In re: Shawe & Elting LLC ( 2015 )


Menu:
  •         IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
    ___________________________________________
    )
    In re: SHAWE & ELTING LLC                   ) C.A. No. 9661-CB
    ___________________________________________ )
    )
    PHILIP R. SHAWE, derivatively on behalf of  )
    TRANSPERFECT GLOBAL, INC., and in his       )
    individual capacity,                        )
    )
    Plaintiff,             )
    )
    v.                            ) C.A. No. 9686-CB
    )
    ELIZABETH ELTING,                          )
    )
    Defendant,             )
    )
    and                           )
    )
    TRANSPERFECT GLOBAL, INC.,                  )
    )
    Nominal Party.         )
    ___________________________________________ )
    )
    In re: TRANSPERFECT GLOBAL, INC.            ) C.A. No. 9700-CB
    ___________________________________________ )
    )
    ELIZABETH ELTING,                           )
    )
    Petitioner,            )
    )
    v.                            ) C.A. No. 10449-CB
    )
    PHILIP R. SHAWE and SHIRLEY SHAWE,          )
    )
    Respondents,           )
    )
    and                           )
    )
    TRANSPERFECT GLOBAL, INC.,                  )
    )
    Nominal Party.         )
    ___________________________________________ )
    MEMORANDUM OPINION
    Date Submitted: June 3, 2015
    Date Decided: August 13, 2015
    Kevin R. Shannon, Berton W. Ashman, Jr., Christopher N. Kelly, Jaclyn C. Levy and
    Matthew A. Golden of POTTER ANDERSON & CORROON LLP, Wilmington,
    Delaware; Kurt M. Heyman and Melissa N. Donimirsky of PROCTOR HEYMAN
    ENERIO LLP, Wilmington, Delaware; Philip S. Kaufman, Ronald S. Greenberg,
    Marjorie E. Sheldon and Jared I. Heller of KRAMER LEVIN NAFTALIS & FRANKEL
    LLP, New York, New York; Gerard E. Harper and Robert N. Kravitz of PAUL, WEISS,
    RIFKIND, WHARTON & GARRISON LLP, New York, New York; Attorneys for
    Elizabeth Elting.
    Gregory P. Williams, Lisa A. Schmidt and Robert L. Burns of RICHARDS LAYTON &
    FINGER, P.A., Wilmington, Delaware; Peter B. Ladig, Brett M. McCartney and Kyle
    Evans Gay of MORRIS JAMES LLP, Wilmington, Delaware; Paul D. Brown of
    CHIPMAN BROWN CICERO & COLE LLP, Wilmington, Delaware; Philip L. Graham,
    Jr. and Penny Shane of SULLIVAN & CROMWELL LLP, New York, New York;
    Howard J. Kaplan and Joseph A. Matteo of KAPLAN RICE LLP, New York, New York;
    Ronald C. Minkoff and Andrew Ungberg of FRANKFURT KURNIT KLEIN & SELZ,
    P.C., New York, New York; Attorneys for Philip R. Shawe.
    Susan W. Waesco and Christopher P. Quinn of MORRIS, NICHOLS, ARSHT &
    TUNNELL LLP, Wilmington, Delaware; Jay S. Auslander, Natalie Shkolnik and Julie
    Cilia of WILK AUSLANDER LLP, New York, New York; Attorneys for Shirley Shawe.
    BOUCHARD, C.
    This post-trial decision chronicles the tumultuous relationship of two individuals
    who started a company in a college dormitory room over twenty years ago.               They
    currently serve as the co-CEOs and the only two directors of the company, which is now
    a Delaware corporation. Elizabeth Elting owns 50% of the corporation. Philip R. Shawe
    owns 49%. The remaining 1% is owned by Shawe’s mother, Shirley Shawe, who is
    firmly aligned with him.
    The primary issue for decision is whether the Court should grant Elting’s petition
    to appoint a custodian to sell the corporation under 
    8 Del. C
    . § 226 even though the
    corporation is highly profitable.    Although it is unusual to grant such relief, it is
    appropriate and necessary in this case.
    As explained in painstaking detail below, the state of management of the
    corporation has devolved into one of complete dysfunction between Shawe and Elting,
    resulting in irretrievable deadlocks over significant matters that are causing the business
    to suffer and that are threatening the business with irreparable injury, notwithstanding its
    profitability to date. The stockholders of the corporation have stipulated to their inability
    to elect successor directors, and there is no prospect they will do so in the future. The
    requirements of both 
    8 Del. C
    . §§ 226(a)(1) and (a)(2) thus have been satisfied, and the
    appointment of a custodian to sell the corporation, with a view toward maintaining the
    business as a going concern and maximizing value for the stockholders, affords the only
    just and viable remedy under the unique circumstances of this case.
    Shawe and Elting have asserted a variety of other claims, all of which are denied
    for reasons explained below except one. Elting’s request under 
    6 Del. C
    . § 18-802 to
    1
    dissolve a separate limited liability company holding approximately $8 million in liquid
    assets that she and Shawe own 50-50 is granted because it is not reasonably practicable to
    carry on the business in conformity with the ostensible purposes for which the company
    was formed.
    I.     BACKGROUND
    These are the facts as I find them based on the documentary evidence and witness
    testimony. 1 I accord the evidence the weight and credibility I find it deserves.
    A.     The Parties
    TransPerfect Global, Inc. (“TPG”) is a Delaware corporation with its headquarters
    in New York, New York. TPG wholly owns TransPerfect Translations International, Inc.
    (“TPI”), a New York corporation, which is TPG’s main operating company. For most
    purposes, the distinction between TPG and its subsidiaries, including TPI, is not relevant
    and thus they are referred to collectively as the “Company.”
    The Company is one of the world’s leading providers of translation, website
    localization, and litigation support services. It has 92 offices in 86 cities worldwide,
    employs more than 3,500 full-time employees, and maintains a network of more than
    10,000 translators, editors and proofreaders working in approximately 170 different
    languages.
    1
    Deposition testimony is part of the trial record. Pre-Trial Stip. and Order (“Pre-Trial
    Stip.”) ¶ 132. Any objections to testimony or trial exhibits used in this opinion are
    overruled.
    2
    Elizabeth (Liz) Elting and Philip (Phil) Shawe are the co-founders and co-Chief
    Executive Officers of TPG and the sole members of its board of directors. They also
    have served as co-CEOs and the only two directors of TPI.
    TPG has 100 shares of common stock issued and outstanding. Since its inception,
    Elting has owned 50 shares of TPG common stock, Shawe has owned 49 shares, and
    Shawe’s mother, Shirley Shawe (“Ms. Shawe”), has owned the remaining 1 share. By
    virtue of Ms. Shawe’s one percent ownership, TPG has been able to claim the benefits of
    being a majority women-owned business. 2
    Although Ms. Shawe holds one share of TPG, Shawe has treated his mother’s
    share as his own property and himself as a 50% co-owner of the Company. In 2014, he
    held a proxy giving him the “full and complete power to exercise at any time . . . any and
    all rights to and/or arising from or connected with” her share of TPG, 3 and represented
    himself to third parties, including the Company’s outside domestic payroll administrator,
    as the “50% owner and Co-CEO” of the Company. 4 In early 2013, he instructed the
    Company’s long-time accountants, Gerber & Co. (“Gerber”) to “start the ball rolling …
    on getting [Ms. Shawe’s 1%] back into [his] name.” 5 When Gerber expressed concern
    2
    Trial Tr. (“Tr.”) 611-12 (Shawe).
    3
    Joint Exhibit (“JX”) 531 at TPT_EE_00043819.
    4
    JX 687; JX 730.
    5
    JX 220. In 2002, Ms. Shawe acquired a 1% interest in the predecessor to the Company.
    The record does not reflect that Ms. Shawe has played any meaningful role in the
    Company’s business or affairs. I infer that Ms. Shawe obtained her 1% interest from
    Shawe and that Shawe believed he was entitled to demand its return.
    3
    about doing so without telling Elting, Shawe objected strenuously, telling Gerber, “No
    f***ing way. It’s my share,” and that it was none of Elting’s business, writing, “It’s my
    property.” 6 Based on this evidence, and the overall trial record, I find that Shawe and
    Elting have behaved functionally at all times relevant to this case as if they were 50-50
    owners of TPG, i.e., two factions with equal, non-controlling ownership interests. 7
    On September 11, 2009, Shawe and Elting formed Shawe & Elting LLC (the
    “LLC”). Shawe and Elting each own a 50% interest in the LLC. The LLC has no written
    operating agreement and has never conducted business operations. Although the LLC
    appears to have been created to serve as vehicle for asset protection for Shawe and Elting
    in their capacity as owners of TPG, its sole function since inception has been to receive
    money from TPG, which occasionally has been distributed to Shawe and Elting for their
    personal use. 8 No money has ever gone back from the LLC to the Company. 9 As of
    trial, the LLC held approximately $8 million in liquid assets. 10
    B.      The Founding and Restructuring of the Company
    In 1992, Elting and Shawe co-founded the business that is now Company when
    they lived together in a dormitory room while attending business school at New York
    6
    JX 221; JX 220.
    7
    Elting initially asserted a claim for dissolution in C.A. No. 9700-CB under 
    8 Del. C
    . §
    273. Ms. Shawe’s legal ownership of one percent of TPG made that statute inapplicable,
    and Elting appropriately withdrew that claim. Pre-Trial Stip. ¶ 104.
    8
    Tr. 61-63 (Elting); 
    id. 1456-1461, 1464
    (Stone); JX 335; JX 74.
    9
    Stone Dep. 120-21.
    10
    Pre-Trial Stip. ¶ 16.
    4
    University. They were engaged in 1996, but Elting ended the relationship in 1997. 11
    According to Elting, Shawe did not take the break-up well, and would “terrorize” her and
    say “horrendous things” about her husband, Michael Burlant, whom she married in
    1999. 12 Despite these tensions, the Company grew from a dorm room start-up to a major
    player in the global market for translation services.
    On June 27, 2007, TPG was incorporated in Delaware as part of a corporate
    reorganization of various entities. The reorganization was completed on July 1, 2007.
    TPG elected to be a Subchapter S corporation. In general, Subchapter S corporations do
    not pay federal income taxes. Instead, the corporation’s income or losses are divided
    among and passed through to its stockholders in proportion to their holdings.         The
    stockholders must then report the income or loss on their own individual income tax
    returns. Distributions from the corporation must be made pro rata with the stockholders’
    ownership interests to preserve the corporation’s Subchapter S status.
    TPG’s bylaws provide that the number of directors constituting the board shall be
    three, or such larger number as may be fixed from time to time by action of the
    stockholders of TPG or the board. The third director seat has remained vacant since
    11
    Tr. 13 (Elting).
    12
    
    Id. 14-15 (Elting).
    Elting’s testimony on these events gives color to her and Shawe’s
    relationship. After the break-up, Shawe became very angry and “got under the bed and
    he stayed there for at least a half hour.” Shawe repeated the same bizarre behavior years
    later when Elting was in Buenos Aires, Argentina, on business. Shawe showed up
    unannounced at Elting’s hotel room, refused to leave and again “got under the bed” for
    about a half hour. Shawe also oddly invited himself and his mother (Ms. Shawe) to
    Elting’s wedding in Montego Bay, Jamaica. 
    Id. 13-17 (Elting).
    Shawe did not deny
    taking any of these actions.
    5
    TPG’s organization. Although they made several attempts to do so, discussed below,
    Shawe and Elting never entered into any written agreements governing the operations of
    the Company or their relationship as stockholders, such as a buy/sell agreement.
    C.     The Company’s Operating Structure and Growth
    Each of the Company’s business lines is run as a separate division or “production
    center.” The employees in these divisions historically have reported to either Shawe or
    Elting, but not both. Elting leads the document translation and interpretation-service-
    related divisions, which are sometimes referred to below as “TPT.” Shawe leads the
    divisions offering website and software localization technology services, such as
    document management and web-based document hosting, which are sometimes referred
    to below as the “TDC” or “TCM.” 13 By number of production divisions, Elting manages
    five, and Shawe manages eighteen. 14 In terms of revenue, their respective divisions have
    accounted for roughly equal percentages in 2013 and 2014. 15
    The Company also has non-production departments known as “Shared Services.”
    They include Accounting and Finance, Operations (which includes Legal), Human
    Resources (HR), Information Technology (IT), Sales, Marketing, and Communications.
    Shawe and Elting share responsibility for managing Shared Services, meaning that the
    employees who work in these divisions are supposed to report to both of them.
    13
    Tr. 547-48 (Shawe); JX 2081.
    14
    JX 328.
    15
    JX 2125 at 6.
    6
    The Company has experienced profitable growth every year for over two decades.
    In 2014, the Company’s revenue exceeded $470 million, an all-time high, 16 and its net
    income totaled $79.8 million. 17 The following table reflects the Company’s annual
    revenues for the years 2008-2014:
    Year             Revenue
    2008           $199,106,330
    2009           $220,019,220
    2010           $251,274,522
    2011           $300,281,114
    2012           $341,626,565
    2013           $401,627,932
    2014           $471,341,019
    The Company has no debt. 18
    D.      Early Disagreements Between Shawe and Elting
    The trial record of the disputes between Shawe and Elting that led to this litigation
    begins in earnest in late 2012, but several earlier events provide additional context.
    In January 2011, Elting became upset when she learned that some of the
    Company’s American Express membership points had been used to purchase an
    expensive plane ticket for Shawe’s fiancée without Elting’s approval or the approval of
    the Company’s former treasurer, Gale Boodram, 19 an employee loyal to Elting who has
    16
    JX 2189.
    17
    JX 2123.
    18
    Tr. 32 (Elting).
    19
    JX 2014 at EltingCTRL00059746.
    7
    played a prominent role in many of the disputes between Shawe and Elting. 20 More
    generally, Elting was upset by Shawe’s recent world travel and his upcoming wedding,
    which she viewed as “self-indulgent.” This prompted her to raise the subject of being
    bought out of the Company in a February 3, 2011, email exchange: “I think your
    priorities are all wrong now and we’re not meant to be business partners. [Let me know]
    how much you want to buy me out for—I’d like to make this amicable.” 21
    On April 19, 2012, Michael Stone of Gerber sent Shawe and Elting a draft of a
    stockholders agreement, which included a buy/sell provision. 22 The same day, Elting
    became upset when she learned that Shawe had submitted raises for certain employees
    without her approval. Shawe believed he had the authority to grant the raises because the
    employees worked for TDC and related divisions he managed. Elting disagreed, stating
    in an email that she and Shawe “both must agree to spend $,” and instructing Stone, who
    was copied on the email chain, to “finalize the buy/sell.” 23 That never happened.
    Before 2012, the Company had distributed funds to its three stockholders
    periodically to cover their respective tax liabilities (“tax distributions”) for profits of the
    20
    On the eve of trial, Shawe learned from HR that there was an ongoing investigation
    into Boodram’s eligibility to work in the United States. Elting confirmed at trial that she
    knew of this potential problem, but had not discussed it with Shawe. Tr. 415-16 (Elting).
    After trial, Boodram was terminated from the Company due to issues with her work visa.
    Tr. of Oral Arg. 99 (Apr. 28, 2015); Tr. of Oral Arg. 118 (June 3, 2015).
    21
    JX 2014 at EltingCTRL00059746.
    22
    See Tr. 574-75 (Shawe); JX 2147.
    23
    JX 2151.
    8
    Company that passed through to them by virtue of the Company’s status as a Subchapter
    S corporation, but had made only relatively modest distributions beyond these amounts
    (“non-tax distributions”). From 2009 to 2011, for example, the total amount of non-tax
    distributions did not exceed $2.5 million in any year for all stockholders.
    In January 2012, at Elting’s urging, Shawe agreed to make a non-tax distribution
    from the LLC totaling $10 million, $5 million each to Shawe and Elting. Elting put her
    portion of the distribution toward the purchase of a home in the Hamptons. 24
    E.     Temper Tantrums and “Mutual Hostaging”
    On October 9, 2012, a TransPerfect employee wrote to Elting and Shawe, seeking
    their approval to hire an employee in India. Shawe was fine with the hire if Elting did
    not object, but Elting was concerned that the office was not meeting its gross margin
    goals. 25 The disagreement started a heated email exchange in which Shawe and Elting
    each criticized the other’s management performance and each took credit for the
    Company’s success. After Shawe accused Elting of having “checked out for 5 years” to
    deal with a personal situation, Elting wrote: “If you think I’m so unnecessary and even
    detrimental I’ll take a sabbatical for a year and you’ll see what happens. Is that what you
    want? I’m on the verge. Just tell me.” 26
    24
    Tr. 64-65, 313-14 (Elting); 
    id. 591-92 (Shawe).
    25
    JX 158 at ShaweCTRL00010038-24.
    26
    
    Id. at ShaweCTRL00010038-23.
    9
    The parties’ disagreement spilled over into a discussion the next day over whether
    to open an office in Montpellier, France. 27 When Elting questioned the wisdom of
    opening this office because of the area’s employment laws, Shawe threatened to shut
    down the entire Company if he did not get his way:
    I know all this, but it doesn’t matter…
    It’s been promised, and I’m opening a tiny office there. … and I’ve
    promised that to a 10 year employee.
    I CANNOT RUN MY PART OF THE COMPANY THIS WAY … AND
    HAVE ENOUGH MONEY AND HAVE NO $12 MILLION HOUSE. SO
    F*** IT.
    ALL ACCOUNTS ARE FROZEN.
    YOU WANT TO GO NUCLEAR OVER THIS … JUST SEND
    EVERYONE HOME NOW AND STOP SERVICING THE CLIENT.
    MY MISS[I]LE KEY IS TURNED. 28
    Two minutes later, Shawe reiterated the same threat, again copying Gerber’s Stone on the
    email:
    My small TDC office opens…or this whole place shuts down.
    I have enough money to live the rest of my life comfortably. I don’t
    have/need $12 million houses so I don’t care.
    Mike [Stone] – I’m holding all payroll, all checks, and freezing all
    accounts. 29
    27
    JX 159.
    28
    
    Id. at EE_00002097.
    29
    JX 161 at EE_00011068.
    10
    Five minutes later, Shawe sent a third email to Elting and Stone entitled “I’m shutting the
    company down if you do this...,” in which Shawe wrote:
    …let’s start letting people know.
    I will go live on an island.
    I don’t care.
    FOR YOU TO MAKE ME GO NUCLER OVER A $20k office decision is
    not one you should take lightly.
    Relent on my tdc stuff.
    Or I will dismantle this place starting today. 30
    Elting ultimately relented to Shawe’s request to open the Montpellier office. 31 Other
    episodes in the record further demonstrate that the bullying tactics Shawe employed to
    get his way in opening the Montpellier office have been part of his modus operandi.
    By late 2012, the disagreements between Shawe and Elting had become weekly, if
    not daily, occurrences and were characterized by what Shawe described as “mutual
    hostaging,” where Elting would hold things up that Shawe wanted unless she got certain
    things that she wanted, and vice versa. Shawe acknowledged that mutual hostaging is not
    “necessarily a healthy way to run the business.” 32          The events in November 2012
    illustrate the mutual hosting phenomenon endemic to the Company’s management.
    30
    JX 160 at EE_00010030.
    31
    Tr. 69-70 (Elting); 
    id. 630 (Shawe).
    32
    
    Id. 624 (Shawe).
    11
    On November 19, 2012, Elting informed Stone that she wanted the Company to
    make a $10 million non-tax distribution to the stockholders. 33 Shawe rejected Elting’s
    request, citing the fact that the Company recently had made a large non-tax distribution,
    and telling Stone that Elting had been “acting like a lunatic lately.” 34 The next day,
    Elting summarily rejected a proposed acquisition of a company called Rixon, writing,
    “[D]on’t bother.” 35
    After the Company’s head of sales (Brooke Christian) replied that “the [R]ixon
    deal is fantastic so please let’s not derail that one,” Elting changed tactics. Twenty
    minutes after her first email, she stated, “I like it too and I’d need to manage it.” 36 Shawe
    objected to that suggestion (and ultimately nixed the Rixon deal 37), prompting Elting to
    threaten to stop paying the Company’s lawyers at Kasowitz Benson Torres & Friedman
    LLP (“Kasowitz”), which was representing the Company in a patent litigation involving a
    company called MotionPoint. In a terse email, Elting wrote that Shawe had “2 minutes to
    decide” on making a profit distribution “immediately” or “the suit is over.” 38 Elting was
    frustrated because the Company had spent “a fortune” on legal fees without her knowing
    33
    JX 167 at G00055.
    34
    
    Id. at G00056.
    35
    JX 170 at G00058.
    36
    
    Id. 37 Tr.
    296-97 (Elting).
    38
    JX 170 at G00057.
    12
    what was happening in the litigation. 39 Shawe told Stone the next day to “move some
    money to the LLC” and implored him to “please find a way to stop the double-approvals
    on everything. It’s bad for morale.” 40
    On November 27, 2012, Stone reported to Boodram that Shawe and Elting had
    approved making automatic quarterly profit distributions to the stockholders of $2
    million in total each quarter beginning on January 1, 2013. 41 Boodram confirmed the
    arrangement with Elting but Shawe would not approve it because he believed that Elting
    was “hostaging” another transaction. 42 In a January 3, 2013, email, Shawe asked Stone
    to find out “if Liz is blocking” the transaction and admitted to Stone “I’m fine with
    distributions. She’s just being a delusional lunatic lately.” 43 No resolution was reached
    on making regular non-tax distributions.
    According to Shawe, he and Elting historically needed to agree on “board-level
    decisions” such as the declaration of a dividend or a significant merger or acquisition, but
    each had the authority to make less significant decisions without approval from the other
    for the business divisions each managed. Shawe asserts that this historical practice,
    39
    Tr. 299-300 (Elting). MotionPoint sued the Company for patent infringement
    concerning a technology Shawe considered to be an “important part of [TPG’s] future.”
    
    Id. 608 (Shawe).
    The Company countersued and was awarded about $4 million in
    damages, but its litigation costs were “upwards of $15 million.” Tr. 612-13 (Shawe).
    40
    JX 175.
    41
    JX 195 at TPT_EE_00044101.
    42
    
    Id. at TPT_EE_00044100.
    43
    
    Id. 13 which
    was not documented, changed around December 2012, when Elting insisted that
    routine decisions must receive their “dual approval.” 44 The dual approval requirement
    for routine decisions fueled more mutual hostaging and intensified the parties’
    disagreements in 2013.
    F.    More Mutual Hostaging
    On February 6, 2013, Elting was asked to approve a bonus for an employee
    working in one of the divisions (TDC) Shawe managed. Elting was willing to approve
    the bonus if Shawe approved other “raises that [were] being held up.” 45 Intent on
    eliminating dual approvals, Shawe would not sign off on the raises Elting wanted to
    implement unless she would agree that “other small TPT/TDC decisions go through with
    either partner’s approval…to avoid hostaging and eventual nuclear war.” 46 Elting would
    not agree: “No, Phil. Not how it works here . . . the arrangement is to share it all with
    both of us. If there is good justification and transparency I will never hold things up.” 47
    Shawe would not relent. He instructed Boodram not to release any of the raises: “They
    will remain hostaged… until we figure out how to make decisions in general without
    44
    Tr. 659 (Shawe); see also 
    id. 1328 (Sank);
    id. 1389 (Stone).
    
    45
    JX 203.
    46
    
    Id. 47 Id.
    14
    hostaging.” 48 The episode was played out in an email string on which many of the
    Company’s senior managers were copied.
    In an email exchange on February 14, 2013, Shawe put a new hire for one of
    Elting’s divisions (TPT) “[o]n hold” to pressure Elting to abandon dual approvals. 49
    Kevin Obarski, Senior Vice President of Sales, who was copied on the email string,
    chimed in with a private email to Shawe telling him that he was acting like a child:
    You told me in New Orleans that I should tell Liz when she is being crazy-
    This is me telling you that you are being crazy. I know you are going
    through a tough time- but you are acting like a child, ruining the rep that
    you have spent two decade[s] to build and all for what. Because you need
    to run things by people. It is wasting your own and everyone’s time- just so
    you can be right. Who cares about being right. We are about to change the
    world and you are wasting your energy and time on something that does not
    matter. 50
    In his private response to Obarski, Shawe revealed his plan to “create constant pain” for
    Elting until she acquiesced to his demands. He wrote, in relevant part:
    I will not run small things by anyone for my divisions. I will make
    decisions for my division…and I will hold up Liz’s TPT stuff till they are
    pushed through.
    I cannot fight on every small decision. I cannot and will not live that way.
    I will not change my position. I will simply create constant pain until we
    go back to the old way of doing things… 51
    48
    
    Id. 49 JX
    217 at TPT_EE_00044011.
    50
    
    Id. at TPT_EE_00044010.
    In contrast to the candor Obarski expressed in his
    contemporaneous emails, I found his testimony at trial not to be credible. Obarski’s
    testimony was rehearsed, belligerent, and calculated to serve as a cheerleader for Shawe
    rather than to provide straight answers.
    51
    
    Id. 15 In
    mid-March 2013, Shawe and Elting were at loggerheads again over their
    respective lists of demands. Shawe wanted to make certain hires and to pay the Kasowitz
    lawyers for the MotionPoint litigation. Elting would not agree unless Shawe approved an
    immediate profit distribution. 52 On March 14, 2013, the two exchanged proposals for a
    longer term agreement on profit distributions, but were unable to reach a compromise. 53
    G.     The April 2013 Tax Distribution Controversy
    Before April 2013, the Company, with Shawe’s and Elting’s mutual consent,
    routinely made tax distributions to cover the stockholders’ tax liabilities as a result of
    TPG’s status as a Subchapter S corporation. 54         In April 2013, Shawe and Elting’s
    combined tax liability was an unprecedented $21 million due to the Company’s strong
    performance. Despite the Company’s historical practice of paying tax distributions,
    Shawe refused to authorize the payment of the full $21 million from the Company,
    52
    JX 227; JX 233 at BoodramCTRL00063126; JX 2340 at BoodramCTRL00063020.
    53
    Elting had proposed either to withdraw anything in excess of $30 million in cash on the
    Company’s books on the first of each month, or to take out a specific amount on the first
    day of each quarter based on a certain level of EBITDA, with the parties agreeing to $2
    million per quarter until the EBITDA level could be agreed on. JX 245 at
    ShaweCTRL00047706-4. Shawe countered with a willingness to distribute $2 million
    per quarter automatically but conditioned on the elimination of dual approvals. 
    Id. at ShaweCTRL00047706-2.
    54
    Tr. 77 (Elting); 
    id. 1035, 1109
    (Shawe); 
    id. 1482 (Stone).
    16
    demanding instead that $8 million of that amount be paid out of funds from the LLC. 55
    An ugly episode ensued.
    On April 9, 2013, Elting threatened to fire a Finance employee (Lora Trujillo) for
    refusing to make an internal transfer so that the Company would have sufficient funds to
    pay the full $21 million. 56     Later, Boodram hovered over the shoulder of another
    employee (Jasmina Pasic) to force her to complete an internal transfer using the password
    of a third employee (Fiona Asmah). 57 With the funds transferred to TPG, Boodram cut
    checks to cover the tax liabilities of each of the three stockholders. 58     Shawe later
    contacted the Company’s bank, Signature Bank, and told them to “let the tax checks be
    cashed when they come in.” 59
    In the wake of the tax distribution controversy, Stone emailed Shawe on April 23,
    reporting that Elting again wanted to get a buy/sell agreement in place. Shawe replied, “I
    don’t care what Liz wants. She’s made it her mission to make my life miserable. We can
    pick this conversation up in 30 days.” 60
    55
    JX 280; Tr. 1029-31 (Shawe). As of the end of March 2013, the LLC had slightly
    more than $8.1 million in assets, almost all of which was held in a money market fund.
    JX 2055.
    56
    JX 274. Lora Trujillo is the wife of Roy Trujillo, the Company’s COO.
    57
    JX 274; JX 710; Asmah Dep. 158-61; Tr. 75-77, 81-83 (Elting); 
    id. 1394-95 (Stone).
    58
    Tr. 82-83 (Elting).
    59
    JX 288; Tr. 1038 (Shawe).
    60
    JX 293.
    17
    H.    Further Disputes and a Failed Compromise
    On August 7, 2013, a Vice President of Production (Jin Lee) asked Shawe and
    Elting to approve annual raises for certain employees in TPT, a division overseen by
    Elting. 61 Shawe refused to approve the raises until “all [his] stuff is approved,” 62 which
    included raises for employees in the divisions he managed, a new hire, a new phantom
    stock plan, a $2 million acquisition of a company called Vasont, and the elimination of
    dual approvals. 63 Elting would not agree, stating that decisions need to be made “one at a
    time” and that she would not “approve things in a group that [she was] not clear on.”64
    When Shawe continued to withhold approval of the raises she wanted, Elting privately
    instructed Boodram to proceed with them anyway and threatened to fire Shawe’s brother
    (Larry Shawe) and another employee if Shawe “tries to get in the way.” 65
    On August 8, 2013, Shawe refused to approve a promotion for an employee that
    Elting had approved, commenting that the Company has a “freeze on all offers, hires,
    raises, bonuses, change form etc.” 66 Shawe also refused to approve a $2 million non-tax
    distribution for the third quarter of 2013 that Stone was recommending, stating: “Are
    61
    JX 312; Tr. 374 (Elting).
    62
    JX 312.
    63
    JX 311.
    64
    
    Id. 65 Id.
    66
    JX 314 at EE_00003570.
    18
    you f***ing [k]idding me??? …you are on all these emails. Everything is frozen until
    Liz relents on the dual approvals.” 67
    On August 15, 2013, Shawe instructed Boodram, the Company’s point person in
    dealing with its outside payroll administrator, Automatic Data Processing, Inc. (ADP),
    “to make sure no TPT (or any) raises are put through” until she had received written
    confirmation from him that items for his divisions (TDC and TDM) had been
    addressed. 68 In the same email string, Shawe accused Boodram of “showing favoritism
    to one partner [Elting] over the other [Shawe]” because he believed Boodram had
    removed his access to the ADP payroll system. 69 After confirming that she had removed
    the access for both Shawe and Elting, Boodram expressed her exasperation at being
    “bullied” by Shawe, writing: “I think I’ll take tomorrow off to seek professional help as I
    do not know what to do any more. How could we not pay these employees, I just don’t
    know. I can’t come to work next week when Liz is not her[e] and not pay these
    employees. You’ll kill me for sure.” 70
    Despite the preceding months of tension, Shawe and Elting seemed to have a
    breakthrough in mid-August. On August 16, 2013, they signed in the presence of a
    notary (Robert DeNoia, the Company’s Vice President of Human Resources) a one-page
    67
    JX 315.
    68
    JX 325.
    69
    
    Id. 70 Id.
    19
    document setting out in bullet points a compromise that was intended to resolve many of
    their differences (the “August Agreement”). The first bullet was the key compromise: in
    exchange for eliminating dual approvals for employees in the divisions they separately
    managed, “regular normal course of Business Quarterly Distributions” were to be paid,
    although the amounts were not specified. 71 The August Agreement listed the divisions
    each would manage, reflected an agreement not to use “an acquisition to retaliate against
    the other,” and addressed what decisions would continue to require dual approval, such as
    joint reporting divisions (i.e., Shared Services), hires over $150,000 in salary, new leases,
    and new offices.
    The August Agreement provided that Shawe and Elting would review its terms in
    January 2014. That never happened, and the parties promptly disregarded its terms. 72
    I.     The Avengers Meeting
    Each year, the Company brought together ten or twelve of its most senior
    executives to discuss initiatives for the next year. 73    Starting in 2012, these annual
    gatherings were called “Avengers” meetings because each of the executives was
    nicknamed after one of the fictional superheroes in Marvel Comics’ The Avengers series.
    71
    JX 328.
    72
    Shawe and Elting each asserted claims against the other for breach of the August
    Agreement. After trial, the parties dropped these claims. Stip. and Scheduling Order ¶ 3
    (Apr. 22, 2015).
    73
    Tr. 95-96 (Elting); 
    id. 824 (Shawe).
    20
    Shawe scheduled the 2013 Avengers meeting to be held in San Francisco, beginning on
    Sunday, September 8 at 10:30 a.m., and continuing until Tuesday, September 10. 74
    On August 21, 2013, Obarski (who is based in Atlanta) emailed Shawe and asked
    to delay the start time for a few hours because he needed to take care of his kids that
    weekend. 75 Shawe responded by threatening Obarski with a $100,000 “fine” if he was
    late. 76 When Obarski protested and copied another employee on his email response,
    Shawe replied by fining Obarski $10,000 for “[b]ringing someone else into this
    conversation” and added Boodram, the Company’s payroll manager, to the email string.77
    Shawe later agreed to postpone the start time of the meeting until noon to accommodate
    Obarski.     Shawe described this and related emails as “bickering,” 78 and Obarski
    minimized the incident at trial. 79 But, the tenor of the emails, Shawe’s inclusion of
    Boodram (whom he despised) in the email string, and the fact that Shawe later berated
    Boodram for not processing the $10,000 fine 80 all suggest he was serious about “fining”
    74
    
    Id. 825 (Shawe).
    75
    JX 332 at TPT_EE_00043916.
    76
    
    Id. at TPT_EE_00043915.
    77
    JX 333 at TPT_EE_00043925.
    78
    Tr. 834 (Shawe); see also JX 336 at TPT_EE_00044872.
    79
    When asked whether this was “a significant event in [his] career,” Obarski responded,
    “Not at all. I call it Monday. That’s just the way we talk to each other.” Tr. 1164
    (Obarski).
    80
    JX 349 at TPT_EE_00045063; Tr. 834-839 (Shawe).
    21
    Obarski for this amount or was using the incident as a pretext to gratuitously harass
    Boodram.
    Although Shawe was willing to accommodate Obarski’s schedule for the
    Avengers meeting, he refused to accommodate Elting’s. Before Shawe scheduled the
    meeting, Elting told him that she could not attend in San Francisco on the proposed dates
    and asked that the meeting either be moved to New York or be rescheduled. 81 Shawe
    peremptorily refused, saying “I don’t care. We’re doing it.” 82
    On September 4, 2013, four days before the Avengers meeting was to begin,
    Elting told a Vice President of Production (Kristyna Marrero) that the location of the
    meeting was “not approved” and to cancel the plane tickets. 83 After learning that most of
    the tickets were non-refundable, Elting demanded that Shawe pay for new tickets
    personally and threatened that if the meeting proceeded as scheduled, “there will never be
    another merger.” 84 The meeting ended up going forward in San Francisco, with Elting
    participating by videoconference. 85 As a result of the Avengers meeting incident, Elting
    told other executives that she was putting a freeze on the Company’s mergers and
    acquisitions activity. 86
    81
    JX 339 at TPT_EE_00048574.
    82
    Tr. 95-96 (Elting).
    83
    JX 338 at TPT_EE_00049235.
    84
    
    Id. 85 Tr.
    383 (Elting).
    86
    JX 340 at TPT_EE_00047859; JX 345 at TPT_EE_00048893; Tr. 1312-16 (Sank).
    22
    J.    Senior Executives Recognize the Harm from the Shawe-Elting Feud
    In the aftermath of the Avengers meeting, senior members of the Company
    acknowledged the harm the constant feuding between Shawe and Elting was causing the
    Company. On September 30, 2013, the Company’s Chief Information Officer (Yu-Kai
    Ng) suggested that one of the Company’s goals coming out of the Avengers meeting
    should be to end the feud: “Love Triangle – Liz / Phil / Company – stop the love / hate
    relationship – finding a way to work together without negatively impacting everyone
    else.” 87 Obarski agreed, calling it the “biggest business issue we face,” as did Michael
    Sank, Vice President of Corporate Development, who wrote, “[I]t’s so obviously the
    biggest problem the company faces.” 88 But Obarksi and Sank expressed seemingly
    genuine concern that Shawe would “fine” them for bringing up the subject. 89 Obarski
    had earlier told Elting that the only way to solve the feud was for Shawe and Elting “to
    agree to someone that is neutral to mediate it.” 90
    K.    Shawe Goes After Boodram Again
    Around the time Obarski and Sank were discussing the importance of ending the
    Shawe-Elting feud, Shawe was continuing to do battle with Boodram, whom he viewed
    87
    JX 363 at EE_00001195.
    88
    
    Id. at EE_00001188.
    89
    
    Id. at EE_00001189.
    90
    JX 355 at TPT_EE_00048614.
    23
    as Elting’s “puppet.” 91 On September 30, 2013, Shawe wrote that he and Elting “were
    unable to work out a plan” concerning her role in the Company’s payroll and finances
    and that she was “not to execute anything (i.e. sign any checks or contracts) on behalf of
    the company” until they did. 92 Responding to Shawe’s directive, Elting told Sank and
    Thomas Pennell, a consultant who helped the Company with acquisitions, “Acquisitions
    will never happen. He is the most sick and evil person I’ve ever met.” 93
    On October 3, 2013, Shawe threatened to terminate Boodram’s employment if she
    sent out a wire transfer to make a distribution to the stockholders without his consent.94
    Saying she could not take Shawe’s treatment anymore, Boodram expressed a desire to
    “take [her] bag and go,” prompting Shawe to “accept” her resignation even though she
    had not actually resigned. 95 Elting retaliated by terminating the employment of the
    Company’s Chief Operating Officer (Roy Trujillo) who she claimed had interfered with
    the wire transfter. 96 Elting also purported to veto an acquisition of Vasont, which Shawe
    had committed the Company to acquire without consulting Elting and which was set to
    close the following week. 97      Despite the threats and counter-threats, Boodram and
    91
    JX 341 at ELTING_00001220.
    92
    JX 352.
    93
    JX 354 at ShaweCTRL00010045.
    94
    JX 361 at ELTING_00000449.
    95
    
    Id. 96 Id.
    at ELTING_00000448.
    97
    JX 362 at TPT_EE_00043324; Tr. 100-01 (Elting).
    24
    Trujillo were not terminated from their positions, and the Company eventually acquired
    Vasont, which Elting manages. 98
    L.    Elting Hires Kramer Levin
    On October 8, 2013, shortly before the Vasont acquisition was supposed to close,
    Shawe asked Elting to approve the transaction “so . . . we can move forward.” 99 The next
    day, Elting told Shawe that “before moving ahead with any further acquisitions,” they
    would “need to have a more productive way of interacting and managing the
    company.” 100 Elting suggested that Shawe “retain a corporate lawyer and have him call”
    Scott Rosenblum, a corporate lawyer from Kramer Levin Naftalis & Frankel LLP
    (“Kramer Levin”) she had retained to help her “resolve the problems with Phil.” 101
    Shawe promptly forwarded Elting’s email to Obarski and Christian, belittling her
    proposal as “her latest tantrum.” 102 Obarski told Shawe he thought Elting’s suggestion
    was reasonable; Christian chimed in that Shawe had “brought it to this point.” 103 Shawe
    told them both that the idea was “batsh*t crazy” and became enraged. 104
    98
    Tr. 652, 679 (Shawe).
    99
    JX 371 at TPT_EE_00043879.
    100
    
    Id. 101 Id.;
    Tr. 101 (Elting).
    102
    JX 371 at TPT_EE_00043878.
    103
    
    Id. 104 Id.
    25
    Just hours after learning that Elting had retained Kramer Levin, Shawe retaliated
    by informing Cushman & Wakefield, the Company’s real estate broker for twenty years,
    that it could “no longer represent TPT/TDC.” 105 It was obvious retaliation because
    Cushman & Wakefield employed Elting’s husband, Michael Burlant, and because the
    record does not reflect any business justification for Shawe’s statement. Shawe warned
    Burlant that Elting had declared “legal armageddon” against him, and that if Elting
    “wants to dance in this fashion, she’ll have a highly motivated dance partner who is
    willing to go the distance and beyond.” 106 Shortly after sending the notice to Cushman &
    Wakefield, Shawe told Roy Trujillo to put a lock on Boodram’s office, and he told Ng to
    “pull [Boodram’s] email from the last 3 months and give” it to him, and not to discuss his
    directive “with anyone else.” 107 Shawe then instructed Steve Tondera, the Company’s
    Chief Financial Officer—whom Shawe had agreed to terminate two months earlier 108—to
    continue to operate in his “current capacity as CFO” and to “have no meetings about
    transitioning or changing your job responsibilities in any way, that do not involve me.” 109
    105
    JX 374 at TPT_EE_00044852.
    106
    
    Id. at TPT_EE_00044851-52.
    The senior member on Burlant’s team at Cushman &
    Wakefield, Dale Schlather, would later prevent the firm from hiring the Company as a
    translations vendor. JX 1201. Schlather testified, “We don’t do business with people
    who terminate us, particularly when we’re terminated for lack of cause[.]” Schlather
    Dep. 90.
    107
    JX 373 at TPT_EE_00043886; JX 370.
    108
    See JX 309 at EE_00000053-54.
    109
    JX 365.
    26
    M.      Shawe Goes Ballistic Over Boodram—Again
    On October 18, 2013, after learning that Boodram had not transferred payroll
    responsibility for the TDC and TDM divisions he managed, Shawe told Boodram she was
    suspended, to remove herself from the Company’s property, and to “not sign into any
    corporate systems until further notice.” 110 A few hours later, he went ballistic, writing to
    Boodram:
    You knew you were not supposed to do this…and you intentionally f***ing
    did it!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
    DO YOU UNDERSTAND THIS YOU CRAZY PERSON.
    THIS IS MY GODDAMN MONEY, MY COMPANY, AND YOU
    REPORT HALF TO ME…
    Perhaps your shrink will have a position for you, because TransPerfect isn’t
    going to.
    This payroll f*** up is the last straw. 111
    This email also was sent to Elting, Gerber’s Stone, Tondera (the no-longer-fired CFO)
    and DeNoia (the Vice President of HR).
    DeNoia, described by Elting as “the best head of HR [the Company] ever had,”112
    was “appalled and disgusted” by Shawe’s conduct. He wrote: “[i]t’s out of control at
    this point – something needs to be done.” 113 Two days later, DeNoia amplified on his
    110
    JX 400 at ELTING_00001263-64.
    111
    JX 390 at TPT_EE_00045055.
    112
    Tr. 217 (Elting).
    113
    JX 388 at EE_00003085.
    27
    frustrations in an email to Shawe, Elting, and everyone else who received Shawe’s initial
    email tirade to Boodram:
    We need to assess how I can legally, morally and professionally continue in
    my role as VP of HR.
    I cannot be complicit in this pervasive and continuous hostile environment
    where inappropriate behavior impacts the morale, health and well-being of
    myself and the staff continues. . . .
    Therefore we need to address what, if any role I will continue to play and in
    what capacity, with this organization. 114
    About six months later, DeNoia resigned because, according to Elting, of the “completely
    toxic” culture of the Company. 115 Shawe and Elting have not agreed on a replacement.
    On October 21, 2013, Shawe twice reminded Boodram that she was “officially
    suspended” and threatened to call the police if she entered the Company’s property. 116
    This threat prompted Ronald Greenberg, one of Elting’s attorneys at Kramer Levin, to
    send an email to Shawe and a number of other Company employees stating that Shawe’s
    “recent actions concerning Gale           Boodram are completely unauthorized and
    inappropriate” and that Shawe had “no authority unilaterally to discharge or suspend Ms.
    Boodram or any other senior company employee without Ms. Elting’s authorization.” 117
    114
    JX 394 at EE_00004261-62.
    115
    Tr. 41, 217 (Elting); 
    id. 981 (Shawe).
    DeNoia died within months of his resignation
    and did not testify in connection with this action. 
    Id. 218 (Elting).
    116
    JX 398 at ELTING_00001247; JX 400 at ELTING_00001263.
    117
    JX 402.
    28
    The employees copied on the email were instructed to “not make any material changes to
    their job responsibilities or issue any checks without Ms. Elting’s express consent.” 118
    Between October 21 and October 28, 2013, Shawe and Stone expressed to Elting
    their concern that concentrating the payroll authority in a single employee created a risk
    to the Company – a “single point of failure” as Shawe called it. 119 In November 2013,
    primary payroll responsibilities for Shawe’s divisions were transferred to Fiona Asmah,
    but Boodram was not removed from the process to Shawe’s satisfaction. 120
    N.    Another Failed Attempt to Resolve the Shawe-Elting Feud
    On October 29, 2013, Shawe (accompanied by Mike Stone and Thomas Pennell)
    met with Elting (accompanied by her advisors from Kramer Levin (Rosenblum and
    Greenberg) and a financial advisory firm) to seek to resolve their differences. 121 Over the
    next few weeks, a number of proposals were exchanged, 122 and the parties appeared to be
    making progress on resolving some of their disputes.           Elting approved the Vasont
    acquisition. 123 Shawe seemed to agree, at least in principle, (i) to enter into a distribution
    agreement providing for quarterly non-tax distributions of $2 million per quarter if the
    118
    
    Id. 119 JX
    399; JX 2284 at BoodramCTRL00081569.
    120
    Asmah Dep. 35-36; Tr. 972 (Shawe).
    121
    Tr. 109-13 (Elting); see also JX 438 at KLNF_00000439-41 (discussing on-going
    issues between Elting and Shawe).
    122
    See JX 430; JX 432; JX 433; JX 444.
    123
    Tr. 116 (Elting); JX 436 at ELTING_00001038.
    29
    Company had at least $30 million in working capital, and regular tax distributions with
    no working capital threshold; (ii) to advance the non-tax distributions for the fourth
    quarter of 2013 and the first quarter of 2014 while the distribution agreement was
    negotiated; and (iii) “to work with Liz in good faith to create a more detailed distribution
    agreement.” 124
    The progress was short-lived. Within five weeks, Shawe and Elting were fighting
    again over day-to-day issues. On December 2, 2013, in response to Elting’s desire for the
    Company to loan Boodram $15,000 for her daughter’s wedding (which was the type of
    accommodation the Company had made for other employees 125), Shawe told Boodram
    that he would not be “permitting any TPT money beyond salary to go” to her until her
    position was restructured. 126 Elting retaliated later in the day by informing Larry Shawe
    and Steve Tondera that she would not permit “any TPT money beyond salary to go to
    either” of them until “Phil and I agree on your positions, if any, going forward.” 127
    Frustrated that Shawe was unwilling to meet “to resolve [their] issues,” Elting wrote that,
    “[i]n the meantime, all acquisitions are on hold, issuance of phantom stock is on hold,
    [and] an operating agreement is on hold.” 128 Elting also refused Roy Trujillo’s request
    that she sign leases for office space in Pune, India and Miami, Florida, and threatened
    124
    JX 444 at KLNF_00000661-62.
    125
    JX 456 at EE_00001822.
    126
    JX 2275 at KLNF_00002115.
    127
    
    Id. at KLNF_00002112.
    128
    
    Id. at KLNF_00002113.
    30
    that, come March 2014, employees in several Shared Services divisions—Accounting, IT
    and Operations—would not receive raises. 129
    On December 27, 2013, Elting became upset when she discovered that Shawe had
    purchased holiday gifts for certain employees without informing her and allowing her to
    sign her name to the gifts. 130 Shawe inflamed the situation by adding people to the email
    chain, including recipients of the gifts, referring to Elting as “Scrooge Liz,” and
    instructing certain staff members that “they needn’t listen to [Elting], or answer questions
    about [Shawe] to [Elting].” 131 Shawe went on to accuse Elting of “physically assault[ing]
    [him].” 132 A little over an hour later, Greenberg joined the email string, warning Shawe
    that his recent misconduct directed at Boodram “must cease immediately.” 133 Shawe was
    surprised to see an email from Greenberg because, one week earlier, he personally went
    into the Company’s email system and arranged to divert Greenberg’s emails by using a
    spam filter. 134 He wrote to Ng: “Did we unblock this criminal?” 135 Ng later provided
    129
    JX 462.
    130
    JX 490 at TPT_EE_00006527.
    131
    
    Id. at TPT_EE_00006527-28.
    132
    
    Id. at TPT_EE_00006525.
    133
    
    Id. at TPT_EE_00006524.
    134
    Tr. 983-88 (Shawe).
    135
    JX 490 at TPT_EE_00006521.
    31
    further instructions to Shawe on how to block Greenberg’s email, which Shawe
    implemented the next day. 136
    On December 29, 2013, Kramer Levin sent Shawe and Stone a draft of a
    document entitled “Operating Principles for Management of TransPerfect.” The draft
    addressed, among other things, the composition of the Company’s board, which decisions
    would require dual approval, and included the following buy/sell provision: “Shawe or
    Elting will each have the option of offering the other in writing a price and terms based
    on which he or she is willing to buy-out the other or be bought out, and the offeree shall
    . . . elect either to be bought out or to buy out the offeror on such terms.” 137
    O.    Shawe Spies on Elting and Obtains Her Privileged Communications
    On December 20, 2013, Shawe instructed Roy Trujillo and another employee to
    intercept and bring to him Elting’s mail, including mail from Kramer Levin and Kidron
    Corporate Advisors LLC (“Kidron”), a financial advisor Kramer Levin had retained on
    behalf of Elting. 138 Shawe would later instruct another individual to look up the “[t]ime
    and date” and “[l]ength of call” for phone calls that Elting made that piqued Shawe’s
    136
    Tr. 989-90 (Shawe); JX 490 at TPT_EE_00006521.
    137
    JX 491 at EE_00008196.
    138
    JX 472 at TPT_EE_00006567-68. Because Elting required that all her mail, including
    junk mail, be delivered to her unopened, Shawe instructed Trujillo to bring it all to him
    before it was distributed, to which Trujillo responded: “We can do that and conveniently
    have the ‘critical’ items on top of the stack ;-)” Id.; Tr. 963-65 (Shawe).
    32
    interest. 139 By the end of December, Shawe’s surreptitious monitoring of Elting had
    expanded to include her private emails, including those with her counsel.
    After retaining Kramer Levin in October 2013, Elting established a password-
    protected, web-based Gmail account to communicate with her lawyers based on their
    advice. Elting found it to be time-consuming to use a web browser to access her Gmail
    account.      To solve that problem, she reconfigured her office computer at the
    recommendation of the Company’s director of Global Information Technology so that
    she could access her personal Gmails through the Outlook program on her office
    computer. Unbeknownst to Elting, the reconfiguration caused her Gmails to be stored
    automatically in a “.pst” (personal storage table) file on her computer’s hard drive.
    On the evening of December 31, 2013, when he knew “[w]ith virtual certainty”
    that Elting would not be in her office, Shawe secretly accessed her locked office on four
    different occasions using a master key card with the intent to obtain the hard drive from
    her computer. 140    Having gained this access, Shawe dismantled Elting’s computer,
    removed the hard drive, made a mirror image of it, and reinstalled the hard drive later that
    night. A log of the key card access reflects that Shawe entered Elting’s office on New
    139
    JX 1361 at PSTXT-0000421.
    140
    Tr. 860-63 (Shawe).
    33
    Year’s Eve at 4:29 p.m., 5:34 p.m., 7:22 p.m., and 7:47 p.m. 141 Shawe began reviewing
    the contents of the hard drive image the next day. 142
    In addition to breaking in to Elting’s computer, Shawe arranged to access the hard
    drive on her office computer remotely. Using the personal identification number he had
    previously obtained from the back of Elting’s computer, he mapped to her hard drive
    from his computer through the Company’s computer network. 143             Shawe accessed
    Elting’s computer in this manner on at least twenty separate occasions from April 3,
    2014, to July 23, 2014. 144 At some point, either through reviewing the hard drive image
    or his remote access snooping (he could not remember precisely when or which method
    he used), Shawe discovered that there was a .pst file of Elting’s Gmails on her hard
    drive. 145 Thereafter, when Shawe remotely accessed Elting’s hard drive, he downloaded
    a replica of the .pst file of Elting’s Gmails (each later .pst file having accumulated more
    of Elting’s Gmails) to thumb drives so he could view Elting’s Gmails privately on his
    laptop, which allowed him to conceal what he was doing. 146 Through these stealthy
    actions, Shawe gained access to approximately 19,000 of Elting’s Gmails, including
    approximately 12,000 privileged communications with her counsel at Kramer Levin and
    141
    JX 1348 at 5.
    142
    Tr. 864 (Shawe); Shawe Dep. 68 (Jan. 20, 2015).
    143
    Tr. 865-69 (Shawe).
    144
    JX 1339 at Interrog. No. 1.
    145
    Tr. 864-65 (Shawe).
    146
    
    Id. 865-69 (Shawe).
    34
    her Delaware counsel in this litigation. 147 Presumably concerned about the nature of
    Shawe’s actions, Sullivan & Cromwell LLP, Shawe’s lead litigation counsel in this
    Court, told him at the outset of its retention in March 2014 not to send information about
    the substance of Elting’s Gmails to anyone at the firm. 148
    A log of the key card access to Elting’s office shows that Shawe entered her office
    ten more times on several different dates in January and February 2014, all between the
    hours of 11 p.m. and 2 a.m. 149 The same log shows that Nathan Richards, a person
    Shawe allegedly hired to serve as his personal “paralegal” on April 4, 2014, entered
    Elting’s office at 4:47 a.m. on April 6, 2014. 150      The record does not provide any
    147
    Elting stopped using her Gmail account to communicate with her counsel in July
    2014. The facts concerning Shawe’s access to Elting’s Gmails are further described in
    the Court’s February 19, 2015, ruling on a motion in limine.
    148
    Shawe Aff. ¶ 19 (Apr. 3, 2015); see also Shane Aff. ¶ 3 (Dec. 5, 2014); Turinsky Dep.
    319-22. About two months after hiring Sullivan & Cromwell, Shawe formally retained
    separate counsel at Frankfurt Kurnit Klein & Selz, P.C. to advise him on various ethical
    issues, including his use of Elting’s Gmails. The Court assumed that a wall had been
    established between Shawe’s merits counsel at Sullivan & Cromwell and his professional
    responsibility counsel pending the Court’s determination whether Shawe could use any of
    these documents in this case given the circumstances under which Shawe obtained them.
    That was not the case. Shawe’s professional responsibility counsel made privilege
    determinations concerning Elting’s documents unilaterally, without taking the logical
    step of first consulting with separate counsel Elting had retained at Paul, Weiss, Rifkind,
    Wharton & Garrison LLP to address the ethical issues arising from Shawe’s conduct. I
    expected, perhaps naïvely, something more from counsel specifically retained to address
    ethical issues. Shawe’s professional responsibility counsel informed the Court that they
    provided Shawe’s merits counsel with access to approximately 3,100 of Elting’s Gmails
    (including some Elting contends were privileged), and that Shawe’s merits counsel
    accessed approximately 300 of them. Tr. of Oral Arg. 155-56 (Feb. 19, 2015).
    149
    JX 1348 at 5-6.
    150
    Tr. 871 (Shawe); Shane Aff. (Feb. 17, 2015) Ex. H; JX 1348 at 7.
    35
    explanation for these bizarre late night visits.        Richards, who was previously the
    Company’s Director of Global Marketing and Communications, resigned from this
    “paralegal” position in January 2015. 151 Richards did not testify at trial, was not deposed,
    and did not respond to attempts to contact him that were made during the trial. 152
    P.      Shawe Refuses to Engage in the Annual True-Up Process
    In January of each year, Shawe and Elting, with Stone’s assistance, engaged in an
    annual “compensation true up,” through which “unagreed-upon” expenses that either of
    them charged to the Company during the previous year were reconciled. 153 For example,
    if Shawe charged to the Company a team-building event (such as tickets to a sporting
    event) and Elting did not agree that it was an appropriate expenditure, it would be treated
    as an “unagreed-upon” expense and Elting would receive additional compensation in a
    commensurate amount in the true-up process. 154 This ensured that Shawe and Elting
    received equivalent compensation from the Company in addition to non-tax distributions
    pro rata with their ownership interests. Historically, Shawe’s unagreed-upon expenses
    exceeded Elting’s by a considerable amount, resulting in the payment of additional
    compensation to Elting. 155
    151
    Tr. 605.
    152
    
    Id. 597; Letter
    from Peter B. Ladig (Feb. 28, 2015).
    153
    Tr. 48 (Elting); 
    id. 1376-77 (Stone).
    154
    
    Id. 741 (Shawe).
    155
    
    Id. 48 (Elting);
    JX 73 at EE_00011212-13.
    36
    From 2000 until 2013, as Shawe was aware and at Stone’s recommendation, the
    true-up process included salary and benefits the Company paid to Elting’s personal
    assistant, Mohanee Jadunath, who has provided care for Elting’s children since
    November 2000. 156 It also included salary and benefits the Company paid to Ms. Shawe
    and to Shawe’s personal assistant, benefits for Shawe’s then-fiancée and now wife, and
    rent paid for Shawe’s apartments. 157 According to Stone, the true-up process was not
    supposed to include personal expenses, but it may have because his role was simply to
    tally the expenses, not to make judgments about whether particular expenses were proper
    business expenses. 158
    In late December 2013, Shawe learned that the Company had paid some bills of
    Kramer Levin. 159 This came about at Stone’s recommendation. On October 10, 2013, he
    told Boodram that the Company should pay certain bills from Kramer Levin and to put
    copies of them “in the file for [him] when [he comes to the Company] in January” to
    perform the annual true-up. 160 In total, the Company paid approximately $144,000 to
    156
    Tr. 36-37, 51-53 (Elting); id, 746-47 (Shawe); see also Stone Dep. 147.
    157
    Tr. 52-53 (Elting); 
    id. 746-47 (Shawe);
    id. 1468-69 (Stone); 
    JX 127.
    158
    Tr. 1376-77 (Stone).
    159
    
    Id. 721 (Shawe).
    160
    JX 487; Tr. 1469-70 (Stone). Despite its role as the Company’s long-time
    accountants, Gerber refused to voluntarily produce to Elting documents concerning the
    past true-ups and, when Elting subpoenaed the firm for these documents, it invoked
    technical objections so that they would not be produced before trial. 
    Id. 1449-50 (Stone);
    Kaplan Affirmation (Feb. 13, 2015) Ex. 19. Stone of Gerber had a more extensive
    relationship with Shawe and, by the time of this litigation, was biased for him and against
    37
    Kramer Levin and $15,000 to Kidron. 161 Consistent with Stone’s testimony, Elting
    testified that when Company funds were used to pay Kramer Levin, “the plan was all
    along to true it up in January, just three months after.” 162 But when the time came in
    January 2014 to true up expenses for 2013, Shawe refused to allow it to occur, as he
    would again the following year. 163
    Q.     Shawe Retains Kasowitz to Represent Him Personally
    On January 7, 2014, Shawe informed Elting that he had retained Kasowitz, the
    Company’s long-time outside counsel, to represent him personally in his dispute with
    Elting. 164 Elting understandably objected to Kasowitz’s simultaneous representation of
    the Company and one of its stockholders and urged Shawe to retain separate counsel, but
    Shawe incredibly claimed not to see any conflict. 165 Among other things, Kasowitz
    prepared a research memorandum for Shawe regarding whether Elting could successfully
    Elting. Stone is Shawe’s personal accountant, was a groomsman at Shawe’s wedding,
    went on numerous trips with Shawe (including to Las Vegas, Mexico, Singapore, Hong
    Kong, and Thailand) at the Company’s expense, assisted Shawe’s formulation of offers to
    buy out Elting, and deferred to Shawe when he was getting conflicting instructions. Tr.
    1420-21, 1443-45, 1470-71 (Stone). In contrast to its approach to Elting, Gerber
    produced documents in this action in response to Shawe’s subpoena. 
    Id. 1430-31 (Stone).
    I have no doubt that, had Shawe wanted the true-up records in Gerber’s
    possession to be available at trial, Gerber would have made them available.
    161
    JX 378; JX 477 at BoodramCTRL00104285-86; JX 382 at ShaweCTRL00006804.
    162
    Tr. 58 (Elting).
    163
    
    Id. 1058-59 (Shawe);
    id. 1470 (Stone); 
    JX 2031 at EE_00001631.
    164
    JX 519.
    165
    JX 529 at ELTING_00000975.
    38
    bring a claim against Shaw for refusing to vote in favor of a profit distribution and
    whether Elting could dissolve the corporation without Shawe’s consent or approval. 166
    On February 13, 2014, an attorney from Kramer Levin, acting on Elting’s behalf,
    told Kasowitz that its relationship with the Company was “under review” given the firm’s
    “failure to address its clear and obvious conflicts of interest,” that it may not to take on
    any new matters for the Company, and that the Company would make no further
    payments to it until further notice. 167 Kasowitz ignored this instruction and continued to
    take on work for the Company, without Elting’s knowledge or approval, including on a
    business matter (the hiring of Chris Patten, discussed below) that Elting had expressly not
    approved. 168 Kasowitz also was also aware that Shawe was reading Elting’s Gmail
    communications with her lawyers and at least one Kasowitz attorney, Daniel Turinsky,
    read around ten of Elting’s Gmails, including some that were communications with
    Kramer Levin. 169 Kasowitz would personally represent Shawe until January 2015. 170
    166
    JX 625. Privilege over this memo was waived because Shawe shared it with a third
    party, Signature Bank.
    167
    JX 567 at EE_00000407. Elting authorized Kasowitz to continue to “work on
    existing, ongoing matters . . . so as not to prejudice the company.” 
    Id. 168 Tr.
    119-20 (Elting); JX 954 at EE_00003393.
    169
    Turinsky Dep. 313-16.
    170
    
    Id. 60-61. 39
             R.     More Employee Frustration and a Counterproposal from Shawe
    On February 20, 2014, Sank brought an acquisition opportunity to Shawe and
    Elting’s attention. 171 Shawe was interested in the opportunity, but Elting put the brakes
    on it, stating “[n]othing happens on any acquisitions until Phil lives up to his end of the
    bargain on items that were due months ago.” 172 Frustrated with “being in the middle” of
    the disputes between Shawe and Elting, Sank replied: “I realize this may be a naïve
    statement, but to repeat what I’ve said many times, there must be some way for you two
    to resolve whatever is going on . . . without impacting the company.” 173
    On February 25, 2014, Shawe, with Kasowitz’s assistance, made a carefully
    drafted counterproposal to the draft Operating Principles he had received from Kramer
    Levin in late December. 174 In the first sentence of his letter, Shawe stated he did “not
    believe that we need to change the way we have operated and grown the Company over
    the last twenty-one years.” After outlining a host of specific operational suggestions,
    Shawe acknowledged that the “turmoil” between Elting and him had “the potential for
    grievously harming” the business and that if they could not “bridge whatever gap [had]
    171
    JX 589 at EE_00008914.
    172
    
    Id. at EE_00008913.
    173
    
    Id. at EE_00008911.
    174
    Tr. 775-78 (Shawe).
    40
    developed” between them, he was “open to considering a variety of reasonable buy-out
    options.” 175
    S.     Shawe Deceptively “Works Around” Elting
    In mid-March 2014, Shawe wanted to hire a new senior level employee, Chris
    Patten, to address a technology a problem in one of the Company’s divisions,
    TransPerfect Remote Interpreting (“TRI”), which Elting managed. 176                Company
    representatives had previously met with Patten in 2013 to discuss, with Elting’s approval,
    the possibility of his working for the Company, but Patten rebuffed their advances. 177
    Elting opposed the renewed attempt to hire Patten because no progress had been made on
    the disputes with Shawe, 178 but she later was willing for the Company “to extend an offer
    to Chris” when she returned from a business trip to Asia if there “no additional crises . . .
    during [her] absence.” 179
    On March 14, 2014, after stating she was in charge of hiring for the TRI division,
    Elting told Patten in an email (with a blind copy to Shawe) that there would be “no offer
    175
    JX 3029 at EE_00011072-75. In May 2014, after engaging in mediation, Shawe and
    Elting exchanged proposals contemplating a buyout of Elting. Tr. 783-85 (Shawe); JX
    893; JX 935. Shawe made additional proposals in the midst of this litigation. See JX
    1189; JX 1312: JX 1338; JX 2003.
    176
    Tr. 492-94 (Elting); 
    id. 1101-03 (Shawe).
    177
    Patten Dep. 29-30; Tr. 1144 (Obarski).
    178
    JX 597 at ShaweCTRL00019563-30.
    179
    JX 603 at ShaweCTRL00019563-37.
    41
    to [him] from the company” until she returned from Asia. 180 Later that day, Shawe sent
    an email—without copying Elting—to Patten, telling him to disregard Elting’s email and
    offering him a position at the Company. Shawe then hired Patten unilaterally without
    Elting’s knowledge by assigning Patten to a different reporting responsibility in the
    Company, even though the bulk of Patten’s time would be devoted to TRI—and then by
    paying Patten personally out of his own pocket. 181 Even though Kasowitz was working
    for Shawe at the time, the firm reviewed the relevant employment agreements on behalf
    of the Company. 182 Shawe also had Patten sign a non-disclosure agreement preventing
    him from disclosing the terms of his employment agreement to Elting. 183 Elting did not
    learn that Shawe had hired Patten until July 2014. 184 As discussed below, Shawe used
    similarly deceptive tactics later in the year to work around Elting and unilaterally hire
    many other employees.
    The Company’s practice for giving raises to employees called for the heads of
    each department to submit recommendations for employees in his or her department to
    Elting and Shawe, who would jointly decide whether or not to approve the
    180
    JX 601 at EE_00008409.
    181
    Tr. 496-97 (Elting); 
    id. 1102-04 (Shawe);
    JX 605.
    182
    JX 628 at KBF&T02204.
    183
    JX 1072.
    184
    Tr. 131, 133-34 (Elting).
    42
    recommendations. 185 When Elting delayed implementation of some of the raises in
    March 2014, Shawe employed another work around.
    On March 19, 2014, while Elting was in Asia, the recommended raises and
    bonuses for certain Shared Services (IT, Finance, and Accounting) employees were
    submitted to her for approval. 186 Elting had questions about the recommendations and
    was concerned that some of the proposed raises were “not in line with performance.” 187
    On March 20, Elting told two of the Company’s senior IT executives (Yu-Kai Ng and
    Mark Hagerty) that she wanted to talk through their recommendations when she returned
    from Asia later in the month. 188
    Upset that Elting was holding up these raises, Shawe instructed a finance manager
    (Fionah Asmah) to process a “supplemental payroll” through ADP to provide the raises
    without obtaining Elting’s approval. 189 Upon learning that Boodram was investigating
    who was responsible for the supplemental payroll and concerned that she may try to
    reverse it, Shawe, who had been monitoring Boodram’s emails, told Ng on March 21,
    2014, to “take her out of ADP” and “kill her phone.” 190 In a March 27, 2014, email to
    Asmah on which the head of HR (DeNoia) was copied, Shawe tried to cover up what had
    185
    
    Id. 472 (Elting).
    186
    JX 619 at EE_00008068; JX 620 at ELTING_00000467.
    187
    Tr. 473-74 (Elting); JX 619 at EE_00008066.
    188
    JX 907 at ELTING_00000460.
    189
    Tr. 748-52, 1074 (Shawe); JX 735 at TPT_EE_00044190.
    190
    JX 638 at TPT_EE_00045006; Tr. 1076-79 (Shawe).
    43
    happened, stating falsely that Asmah “had nothing to do” with processing the
    supplemental payroll. 191
    On March 27, 2014, after returning from Asia, Elting instructed ADP to reverse
    the raises Shawe had implemented without her approval. She further instructed ADP to
    remove everyone other than Elting and Boodram from the authorized caller list, leaving
    only her and Boodram capable of processing a payroll. 192          Two days later, Elting
    instructed Boodram to reprocess most of the raises. 193 All of the relevant Shared Services
    employees, other than Asmah, ultimately received those raises, and Ng did not receive a
    bonus. 194
    T.      The Double Payment of Elting’s Taxes in April 2014
    Shawe and Elting’s estimated taxes for the first quarter of 2014 were due on April
    15, 2014. The seemingly simple exercise of arranging for the Company to distribute
    funds to cover the taxes owed or to pay them directly to the tax authorities for that quarter
    became yet another point of controversy.
    On April 1, 2014, after receiving an email from Gerber suggesting that Roy
    Trujillo was handling the Company’s payment of the first quarter estimated taxes, Elting
    sent Shawe an email saying, in no uncertain terms, “Roy [Trujillo] is not to handle my
    191
    JX 667 at TPT_EE_00043179; Tr. 1073-75, 1079-81 (Shawe); see also JX 666.
    192
    Tr. 480-82, 485-87 (Elting); JX 671.
    193
    Tr. 483 (Elting).
    194
    JX 802 at ShaweCTRL00001692; JX 1257 at ¶ 4.
    44
    taxes or my distributions.” 195       Earlier that day, Elting had the Company send out
    payments for her estimated taxes, but she waited to inform Shawe that she had done so
    because she wanted to make sure Shawe did not cancel the checks before they cleared. 196
    On April 3, 2014, at 4:15 p.m., Shawe announced in an email that he was “pleased
    [to report] that as promised, all of our S-corp taxes are finished and paid.” 197 This
    prompted Elting to respond at 9:25 p.m. on April 3, that Shawe was “not authorized to
    pay [her] personal taxes,” which she was handling herself. 198 The tax payments Shawe
    had arranged were not actually sent out until April 4, 2014. 199          Consequently, the
    Company paid Elting’s first quarter estimated taxes twice (on April 1 and on April 4)
    because Shawe and Elting were incapable of behaving rationally to accomplish a simple
    task. To prevent the Company’s Subchapter S status from being jeopardized by the
    double payment of Elting’s taxes, the Company made corresponding distributions to
    Shawe and Ms. Shawe in August 2014 to equalize their pro rata distributions. 200
    U.    The Termination of the Company’s Public Relations Firm
    Before April 2014, the Company used the public relations firm Metis, Inc.
    According to Elting, Metis helped generate “terrific press” for the Company in many
    195
    JX 784 at EE_00001930-31.
    196
    Tr. 164-67, 451-59 (Elting); 
    id. 1044-45 (Shawe);
    JX 2031 at EE_00001629; JX 742.
    197
    JX 784 at EE_00001930.
    198
    
    Id. 199 See
    Tr. 1046-47 (Shawe).
    200
    
    Id. 167-68 (Elting);
    id. 1052 (Shawe).
    
    45
    publications, including The New York Times, The Wall Street Journal and Forbes. 201 In
    April, believing Metis was loyal to Elting, Shawe demanded that the firm provide him
    with Elting’s personal password to access the Company’s Facebook account. When
    Metis declined, Shawe stopped payment of Metis’s invoices, after which Metis
    terminated its relationship with Company. 202 Shawe and Elting have since been unable to
    agree on a replacement public relations firm. 203 According to Elting, Metis’s termination
    has negatively impacted the Company, which received significant negative press in 2014
    after Shawe and Elting sued each other. 204
    V.     The Litigations Begin
    It was only a matter of time before the Shawe-Elting feud would make its way to
    the courthouse. In May 2014, Shawe and Elting filed four separate lawsuits against each
    other.
    On May 8, 2014, Elting filed an action in the New York Supreme Court (the “New
    York action”) seeking to remove Shawe as a director and officer of TPI, the main
    operating subsidiary of TPG. 205 On May 15, 2014, Elting filed a Verified Petition for
    Dissolution of the LLC in this Court (C.A. No. 9661-CB). It was preceded by an
    201
    
    Id. 121-22 (Elting).
    202
    
    Id. 122 (Elting).
    203
    
    Id. 1108 (Shawe).
    204
    
    Id. 125-28 (Elting);
    JX 1018; JX 1022.
    205
    Pre-trial Stip. ¶ 15.
    46
    exchange of correspondence in April 2014 in which Shawe refused Elting’s request for
    his written consent to dissolve the LLC under 
    6 Del. C
    . § 18-801(a)(3).
    On May 22, 2014, Shawe filed a Verified Complaint in this Court (C.A. No. 9686-
    CB) individually and derivatively on behalf of TPG asserting claims against Elting for
    waste, breach of fiduciary duty, unjust enrichment, breach of contract, and
    indemnification. The next day, Elting filed a petition in this Court (C.A. No. 9700-CB)
    that, in its most recent form (the Third Amended and Supplemental Verified Petition for
    Dissolution and Appointment of a Custodian or Receiver, and Verified Complaint), seeks
    (i) the appointment of a custodian for TPG under 
    8 Del. C
    . §226(a)(2) to sell the
    Company; and (ii) the dissolution of TPG under the Court’s equitable powers. 206
    W.     The Audited Financials Controversy
    The Company has never obtained audited financial statements, instead choosing to
    obtain reviewed financial statements. 207 Elting asked Shawe at some undefined point to
    authorize an audit of the Company, but he refused. 208 Elting testified she wants audited
    206
    The petition seeking dissolution originally asserted six claims. Elting later voluntarily
    withdrew four of them. Stip. and Scheduling Order ¶ 3 (Apr. 22, 2015) (withdrawing the
    breach of contract claim asserted in Count IV); Elting’s Post-Trial Ans. Br. 32 n.17
    (withdrawing the breach of fiduciary duty claims asserted in Counts V-VI); Pre-trial Stip.
    ¶ 104 (withdrawing the dissolution claim under 
    8 Del. C
    . § 273 asserted in Count III).
    207
    “Reviewed” financial statements are based on an outside auditor’s review of the
    company’s statements, including inquiries of company management, but they do not
    involve an assessment of the company’s internal controls or fraud risk. See, e.g., Lola
    Cars Int’l Ltd. v. Krohn Racing, LLC, 
    2010 WL 3314484
    , at *6 n.77 (Del. Ch. Aug. 2,
    2010) (discussing the difference between reviewed and audited financial statements).
    208
    Tr. 182-83, 251-53 (Elting).
    47
    financial statements in part because the Company’s clients have requested them in
    response to concerns arising from the litigation, and because she and Shawe “will not be
    able to effectuate a deal” to resolve their disputes without them. 209 Shawe testified that
    there is no business reason to audit the Company because it is a closely held private
    corporation, and that the Company would likely not pass an audit unless it first addressed
    certain internal control problems. 210
    Shawe challenges Elting’s contention that the Company’s clients want audited
    financial statements. He asserts that Elting prompted some clients to request them for the
    ulterior purpose of facilitating her desire for a buy-out. Although Elting denies asking
    any client to ask for audited financials of the Company, 211 I find it is more likely than not
    that she did so with respect to Goldman Sachs and Bank of America.
    In June 2014, the Company was negotiating a new contract with Goldman Sachs
    to provide translation services for its Asia business. 212 Goldman Sachs had another role
    relevant to the Company. In May 2014, it had indicated it was “highly interested” in
    providing debt financing in connection with a proposal Elting made to acquire the
    209
    
    Id. 182-83 (Elting).
    210
    
    Id. 581-82, 759-61(Shawe).
    211
    
    Id. 184-86 (Elting).
    212
    
    Id. 227 (Elting).
    48
    Shawes’ equity interests in the Company. 213 Mark Segall of Kidron was interacting with
    an employee of Goldman Sachs (John Waldron) for this purpose.
    On June 9, 2014, Waldron forwarded Segall an internal Goldman Sachs email in
    which a person working on the Asia business contract inquired about the significance of
    the New York action, which Goldman Sachs discovered in its due diligence. Segall
    responded to Waldron that “perhaps we can use this commercial matter with Goldman”
    (referring to the new Asia business) “as a way to move the ball forward” on a buy/sell
    process. He then asked Goldman Sachs to “consider sending Liz an email that we could
    distribute internally to Phil and our senior managers” saying, in part, that to obtain a
    commitment letter from Goldman Sachs to facilitate a buy-out:
    [A]n audit must be undertaken covering the last 3 years of consolidated
    financial statements by a top US accounting firm; and [o]nce Goldman has
    confidence that the process is moving forward along this path, it can
    continue with the commercial relationship; until then, there is in fact too
    much risk to do so. 214
    Segall testified that he “did not sent this out on [his] own,” 215 from which I infer that
    Elting and/or her legal advisors were involved in that decision.
    Elting read Segall’s email the day it was sent, did not object to it, and pursued the
    strategy Segall suggested. 216 On June 16, 2014, Elting forwarded to Shawe and other
    213
    JX 935 at EE_00000101.
    214
    JX 982 at ELTING_00004451.
    215
    Segall Dep. 163.
    216
    Tr. 237, 526 (Elting).
    49
    senior managers of the Company an email she had received from Goldman Sachs earlier
    in the day, which she used to press the need for audited financials to reach a “buy/sell
    resolution”: “Goldman is indicating below they will not move forward [with the Asia
    business] until they see the timing around the resolution.” 217
    Elting admits she likely told Bryan Cohen of Bank of America during the summer
    of 2014 that having audited financial statements would help her resolve her issues with
    Shawe. 218       Bank of America also was in discussions with Elting about providing
    financing for a potential transaction. 219 On September 4, 2014, Cohen sent an email to
    certain employees of the Company (copying Elting) in which he stated, “Bank of
    America requires audited financials as part of standard vendor management activities to
    validate vendor financial stability.” 220 Although Cohen vigorously denied that Elting
    asked him to make this request, 221 I discount this testimony because of another email he
    sent (less twenty minutes earlier) in which he told several TPG employees (without
    copying Elting) that he would “be sending an email to [them] with a copy to Liz (per her
    request to help things along with the ‘issue’) requesting 3 years of audited financials.” 222
    217
    JX 1019 at Kidron_00001627; Tr. 238-42 (Elting).
    218
    Tr. 256-57, 259 (Elting).
    219
    
    Id. 220 JX
    1159.
    221
    Cohen Dep. 64-65, 76, 210-12.
    222
    JX 1160.
    50
    Bank of America, like Goldman Sachs, has not received audited financials from TPG
    because they do not exist.
    According to Elting, separate from the audited financial statements issue,
    Goldman Sachs and Bank of America, along with several other clients, have expressed
    concern about the state of affairs at the Company. These additional clients include
    Procter & Gamble, Shell Oil, and numerous law firms. 223 Contemporaneous documents
    corroborate Elting’s testimony, which I credit. Internal Goldman Sachs emails from June
    2014 reflect that the firm was concerned about spending time and money negotiating the
    Asia business contract given the risk there might not be a corporate entity to stand behind
    the contractual representations and warranties. 224 Emails from Bank of America to the
    Company reflect that the bank viewed the litigation in June 2014 as a “significant risk”
    from a vendor management perspective because of the potential “instability within an
    executive management structure” of the Company. 225
    More recently, on January 15, 2015, a Shell Oil representative wrote to a
    Company sales representative explaining that Shell Oil “ha[s] been thrown something of
    a curveball” because it had discovered “some concerning articles in the media relating to
    some splits in the senior management at Transperfect” and it was “worried around what
    223
    Tr. 218, 513 (Elting); 
    id. 1678-79 (Geller).
    224
    JX 982 at ELTING_00004452.
    225
    JX 972; JX 974; Cohen Dep. 18-20.
    51
    direction this might take.” 226 In forwarding Shell Oil’s email to Elting, a Company
    salesperson emphasized “how important this deal is to our company from the $s of the
    deal itself, to the much bigger opportunity cost.” 227
    The strife within the Company has not been lost on its competition.      The
    Company’s primary competitor, Lionbridge, 228 has portrayed the Shawe/Elting conflicts
    and resulting lawsuits as calling into question the ability of the Company “to deliver on
    client contractual obligations, as well as basic financial obligations to employees.” 229
    The record reflects that, in June 2014, Lionbridge solicited Avis Budget Group, Bank of
    America, and Morgan Stanley in this manner. 230 A Company employee stated that this
    issue “could go down as the largest corporate own goal in history.” 231 In response, the
    Company sent out a mass email message to many of its clients to “guarantee” that the
    Company “is healthy as ever and will continue to grow and prosper.” 232
    X.    The London Office Lease
    On June 6, 2014, Roy Trujillo informed Shawe and Elting that the Company’s
    “London office will [be] at absolute maximum capacity by the end of the month” and
    226
    JX 1347.
    227
    
    Id. 228 Tr.
    553-54 (Shawe).
    229
    JX 970 at BOA000064.
    230
    JX 967; JX 970; JX 975.
    231
    JX 967 at TPT_EE_00006130.
    232
    JX 974 at BOA000104.
    52
    asked whether, “given the risks related to recent events, . . . the company is willing to
    enter into an additional lease contract of this magnitude at this time.” 233 He reiterated
    this request on June 10, 2014. The next day, Shawe approved it, 234 while Elting reached
    out to her legal (Kramer Levin) and financial (Kidron) advisors, suggesting that the
    request could be used as another point of leverage to obtain a buy/sell agreement: “How
    should I handle? What about we require a buy sell agreement (for the good of the
    company) in order to move forward?” 235 That antagonistic course was not pursued.
    After inspecting the London office space during a visit on June 20, 2014, Elting approved
    a lease for additional space in the Company’s then-current building. 236
    Y.    Shawe Presses Assault and Battery Charges against Elting
    In early June 2014, Elting instructed Roy Trujillo to deliver checks to Shawe and
    Ms. Shawe to cover their quarterly tax distributions. 237 When Trujillo attempted to
    deliver the checks to Shawe on June 10, Shawe told him the distributions were not
    authorized, even though the Company had more than $50 million in available cash. 238
    Later in day, Shawe went to Elting’s office to confront her about the approximately
    233
    JX 993 at Cushman00034765.
    234
    
    Id. 235 Id.
    at Cushman00034764; Tr. 245-47, 249-50 (Elting).
    236
    Tr. 250 (Elting).
    237
    
    Id. 186-87 (Elting).
    238
    JX 995 at EE_00000659; Tr. 186 (Elting).
    53
    $445,000 tax distribution paid to her. 239 According to Elting, Shawe would not leave her
    office despite repeated requests and blocked her from closing the door by putting his foot
    in it, at which point Elting “tried to move it with [her] foot.”240 Curiously, while his foot
    was in the door, Shawe called one of his attorneys from Sullivan & Cromwell, rather than
    focus on resolving the situation at hand (i.e., removing his foot from the door). 241 Elting
    called DeNoia for help and the situation was eventually defused. 242
    On June 11, 2014, Shawe filed a “Domestic Incident Report” in which he accused
    Elting of pushing him and kicking him in the ankle the previous day. 243 In a parenthetical
    at the very end of the report, Shawe identified Elting as his ex-fiancée, even though their
    engagement ended seventeen years earlier, apparently to ensure that the matter would be
    treated as a domestic violence incident and require Elting’s arrest. 244 Shawe’s denial of
    reporting the incident in this manner to have Elting arrested is not credible.
    The police called Elting the next day and told her she was going to be arrested for
    assault and battery. After Elting’s lawyers intervened, the charges were dropped, but
    Shawe filed a civil tort case against her that remains pending. 245 When discussing with
    239
    Tr. 187 (Elting); 
    id. 993 (Shawe);
    JX 997 at EE_00001520.
    240
    Tr. 187-88 (Elting); JX 997 at EE_00001520.
    241
    JX 997 at EE_00001518.
    242
    Tr. 188 (Elting).
    243
    JX 999.
    244
    Tr. 995-96 (Shawe).
    245
    
    Id. 189-90 (Elting).
    54
    her friend a New York Post article about the assault and battery charge, Elting wrote, “It’s
    heartbreaking and surreal. [Shawe’s] retaliating big time because I had to pursue legal
    action and I want out.” 246     Elting claimed at trial she meant she wanted “out of a
    relationship” with Shawe, not that she wanted out of the Company. 247
    On October 20, 2014, Shawe’s lawyer in the tort lawsuit sent a letter asking
    Elting’s counsel to advise Elting not to move any “evidence, including items in or in the
    general vicinity” of her office, until it could be inspected. 248 It makes no sense to inspect
    the premises of an incident more than four months after the fact. The inspection request
    was a pretext for Shawe to embarrass Elting as the high-profile litigation in this Court
    was well underway. The day he received the letter from his counsel, Shawe forwarded it
    to Elting and nine other employees of the Company, some of whom did not even work in
    the New York office. 249 Ten days later, Shawe wrote to Elting (copying another group of
    Company employees) to remind her “to bring the shoes [she was] wearing on 6/10 and
    make them available for the inspectors.” 250
    Z.     Shawe Falsifies Records to Arrange More “Work Arounds”
    On August 11, 2014, a member of the linguist accounts payable team (Kai Chu)
    told Elting that, even though his “staff has some of the best retention rates in this
    246
    JX 1081 at ELTING_000000011.
    247
    Tr. 244-45 (Elting).
    248
    JX 1239 at ELTING_0003607.
    249
    Tr. 996-99 (Shawe); JX 1239 at ELTING_00003605.
    250
    JX 1250 at EE_00010903.
    55
    company,” his team had lost three people in the last six months due, in part, to “the
    environment” at the Company. Elaborating, Chu explained:
    Staff is stressed out because we haven’t found proper help in many months.
    They are trying to do the right thing by staying and doing the extra time to
    pay linguists on time but morale is plummeting because they don’t see an
    end to this. Managers are stressed out because we’re dedicating our time
    trying to walk a line to placate orders [from Shawe and Elting] that are
    diametrically opposed and mutually exclusive. The same mutually
    exclusive orders disallow action on my replacement hires – which is
    directly causing the morale problem. 251
    Chu pleaded to Elting to “please allow HR to hire replacements” for the employees who
    had left the Company so he could “restore the morale back to what it used to be and
    restore our company image back to what it used to be.” 252 These positions were in one of
    the Shared Services departments (Accounting) that Shawe and Elting managed jointly
    and for which both of their approvals was necessary to hire new employees. Citing the
    fact that procedures had recently been implemented in Accounting without her approval,
    Elting refused to approve the additional hires unless they reported to her. 253            In a
    contemporaneous document, Roy Trujillo identified “the ongoing disputes and the
    stressful environment created by it” as the likely cause of the “mass exodus” in
    Accounting and Finance. 254
    251
    JX 1114 at TPT_EE_00045175.
    252
    
    Id. 253 Id.
    at TPT_EE_00045174.
    254
    JX 1111 at ELTING_00002815.
    56
    Rather than try to reach a compromise with Elting, Shawe circumvented the need
    for Elting’s approval for these and other new hires in the Shared Services departments by
    concocting a scheme to falsify records that would create the appearance that employees
    were being hired for one of the divisions Shawe managed, even though they would
    actually work for a Shared Services division. Specifically, a number of new employees
    were presented with and asked to countersign two written offers of employment that were
    virtually identical except in one critical respect. One of the offer letters falsely stated that
    the employee would report to a manager in one of the divisions Shawe oversaw. The
    other offer letter, which reflected the reality, stated that the employee would report to a
    manager in one of the Shared Services departments. 255 Shawe, who personally signed
    both versions of the offer letters, admitted to hiring approximately ten employees in this
    manner. 256 At least one was instructed to avoid Elting in the hallways. 257
    AA.    Shawe Disparages Elting within the Company and Publicly
    On September 3, 2014, as the various litigations were heating up, Elting sent a
    litigation hold notice (with a copy to Shawe) to over one hundred of her “TPT Team
    Members,” instructing them “to preserve all materials that may be relevant to any of the
    pending actions.” 258 Shawe used this as an opportunity to gratuitously cast aspersions on
    255
    Tr. 1093-1101 (Shawe); JX 1147; JX 1148; JX 1213; JX 1317.
    256
    Tr. 1100 (Shawe).
    257
    Cao Dep. 35-36.
    258
    JX 1146 at EE_00006322.
    57
    Elting in front of the employees who report to her by sending a “reply all” to Elting’s
    email, writing, “Liz is absolutely correct. . . . p.s. As an example, I’ve attached one such
    document that a Court may find very relevant to our dispute.” 259 The attachment was a
    memorandum on Gerber’s letterhead to Shawe from Stone, dated April 4, 2014, explicitly
    accusing Elting and Boodram of colluding to engage in a variety of financial
    improprieties. 260    Shawe admitted at trial that he was “not proud” of this email,
    rationalizing it as “a tit-for-tat attack that I regret.” 261
    Shawe was not done. A few days later, on September 8, 2014, he upped the ante
    in his campaign to disparage Elting, this time by issuing a press release in the Company’s
    name concerning developments in the New York action Elting had filed to dissolve
    TPI. 262 The press release—entitled “TransPerfect Translations International Announces
    Major Victory in New York Supreme Court”—was disseminated to three business
    newswires, posted on the Company’s Facebook page, and published in the Business
    Section of The New York Times. It falsely purported to be an official public statement of
    the Company, even though Elting had not approved the press release; it falsely
    characterized Elting as a “minority shareholder,” even though she owns 50% of the
    Company; and it falsely attributed to Elting a quotation suggesting she was “extremely
    259
    
    Id. at EE_00006321.
    260
    Tr. 1006-07 (Shawe); JX 768.
    261
    Tr. 1007-08 (Shawe).
    262
    
    Id. 198-200 (Elting);
    JX 1172.
    58
    pleased” with rulings the New York court made—rulings that were adverse to her own
    claims in that case. 263 I find it entirely not credible that Shawe believed, as he testified
    under oath, that “this press release was factually accurate when [he] wrote it”; that “the
    Company could use this positive press”; and that it was “very respectful.” 264
    BB.    Elting Impedes the Annual Review of the Company’s Financials
    Since 2007, the accounting firm Berson & Corrado has conducted an annual
    review to prepare reviewed financial statements for the Company. Berson & Corrado
    was designated for this purpose by Signature Bank, which provides a line of credit to the
    Company. In September 15, 2014, Elting stopped payment on a $10,000 check to Berson
    & Corrado for its 2014 annual review because it was made without her approval. 265 This
    action prompted Shawe to file a motion to enjoin Elting from interfering with Berson &
    Corrado’s financial review. On October 3, after the filing of that motion, Elting relented
    and allowed Berson & Corrado to complete its review. 266
    263
    The issuance of this press release prompted Elting’s September 15, 2015, motion for a
    temporary restraining order, which I granted on September 18, 2015, enjoining Shawe
    from disseminating any statements on behalf of the Company or its subsidiaries without
    Elting’s prior, written consent.
    264
    Tr. 1010 (Shawe).
    265
    
    Id. 277-80 (Elting);
    JX 2260 at EE_00003373.
    266
    JX 1224. Specifically, Elting took the position that did she did “not object to the
    Company proceeding with the review (and paying the related costs),” she but wanted “the
    reviewed financial statements [to] be provided only to Signature Bank and not further
    disseminated until the parties reach an agreement on such dissemination or the Court
    enters a decision on the issue.” 
    Id. 59 CC.
       The Parties Stipulate to a Deadlock over Electing Directors
    Since its incorporation in 2007, TPG had never held an annual stockholders
    meeting to elect directors. On September 17, 2014, Elting filed an action (C.A. No.
    10141-CB) under 
    8 Del. C
    . § 211 to compel TPG to hold an annual meeting. TPG’s
    bylaws provide for a three-member board of directors, or a larger number set by action of
    the stockholders or the board. 267 No such action has ever been taken. Shawe and Elting
    have served as TPG’s only two directors since its incorporation, with the third seat
    remaining vacant. 268
    To resolve the Section 211 action, the parties stipulated that they were deadlocked
    on electing directors.        TPG’s bylaws provide for plurality voting in the election of
    directors, 269 so it is readily apparent that the Company’s evenly split factions (Elting
    versus Shawe and Ms. Shawe) would not be able to elect successor directors, rendering
    an annual meeting futile. On December 5, 2014, the stipulation among Elting, Shawe,
    and Ms. Shawe, quoted below, was entered as an Order of the Court:
    1.     The Stockholders shall be deemed to have participated in a
    stockholders meeting for the election of directors of the Company (the
    “Stockholders Meeting”), at which the Stockholders were so divided that
    they failed to fill the vacancy on the Board and they also failed to elect
    successors to directors whose terms have expired (i.e., Shawe and Elting).
    2.     Elting and Shawe therefore currently hold the positions of
    holdover directors of the Company whose terms have expired, but the
    Stockholders are so divided that they are unable to elect their successors.
    267
    JX 936 at Art. II, § 2(a).
    268
    Pre-trial Stip. ¶ 10.
    269
    JX 936 at Art. I, § 7(a).
    60
    3.    The Stockholders agree that any Stockholder may use this
    Order, and the fact that the Stockholders have consented to this Order in
    lieu of proceeding with a stockholders’ meeting, in support of a claim under
    
    8 Del. C
    . § 226(a)(1), and that no Stockholder shall use the fact that an
    actual meeting was not convened as a defense to any such claim. 270
    On December 10, 2014, Elting voluntarily dismissed the Section 211 action. The
    next day, she filed another action (C.A. No. 10449-CB) seeking under 
    8 Del. C
    . §
    226(a)(1) the appointment of a custodian or receiver to act in the best interests of TPG
    given the stipulated deadlock among the Company’s stockholders over the election of
    directors.
    DD.     Shawe Seats Himself Next to Elting on Plane
    On December 2, 2014, Elting boarded a red eye flight to Paris and discovered, to
    her surprise, that Shawe was seated across the aisle from her. Shawe claimed to have “no
    idea” she would be on the flight. 271 In truth, Shawe previously learned that Elting would
    be on the flight and made arrangements to be seated next to her without her
    knowledge. 272 Elting changed seats. The next day, Shawe sent a text message to several
    of his allies, stating: “Was next to Liz on the plane to Paris and she switched seats ;).”273
    Two of the recipients of the text message were Nathan Richards and Joe Campbell, both
    of whom are implicated in events concerning Shawe’s alleged spoliation of evidence,
    which is the subject of a motion for sanctions discussed below.
    270
    JX 1292 (Stip. and Order (Dec. 5, 2014)) at ¶¶ 1-3.
    271
    Tr. 215 (Elting).
    272
    
    Id. 1011-13 (Shawe).
    273
    JX 3035 at PSTXT-0000567.
    61
    I find Shawe’s characterization of the incident as an attempt to extend an olive
    branch not to be credible. He did not deny telling Elting that he had “no idea” she would
    be on the flight, which was not true, and the smiley-face emoticon at the end of his text
    message suggests he was amused by yet another opportunity to harass Elting, who Shawe
    knew full well would not welcome his presence on the flight.
    II.   PROCEDURAL HISTORY
    On November 18, 2014, at the conclusion of a hearing during which the parties
    argued three motions, 274 I ordered that the three then-pending cases (C.A. No. 9661-CB,
    C.A. No. 9686-CB, and C.A. No. 9700-CB) be scheduled for an expedited trial on a
    consolidated basis. Trial was scheduled to begin on February 23, 2015, by which date a
    fourth action (C.A. No. 10449-CB) had been filed.
    On December 2, 2014, Elting moved for expedited discovery in aid of a motion for
    sanctions she intended to file based on her discovery, on November 25, 2014, that Shawe
    had accessed and reviewed her personal Gmail account, containing approximately 19,000
    emails. I granted this motion after full briefing and argument on December 11, 2014.
    As trial approached, the parties deluged the Court with twelve separate discovery
    motions and motions in limine. I ruled on the discovery motions during a full-day
    274
    Elting moved for summary judgment to dissolve the LLC and for the appointment of a
    temporary custodian. Shawe moved to enjoin Elting from interfering with the work of
    the Company’s outside accountants (Berson & Corrado and Gerber) and other relief.
    Each of these motions was denied for the reasons stated on the record during the
    November 18 hearing and in a letter decision issued on December 3, 2014. See generally
    In re TransPerfect Global, Inc., 
    2014 WL 6810761
    (Del. Ch. Dec. 3, 2014).
    62
    hearing held on February 11, 2015. During another full-day hearing held on February 19,
    2015, which carried over to the next day, I ruled on the motions in limine.
    On February 22, 2015, Elting filed a motion for sanctions against Shawe based on
    the following acts of alleged misconduct by Shawe (the “Sanctions Motion”):
    • The covert acquisition of approximately 12,000 privileged communications
    with or for Elting and her counsel.
    • The covert entry into Elting’s Company office on numerous occasions,
    including at least once by Shawe’s paralegal (Nathan Richards).
    • The spoliation of evidence on Shawe’s laptop after the Court had ordered a
    forensic analysis of it.
    • The deletion, with Richards’ assistance, of 21,000 files on Shawe’s laptop.
    • The spoliation of external drives onto which Elting’s communications with her
    lawyers had been downloaded.
    • The spoliation of files on Shawe’s Company computer.
    • The placement of a program on Shawe’s laptop to delete and prevent the
    recovery of certain files.
    • The failure to safeguard evidence on Shawe’s mobile phone, which allegedly
    was dropped into a glass of soda on November 24, 2014, and later discarded by
    Joe Campbell, a project manager at the Company hired by Shawe. 275
    Based on this alleged misconduct, Elting requests the imposition of an order:            (1)
    appointing a custodian to conduct an auction of the Company, (2) precluding Shawe from
    participating in the auction as a purchaser, (3) enjoining Shawe from communicating with
    any third-party bidders except through Delaware counsel, (4) providing Elting with
    matching rights, (5) enjoining Shawe from disclosing to any third party the contents of
    275
    Br. in Support of Elting’s Motion for Sanctions 3-4.
    63
    Elting’s privileged Gmail emails and certain other documents, (6) enjoining Shawe from
    engaging in any business competition with the Company for three years following the
    sale of the Company, and (7) awarding Elting attorneys’ fees and costs associated with
    opposing Shawe’s efforts to use the privileged Gmails. 276
    From February 23, 2015, to March 3, 2015, a consolidated trial occurred over a
    period of six days to address the claims asserted in the four pending actions.
    On March 6, 2015, Shawe filed a motion for monetary sanctions against Elting
    and Kramer Levin for alleged misconduct that occurred during the deposition of Kramer
    Levin attorney Ronald Greenberg. This motion will be ruled on separately at a later date.
    On March 9, 2015, I entered an Order appointing Robert B. Pincus, a corporate
    attorney with Skadden, Arps, Slate, Meagher & Flom LLP, as a custodian for the purpose
    of serving as a mediator to assist Elting and Shawe in negotiating a resolution of their
    disputes. The Order recited, based on my fresh impressions, that “the evidence at trial
    demonstrates that Elting and Shawe have been fundamentally divided respecting the
    management of the affairs of TPG concerning, among other things, capital allocation, the
    payment of distributions to stockholders to cover their respective tax liabilities arising out
    of TPG’s status as a Subchapter S corporation and out of the profits of TPG, the pursuit
    of acquisitions, and the hiring and retention of various personnel and advisors.”
    Post-trial arguments occurred during two full days on April 28, 2015, and June 3,
    2015. At the conclusion of the June 3 hearing, I informed the parties that no decision
    276
    
    Id. at 2.
    64
    would be rendered before June 30 to afford them additional time to seek to resolve their
    disputes through the auspices of the mediator. No resolution was reached by that date.
    For the reasons discussed below, I conclude that the evidence presented at trial
    warrants the appointment of a custodian to sell the Company to resolve the deadlocks
    between Shawe and Elting. I have reached this conclusion solely based on the evidence
    presented at trial and not as a form of sanction against Shawe.
    The Sanctions Motion raises very serious issues of spoliation and discovery abuse
    that may warrant shifting to Shawe the entire amount of the attorneys’ fees and expenses
    Elting has incurred in the litigating the actions in this Court. As discussed below,
    however, I conclude it would not be appropriate to impose as a form of sanction any
    limitations or conditions on the sale process to be overseen by the custodian.
    A significant part of the record relating to the Sanctions Motion consists of
    affidavits from computer forensic experts and other witnesses. Shawe objects to Elting’s
    reliance on purported facts not admitted at trial to decide the Sanctions Motion. I share
    this concern and have decided to hold an evidentiary hearing on the issues implicated by
    the Sanctions Motion before ruling on it. The parties are directed to confer and report
    back to the Court within ten business days of the date of this opinion with a proposed
    plan and schedule to present at a hearing live witness testimony and any other evidence
    relevant to the issues raised by the Sanctions Motion as promptly as practicable. 277
    277
    Testimony from Shawe, Richards, Campbell, and the parties’ respective forensic
    experts would be of particular interest to the Court.
    65
    III.     LEGAL ANALYSIS – DISSOLUTION OF THE COMPANY
    In her Third Amended and Supplemental Verified Petition for Dissolution and
    Appointment of a Custodian or Receiver (C.A. No. 9700-CB), Elting seeks a custodian
    under 
    8 Del. C
    . § 226(a)(2) to resolve board-level deadlock by selling the Company
    (Count I) and dissolution of the Company under the Court’s equitable powers (Count II).
    In her Petition for Appointment of a Custodian or Receiver (C.A. No. 10449-CB), Elting
    seeks a custodian to resolve stockholder-level deadlock by acting in the best interests of
    the Company and its stockholders (Count I). I first address the two claims asserted under
    Section 226(a) before analyzing the equitable dissolution claim.
    A.     The Requirements of Section 226(a)(1) have been Satisfied
    Under Section 226(a)(1), the Court may appoint a custodian for a solvent
    corporation when “[a]t any meeting held for the election of directors the stockholders are
    so divided that they have failed to elect successors to directors whose terms have been
    expired or would have expired upon qualification of their successors.” 278 This statutory
    provision does not require a showing of irreparable injury as a prerequisite to obtaining
    relief. 279 The requirements of this statute plainly have been met.
    TPG’s bylaws provide for a three-member board. Shawe and Elting have served
    as TPG’s only two directors since it was formed in 2007, with the third seat remaining
    vacant. On September 17, 2014, in accordance with her statutory right as a stockholder
    278
    
    8 Del. C
    . § 226(a)(1).
    279
    See Giuricich v. Emtrol Corp., 
    449 A.2d 232
    , 238 (Del. 1982).
    66
    of TPG, Elting filed an action under 
    8 Del. C
    . §211 to hold an annual meeting for the
    purpose of electing directors of TPG for the first time in its history. On December 5,
    2014, in lieu of holding the annual meeting, the stockholders of TPG stipulated that they
    “were so divided that they failed to fill the vacancy on the Board and they also failed to
    elect successors to directors whose terms have expired (i.e., Shawe and Elting).” 280 The
    stipulation was entered as an Order of the Court on December 5, 2014.
    Even when the requirements of Section 226(a)(1) have been satisfied, the
    appointment of a custodian under that section is discretionary. 281 I address the issue of
    relief below in Section III.C.
    B.      The Requirements of Section 226(a)(2) have been Satisfied
    Under Section 226(a)(2), the Court may appoint a custodian for a solvent
    corporation when:
    The business of the corporation is suffering or is threatened with irreparable
    injury because the directors are so divided respecting the management of
    the affairs of the corporation that the required vote for action by the board
    of directors cannot be obtained and the stockholders are unable to terminate
    this division. 282
    280
    JX 1292.
    281
    See 
    Giuricich, 449 A.2d at 240
    (holding it was an abuse of discretion to deny the
    petition for appointment of a custodian under Section 226(a)(1) where stockholder
    deadlock was conceded); Miller v. Miller, 
    2009 WL 554920
    , at *4 (Del. Ch. Feb. 10,
    2009).
    282
    
    8 Del. C
    . § 226(a)(2).
    67
    In Hoban v. Dardanella Electric Corp., 283 the Court explained that Section 226(a)(2) sets
    forth three conditions before this Court may exercise its authority under the statute. First,
    the directors must be deadlocked; that is, they must be “so divided respecting the
    management of the affairs of the corporation that the vote required for curative action by
    the board as a governing body cannot be obtained.”           Second, “the business of the
    corporation must either be suffering or be threatened with irreparable injury” because of
    the deadlock. Third, “circumstances must be such that the shareholders are unable by
    shareholder vote to terminate the division between the directors.” 284 I address the three
    conditions in turn.
    1.     The Existence of Deadlocks
    In my opinion, Shawe and Elting are deadlocked on several matters of critical
    importance to the Company. To begin, the record shows that they have been unable to
    agree for an extended period on the issue of distributions, particularly non-tax
    distributions. 285      Since 2012, Elting has desired to increase the amount of non-tax
    distributions as the Company’s profits have increased. She believes there should be
    regular, quarterly non-tax distributions, subject to specified levels of EBITDA or some
    283
    
    1984 WL 8221
    (Del. Ch. June 12, 1984).
    284
    
    Id. at *1.
    285
    The Company generally has made distributions to cover the stockholders’ respective
    tax liabilities for the income passed through to them. But even that seemingly simple
    task has caused controversy. In April 2013, Shawe and Elting disagreed vehemently over
    Shawe’s desire to pay $8 million of the $21 million due in taxes from funds in the LLC,
    and, in April 2014, Shawe caused the Company to double pay Elting’s taxes, putting at
    risk the Company’s Subchapter S status.
    68
    other performance metric. Despite repeatedly saying he is willing to work something out,
    Shawe has refused to actually agree to anything.        The absence of any agreement
    governing distributions means that Shawe can continue, as he has done in the past, to use
    the need for his consent to make a distribution as a club to exert leverage over Elting as
    part of the destructive culture of “mutual hostaging” that has characterized their
    relationship over the past several years as the only two directors and co-CEOs of the
    Company. 286
    Related to their deadlock on distributions, Shawe and Elting are equally divided
    on the Company’s pursuit of acquisitions and the need to conduct expense true-ups.
    Shawe believes acquisitions are critical to the Company’s success. Elting is opposed to
    acquisitions because she does not trust Shawe and does not want to increase her
    investment with him. Although blanket opposition to acquisitions does not comport with
    286
    Shawe seeks to claim the high ground by casting Elting’s desire for larger
    distributions as one motivated solely by self-interest, while asserting that he is pure of
    heart because he wants the Company to retain earnings. It is a legitimate matter of
    corporate concern, however, for directors to return capital to stockholders in the form of
    pro rata distributions. See, e.g., Sinclair Oil Corp. v. Levien, 
    280 A.2d 717
    , 722 (Del.
    1971) (concluding that there was no self-dealing where the company’s controlling
    stockholder and minority stockholders received dividends pro rata). The need to
    thoughtfully make distributions is particularly important in a closely held corporation
    where the salaries of the principals holding 99% of the Company’s stock are relatively
    modest and distributions are expected to account for a significant component of their
    effective compensation. Elting, the co-founder and co-CEO of the Company, earns a
    salary of $375,000, which is a small fraction of what the Company pays a senior sales
    executive, and the amount of non-tax distributions she received in 2014 for her 50%
    interest in the Company constituted less than 1.5% of the Company’s net profits that year.
    JX 2123.
    69
    a director’s obligation to act in the best interests of the corporation as a general matter, 287
    Elting’s distrust of Shawe is understandable and strikes at the heart of the palpable
    dysfunction that exists in the governance of the Company.             The record shows, for
    example, that:
    • Shawe engaged in a secret campaign to spy on Elting and invade her privacy
    by intercepting her mail, monitoring her phone calls, accessing her emails
    (including thousands of privileged communications with her counsel), and
    entering her locked office without permission on numerous occasions as well
    as sending his so-called “paralegal” there at 4:47 a.m. on another occasion. 288
    • Shawe co-opted the services of Company advisors (e.g., Gerber and Kasowitz)
    to assist him in advancing his personal agenda against Elting.
    • Shawe unilaterally hired numerous employees to perform Shared Services
    functions (Accounting and Finance) and even to work in divisions Elting
    managed (Chris Patten in TRI) without her knowledge or consent by creating
    “off book” arrangements and fabricating documents.
    • Shawe sought to have Elting criminally prosecuted by referring to her as his
    ex-fiancée seventeen years after the fact when filing a “Domestic Incident
    Report” as a result of a seemingly minor altercation in her office.
    • Shawe disparaged Elting and tried to marginalize her within the Company by
    gratuitously disseminating a memorandum (on Gerber’s letterhead) to
    employees in her own division accusing her of collusion and financial
    improprieties.
    • Shawe disparaged Elting publicly by unilaterally issuing a press release in the
    Company’s name containing false and misleading statements.
    287
    See, e.g., McMullin v. Beran, 
    765 A.2d 910
    , 921 (Del. 2000) (observing that directors
    must exercise “informed business judgment” in evaluating business opportunities
    available to the corporation).
    288
    I reject as an after the fact rationalization Shawe’s assertion that he was looking out
    for the Company’s interests in taking these actions. I find to the contrary that Shawe
    became enraged when Elting engaged counsel to assist her and that he spied on Elting to
    gain intelligence in pursuit of a personal vendetta against her.
    70
    Amazingly, many of these incidents occurred during this litigation when one would
    expect Shawe to be on his best behavior. In short, Elting’s distrust of Shawe is justified.
    Since January 2014, Shawe has prevented true-ups that the Company historically
    performed to reconcile Shawe’s and Elting’s respective use of Company funds to pay for
    various expenses. Elting wants to complete the true-up to resolve the controversy over
    the fees the Company paid (at Stone’s suggestion) to her advisors in late 2013, and to
    determine if she is owed additional compensation if Shawe’s expenses exceeded her own,
    as historically had been the case. They are deadlocked on this issue, as they are on
    whether the Company should undertake an audit now to obtain audited financial
    statements.
    Shawe and Elting also are fundamentally divided on a series of issues relating to
    the hiring and retention of various personnel and advisors. Elting wants to terminate
    Gerber because she does not trust Stone (who has displayed a bias towards Shawe and
    against Elting) and because she believes the Company needs a top accounting firm.
    Shawe has refused. Elting wants to terminate four senior executives in Shared Services
    departments (the COO, CFO, CIO, and CTO) who she believes have aligned themselves
    with Shawe and have been insubordinate to her as the Company’s co-CEO. Shawe has
    refused. As of trial, the two had been unable to agree on a replacement for the former
    head of Human Resources (DeNoia), who left the Company about one year earlier, or on
    a replacement PR firm since Metis was terminated in April 2014.
    71
    I reject Shawe’s defense that Elting has manufactured the deadlocks described
    above simply to facilitate a sale of the Company and liquidate her interest in it. 289 The
    record does show that Elting has expressed a desire to be bought out and acted
    improperly at times to pursue that goal. 290 It also shows that she and Shawe both
    engaged in “mutual hostaging” over specific hiring decisions, employee compensation,
    outside counsel payments, office leases, acquisition candidates, and other matters (mostly
    routine in nature) as they each sought to advance their own agendas within the Company.
    That said, this is not a case where a director has “sought to create a deadlock by refusing
    to consider any issue” until the deadlock is resolved. 291 It cannot be legitimately disputed
    in my judgment that the matters discussed above reflect genuine, good faith divisions
    between Shawe and Elting of a fundamental and systemic nature over how the Company
    should be managed.
    2.     Harm to the Business
    The second condition of Section 226(a)(2) asks whether “the business of the
    corporation is suffering or is threatened with irreparable injury” because of the divisions
    between the directors. This is a closer question than the existence of the deadlocks
    289
    Shawe’s Post-Trial Ans. Br. 32.
    290
    Elting played a role, for example, in exploiting concerns that Goldman Sachs and
    Bank of America had expressed about the divisions within the Company to prompt them
    to request audited financials.
    291
    See Millien v. Popescu, 
    2014 WL 656651
    , at *2 n.17 (Del. Ch. Feb. 19, 2014)
    (positing that such actions are “not the type of conduct that should support the
    appointment of a custodian” under 
    8 Del. C
    . § 226(a)).
    72
    themselves. Shawe argues that the irreparable harm element of the statute requires that
    the Company suffer or be threatened with irreparable financial harm, which cannot be
    established because the Company has been highly profitable. 292
    It is true the Company has been highly profitable. It stands to reason it would be
    more profitable but for the systemic dysfunction that exists between its two directors and
    co-CEOs, but that form of inquiry is speculative. In any event, the fact that the Company
    has been profitable is not dispositive. Section 226 contemplates that a custodian may be
    appointed for solvent corporations, 293 and logic suggests that the business of even a
    profitable corporation may be suffering or may be threatened with “irreparable injury” in
    the traditional sense of that legal principle when the directors are so fundamentally
    divided respecting the management of the corporation’s affairs that they are unable to
    govern. Indeed, Shawe himself acknowledged “the potential for grievously harming” the
    business that his feud with Elting could cause. 294
    The “irreparable injury” standard was added to Section 226 in 1967 when the
    Delaware General Corporation Law underwent a major revision. In his classic
    commentary on the revision, Professor Folk, the reporter for the commission overseeing
    292
    Shawe’s Post-Trial Op. Br. 71-78.
    293
    Section 226(a) provides, in relevant part, that, “[t]he Court of Chancery … may
    appoint 1 or more persons to be custodians, and, if the corporation is insolvent, to be
    receivers[.]” 
    8 Del. C
    . § 226(a).
    294
    JX 3029. Although Shawe objected before trial to the admission of this document
    under Rule 408 of the Delaware Rules of Evidence, he cited and relied on this document
    in his opening post-trial brief. Shawe’s Post-Trial Op. Br. 56-57. Thus, this objection is
    waived.
    73
    the revision, referred to the “irreparable injury” standard in Section 226 as “a familiar
    equity principle.” 295 “Perhaps the most often articulated formulation of what constitutes
    irreparable injury is that it consists of harm for which there can be no adequate
    recompense at law.” 296 Irreparable injury exists “when a later money damage award
    would involve speculation,” 297 and irreparable harm to a corporation has been found to
    include harm to a corporation’s reputation, goodwill, customer relationships, and
    employee morale. 298 Applying these principles, the record establishes that the Company
    is suffering and is threatened with irreparable harm.
    Numerous employees, including many loyal to Shawe, have recognized the harm
    to employee morale and retention the Shawe/Elting feud has caused and poses to the
    Company. For example:
    295
    Ernest L. Folk, III, The Delaware General Corporation Law: A Commentary and
    Analysis 271-72 (1972) (internal quotations omitted).
    296
    Donald J. Wolfe, Jr. and Michael A. Pittenger, Corporate and Commercial Practice in
    the Delaware Court of Chancery § 12.02[e] at 12-30 (2014) (citing, inter alia, 4
    Pomeroy, A Treatise on Equity Jurisprudence § 1338)).
    297
    Hollinger Int’l., Inc. v. Black, 
    844 A.2d 1022
    , 1090 (Del. Ch. 2004), aff’d, 
    872 A.2d 559
    (Del. 2005); see also Kallick v. Sandridge Energy, Inc., 
    68 A.3d 242
    , 264 (Del. Ch.
    2013) (finding irreparable harm where damages would be difficult to calculate).
    298
    See, e.g., Kirpat, Inc. v. Del. Alcoholic Beverage Control Comm’n, 
    741 A.2d 356
    , 358
    (Del. 1998) (finding irreparable harm found where the company would suffer “loss of its
    customer base, and loss of its employees”); Arkema Inc. v. Dow Chem. Co., 
    2010 WL 2334386
    , at *4 (Del. Ch. May 25, 2010) (finding irreparable harm where an imminent
    threat to the company’s goodwill and reputation existed); Penn Mart Supermarkets, Inc.
    v. New Castle Shopping LLC, 
    2005 WL 3502054
    , at *15 (Del. Ch. Dec. 15, 2005)
    (finding potential lost sales and lost customers sufficient to establish irreparable harm);
    Shah v. Shah, 
    1986 WL 10918
    , at *2 (Del. Ch. Sept. 25, 1986) (finding irreparable harm
    when disruptive management conflicts threatened employee retention).
    74
    • Kevin Obarski (Senior Vice President of Sales) called the feud the “biggest
    business issue” the Company faces, 299 and bemoaned that the “crazy arbitrary
    stuff” coming out of it was “the number 1 reason people leave to go to work at
    competitors.” 300
    • Michael Sank (Vice President of Corporate Development) agreed: “it’s so
    obviously the biggest problem the company faces.” 301
    • Yu-Kai Ng (Chief Information Officer) identified as a Company goal in the
    wake of the 2013 Avengers meeting the need to find a way for Shawe and
    Elting to work together “without negatively impacting everyone else.” 302
    • Mark Hagerty (Chief Technology Officer) testified that the conflict “hurts
    company morale” and “is detrimental to the company.” 303
    • Robert DeNoia (former Vice President of Human Resources) expressed his
    frustration with the “pervasive and continuous hostile environment where
    inappropriate behavior impacts the morale, health and well-being of myself
    and the staff.” 304
    • Roy Trujillo (Chief Operating Officer), in a letter drafted for submission to a
    special master appointed in the New York action, attributed the “mass exodus”
    in Accounting and Finance to “the ongoing disputes and stressful environment
    created by it.” He further stated that “[e]mployees are resigning and leaving
    these departments at unprecedented rates,” that “[t]he morale and retention
    issue will likely spread,” and that “[t]he company’s reputation is taking a
    beating, internally and externally.” 305
    299
    JX 363 at EE_00001188.
    300
    JX 337 at TPT_EE_00048565.
    301
    JX 363 at EE_00001188.
    302
    
    Id. at EE_00001195.
    303
    Hagerty Dep. 104-06.
    304
    JX 394 at EE_00004261-62.
    305
    JX 1111 at TPT_EE)00045174.
    75
    • Kai Chu (an Accounting employee), attributed the “plummeting” morale and
    loss of employees in Accounting to the “diametrically opposed” orders that had
    been received from Shawe and Elting. 306
    • Fiona Asmah (a Finance employee) testified that the disputes and conflicting
    directives have caused her and others to feel “caught in the middle,” have
    created an “unhealthy work environment,” and have “affected employee
    morale.” 307
    The harm to employee morale has manifested itself in the loss of employees in Shared
    Services departments (e.g., Accounting and Finance), some of whose positions only
    could be filled through duplicitous, unilateral actions by Shawe, as well as senior
    executives (e.g., Robert DeNoia).
    On the client front, Elting testified that clients “have expressed major concerns”
    about the disputes between her and Shawe, including “Business Wire, Procter & Gamble,
    Shell Oil, Bank of America, Goldman Sachs, and numerous law firms.” 308 As discussed
    306
    JX 1114 at TPT_EE_00045175.
    307
    Asmah Dep. 131-36.
    308
    Tr. 218 (Elting). After trial, the parties made numerous letter submissions without
    obtaining leave of Court as required by Court of Chancery Rule 171(a). In one of those
    submissions, Shawe identifies certain post-trial business developments of the Company,
    and he requests that I either take judicial notice of them or reopen and supplement the
    record to admit them into evidence. The most noteworthy developments are that, in
    March 2015, the Company entered into a new services agreement with Goldman Sachs,
    and the Company was awarded a services agreement with Shell Oil. Letter from Lisa A.
    Schmidt (Apr. 21, 2015) Ex. C, Ex. F. I decline to take judicial notice of these
    developments or to reopen the record. The fact that Goldman Sachs and Shell Oil have
    decided to continue doing business with the Company does not change my conclusion
    that the dysfunction that is now endemic to the Company’s management threatens the
    Company with irreparable injury. Indeed, in one of Elting’s post-trial submissions, she
    asserts that the Company did not obtain increased business with another customer
    (Johnson & Johnson) due to the Shawe/Elting disputes. Letter from Kevin A. Shannon
    (Apr. 24, 2015) Ex. B.
    76
    earlier, contemporaneous documents corroborate this testimony and demonstrate that the
    Company’s largest competitor is seeking to exploit the dysfunction between Shawe and
    Elting to solicit clients away from the Company. Shawe testified that these clients are not
    bound by exclusive agreements and are free to leave the Company at “any time they
    want,” 309 and Martha Geller, Vice President of Strategic Accounts in the Company’s
    Enterprise Solutions Group, acknowledged that the disputes have added a level of
    complexity to maintaining existing clients and adding new clients, in addition to affecting
    employee morale. 310
    The deadlock concerning acquisitions, the importance of which Shawe
    emphasized at trial, also threatens harm. From January 2009 through October 2014,
    businesses acquired by the Company accounted for between 16.5% and 20% of the
    Company’s annual revenue and between 8% and 14% of its annual net profit. 311 As of
    trial, however, Shawe and Elting had not agreed on an acquisition since the Vasont
    transaction in late 2013. It would be speculative to attempt to quantify the harm the
    business may be suffering from failing to engage in acquisitions, but by Shawe’s own
    admission the deadlock on this issue is a harmful threat to the Company.
    In sum, although it is true that the Company is and has been a profitable enterprise
    to date, its governance structure is irretrievably dysfunctional. The Company already has
    309
    Tr. 771 (Shawe).
    310
    
    Id. 1679 (Geller).
    311
    JX 2210 at HOF0001244; Tr. 1310-11 (Sank).
    77
    suffered from this dysfunction and, in my view, is threatened with much more grievous
    harm to its long-term prospects if the dysfunction is not addressed.
    3.     The Stockholders’ Inability to Break the Directors’ Deadlocks
    The third condition of Section 226(a)(2) is whether the stockholders of the
    Company are unable to terminate the division between the directors. This condition
    plainly exists. As demonstrated by the stipulation they entered on December 5, 2014,
    which provided the basis for the finding of deadlock under Section 226(a)(1), the three
    stockholders of the Company have been unable to elect successor directors.
    Additionally, Shawe and Elting have behaved functionally at all times relevant to
    this case as if they were 50-50 owners of the Company. 312 Although Shawe’s mother
    holds one percent of the Company, there is zero chance as a practical matter that she ever
    would align herself with Elting, and, thus, there is no prospect that the stockholders ever
    will be able to resolve the divisions between Shawe and Elting as the Company’s only
    directors.
    C.     A Custodian Will be Appointed to Sell the Company to Resolve the
    Stockholder and Director Deadlocks
    Even when the requirements of Sections 226(a)(1) or (a)(2) have been satisfied,
    the appointment of a custodian is not mandatory, but is committed to the Court’s
    312
    Although 
    8 Del. C
    . § 273 technically does not apply because TPG has three
    stockholders, this case in substance involves the type of 50-50 deadlock that Section 273
    was intended to address.
    78
    discretion. 313 A custodian appointed under Section 226 shall “continue the business of
    the corporation and not . . . liquidate its affairs and distribute its assets, except when the
    Court shall otherwise order.” 314 The Court has explained that “the notion of remedying
    an ‘injustice’ informs the Court’s discretion, first, whether to appoint a custodian and,
    second, in establishing the scope of such custodian’s authority. Deadlock, itself, is not an
    injustice. The consequences of that deadlock for the stockholders and the enterprise must
    be assessed.” 315
    Elting argues that the Court should appoint a custodian to sell the Company
    because “[t]he trial record shows that it is no longer possible, even with a custodian in
    place, to ‘continue the business’ with Elting and Shawe as its co-owners, and that the
    only equitable result – for both the Company itself and the stockholders – is for the
    custodian to maximize value for all concerned by selling the Company to the highest
    bidder.” 316 Elting further argues that, absent this remedy, she will be left with “the
    Hobson’s choice of remaining locked with Shawe in corporate hell or cashing out her
    stake for a fraction of its true value,” affording Shawe a windfall. 317
    313
    Section 226(a) provides that “[t]he Court of Chancery . . . may appoint 1 or more
    persons to be custodians[.]” 
    8 Del. C
    . § 226(a) (emphasis added).
    314
    
    8 Del. C
    . § 226(b).
    315
    Miller, 
    2009 WL 554920
    , at *5 n.19.
    316
    Elting’s Post-Trial Op. Br. 26.
    317
    Elting’s Post-Trial Ans. Br. 2.
    79
    Relying heavily on the Company’s profitability to date and minimizing his
    disagreements with Elting as mere “squabbles,” Shawe opposes the appointment of a
    custodian for any purpose. He further contends that “[a]ppointing a custodian with the
    authority to participate in Company management would risk grave damage to TPG’s
    business” and that a custodian “should not be authorized to sell the Company, or
    otherwise impose a ‘buy/sell’ process that requires Shawe to pay Elting more in order to
    preserve his ownership than a third party would pay to acquire her shares.” 318
    There are essentially three alternatives available in my estimation to address the
    Section 226 claims in this case. The first option is to decline to appoint a custodian and
    leave the parties to their own devices. I reject that option. The state of management of
    the Company is one of complete and utter dysfunction that is causing the business to
    suffer and threatens it with irreparable harm notwithstanding its profitability to date, and
    it would be unjust to leave Elting with no recourse except to sell her 50% interest in the
    Company. For the same reasons I have found Elting’s distrust of Shawe to be justified,
    Shawe’s actions have cast a pall on the prospect that a third party would pay a fair price
    for her shares. What rational person would want to step into Elting’s shoes to partner
    with someone willing to “cause constant pain” and “go the distance” to get his way? To
    afford no relief in this circumstance would be unjust in my opinion.          As a former
    318
    Shawe’s Post-Trial Op. Br. 79, 81.
    80
    Chancellor of this Court once stated: “Quite simply, equity will not suffer a wrong
    without a remedy.” 319
    The second option is to appoint a custodian to serve as a third director or some
    form of tie-breaking mechanism in the governance of the Company. I reject this option
    because it would enmesh an outsider and, by extension, the Court into matters of internal
    corporate governance for an extensive period of time.        Shawe and Elting are both
    relatively young. Absent a separation, their tenure as directors and co-CEOs of the
    Company could continue for decades.        It is not sensible for the Court to exercise
    essentially perpetual oversight over the internal affairs of the Company.
    The final option is to appoint a custodian to sell the Company so that Shawe and
    Elting can be separated and the enterprise can be protected from their dysfunctional
    relationship. Although it is unusual, this Court occasionally has appointed custodians to
    resolve deadlocks involving profitable corporations and authorized them to conduct a sale
    of the corporation. 320 In my opinion, such a remedy should be implemented only as a last
    319
    Weinberger v. UOP, Inc., 
    1985 WL 11546
    (Del. Ch. Jan. 30, 1985), aff’d, 
    497 A.2d 792
    (Del. 1985) (TABLE).
    320
    See Bentas v. Haseotes, 
    769 A.2d 70
    , 73 n. 3 (Del. Ch. 2000) (granting summary
    judgment to appoint custodian to resolve a deadlock arising under Section 226(a)(1) for a
    “solvent and profitable corporation”). In a subsequent opinion, the Court granted the
    custodian’s motion to order an auction of the corporation. See Bentas v. Haseotes, 
    2003 WL 1711856
    (Del. Ch. Mar. 31, 2003).
    In Fulk v. Washington Service Associates, Inc., the Court appointed a custodian to
    formulate and execute a plan to sell a corporation that had “consistently been profitable
    and [had] achieved attractive margins and a solid record of generating cash without
    incurring any debt.” Fulk, 
    2002 WL 1402273
    , *2 (Del. Ch. June 21, 2002). It appears
    that this relief was implemented after the parties had come to agree that the corporation
    81
    resort and with extreme caution, but it is appropriate and necessary in this case. Having
    conducted a six-day trial, decided at least sixteen motions, held numerous lengthy
    hearings, and considered carefully the documentary evidence and credibility of the
    witnesses along with the parties’ extensive submissions, the painfully obvious conclusion
    is that Shawe and Elting need to be separated from each other in the management of the
    Company for its own good.        Their dysfunction must be excised to safeguard the
    Company.
    I am unpersuaded by Shawe’s argument that ordering a sale of the Company will
    afford Elting an unfair windfall because she did not obtain at the bargaining table a
    contractual right to exit her investment in the Company. It is true that Shawe and Elting
    never came to terms on a buy/sell mechanism, but they also never came to terms on any
    other form of agreement to govern the management of the Company, such as an operating
    agreement or a stockholders agreement, the terms of which might influence the analysis
    of whether relief under Section 226 is warranted. 321 As such, the provisions of the
    Delaware General Corporation Law, including those afforded under Section 226, apply
    by default. For the reasons stated above, the requirements of two separate subsections of
    needed to be dissolved. See Tr. of Oral Arg. at 3, Fulk v. Wash. Serv. Assocs., Inc., C.A.
    No. 17747 (Del. Ch. June 4, 2001).
    321
    See, e.g., Blaustein v. Lord Baltimore Capital Corp., 
    2013 WL 1810956
    , at *17 (Del.
    Ch. Apr. 30, 2013) (concluding, in a closely-held corporation, that a breach of fiduciary
    duty claim with respect to the board’s rejection of minority stockholder plaintiffs’ stock
    repurchase proposal was foreclosed by a shareholders’ agreement that “provides an
    explicit process by which the parties intended for share repurchases to occur”), aff’d, 
    84 A.3d 954
    (Del. 2014).
    82
    Section 226 have been satisfied here and it would be unjust not to exercise my discretion
    to afford relief under the unique circumstances of this case.
    I am equally unpersuaded by Shawe’s contention that his so-called “squabbles”
    with Elting can be easily resolved. The areas of deadlock described above are not mere
    squabbles; they reflect systemic divisions in the management of the Company. The
    parties have had literally years to attempt to resolve them, but they have failed to do so
    despite repeated attempts.
    On the other side of the ledger, I am unpersuaded by Elting’s argument that
    conditions should be imposed on a sale of the Company as a form of sanction, such as
    entry of an order that would preclude Shawe from bidding to acquire the Company,
    impose on him a non-competition agreement if the Company were sold to someone else,
    or afford Elting matching rights. 322 Such measures would be unduly punitive in my
    judgment. 323 The distinct possibility also exists that Shawe would be the most logical
    purchaser of the business or that a third party would be unwilling to acquire the Company
    without securing his participation and expertise. 324
    For the reasons stated, and subject to his acceptance of the position, I am
    appointing Robert B. Pincus, Esquire, who became familiar with the Company through
    322
    Br. in Support of Elting’s Motion for Sanctions 2.
    323
    As noted previously, the issue to be decided in resolving the Sanctions Motion is
    whether all of Elting’s attorneys’ fees and expenses should be shifted to Shawe.
    324
    Numerous witnesses testified at trial to the effect that Shawe’s contributions to the
    operations and current success of the business significantly exceed the contributions
    made by Elting.
    83
    his previous service as a mediator, as a custodian to oversee a judicially ordered sale of
    the Company. In the interim, I appoint Mr. Pincus to serve as a third director with the
    authority to vote on any matters on which Shawe and Elting cannot agree and which rise
    to the level that he deems to be significant to managing the Company’s business and
    affairs. 325
    A form of implementing order accompanies this opinion. In that order, I ask Mr.
    Pincus to evaluate and report back to the Court as promptly as practicable after
    confirming his acceptance of the position on a proposed a plan to sell the Company with
    a view toward maintaining the business as a going concern and maximizing value for the
    stockholders. In particular, I request that the Custodian evaluate the viability and the pros
    and cons of conducting a sale of the Company (a) in which the bidders would be limited
    to Shawe and Elting (individually or as part of a group), such as in a “Texas shoot out” or
    some other auction format, 326 (b) in an open auction process that would include any
    interested bidders, or (c) in any other format the Custodian deems practicable in the
    circumstances of this case, which could include conducting a public offering to afford
    stockholders liquidity or dividing the operating assets of the Company along the
    325
    See 
    Bentas, 769 A.2d at 79
    .
    326
    A “Texas shoot out” format is an auction process in which either Shawe or Elting
    would specify a price for his/her interest in the Company and the other would have the
    option either to buy the other’s interest at the specified price or to sell his/her own interest
    at that price. Ms. Shawe’s one percent interest also would need to be taken into account.
    84
    production divisions that Shawe and Elting have separately managed. 327             “Although
    competitive bidding is highly desirable, where it is possible and appropriate to the
    circumstances involved, the fiduciary who is selling the asset should adopt whatever
    course of action persons of ‘prudence, discretion, and intelligence’ would choose under
    the circumstances to assure that the asset brings the best price obtainable.” 328
    D.     Equitable Dissolution is Not Warranted
    In addition to seeking the dissolution and sale of TPG under the two provisions of
    Section 226 discussed above, Elting seeks the same relief under this Court’s inherent
    authority to order dissolution of a Delaware corporation as an equitable matter.
    The doctrine of equitable dissolution operates differently than Section 226. Under
    Section 226, a stockholder need not establish that a director engaged in misconduct as a
    prerequisite to relief, although the existence of misconduct would be a factor to consider
    in the Court’s exercise of discretion in deciding whether to appoint a custodian and what
    scope of authority to assign to a custodian. The doctrine of equitable dissolution, by
    contrast, may be invoked in the absence of any stockholder- or board-level deadlock but
    it is reserved for situations involving egregious misconduct in the exercise of one’s
    fiduciary responsibilities. As the Court in Carlson v. Hallinan 329 explained:
    327
    Similar alternatives were explored, but not ultimately approved, in Bentas. See
    Bentas, 
    2003 WL 1711856
    , at *1-2, *4 n. 13 (holding that the Court had the power to
    order an asset division under 
    8 Del. C
    . § 226(b)).
    328
    
    Id. at *4
    n.13 (quoting Lockwood v. OFB Corp., 
    305 A.2d 636
    , 638 (Del. Ch. 1973)).
    329
    
    925 A.2d 506
    (Del. Ch. 2006), clarified by 
    2006 WL 1510759
    (Del. Ch. May 22,
    2006).
    85
    This Court may order the dissolution of a solvent company and the
    appointment of a custodian or receiver “only upon a showing of gross
    mismanagement, positive misconduct by corporate officers, breach of trust,
    or extreme circumstances showing imminent danger of great loss to the
    corporation which, otherwise, cannot be prevented.” The Court exercises
    this power to dissolve a solvent corporation with “great restraint” and only
    upon a “strong showing.” “Mere dissension among corporate stockholders
    seldom, if ever, justifies the appointment of a receiver for a solvent
    corporation. The minority’s remedy is withdrawal from the corporate
    enterprise by the sale of its stock.” 330
    In Carlson, the corporation’s board consisted of three directors. Two of the
    directors (Hallinan and Gordon) together held 70% of the corporation’s stock, and the
    remaining 30% of the shares were held by an entity affiliated with the third director
    (Carlson). The Court found that the “facts and circumstances . . . comprise[d] the very
    rare case” to warrant dissolution of a solvent corporation because “Hallinan and Gordon
    repeatedly breached their fiduciary duties in a continuing effort to enrich themselves” at
    the expense of the corporation and its remaining stockholder, and because they had
    “prevented Carlson from having any meaningful role in the oversight” of the corporation
    “despite his position as a director.” 331
    330
    
    Id. at 543
    (internal citations omitted); see also Zutrau v. Jansing, 
    2013 WL 1092817
    ,
    at *5-6 (Del. Ch. Mar. 18, 2013) (finding sufficient allegations of fraud and gross
    mismanagement “ ‘that might, at some later stage, lead to the Court’s appointment a
    custodian to the corporation’ ” (quoting Andreae v. Andreae, 
    1992 WL 43924
    , at *9 (Del.
    Ch. Mar. 3, 1992))); Weir v. JMACK, Inc., 
    2008 WL 4379592
    , at *2 (Del. Ch. Sept. 23,
    2008) (declining to order equitable dissolution for “relatively minor regulatory
    misconduct.”);
    331
    
    Carlson, 925 A.2d at 543
    .
    86
    Last year, in VTB Bank v. Navitron Projects Corp., 332 Vice Chancellor Noble
    explained that the Court of Chancery “has the inherent equitable power to appoint a
    receiver for a Delaware limited liability company even where this remedy is not
    expressly available by statute or under the operative company agreement.” 333 After
    examining Carlson and other decisions in which equitable dissolution had been sought in
    this Court, 334 the Vice Chancellor held that an equitable receivership is a remedy and not
    an independent cause of action and, thus, the petitioner must prove an underlying claim to
    obtain such relief:    “Therefore, whether [the plaintiff] may prevail on its remedial
    equitable receivership claim depends per force on whether it successfully proves its
    primary claims for fraudulent transfers.” 335 I agree with the Court in VTB Bank that a
    petitioner must prove an underlying claim to obtain the remedy of equitable dissolution.
    Here, Elting has not pressed an underlying claim against Shawe, such as a claim
    for breach of fiduciary duty, as a basis for seeking the remedy of equitable dissolution.336
    She instead seeks the imposition of such a remedy by asserting in general terms that
    332
    
    2014 WL 1691250
    (Del. Ch. Apr. 28, 2014).
    333
    
    Id. at *5
    (citing Ross Hldg. & Mgmt. Co. Advance Realty Gp., LLC, 
    2010 WL 3448227
    , at *6 (Del. Ch. Sept. 2, 2010)).
    334
    The Court also examined Drob v. National Park, Inc., 
    41 A.2d 589
    , 597 (Del. Ch.
    1945) and Zutrau, 
    2013 WL 1092817
    , at *6.
    335
    VTB Bank, 
    2014 WL 1691250
    , at *5-6.
    336
    Elting initially asserted a claim against Shawe for breach of fiduciary duty, but later
    dropped that claim.
    87
    Shawe engaged in a litany of acts of misconduct. 337 By proceeding in this manner, Elting
    has not framed the issues to provide Shawe fair notice of the legal basis on which he has
    been accused of wrongdoing, or for the Court to conduct a rigorous analysis of the legal
    basis for her various assertions of wrongdoing. Elting’s post-trial briefs, for example,
    make no effort to explain how any of Shawe’s specific acts was the product of a breach
    of the fiduciary duty of loyalty. 338 Having failed to press any underlying cause of action
    against Shawe, Elting has failed to carry her burden to prove a necessary prerequisite for
    the imposition of the remedy of equitable dissolution. For this reason, her “claim” for
    equitable dissolution fails for a lack of proof.
    337
    The asserted acts of misconduct are that Shawe (i) enlisted the Chief Information
    Officer and Chief Operating Officer in a “payroll takeover that involved cutting the
    computer access of the Company’s payroll manager”; (ii) signed “false employment
    letters with multiple new employees to make hires without Elting’s knowledge and over
    her objection”; (iii) unilaterally terminated the Company’s PR firm and real estate broker;
    (iv) issued a false press release purportedly on behalf of the Company; (v) broke “into
    Elting’s office, dismantl[ed] her computer, and cop[ied] her hard drive in order to read
    her privileged Gmails”; (vi) ordered Trujillo “to intercept Elting’s mail and deliver it to
    him so that he could read correspondence from her lawyers”; (vii) placed “scores of
    employees at the center of the dispute, including by sending them a false memo from the
    Company’s compromised accountant accusing Elting of ‘collusion’ ”; (viii) refused to
    produce and spoliated text messages and personal emails with employees, (ix) physically
    confronted Elting in her office, “fil[ed] a false police report, [sought] her arrest, and
    mov[ed] for a restraining order against her”; (x) refused to permit an audit of the
    Company’s financial statements; and (xi) used the Company’s outside lawyers and
    accountants to assist him in the litigation and caused “them to be paid with Company
    funds over Elting’s objection.” Elting’s Post-Trial Op. Br. 6-7.
    338
    I previously found that Elting had stated a colorable claim against Shawe for breach of
    fiduciary duty relating to the issuance of the false press release on September 8, 2014.
    Tr. of Oral Arg. 35 (Sept. 18, 2014). Other actions taken by Shawe (e.g., falsifying
    corporate records to unilaterally hire employees) may also implicate potential breaches of
    fiduciary duty owed to the Company. But those claims have not been placed before me
    for a final determination, and, thus, I reach no conclusion with respect to them.
    88
    Even if I were to engage in a holistic assessment of Shawe’s conduct removed
    from considering the merits of a specific underlying cause of action against him, as Elting
    suggests, I would decline to order the remedy of equitable dissolution based on the record
    before me. Unlike in Carlson, the record does not show that Shawe engaged in self-
    dealing or financially enriched himself at the Company’s expense. Additionally, many of
    the cited acts of misconduct (e.g., intercepting Elting’s mail, copying her hard drive,
    reading her privileged Gmails, filing a police report against her, etc.) were aimed at
    Elting personally.       To be sure, those actions demonstrate the dysfunction in the
    Company’s management, the basis for Elting’s justifiable distrust of Shawe, and the need
    for relief under Section 226 to resolve proven deadlocks, but it is not self-evident that
    these actions amount to egregious breaches of fiduciary duty. In addition, other asserted
    acts of misconduct, such as those relating to the alleged spoliation of evidence, form the
    basis of the Sanctions Motion that will be the subject of a separate evidentiary hearing.
    In sum, the asserted acts of misconduct committed by Shawe that Elting has identified—
    although disturbing and contrary to expected norms of behavior—do not establish the
    very high level of fiduciary misconduct resulting in harm to the Company or its
    stockholders (in their capacity as stockholders) necessary to impose the remedy of
    equitable dissolution.
    *****
    For the foregoing reasons, Elting’s claims for the appointment of a custodian
    under Section 226 are granted, and her request for equitable dissolution is denied. An
    implementing order accompanies this opinion.
    89
    IV.      LEGAL ANALYSIS – SHAWE’S CLAIMS AGAINST ELTING
    In his Verified Complaint (C.A. No. 9686-CB), Shawe alleged seven direct and
    derivative claims against Elting in her capacity as a director, co-CEO, and 50%
    stockholder of the Company. His derivative claims were for waste (Count I); breach of
    fiduciary duty (Count II); and indemnification (Count VI). His direct claims were for
    breach of fiduciary duty (Count III); unjust enrichment (Count IV); breach of contract
    based on the August Agreement (Count V); and indemnification (Count VII). Shortly
    before trial, Shawe sought to amend his pleading to add two additional breach of contract
    claims (one direct and one derivative) relating to Elting’s alleged breach of certain
    confidentiality provisions arising from settlement discussions and a mediation. 339
    Shawe dropped his contract claim concerning the August Agreement (Count V)
    after trial. 340 He did not put forth any probative evidence at trial in support of the unjust
    enrichment claim, the other breach of contract claims, or the indemnification claims, nor
    did he present any argument in support of those claims in his post-trial submissions.
    Consequently, Shawe has waived those claims. 341 Shawe’s remaining claims for breach
    of fiduciary duty and waste are analyzed below.
    339
    Pre-Trial Stip. ¶¶ 106, 108-114.
    340
    Stip. and Scheduling Order ¶ 3 (Apr. 22, 2015).
    341
    See In re El Paso Pipeline P’rs, L.P. Deriv. Litig., 
    2015 WL 1815846
    , at *14 (Del.
    Ch. Apr. 20, 2015).
    90
    Shawe contends that Elting “engaged in a pattern of conduct that is both self-
    interested and an abdication of her duty to exercise business judgment.” 342 He seeks
    monetary damages for several, allegedly self-interested transactions with the Company:
    the April 2013 tax payments (because approximately $8 million of the $21 million in
    taxes owed that year was paid from the Company instead of the LLC) and the Company’s
    payments to Kramer Levin ($144,163.83), Kidron ($15,194.46), and Elting’s
    housekeeper ($436,946.67 incurred over many years). 343               As to Elting’s alleged
    abdication of her business judgment, Shawe cites her “refusal to approve acquisitions,
    leases, new hires, lawyers’ fees for patent litigation, and internal control reforms.”
    Shawe further contends that Elting attempted to “sabotage” the Company’s business with
    Goldman Sachs, Bank of America, and Cushman & Wakefield, 344 and he seeks a
    permanent injunction barring Elting from breaching her fiduciary duties. 345
    342
    Shawe’s Post-Trial Op. Br. 61.
    343
    Shawe also seeks an order requiring Elting to join Shawe in transferring $8.15 million
    from the LLC to the Company, reflecting the approximately $8.15 million that was held
    by the LLC at the time Elting caused the Company to pay the stockholders’ April 2013
    tax obligations. 
    Id. 93-94. 344
          
    Id. 61. 345
          
    Id. Specifically, Shawe
    seeks an order:
    (a) declaring that Elting has breached her fiduciary duties, including the
    duty of loyalty, and (b) permanently enjoining Elting from further breaches
    of fiduciary duty by linking her personal interests in receipt of distributions
    or other payments from TPG to the exercise of her business judgment with
    respect to (i) approval of mergers and acquisitions, (ii) approval of leases
    for office space, (iii) reforming the Company’s internal controls,
    (iv) employee compensation and the hiring and firing of employees,
    91
    In addition to contending that Shawe failed to prove his claims at trial, Elting
    raises the affirmative defenses of unclean hands and acquiescence. 346 She invokes the
    equitable maxim that “he who comes into equity must come with clean hands” 347 to argue
    that Shawe’s “inequitable conduct before and during this litigation . . . relates directly to
    the matter in controversy and should preclude [him] from recovering on any of his
    claims.” 348
    Directors of a Delaware corporation owe fiduciary duties of care and loyalty to the
    corporation and to its stockholders. 349 The duty of care requires the “exercise [of] an
    informed business judgment.” 350 The duty of loyalty “mandates that the best interest of
    the corporation and its shareholders takes precedence over any interest possessed by a
    director, officer or controlling shareholder and not shared by the stockholders
    generally.” 351 “To that end, a director may not allow his self-interest to jeopardize his
    (v) whether the Company should undergo an audit and (vi) any other
    business matters that require the exercise of informed business judgment.
    He also seeks a full accounting of and access to the books, records and financial systems
    (including accounts related to banking and payroll) of the Company and its subsidiaries.
    
    Id. 94-95. 346
          Answer (C.A. No. 9686-CB) ¶ 129.
    347
    Bodley v. Jones, 
    59 A.2d 463
    , 469 (Del. 1947).
    348
    Elting’s Post-Trial Ans. Br. 31.
    349
    See Mills Acq. Co. v. Macmillan, Inc., 
    559 A.2d 1261
    , 1280 (Del. 1989).
    350
    
    McMullin, 765 A.2d at 921
    .
    351
    Cede & Co. v. Technicolor, Inc., 
    634 A.2d 345
    , 361 (Del. 1993).
    92
    unyielding obligations to the corporation and its shareholders. A director must, therefore,
    exercise good faith in advancing the corporation’s interests.” 352
    A claim for breach of fiduciary duty, like a claim for waste, 353 sounds in equity.
    As such, Shawe’s claims are subject to equitable defenses, including unclean hands.
    Under that longstanding equitable doctrine, “a litigant who engages in reprehensible
    conduct in relation to the matter in controversy . . . forfeits his right to have the court
    hear his claim, regardless of its merit.” 354
    [T]he purpose of the clean hands maxim is to protect the public and the
    court against misuse by one who, because of his conduct, has forfeited his
    right to have the court consider his claims, regardless of their merit. As
    such it is not a matter of defense to be applied on behalf of a litigant; rather
    it is a rule of public policy. 355
    “[T]he conduct that renders a plaintiff’s hands ‘unclean’ must also relate directly to the
    matter in controversy.” 356
    I hold that Shawe’s “abdication of business judgment” and “sabotage” claims are
    barred by unclean hands. As discussed above, Shawe and Elting both engaged in a
    dysfunctional system to manage the Company’s business through “mutual hostaging.”
    352
    BelCom, Inc. v. Robb, 
    1998 WL 229527
    , at *3 (Del. Ch. Apr. 28, 1998), aff’d, 
    725 A.2d 443
    (Del. 1999) (TABLE).
    353
    See Sample v. Morgan, 
    914 A.2d 647
    , 669 (Del. Ch. 2007) (“[T]he doctrine of waste
    is a residual protection for stockholders that polices the outer boundaries of the broad
    field of discretion afforded directors by the business judgment rule.”).
    354
    Portnoy v. Cryo-Cell Int’l, Inc., 
    940 A.2d 43
    , 80-81 (Del. Ch. 2008) (citation omitted).
    355
    Skoglund v. Ormand Indus., Inc., 
    372 A.2d 204
    , 213 (Del. Ch. 1976).
    356
    Nakahara v. NS 1991 Am. Trust, 
    739 A.2d 770
    , 792 (Del. Ch. 1998).
    93
    An obvious pattern emerges from the record: (i) when Shawe wanted Elting’s approval
    on something, he withheld his approval on something else until she relented; and (ii)
    when Elting wanted Shawe’s approval on something, she withheld her approval on
    something else until he relented. The fact that Shawe often (but not always) hostaged
    distributions rather than other business matters does not preclude a finding of unclean
    hands because the approval of dividends, as with the approval of acquisitions and other
    material matters, is a business decision for directors to make. 357 The record reflects a
    continuous pattern of this conduct throughout the past three years, and that Shawe’s
    participation in this conduct directly relates to the claims he advances here, i.e., Elting’s
    refusal (often short-lived) to approve acquisitions, leases, new hires, the MotionPoint
    legal expenses, and internal control reforms, as well as her correspondence with Goldman
    Sachs and Bank of America.
    The absence of any binding operating agreement authorizing Shawe or Elting to
    make certain types of decisions individually enabled both of them to engage in mutual
    hostaging. How the mutual hostaging began is not consequential, as each successive
    episode in the Shawe/Elting feud became inextricably intertwined with the episode
    preceding it, and both Shawe and Elting could be said to have initiated particular
    episodes. On Shawe’s side in particular, the episodes of mutual hostaging evolved into a
    series of problematic, unilateral actions, such as his falsification of records to hire Shared
    357
    See Gabelli & Co. v. Liggett Grp. Inc., 
    479 A.2d 276
    , 280 (Del. 1984) (“It is settled
    law in this State that the declaration and payment of a dividend rests in the discretion of
    the corporation’s board of directors in the exercise of its business judgment[.]”).
    94
    Services employees in August 2014, 358 his email attaching Stone’s “collusion”
    memorandum to over a hundred Company employees in September 2014, 359 and his
    disparaging press release in September 2014. 360
    The doctrine of unclean hands is not “bound by formula or restrained by any
    limitation that tends to trammel the free and just exercise of discretion.” 361 To wit, “[t]he
    decisional authority is almost universal in its acceptance that courts of equity have
    extraordinarily broad discretion in application of the doctrine.” 362             Under the
    circumstances of this case, it would be inequitable to permit Shawe, who was at least
    equally at fault for the culture of mutual hostaging chronicled above, to castigate Elting
    for conduct that was part and parcel of their dysfunctional relationship as the Company’s
    only two directors and co-CEOs.         Accordingly, and without regard to their merit,
    Shawe’s claims that Elting abdicated her fiduciary obligations and sabotaged the
    Company’s business relationships are denied on the basis of unclean hands.
    Shawe’s remaining fiduciary claims against Elting concerning the April 2013 tax
    payments and the payments to Kramer Levin, Kidron, and her housekeeper are also
    358
    Tr. 1100 (Shawe).
    359
    
    Id. 1006-07 (Shawe);
    JX 768.
    360
    Tr. 198-200 (Elting); JX 1172.
    361
    Merck & Co. v. SmithKline Beecham Pharm. Co., 
    1999 WL 669354
    , at *44 (Del. Ch.
    Aug. 5, 1999), aff’d, 
    766 A.2d 442
    (Del. 2000).
    362
    Nakahara v. NS 1991 Am. Trust, 
    718 A.2d 518
    , 522 (Del. Ch. 1998).
    95
    barred by the equitable defenses of acquiescence and unclean hands. The doctrine of
    acquiescence has been described as follows:
    Acquiescence is an equitable defense which is assertable against a party
    who remains inactive for a considerable period of time, or who recognizes
    the validity of the complained of act or who acts in a manner inconsistent
    with the subsequent repudiation and thus leads the other party to believe the
    act has been approved. Application of the standards underlying the defense
    of acquiescence is fact intensive, often depending . . . on an evaluation of
    the knowledge, intention and motivation of the acquiescing party. 363
    The party against whom an acquiescence defense is asserted must have knowledge of its
    rights and the material facts. 364
    Shawe complains that Elting improperly had the Company pay salary and benefits
    to her housekeeper, but he admitted he knew about these payments, which had been made
    for over a decade. 365 Indeed, throughout the same period, the Company paid benefits for
    Ms. Shawe and for Shawe’s then-fiancée, and paid rent for Shawe’s apartments. 366 This
    was all part of the compensation true-up that had been an annual occurrence until Shawe
    unilaterally stopped that process in January 2014. Given these circumstances, Shawe
    acquiesced in the payments to Elting’s housekeeper.
    363
    Julin v. Julin, 
    787 A.2d 82
    , 84 (Del. 2001).
    364
    See NTC Gp., Inc. v. W. Point-Pepperell, Inc., 
    1990 WL 143842
    , at *5 (Del. Ch. Sept.
    26, 1990) (“Acquiescence arises where a complainant has full knowledge of his rights
    and the material facts and (1) remains inactive for a considerable time; or (2) freely does
    what amounts to recognition of the complained of act; or (3) acts in a manner inconsistent
    with the subsequent repudiation, which leads the other party to believe the act has been
    approved.”).
    365
    Tr. 36-37, 51-53 (Elting); 
    id. 746-47 (Shawe);
    see also Stone Dep. 147.
    366
    Tr. 52-53 (Elting); 
    id. 746-47 (Shawe);
    id. 1468-69 (Stone); 
    JX 127.
    96
    Likewise, after Shawe learned that the Company had paid the entire amount of the
    $21 million in estimated taxes due in April 2013, instead of having the LLC pay
    approximately $8 million of that amount as he desired, he expressly informed Signature
    Bank in April 2013 to “let the tax checks be cashed when they come in.” 367 Permitting
    Signature Bank to allow the checks to be cashed was an act of acquiescence in Elting’s
    conduct, which precludes Shawe from recovering on that claim here. 368
    Furthermore, Shawe’s claims against Elting for the Company’s payments to
    Kramer Levin and Kidron are barred by unclean hands. Elting had the Company make
    those initial payments—which she understood from the outset would be addressed as part
    of the annual compensation true-up in January 2014—upon the recommendation of
    Stone, the Company’s long-time accountant. 369 The only reason the 2014 compensation
    true-up did not occur is because Shawe prevented it. 370 It would be inequitable to permit
    Shawe to renege on the parties’ longstanding course of dealing and recover on a fiduciary
    367
    JX 288; Tr. 1038 (Shawe).
    368
    Shawe contends that the use of Company funds to cover $8 million of the $21 million
    of estimated taxes owed in April 2013 caused a cash crunch and led to complaints from
    vendors whose payments were delayed. Shawe provided no persuasive evidence that the
    Company suffered any cognizable harm as a result of this action. As he admitted, the
    Company did not even utilize its $15 million credit line with Signature Bank after the
    April 2013 tax payments, Tr. 1039 (Shawe), and Shawe asserted a year later there “never
    has been[] any crisis related to taxes at TransPerfect.” JX 724.
    369
    JX 487; Tr. 1469-70 (Stone).
    370
    Tr. 1058-59 (Shawe); 
    id. 1470 (Stone);
    JX 2031 at EE_00001631.
    97
    claim based on a compensation true-up that did not occur because of his own peremptory
    action. 371
    For the reasons set forth above, I conclude that Elting is entitled to judgment in her
    favor for each of the direct and derivative claims Shawe asserted against her. An order
    dismissing these claims with prejudice accompanies this opinion.
    V.        LEGAL ANALYSIS – DISSOLUTION OF THE LLC
    In her Verified Petition for Dissolution (C.A. No. 9661-CB), Elting seeks
    dissolution of the LLC under 
    6 Del. C
    . § 18-802, which provides as follows:
    On application by or for a member or manager the Court of Chancery may
    decree dissolution of a limited liability company whenever it is not
    reasonably practicable to carry on the business in conformity with a limited
    liability company agreement.
    As then-Vice Chancellor Strine explained when granting a petition for dissolution in Vila
    v. BVWebTies LLC, 372
    when an LLC agreement requires that there be agreement between two
    managers for business decisions to be made, those two managers are
    deadlocked over serious issues, and the LLC agreement provides no
    alternative basis for resolving the deadlock, it is not “reasonably
    practicable” to continue to carry on the LLC business “in conformity with
    [its] limited liability company agreement.” 373
    371
    It also would be inequitable to afford Shawe relief for the Kramer Levin and Kidron
    invoices when he has not provided the Court with a complete picture of the true-up
    process that would shed light on how his own expenses have been handled historically in
    the true-up process. As noted above, I have no doubt that Gerber, which demonstrated
    overt favoritism to Shawe by the time of trial, would have produced the records relating
    to the true-up process if Shawe requested them.
    372
    
    2010 WL 3866098
    (Del. Ch. Oct. 1, 2010).
    373
    
    Id. at *7.
    98
    For the reasons explained below, under the rule articulated in Vila, Elting’s petition to
    dissolve the LLC will be granted because Shawe and Elting, who must jointly approve
    any act the LLC takes, are deadlocked over the LLC’s business and there is no
    contractual mechanism to resolve that deadlock.
    Shawe and Elting are the only members of the LLC, and each owns a 50%
    interest. The LLC does not have an operating agreement, and thus Shawe’s and Elting’s
    approval is required under 
    6 Del. C
    . § 18-402 for the LLC to take any action. 374
    Shawe and Elting periodically have funded the LLC with distributions from the
    Company. When they have done so, the Company also made a pro rata distribution to
    Ms. Shawe for her 1% interest in the Company. 375
    Since its formation, the LLC has held various liquid assets, primarily Treasury
    bills. The LLC periodically has sold these assets and distributed the proceeds to Shawe
    and Elting for their personal use. The assets of the LLC have never been used for the
    benefit of the Company, such as to fund an acquisition or to pay legal expenses. 376 As of
    trial, the LLC held approximately $8 million in liquid assets. It appears that the LLC has
    no creditors or liabilities.
    374
    That provision states, in relevant part: “Unless provided in a limited liability company
    agreement, the management of a limited liability company shall be vested in its members
    in proportion to the then current percentage or other interest of members in the profits of
    the limited liability company owned by all of the members, the decision of members
    owning more than 50 percent of the said percentage or other interest in the profits
    controlling[.]”
    375
    Tr. 62 (Elting).
    376
    
    Id. 63 (Elting);
    Stone Dep. 120-21.
    99
    Elting contends that the LLC should be dissolved because it has no business
    (because she and Shawe never agreed to one) and, even if they had agreed to a business,
    it is no longer reasonably practicable to carry on that business due to their deadlock over
    the use of funds currently in the LLC. 377 Shawe responds that “the LLC was established
    to protect TPG’s assets while leaving them available for business purposes should they be
    needed.” 378 He further submits that Elting’s manufactured refusal to use the LLC’s funds
    for these purposes is an insufficient basis to dissolve the LLC.
    The record supports the assertion that the LLC was intended to serve as an asset
    protection vehicle. 379 What is less clear from the record is how the parties intended to
    use the assets in the LLC after funds were transferred to it. Stone testified that he first
    suggested the LLC in 2009 to protect Shawe’s and Elting’s distributions from the
    Company from liability “but still have them available to the corporation in the event it
    was needed.” 380 In August 2009, when the parties were still considering forming the
    LLC, Elting noted that “we can always put the money back.” 381 A year later, Stone
    suggested to Elting and Shawe that they move $5-7 million to the LLC because “[t]here
    377
    Elting’s Post-Trial Op. Br. 32.
    378
    Shawe’s Post-Trial Op. Br. 92-93.
    379
    Tr. 61-62 (Elting); 
    id. 621 (Shawe);
    id. 1409-10 (Stone).
    
    380
    
    Id. 1410 (Stone).
    381
    JX 44.
    100
    is too much cash in the corp,” noting that “[i]f you need funds for TPT related things, we
    can put it back.” 382 There are similar emails dated February 2012 and December 2012. 383
    On the other hand, in the six years since its formation, the LLC has not conducted
    any business other than investing in liquid assets and distributing the proceeds from those
    assets to Shawe and Elting. 384 In August 2013, before litigation commenced, Stone
    informed Elting and Shawe in an email that in order to serve its asset protection function,
    “the LLC needs to be conducting business,” which it still was not doing at the time.385
    He further stated that it would defeat the purpose of the LLC if it conducted “translation
    business,” and suggested investing in real estate. 386 That type of investment might serve
    some purpose indirectly related to the Company, such as owning corporate apartments, 387
    but would make it difficult to readily allow the LLC to transfer funds back to the
    Company.
    “In determining whether it is reasonably practicable to carry on the business of the
    LLC, the Court must look to the purpose clause set forth in the governing
    382
    JX 80.
    383
    JX 132; JX 180.
    384
    JX 74.
    385
    JX 335; Tr. 1457-61 (Stone).
    386
    JX 335; see also JX 74.
    387
    See Tr. 621-22 (Shawe).
    101
    agreements[.]” 388 Here, because there is no operating agreement, I must determine the
    LLC’s purpose based on the trial record. Although the record does not reveal a precise
    answer to this question, the weight of the evidence reflects that the LLC was intended to
    serve two different purposes: (i) to serve as an asset protection vehicle, with the potential
    to return funds to the Company or make investments that would have a tangential
    corporate purpose; and (ii) to distribute money to Shawe and Elting. The LLC has never
    transferred any money back to the Company in furtherance of the first purpose, but it has
    distributed money to Shawe and Elting on multiple occasions in furtherance of the second
    purpose.
    Taking into account the two apparent purposes of the LLC, Shawe and Elting are
    in deadlock over what to do with the LLC’s assets such that it is not reasonably
    practicable to carry on the LLC’s business. Shawe wants to keep the $8 million in funds
    currently in the LLC available for corporate purposes and maintain the LLC as an asset
    protection vehicle. 389 Elting wants all the money distributed to her and Shawe as the
    LLC’s two members. 390        There is no agreed-upon mechanism, such as a dispute
    388
    In re Senecca Invs. LLC, 
    970 A.2d 259
    , 263 (Del. Ch. 2008) (dismissing a petition to
    dissolve a limited liability company where the purpose clause of the operating agreement
    authorized the company “to engage in any lawful act or activity for which corporations
    may be organized under the Delaware General Corporation Law”).
    389
    Tr. 621 (Shawe). This position conflicts with his demand in April 2013 that the LLC
    use essentially all of its assets at the time to cover part of Shawe and Elting’s tax
    liabilities that quarter. JX 280; Tr. 1029-31 (Shawe).
    390
    Tr. 65 (Elting).
    102
    resolution provision in a written operating agreement, to resolve that deadlock. 391 As
    such, the LLC is serving neither of its two possible purposes and there is no reasonable
    prospect that it will serve either purpose in the future.      In sum, given the LLC’s
    ownership structure, the deadlock, and the inability to resolve the deadlock, it is not
    reasonably practicable to carry on the business of the LLC. 392 The standard for judicial
    dissolution of the LLC thus has been met.
    “[I]n the case where the standard for judicial dissolution is met, the ultimate
    determination of whether a decree of dissolution should issue is committed to this court’s
    equitable discretion.” 393   In my judgment, the LLC should be dissolved.          Judicial
    dissolution is “the only practical deadlock-breaking remedy available” to Elting as a 50%
    member of the LLC. 394 Under 
    6 Del. C
    . § 18-804(a), and unless otherwise provided in a
    391
    See Lola Cars Int’l Ltd. v. Krohn Racing, LLC, 
    2010 WL 3314484
    , at *23-24 (Del.
    Ch. Aug. 2, 2010) (observing that a party “may not seek judicial dissolution simply as a
    means of freeing itself from what it considers a bad deal” in a case where the petitioner
    failed to prove any contractual or fiduciary misconduct and where the operating
    agreement contained a dispute resolution mechanism in the form of a buy/sell provision).
    392
    See In re Silver Leaf, L.L.C., 
    2005 WL 2045641
    , at *12 (Del. Ch. Aug. 18, 2005)
    (“Given its ownership structure and Operating Agreement, Silver Leaf is no longer able
    to carry on its business in a reasonably practicable manner. The vote of the members is
    deadlocked and the Operating Agreement provides no means around the deadlock.
    Moreover, Silver Leaf has no business to operate. Therefore, upon application of a
    member, . . . the court dissolves Silver Leaf.”).
    393
    Vila, 
    2010 WL 3866098
    , at *6 (granting a petition to dissolve a limited liability
    company where the company’s two managers were “deadlocked over serious managerial
    issues, including “a strategic vision for, or the current operation of,” the company).
    394
    See Haley v. Talcott, 
    864 A.2d 86
    , 88 (Del. Ch. 2004) (granting a petition to dissolve a
    limited liability company where the company’s two, 50% member/managers were in
    “deadlock . . . about the business strategy and future of” the company).
    103
    limited liability company agreement, the assets of the company shall be distributed to the
    company’s creditors and then to its members. The record does not establish that Shawe
    and Elting agreed to any different plan of distribution. Therefore, the LLC’s assets shall
    be liquidated and the proceeds of those assets shall be distributed equally to the LLC’s
    members, Shawe and Elting. 395
    The dissolution and liquidation of the LLC should not be a prolonged affair.
    Accompanying this opinion is an implementing order appointing Robert B. Pincus,
    Esquire, as liquidating trustee for the LLC and directing Mr. Pincus to submit a plan of
    dissolution and liquidation within ten business days after receipt of confirmation of his
    willingness to serve as the liquidating trustee.
    VI.    CONCLUSION
    For the foregoing reasons, Elting’s petitions for dissolution of the Company under
    
    8 Del. C
    . §§ 226(a)(1) and (a)(2) and her petition for dissolution of the LLC under 
    6 Del. C
    . § 18-802 are granted. Shawe is entitled to judgment in his favor on Elting’s other
    claims for relief. Elting is entitled to judgment in her favor on Shawe’s claims for relief.
    Implementing orders accompany this opinion.
    395
    As noted above, there is no indication in the record that the LLC has any liabilities or
    creditors. If there are any liabilities, they must be satisfied before the remaining proceeds
    are distributed to the members.
    104