January 17, 2017 / 8:00 PM / 3 years ago

Delaware high court hears translation firm's messy board battle

WILMINGTON, Del., Jan 17 (Reuters) - The Delaware Supreme Court will hear an appeal on Wednesday in a boardroom battle between former college sweethearts that includes claims of midnight office break-ins and assault, and prompted a lobbying campaign to rewrite the state’s corporate law.

The appeal could determine who controls TransPerfect Global Inc, a billion-dollar translation company started by Elizabeth Elting and Philip Shawe, warring co-owners who founded the company in the 1990s in a college dorm.

Shawe wants Delaware’s top court to overturn a 2015 ruling by Andre Bouchard, chief of the Court of Chancery, who found the relations between the two were so poisoned that they deadlocked on decisions on hiring, expansion and investment.

Bouchard sided with Elting and ordered the co-owners to sell their stakes and protect the company’s future.

The case prompted a campaign by some of TransPerfect’s 3,500 employees seeking to curtail the power of the Court of Chancery, which handles disputes involving the state’s corporate law for companies all over the United States. They want to limit the court’s power to order the sale of a company and are planning a rally outside the Delaware Supreme Court on Wednesday.

Shawe maintains that TransPerfect is growing rapidly and remains profitable and Bouchard should have adopted less draconian steps rather than ordering him to sell his 49 percent stake. Shawe argued that Elting used her lawsuit to get a better deal than he offered for her half of the company.

Shawe also wants the Supreme Court to review $7 million of sanctions that Bouchard imposed on him for violations such as destroying evidence.

Bouchard penalized Shawe for breaking into Elting’s office on New Year’s Eve to swipe from her computer emails to her lawyers, and for the loss of text messages on an iPhone. Shawe’s assistant discarded the phone, saying he feared it was contaminated by rat droppings.

Shawe has said all evidence was preserved. He has argued he entered Elting’s office in the middle of the night because she was being investigated for stealing from TransPerfect.

A six-day trial revealed years of explosive arguments and harassing behavior, such as Shawe showing up uninvited to Elting’s wedding and booking a seat next to her without notice on a transatlantic flight.

Elting kicked Shawe during a fight in her office and he reported her to the police, although assault charges were dropped before she was arrested.

The legal battle may not end with state’s Supreme Court.

Shirley Shawe, Philip’s mother and owner of 1 percent of TransPerfect, hired famed lawyer Alan Dershowitz, and has raised questions of constitutional law, which could open an appeal to the U.S. Supreme Court. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Noeleen Walder and Grant McCool)

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