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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Chancery Enters Sanctions in TransPerfect Litigation for Violating Exclusive Jurisdiction Provision in Court Order
This decision arose out of the dispute between once deadlocked co-owners of TransPerfect Global that played out in the Delaware courts over several years. That heavily-litigated controversy resulted in the appointment of a Custodian by the Court of Chancery and a forced sale of the company as part of a Final Order, with one of the co-owners, Phil Shawe, prevailing as the buyer.
After the Custodian filed several fee petitions in accordance with Court of Chancery orders, TransPerfect sued the Custodian in Nevada state court asserting claims for breach of fiduciary duty and declaratory relief. In response, the Custodian filed a motion for civil contempt in the Court of Chancery, arguing that the conduct of TransPerfect and Shawe in bringing the Nevada action violated the terms of the Court’s orders, including the Final Order providing the Court of Chancery with exclusive jurisdiction over the issues Respondents were attempting to litigate in Nevada.
The Court of Chancery agreed with the Custodian, finding that the Respondents were bound by the Final Order, had notice of it, and willfully and intentionally violated it by filing a complaint in Nevada that specifically put the Final Order, various related orders, and the Sale Agreement at issue, depriving the Court of its exclusive jurisdiction over such matters as set forth in the Final Order. Having found a violation of its order, the Court determined the appropriate sanction was to enter an anti-suit injunction and award a $30,000 per day monetary sanction until the Respondents dismissed the Nevada action. In addition, the Court imposed on the Respondents all expenses, including attorneys’ fees, that the Custodian incurred both in the Nevada action and in prosecuting the motion for contempt in Delaware.