throbber
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`
`
`
`
`In re: TRANSPERFECT GLOBAL, INC.
`
`
`ELIZABETH ELTING,
`
`
`Petitioner,
`
`
`
`v.
`
`PHILIP R. SHAWE and SHIRLEY
`SHAWE,
`
`
`Respondents,
`
`
`
`and
`
`
`TRANSPERFECT GLOBAL, INC.
`
` Nominal Party.
`
`
`
`
`
`
`)
`) C.A. 9700-CB
`)
`)
`)
`)
`)
`)
`)
`)
`)
`) C.A. No. 10449-CB
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`AMENDED JOINT MOTION OF TRANSPERFECT
`GLOBAL, INC. AND PHILIP R. SHAWE FOR AN ORDER
`PRECLUDING THE CUSTODIAN FROM RECOVERING
`CONTEMPT SANCTION FEES AND EXPENSES FOR
`FAILURE TO TIMELY FILE A FEE APPLICATION
`
`TransPerfect Global, Inc. (“TPG” or “TransPerfect”) and Philip R. Shawe
`
`(“Shawe”)
`
`(together, “Respondents”),
`
`through
`
`their undersigned counsel,
`
`respectfully submit this Motion seeking an order precluding Robert B. Pincus
`
`(“Pincus” or the “Custodian”), from recovering contempt sanction fees and expenses
`
`for failure to timely file a fee application.
`
`
`
`
`
`
`
`1
`
`EFiled: Feb 27 2020 03:40PM EST
`Transaction ID 64768887
`Case No. Multi-Case
`
`
`
`
`
`
`
`

`

`PRELIMINARY STATEMENT
`
`1.
`
`Court intervention is necessary to avoid the filibuster strategy now
`
`being employed by Pincus and his counsel Skadden to delay TPG’s and Shawe’s
`
`constitutionally guaranteed right of appeal of this Court’s erroneous contempt ruling.
`
`Having obtained a defective result, Skadden is protecting its position by NOT filing
`
`an application for its awarded fees to prevent the matter from being deemed final
`
`and appealable. After more than four months (when a federal court would allow
`
`only 14 days), Skadden continues to stonewall and refuses to disclose its fees despite
`
`promises to the contrary. When pressed on the issue, the firm excuses its conduct
`
`by effectively acknowledging that it is unscrupulously waiting to see future Court
`
`rulings so that it may modify its billing records in an effort to avoid challenge.
`
`Skadden’s mercenary behavior in this court of equity must not be tolerated.
`
`2.
`
`Pincus has willfully failed to file a timely fee application in accordance
`
`with the procedures established in this Court’s Order dated November 1, 2019 (the
`
`“Second Order”) (Dkt.1399) as a predicate for the recovery of attorneys’ fees under
`
`paragraph 4 of the Court’s October 17, 2019 Order Concerning Custodian’s Motion
`
`for Civil Contempt and Sanctions (the “First Order”). The Custodian’s utterly
`
`unreasonable and inexcusable failure after some four months to submit a fee
`
`application in accordance with this Court’s directives and established procedures, as
`
`contained in the Second Order, is a particularly pernicious abuse and manipulation
`
`
`
`2
`
`

`

`of the judicial process for the manifold reasons set forth below, so as to require that
`
`the Custodian be precluded from recovering any such sanction fees and expenses
`
`(the “Contempt Fee Award”).
`
`3.
`
`First, the issuance of an order precluding the Custodian from recovery
`
`is necessary in this instance because the Custodian’s conduct is motivated by a
`
`patently improper attempt to prejudice Respondents by blocking them from
`
`appealing the contempt sanctions set forth in the First Order. Thus, at every turn the
`
`Custodian has sought to prevent Respondents from exercising their appellate rights
`
`on the ground that any appeal must await this Court’s determination of the Contempt
`
`Fee Award, successfully asserting that argument before this Court and the Delaware
`
`Supreme Court. All the while the Custodian has chosen to withhold filing of a fee
`
`application, thereby failing to even initiate the process, and in so doing has blatantly
`
`ignored the procedure mandated by this Court and far exceeded any reasonable time
`
`frame for compliance. The resulting prejudice to Respondents is manifest as the
`
`stigma of contempt continues to hang over them while their only avenue of appeal
`
`is blocked by the capricious and bad faith conduct of the Custodian and his counsel.
`
`4.
`
`Such sharp practice and contemptuous conduct by a Court-appointed
`
`Custodian, subjecting the Respondents to the ongoing harm of the contempt and its
`
`sanctions without recourse to appellate review, should not be countenanced.
`
`Accordingly, an order precluding recovery of attorneys’ fees as a fee-shifting
`
`
`
`3
`
`

`

`sanction is required here. In any event, the Custodian’s unreasonable and
`
`inexcusable failure to submit a fee application since October of last year must be
`
`deemed a waiver of any right to pursue the Contempt Fee Award.
`
`5.
`
`Second, the Custodian’s conduct that is the subject of this Motion is
`
`part of a continuing pattern of flagrant disregard for this Court’s orders and mandated
`
`procedures by Pincus and Skadden. Thus, separate from his calculated withholding
`
`of his application in support of fees sought pursuant to the Contempt Fee Award, the
`
`Custodian has also failed to comply with the series of Court Orders requiring that
`
`the Custodian submit fee petitions “on a monthly basis.” See Dkt.607 (Aug. 13,
`
`2015 Implementing Order, at ¶10); In re TransPerfect Global, Inc., 2016 WL
`
`3949840, at ¶14 (Del. Ch. July 18, 2016) (“Sale Order”). The Custodian’s failure to
`
`adhere to those Orders is the subject of Respondents’ Joint Motion for an Order to
`
`Show Cause Why Pincus and Skadden Should Not Be Held in Contempt and
`
`Precluded From Submitting Untimely Fee Petitions, filed February 6, 2020.
`
`Dkt.1448.
`
`6. Moreover, to the extent the Custodian and Skadden have provided some
`
`form of billing records in support of prior fee petitions submitted following the entry
`
`of the Second Order and the accompanying Records Confidentiality Order (“RCO”),
`
`they have insisted on doing so under a cloak of complete secrecy from public view,
`
`which extends not only to the billing records themselves but any documents that so
`
`
`
`4
`
`

`

`much as touch upon the subject matter. The result has been a surreal series of public
`
`filings consisting of nothing but blacked out pages. See, e.g., Dkt.1446 and 1447.
`
`The Custodian’s concealment of any information relating to his fee petitions in
`
`contravention of Court of Chancery Rule 5.1(a) and basic constitutional principles
`
`of public access to judicial proceedings is the subject of TPG’s Motion for an Order
`
`Clarifying or Modifying the Court’s November 1, 2019 Orders Pursuant to Court of
`
`Chancery Rule 54(b) and Shawe’s Joinder in that Motion, both filed on January 21,
`
`2020. Dkt.1436 and 1437.
`
`7.
`
`Third, the Custodian’s failure to submit a fee application in connection
`
`with the fee-shifting award warrants an order barring recovery because the
`
`Custodian is a Court-appointed officer charged with complying with both the letter
`
`and intent of this Court’s orders, rather than seeking to advance his own interests
`
`and those of his counsel by sitting on readily-available billing records for months in
`
`an apparent attempt to see how much they can get away with billing based on the
`
`determination of the pending Fee Petition Objections. The Custodian’s self-serving
`
`and flexible approach to the Court’s Orders governing the procedure for submission
`
`of fee petitions is all the more hypocritical given that the Contempt Fee Award
`
`resulted from the Custodian’s public filing of his motion seeking, inter alia, to hold
`
`
`
`5
`
`

`

`Respondents in contempt for violation of a procedural provision of the Court’s
`
`February 15, 2018 Final Sale Order.1
`
`FACTUAL BACKGROUND
`
`8.
`
`Following the Custodian’s filing of the Contempt Motion on August
`
`26, 2019, the Court in two decisions granted in part and denied in part that Motion.
`
`In particular, in its memorandum opinion dated October 17, 2019, and the
`
`accompanying First Order entered that same day, the Court granted the Contempt
`
`Motion to the extent of imposing sanctions against Respondents based on TPG’s
`
`filing of a lawsuit against the Custodian in Nevada, holding that the filing of the
`
`Nevada action violated the exclusive jurisdiction provision contained in the Final
`
`Sale Order. The Contempt Fee Award provided that Respondents “shall pay all fees
`
`and expenses, including reasonable attorneys’ fees, incurred by the Custodian and
`
`his counsel in (i) connection with the Nevada action and (ii) prosecution of the
`
`motion for civil contempt and sanctions in this court.” Dkt.1379 (First Order), at ¶4.
`
`9.
`
`In its oral ruling on October 21, 2019, the Court denied the Contempt
`
`Motion with respect to the alleged violation of the June and July 2019 Fee Orders,
`
`noting that it was “sympathetic to some of the practical concerns the company has
`
`
`1 The Custodian acknowledged in his letter to the Court dated February 10, 2020
`that he had unilaterally decided to defer filing monthly fee petitions so as to avoid
`possibly “having to revise petitions to conform with however the Court might rule
`on the Omnibus Objection.” Dkt.1450, at 4.
`
`
`
`6
`
`

`

`raised in its opposition papers” and outlined the implementation of changes to the
`
`fee petition process. Dkt.1408 (Oct. 21, 2019 Tr. at 7, 8-10). The Court in its oral
`
`rulings also recognized the need to modify the First Order in light of those rulings
`
`by limiting the Contempt Fee Award to the fees and expenses incurred by the
`
`Custodian “only with respect to prosecution of the motion for civil contempt insofar
`
`as those fees and expenses concern the Final Sale Order.” Id. at 14. The Court
`
`therefore excluded from the scope of paragraph 4(ii) of the First Order “fees and
`
`expenses incurred with respect to the prosecution of the contempt motion insofar as
`
`the fee orders are concerned.” Id.
`
`10. The additional procedures governing the fee petition process were
`
`implemented through the Second Order and accompanying RCO. The Second Order
`
`in paragraph 7 specifically provides that the process set forth in paragraph 3 of that
`
`Order, including the requirement that the Custodian for the first time must attach as
`
`an exhibit to any fee petition “an invoice, billing record or other document”
`
`evidencing the work for which payment is sought, “shall be utilized to obtain
`
`payment” of the Contempt Fee Award under paragraph 4 of the First Order.
`
`Dkt.1399 (Second Order), at ¶7.2
`
`
`2 Paragraph 7 of the Second Order further provides the additional requirement that
`“with respect to Paragraph 4(ii) of the First Order, the Confidential Records
`specified in Paragraph 3(a) of this Order shall include the percentage of overall fees
`and expenses that were incurred for prosecution of the motion for civil contempt and
`sanctions in this court that related to (a) the Final Order and (b) the Fee Orders.” Id.
`
`
`
`7
`
`

`

`11. Respondents thereafter sought to appeal from the imposition of
`
`contempt under the October 17, 2019 opinion and the First Order and to appeal from
`
`the confidentiality provisions imposed by the Second Order and RCO as unduly and
`
`improperly restrictive. TPG and Shawe filed separate Notices of Appeal from the
`
`opinion and First Order on October 19 and October 21, 2019, respectively, and filed
`
`a joint Notice of Appeal from the Second Order on November 25, 2019.
`
`12. The Custodian strenuously resisted the appeals moving forward,
`
`arguing that both appeals were interlocutory for the very reason that the Custodian
`
`had not filed a fee application and the amount of the Contempt Fee Award therefore
`
`remained to be determined. This Court denied Respondents’ Motion for
`
`Certification of Interlocutory Appeal of the First Order in its Order entered
`
`November 18, 2019, pointing out that it “has not yet determined the amount of the
`
`Contempt Fee Award, which undoubtedly will be the subject of future proceedings.”
`
`Dkt.1410, at ¶L see also ¶9 (one of the “two other matters directly related to the
`
`Opinion and the First and Second Orders” that remains outstanding is “the amount
`
`
`Thus, the Second Order clearly contemplated and set forth the process for the
`Custodian to submit a timely fee petition, including supporting billing records, and
`specifying the percentage of fees for prosecution of the Contempt Motion allocable
`to the Final Order as opposed to the Fee Orders.
`
`
`
`8
`
`

`

`of the Contempt Fee Award”).3
`
`13. Respondents thereafter asserted, in response to Notices to Show Cause
`
`issued by the Delaware Supreme Court on November 27, 2019, that the appeals fell
`
`within the collateral order doctrine. The Custodian again vigorously opposed any
`
`attempt to appeal, arguing that the First and Second Orders were not final for
`
`purposes of the collateral order doctrine because the determination of the Contempt
`
`Fee Award remained open. The Delaware Supreme Court agreed with the
`
`Custodian’s position in its Order issued on December 31, 2019, concluding that the
`
`First and Second Orders “do not fall within the collateral order doctrine” because,
`
`inter alia, they “are not final.” TransPerfect Global, Inc. v. Pincus, 2019 WL
`
`7369433, at *2 (Del. Dec. 31, 2019). The Supreme Court reiterated: “As the Court
`
`of Chancery recognized, the amount of fees to be awarded to the Custodian pursuant
`
`to the First Order is unresolved.” Id.
`
`14. During the course of the briefing before the Delaware Supreme Court,
`
`Pincus represented in his Reply to Appellant’s Response to Notice to Show Cause
`
`filed on December 19, 2019 that “[t]he Custodian expects to file his Contempt Fee
`
`Award petition shortly.” Sup.Ct.Dkt.13, at ¶17 (DSC Case No. 439,2019). But over
`
`two months later the Custodian has not done so, choosing instead to block the
`
`
`3 The Court denied Respondents’ motion for certification of an interlocutory appeal
`of the Second Order on the same grounds in a letter decision dated November 27,
`2019. Dkt.1425.
`
`
`
`9
`
`

`

`appeals and prevent Respondents from challenging the finding of contempt. In
`
`pursuing this gambit, the Custodian has undermined the purpose of the Second Order
`
`read in conjunction with the First, failing to file a fee petition in accordance with the
`
`process set forth in paragraph 3 of the Second Order, which paragraph 7 expressly
`
`makes applicable to the Contempt Fee Award under paragraph 4 of the First Order.
`
`Pincus should not be permitted to continue to hold Respondents’ appellate rights
`
`hostage, and through his unprincipled conduct has forfeited any right to recovery of
`
`attorneys’ fees and expenses under the Contempt Fee Award.
`
`ARGUMENT
`
`15. The Custodian has failed to file the required fee petitions and billing
`
`records for four months in dereliction of his obligation to do so under paragraph 4
`
`of the First Order and paragraphs 3 and 7 of the Second Order, as read in conjunction
`
`with one another, and is therefore precluded by his contumacious conduct from
`
`recovering attorneys’ fees under the Contempt Fee Award.
`
`16. While the Contempt Fee award did not fix a set time for filing the
`
`mandated fee application, it clearly contemplated and required that such application
`
`be filed in a reasonably timely manner. In this regard, the Court’s prior chain of
`
`Orders governing the fee petition process required that that such petitions be filed
`
`“on a monthly basis.” Dkt.607 (Implementing Order, at ¶10) (“The Custodian shall
`
`petition the Court on a monthly basis … for approval of fees and expenses.”)
`
`
`
`10
`
`

`

`(emphasis added). See also Sale Order ¶14 (“Custodian shall petition the Court on
`
`a monthly basis, or such other interval as the Court may direct, for approval of fees
`
`and expenses.”). These Orders, which remain in force, established a pre-existing
`
`framework and prior course of conduct for assessing a reasonable time period, such
`
`that four months is inherently untimely.4
`
`17. Furthermore, the Custodian’s failure to file a timely fee application
`
`should be assessed in the context of this case, in which Respondents are subject to
`
`continuing prejudice from the contempt findings, and the Custodian has successfully
`
`exploited the unfixed amount of the Contempt Fee Award as an insuperable barrier
`
`to any appeal. In these circumstances, the refusal even to initiate the fee award
`
`process under the applicable Orders smacks of bad faith, and does not meet any
`
`conceivable standard of reasonableness.5 Indeed, the issue of contempt, by its very
`
`nature, is one that merits prompt appellate review and the ongoing prejudice to
`
`Respondents from the contempt opinion and First Order, including reputational
`
`
`4 Rule 54(d)(2)(B) of the Fed. R. Civ. P. also provides a relevant guidepost,
`providing that a claim for attorneys’ fees must be made by motion filed no later than
`14 days after entry of judgment. See Mattel, Inc. v. Radio City Entm’t, 210 F.R.D.
`504, 505 (S.D.N.Y. 2002) (noting that FRCP 54(d)(2)(B) “prescribes a tight time
`limit for any motion for attorneys’ fees, to wit, within 14 days of the entry of
`judgment” which “bespeaks an intent to limit such motions”).
`
`5 See, e.g., Salzberg v. Sciabacucchi, 204 A.3d 841, 841 (Del. 2019) (Table)
`(plaintiff filed a motion in the Court of Chancery for attorneys’ fees 23 days after
`entry of summary judgment); In re Rural Metro Corp. S’holders Litig., 2014 WL
`7010818, at *1 (Del. Dec. 2, 2014) (plaintiff filed fee application 19 days after entry
`of judgment).
`
`
`
`11
`
`

`

`harm, is incontrovertible. See Evans v. Justice of the Peace Court No. 19, 652 A.2d
`
`574, 577 (Del. 1995) (“The finding of civil contempt … and the imposition of
`
`sanctions, all of which implicate fundamental issues concerning the exercise of
`
`judicial power, are matters over which appellate review is a particular imperative.”).
`
`18.
`
`In sum, the Custodian’s intentional thwarting of the appellate process
`
`warrants an order precluding the recovery of attorneys’ fees as a contempt sanction,
`
`particularly given the nature of the order sought to be appealed and the continuing
`
`prejudice to Respondents, the Custodian’s position as a Court-appointed officer
`
`charged with good faith compliance with the Court’s orders governing his conduct,
`
`and the lack of any justification for not providing fee information that is readily
`
`available and already subject to stringent confidentiality requirements.6 As set forth
`
`above, the Custodian and Skadden are intent on delaying and manipulating the fee
`
`application process to serve their own ends and to inflict further prejudice on
`
`Respondents by denying them indefinitely their appellate rights.
`
`19. Further, the failure to submit the requisite Contempt Fee Award
`
`application constitutes undue and unreasonable delay as a matter of law constituting
`
`waiver of any right to recover fees and expenses. See Maurer v. Int’l Re-Ins. Corp.,
`
`96 A.2d 347, 348 (Del. Ch. 1953) (denying application for reimbursement of
`
`attorneys’ fees because of petitioners’ laches, holding that “[t]hey permitted an
`
`
`6 Indeed, the Fee Objections were fully briefed as of February 11, 2020.
`
`
`
`12
`
`

`

`undue length of time to elapse after they were advised through their attorney that all
`
`petitions for compensation should be filed so that notice thereof could be sent to
`
`interested parties. Their delay has been prejudicial because I feel that all interested
`
`parties should receive notice of this petition for substantial fees.”); see also Mattel,
`
`Inc., 210 F.R.D. at 505 (denying attorneys’ fee application as untimely where
`
`defendant’s counsel’s five-week delay in filing its application for attorneys’ fees was
`
`inexcusable, particularly in light of his diligence in otherwise following case
`
`developments, and plaintiff demonstrated prejudice).
`
`CONCLUSION
`
`For all the reasons set forth above, this Court should grant Respondents’
`
`Motion.
`
`Dated: February 27, 2020
`
`
`
`
`
`EICHER LAW LLC
`
`
`
` /s/ Jeremy D. Eicher
`
`Jeremy D. Eicher (#5093)
`1007 N. Orange Street, 4th Floor
`Wilmington, DE 19801
`
`
` (302) 299-0959
`
`
`
`jeicher@eicherlaw.com
`
`
`Attorneys for Philip R. Shawe
`
`
`
`
`
`
`
`
`Of Counsel:
`Alan Dershowitz
`1575 Massachusetts Ave.
`Cambridge, MA 02138
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`OFFIT KURMAN, P.A.
`
`/s/ Frank E. Noyes, II
`
`Frank E. Noyes, II (#3988)
`222 Delaware Avenue, Suite 1105
`Wilmington, DE 19801
`(267) 338-1381
`fnoyes@offitkurman.com
`Attorneys for TransPerfect Global,
`Inc.
`WORDS: 2938
`
`
`
`13
`
`

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