360.com/articles/691571/corrected-chancery-sanctions-kramer-levin-in-transperfect-case

While their romantic ties appeared to fall apart, their business relationship did not, and over the years thetranslation company grew into a global powerhouse in the industry with 92 offices in 86 cities worldwide,court records state.

But the co-CEOs' professional dealings eventually fractured into a morass of litigation in both Delaware andNew York, with Elting seeking to have the company dissolved because of the endless loggerheads andcorporate battles.

In March, Shawe moved for sanctions against Elting and Kramer Levin, maintaining Kaufman actedinappropriately while defending the deposition of Greenberg, according to the chancellor’s opinion on Friday.

In Friday's opinion, Chancellor Bouchard said that Kaufman should not have instructed Greenberg not toanswer certain questions, as there was no order from the court limiting the scope of the deposition.

“Having reviewed the complete transcript of Mr. Greenberg’s deposition, I conclude that Mr. Kaufman’sdefense of that deposition did not comport with the standards required by the Court of Chancery Rules,” thechancellor wrote. “Many of the questions that Mr. Kaufman instructed Mr. Greenberg not to answer werebenign and did not implicate any privilege.”

The chancellor said Kaufman was not relieved of his obligations under the court’s rules simply becauseShawe did not call him as a witness at the trial, and that that very decision seemed to be a “legitimatestrategic choice,” based on the trial proceedings.

He added that “unclean hands” does not apply in this particular instance because Shawe’s motion forsanctions during the Greenberg deposition does not relate to the allegations of discovery misconduct Eltinghas claimed in her pending motion for sanctions.

On Thursday, Chancellor Bouchard named a Skadden Arps Slate Meagher & Flom partner as the court-appointed custodian to oversee the sale of TransPerfect Global Inc., ruling that the hopeless deadlockbetween its warring co-CEOs is threatening the multimillion-dollar global firm's financial future.

The case, most of which is heavily redacted in the court record, went before the Chancery Court for a six-daytrial earlier this year, and during post-trial arguments, Chancellor Bouchard warned the pair to come tosome sort of settlement or he would be forced to write an opinion that makes both sides look “small-minded,petty and vindictive.”

In the chancellor’s Thursday opinion, he described all manner of conduct such as profanity-laced, angryemails over company business, and what he called “temper tantrums” and “mutual hostaging,” where the co-CEOs would hold up business decisions until they got their way.

Chancellor Bouchard devotes particular attention to allegations Shawe spied on Elting by accessing hercomputer to get hold of personal email, and going into her unoccupied office on New Year's Eve 2013 tocopy her hard drive and set up a way to monitor it remotely, writing that he believes Shawe “became enragedwhen Elting engaged counsel to assist her and that he spied on Elting to gain intelligence in pursuit of apersonal vendetta against her.”

CORRECTED: Chancery Sanctions Kramer Levin In TransPerfect Case - Law360

http://www.law360.com/articles/691571/corrected-chancery-sanctions-kramer-levin-in-transperfect-case

Shawe has accused Elting of her own misconduct, such as what his court papers called “outright sabotage” ofthe company by allegedly getting customers to withhold business and blocking needed hires. He has alsomoved to have her Kramer Levin partner Greenberg disqualified from the case, arguing that one of theattorneys representing her should actually be a witness in the case because he has been a “central figure” inpast disputes, in addition to asking for monetary sanctions based on Kaufman’s improper actions during thedeposition.

The chancellor on Thursday wrote that Shawe's sabotage claims were barred by “unclean hands.”

Attorneys from Kramer Levin Naftalis & Frankel LLP did not immediately respond to request for commentFriday.

Elting is represented by Gerard E. Harper and Robert N. Kravitz of Paul Weiss Rifkind Wharton & GarrisonLLP, Philip S. Kaufman, Ronald S. Greenberg, Marjorie E. Sheldon,and Jared I. Heller of Kramer LevinNaftalis & Frankel LLP, Kevin R. Shannon, Berton W. Ashman Jr., Christopher N. Kelly and Jaclyn C. Levyof Potter Anderson & Corroon LLP, and Kurt M. Heyman and Melissa N. Donimirsky of Proctor HeymanEnerio LLP.

Shawe is represented by Ronald C. Minkoff, Richard M. Maltz and Andrew J. Ungberg of Frankfurt KurnitKlein & Selz LLP, Philip L. Graham Jr. and Penny Shane of Sullivan & Cromwell LLP, Howard J. Kaplanand Joseph A. Matteo of Kaplan Rice LLP, Gregory P. Williams, Lisa A. Schmidt and Robert L. Burns ofRichards Layton & Finger PA., Peter B. Ladig, Brett M. McCartney and Kyle Evans Gay of Morris JamesLLP, and Paul D. Brown of Chipman Brown Cicero & Cole LLP.

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

— Additional reporting by Matt Chiappardi and Lisa Ryan.

Correction: An earlier story incorrectly stated the parties subject to sanctions. The error has been corrected.

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