The Day the Delaware Courts Failed
A Day to Live in Infamy in Delaware
February 13th, is as President Roosevelt once said “a day that will live in infamy.” The Supreme Court of Delaware upheld the ruling against Philip Shawe and his mother Shirley Shawe by Chancellor Andre Bouchard in complete favor of Plaintiff Elizabeth Elting, with all its negative impacts, including the forced sale of a thriving company, TransPerfect, which could ruin the business and cost 4,000 people their jobs. The Delaware establishment had to protect the “integrity” of its overreaching Chancery Court regardless of how disgraceful and detrimental this ruling is to Delaware’s business community and economy.
Frankly, I suspected this would happen, as former Chancellor of now Bouchard’s Court of Chancery, and current Chief Justice Leo Strine, had obviously made up his mind before the appeal even started from his adversarial questioning and rude behavior toward America’s leading Constitutional Scholar, Alan Dershowitz, during the oral arguments. Interestingly, if the verdict by the Supreme Court had been unanimous in upholding this travesty of justice, I suppose it would be a complete slam dunk for Bouchard, regardless of all the obvious bias, cronyism and appearances of impropriety that occurred in this controversial case. However, it was not! Justice Valihura, in her extraordinary wisdom, dissented with a 35-page dissertation on why Bouchard’s ruling was completely unjustified.
Of course the Custodian, Robert Pincus, and his buddies will now be able to continue their apparent fleecing of TransPerfect with their outrageous and unnecessary fees until the company is sold ($15 million so far all approved by Chancellor Bouchard). Interestingly, Andre Bouchard mysteriously, and for no understandable reason, cancelled a settlement conference that he himself ordered the parties to attend on February 7th.
I have confirmed the facts by several company insiders close to the situation, and here’s my best assessment of what happened: Shawe made his $300 million offer even more attractive, by offering Elting and the custodian months to beat it and he would give up all his appeals and end the case. When he took his offer to Chancellor Bouchard and asked him to set up a settlement conference what did Bouchard do... when faced with a request for an open hearing by Senator Bonini and the public becoming aware of what was really happening... he decided to cancel it. Why would any judge cancel a settlement conference?! It’s unprecedented and it seems as if this Chancellor has something to hide or could he have known the results of the Delaware Supreme Court appeal a head of time????
Most likely this travesty of justice and grotesque inequity will be appealed all the way to the U.S. Supreme Court, and hopefully the Shawes will prevail when the wisdom and correctness of Justice Valihura’s Opinion is understood and the case is ultimately adjudicated. During the interim, the meter continues to run with huge damages to Philip Shawe, his mother, TransPerfect, and its employees, not including the damage to Delaware’s reputation as the incorporation capital of the world. Watch the franchise taxes and future incorporations in Delaware drop drastically. Alan Dershowitz was already quoted in the media as saying: “He would never advise a client to incorporate in Delaware” based on the handling of this case. Delaware’s State Court system is exhausted: It’s now all on the Legislature. Law-makers, I call upon you to stand up, do your duty, and save this thriving company!