TransPerfect’s Shawe Escalates Feud With Defamation Suitby
Shawe claims lawyers for co-CEO destroyed his reputation
Suit is latest spawned by control fight over software maker
The battle over control of TransPerfect Global Inc. intensified after one of the company’s co-owners accused lawyers for his estranged partner of destroying his reputation by making false statements to reporters.
Phil Shawe, TransPerfect’s co-CEO, contends attorneys for fellow Chief Executive Liz Elting lied about his conduct and painted him in a derogatory light, according to a lawsuit filed Jan. 31 in state court in Manhattan.
The suit joins at least three other cases spawned by the bitter fight over the future of New York-based TransPerfect. Shawe and Elting, once engaged to be married, are at loggerheads over who should control the translation-software company, prompting a Delaware judge to conclude last year that the firm should be put on the auction block.
Elting’s lawyers, Philip Kaufman and Ronald Greenberg of New York’s Kramer Levin Naftalis and Frankel LLP, “crossed the line” by making false statements in connection with the Delaware sale case that “were intended to damage Shawe’s business and personal reputation,” according to the suit.
Jennifer Manton, a spokeswoman for the Kramer Levin firm, said in an e-mail Thursday that the lawsuit “is completely without merit, and we will defend it vigorously.”
Elting founded TransPerfect with Shawe while they were in graduate school at New York University. It grew into the second-biggest translation software maker with annual sales of more than $500 million.
The partners’ relationship soured and they began to clash over who should have ultimate say in the company and who should sell out. The feud escalated to the point that they couldn’t agree on a new head for TransPerfect’s human resources department or which public relations firm to hire, according to court filings.
Elting filed a petition in Delaware Chancery Court in 2014 to dissolve the partnership because of the deadlocks. Judge Andre Bouchard backed her request over protest from Shawe and his mother, Shirley, who holds a minority stake in the company.
The Shawes appealed Bouchard’s order to the Delaware Supreme Court, which heard arguments last month. While the case has been winding its way through the courts, a group representing some TransPerfect employees began bombarding the state with television ads, sending out mailers and lobbying lawmakers to change laws governing forced business sales.
A TransPerfect executive also sued Bouchard in federal court in New York, accusing him of trampling on his free-speech rights by allowing a company administrator to bar employees from working with the group, Citizens for Pro-Business Delaware. That case is still pending.
The controversy over Bouchard’s order has unsettled some Delaware officials, who carefully guard the state’s business-friendly reputation as rivals such as Nevada and Oklahoma woo companies eyeing incorporation. More than 1 million legal entities are incorporated in Delaware paying annual fees of more than $1 billion, which account for a quarter of the state’s budget.
Lobbyists for TransPerfect, which has just a handful of its 4,000 workers in Delaware, want lawmakers to amend the state’s business-dissolution law to require a three-year delay before a judge can force a deadlocked company to be sold.
In the defamation case filed Jan. 31 in New York Supreme Court, Shawe contends Kaufman and Greenberg harmed his reputation in a 2016 interview with freelance reporters doing a story on the fight over the company.
Shawe said Kaufman, a partner at Kramer Levin, told the reporters the executive “was a bad guy,” who did “very bad things,” such as destroying evidence in the Delaware case, according to the complaint. Kaufman also said “no rational person would ever want to partner with Shawe,” according to the lawsuit.
Bouchard ordered Shawe to pay $7.1 million in sanctions last year for deleting computer files in an effort to destroy evidence and lying in connection with the Delaware suit over TransPerfect’s sale. In 2015, Bouchard also sanctioned Kramer Levin $135,000 for Kaufman’s role in a deposition in the Delaware case instructing Elting not to answer more than 70 questions.
In other litigation over the company, Shawe accused Greenberg of sending an e-mail to a New York Post reporter in 2014 saying Elting was being “victimized” by Shawe and that she needed protection from Shawe’s “aggressive behavior,” according to the lawsuit.
“Greenberg’s statements to the Post were not true and Greenberg knew that, but was intent on damaging Shawe to advance the interests of his client,” according to the filing.
The case is Philip R. Shawe v. Kramer Levin Naftalis and Frankel, No. 151025/2017, New York Supreme Court (Manhattan).
(An earlier version of this story corrected the month of argument.)