Transperfect Global, Inc. v. Pincus

IN THE SUPREME COURT OF THE STATE OF DELAWARE
TRANSPERFECT GLOBAL, INC. §
and PHILIP R. SHAWE, §
§ No. 154, 2021
Respondents Below, §
Appellants, § Court Below–Court of Chancery
§ of the State of Delaware
v. §
§ C.A. Nos. 9700 & 10449
ROBERT PINCUS, §
§
Movant Below, §
Appellee. §
TRANSPERFECT GLOBAL, INC. §
and PHILIP R. SHAWE, §
§ No. 167, 2021
Respondents Below, §
Appellants, § Court Below–Court of Chancery
§ of the State of Delaware
v. §
§ C.A. Nos. 9700 & 10449
ROBERT PINCUS, §
§
Movant Below, §
Appellee. §
TRANSPERFECT GLOBAL, INC. §
and PHILIP R. SHAWE, §
§ No. 175, 2021
Respondents Below, §
Appellants, § Court Below–Court of Chancery
§ of the State of Delaware
v. §
§ C.A. Nos. 9700 & 10449
ROBERT PINCUS, §
§
Movant Below, §
Appellee. §
Submitted: May 4, 2022
Decided: June 1, 2022
Before SEITZ, Chief Justice; VALIHURA, VAUGHN, TRAYNOR, and
MONTGOMERY-REEVES, Justices, constituting the Court en Banc.
Upon appeal from the Court of Chancery. AFFIRMED IN PART, REVERSED
AND VACATED IN PART.
Frank E. Noyes, II, Esquire, OFFIT KURMAN, P.A., Wilmington, Delaware; Adam
K. Bult, Esquire, BROWNSTEIN HYATT FARBER SCHRECK, LLP, Las Vegas,
Nevada, for Appellant TransPerfect Global, Inc.
Jeremy Eicher, Esquire, EICHER LAW LLC, Wilmington, Delaware; Alan M.
Dershowitz, Esquire, Cambridge, Massachusetts, for Appellant Philip R. Shawe.
Jennifer C. Voss, Esquire, Cliff C. Gardner, Esquire, Elisa M.C. Klein, Esquire,
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, Wilmington, Delaware,
for Appellee Robert Pincus.
2
TRAYNOR, Justice:
In 2014, Elizabeth Elting, a co-founder of TransPerfect Global, Inc. (“TPG”
or “the Company”), asked the Court of Chancery to appoint a custodian to sell the
Company because of a hopeless deadlock between Elting and fellow co-founder,
Philip R. Shawe. More than eight years later, Elting has sold her shares to Shawe,
who won a court-ordered auction supervised by Robert B. Pincus, a custodian duly
appointed by the Court of Chancery under 8 Del. C. § 226. The parties executed the
sale agreement (the “SPA”) in November 2017. Although this might have ended the
stalemate between Elting and Shawe, it sparked a new series of conflicts that we are
asked to resolve here.
With Elting cashed out, the contentious relationship between Shawe and
Pincus took center stage. Aside from a brief détente when he won the auction, Shawe
has been—to be charitable—unsupportive of Pincus’s court-mandated role with
TPG. The result has been seemingly endless litigation in Delaware, New York, and
Nevada, millions in contested legal fees, and an inability to agree on any material
aspect of Pincus’s tenure as Custodian, up to and including his discharge. All of this
occurred while Pincus was finishing a small number of post-closing tasks and
attempting to wind-down his custodianship.
This case consolidates three challenges brought by Shawe and TPG to orders
of the Court of Chancery. Each of the issues raised on appeal implicates Pincus’s
3
right to petition the trial court for reimbursement of fees and expenses under the SPA
and various court orders, including its August 13, 2015 Order appointing Pincus as
Custodian (the “Appointment Order”) and its February 15, 2018 Order approving
the sale of Elting’s shares to Shawe (the “Final Order”). Broadly speaking, these
authorities allow Pincus and his advisers to request reasonable reimbursements
related to the custodianship, but the parties disagree bitterly about the operation and
reach of each provision.
Shawe and TPG first challenge the Court of Chancery’s October 17, 2019
order (the “Contempt Order”), which found them both in contempt of an exclusive
jurisdiction provision contained in the Final Order. According to the court, the
contemptuous act was a lawsuit TPG filed in August 2019 against Pincus in Nevada
state court (the “Nevada Action”). We agree that this constituted a violation of the
Final Order and that the Court of Chancery was justified in finding TPG in contempt.
But we reverse the portion of the Contempt Order finding Shawe in contempt
because he was not a plaintiff in the Nevada Action and the trial court did not
specifically determine that he bore personal responsibility for TPG’s conduct.
Shawe owns 99 percent of TPG, but this does not, without more, make him
personally liable for the Company’s violation.
Second, Shawe and TPG appeal the Court of Chancery’s April 14, 2021 order
(the “Discharge Order”), which terminated Pincus’s custodianship. Shawe and TPG
4
argue that the Discharge Order improperly expanded Pincus’s protection from
lawsuits, violating the SPA. We do not accept that the Discharge Order conflicts
with the SPA; in any case, a contract cannot prospectively constrain the Court of
Chancery’s discretionary authority under 8 Del. C. § 226 to manage a custodianship.
Thus, we affirm the Discharge Order.
Third, Shawe and TPG object to the Court of Chancery’s April 30, 2021 Order
(the “2021 Fee Order”) awarding Pincus $3,242,251 in fees and expenses incurred
from May 2019 to December 2020. Subject to the qualification that Shawe is not
personally liable for any of these fees given our reversal of the Contempt Order as
applied to him, we affirm the 2021 Fee Order as free from legal error and a product
of the sound exercise of the trial court’s discretion.
5
I. FACTUAL BACKGROUND
A. The Court of Chancery Appoints Pincus as Custodian to Sell TPG
Elting and Shawe launched TPG from their dorm room in 1992.1 The
Company provides translation, litigation support, and website localization services.
It was previously incorporated in Delaware and is now organized in Nevada.2 As
TPG grew, Elting and Shawe planned to wed, but after Elting called the marriage
off, the co-founders gradually lost any ability to work together.3 Serving as co-
CEOs, they would “harass each other, interfere with the business, and demoralize
the employees.”4 Shawe was often the instigator. On one occasion, he was caught
surveilling Elting’s communications.5 On another, he followed her to Paris by
1
In re Shawe & Elting LLC, 2015 WL 4874733, at *1, (Del. Ch. Aug. 13, 2015), aff’d sub nom.
Shawe v. Elting, 157 A.3d 152 (Del. 2017) (Shawe I) (affirming the appointment of Pincus as
Custodian). The instant appeal is the fifth time this Court has addressed the custodianship of TPG,
see In re Shawe & Elting LLC, 2016 WL 3951339 (Del. Ch. July 20, 2016), aff’d sub nom. Shawe
v. Elting, 157 A.3d 142 (Del. 2017) (Shawe II) (ordering Shawe to pay $7.1 million in Elting’s
legal fees due to his litigation misconduct); In re TransPerfect Glob., Inc., 2018 WL 904160 (Del.
Ch. Feb. 15, 2018), aff’d sub nom. Elting v. Shawe, 185 A.3d 694, 2018 WL 2069065 (Del. May
3, 2018) (TABLE) (Shawe III) (approving the sale of Elting’s shares to Shawe); In re TransPerfect
Glob., Inc., 2019 WL 5260362 (Del. Ch. Oct. 17, 2019), appeal dismissed sub nom. TransPerfect
Glob., Inc. v. Pincus, 224 A.3d 203, 2019 WL 7369433 (Del. 2019) (TABLE) (Shawe IV). This
consolidated appeal might be designated Shawe V, though this does not include various decisions
by the Court of Chancery that we have not directly reviewed, nor does it count litigation by Shawe
and TPG against Pincus, Elting, and related parties in other forums. See, e.g., Shawe v. Bouchard,
2021 WL 1380598 (D. Del. Apr. 12, 2021); Shawe v. Elting, 126 N.E. 3d 1060 (N.Y. 2019); Shawe
v. Pincus, 265 F. Supp. 3d 480 (D. Del. 2017); Shawe v. Potter Anderson & Corroon LLP, 2017
WL 6397342 (D. Del. Dec. 8, 2017).
2
In re TransPerfect Glob., Inc., 2019 WL 5260362, at *8 n.56 (Del. Ch. Oct. 17, 2019) [hereinafter
Contempt Op., 2019 WL 5260362, at *__].
3
Shawe I, 157 A.3d at 157.
4
Id.5
Id. at 156.
6
“arrang[ing] to be seated next to her without her knowledge” on a commercial flight
from New York.6
In 2014, Elting threw up her hands and sought relief from the Court of
Chancery. At that point, TPG was controlled evenly—or not at all—by Elting and
Shawe, who each held one director seat.7 Elting owned 50 shares of TPG, Shawe
owned 49, and his mother, Shirley Shawe, owned one, which she allowed her son to
control.8 At an impasse, on May 23, 2014, Elting filed a petition under 8 Del.
C. § 226, asking the Court of Chancery to appoint a custodian to sell TPG because
the governance of the company was deadlocked.9 After twelve hearings, sixteen
motions, and a six-day trial, the court asked Pincus to mediate Elting’s and Shawe’s
disputes.10 When mediation failed, the court issued the Appointment Order, naming
Pincus the Custodian of TPG to oversee a sale of the Company.11 The court also
named Pincus as the third director of TPG and instructed him to break ties on critical
board-level business decisions.12 Shawe appealed Pincus’s appointment, and we
affirmed in Shawe I.13
6
Id. at 157.
7
Id. at 156.
8
Id. at 155–156. Shirley Shawe’s one-percent interest allowed TPG “to claim the benefits of being
a majority women-owned business.” Id.
9
Id. at 158.
10
Id.; see Mar. 9, 2015 Order Appointing Pincus as Mediator, App. to Opening Br. at A743
[hereinafter A____].
11
Appointment Order, A749.
12
Shawe I, 2015 WL 4874733, at *32. Director Indemnification Agreement at 1, A753.
13
Shawe I, 157 A.3d at 157.
7
B. Shawe Purchases Elting’s 50-percent Interest in TPG
To sell the Company, Pincus designed a modified-auction process that
allowed both Shawe and Elting to bid for full control, which the court approved in a
July 18, 2016 Order (the “Sale Order”).14 Elting never submitted a competitive
offer.15 Instead, Shawe bid against H.I.G. Middle Market, LLC (“H.I.G.”), which
owned TPG’s top competitor.16 In the final round, H.I.G. slightly outbid Shawe, but
Pincus determined that Shawe would ultimately deliver “with fewer closing
conditions and other better terms while retaining virtually all of the Company’s
employees.”17
On November 9, 2017, Shawe agreed in the SPA to purchase Elting’s 50-
percent ownership in TPG for $385 million in cash, implying an enterprise value of
$770 million.18 Shawe completed the purchase through PRS Capital, a New York
LLC that he controlled as the sole and managing member.19 PRS Capital is now
known as TransPerfect Holdings, LLC.20 Through TransPerfect Holdings, Shawe
14
Sale Order ¶ 1, A766.
15
Shawe III, 2018 WL 904160, at *11. Elting joined a group led by Blackstone, whose “bid simply
was not competitive.” Id. (internal quotation marks omitted).
16
Id. at *1.
17
Id. at *12.
18
Id.
19
SPA at 1, A777.
20
TransPerfect Global, Inc. v. Robert B. Pincus, Esq., No. A-19-800185 (Clark Cnty., Nev.),
Compl. ¶ 6, A1120 [hereinafter Nev. Compl. ¶ __].
8
owns 99 percent of TPG, and his mother owns one percent.21 Shawe is now the
Company’s sole CEO.22
The Court of Chancery entered the Final Order approving the SPA on
February 15, 2018.23 The Final Order applies to the Court of Chancery civil actions
that have addressed Elting’s petition and Pincus’s custodianship, C.A. Nos. 9700 (In
re TransPerfect Global) and 10449 (Elting v. Shawe and TransPerfect Global).24
The Final Order contains three provisions relevant to the consolidated appeals.
Paragraph 7 entitles Pincus and his law firm, Skadden, Arps, Slate, Meagher & Flom
(“Skadden”) “to judicial immunity and to be indemnified by the Company . . . to the
fullest extent permitted by Law.” It also provides that
fees and expenses incurred by the Custodian or Skadden,
Arps, Slate, Meagher & Flom LLP (and its partners and
employees) in defending or prosecuting any civil,
criminal, administrative or investigative claim, action, suit
or proceeding reasonably related to the Custodian’s
responsibilities under the Sale Order or this Order, shall be
paid by the Company[.]25
21
Shawe was the sole and managing member of PRS Capital LLC when it purchased Elting’s
shares. Shawe III, 2018 WL 904160, at *12. TPG’s recent filings in other courts indicate that
Shawe owns 99 percent of TransPerfect Holdings and Shirley Shawe owns 1 percent. See Nev.
Compl. ¶ 6–7, A1120–21. In turn, TransPerfect Holdings owns 100 percent of TPG, according
to these filings. Id.22
Id. ¶ 7, A1121.
23
Final Order ¶ 2, A925.
24
Id. at 1, A919.
25
Id. ¶ 7, A933–34.
9
Additionally, Paragraph 8 confirms the continued validity of the court’s previous
orders.26 And Paragraph 10 provides that “the Court retains continuing and
exclusive jurisdiction over the parties to the Actions for all matters relating to the
Actions, including the administration, interpretation, effectuation or enforcement of
the Sale Agreement . . . and all orders of the Court[.]”27
We affirmed the Final Order on May 3, 2018.28 Pincus resigned from the
TPG board on May 7 but remained as Custodian to complete certain post-closing
tasks.29
C. Pincus Seeks Fees Directly from TPG
Beginning with his appointment in August 2015, Pincus regularly petitioned
the Court of Chancery to approve reimbursement of his fees and expenses. He did
so by invoking Paragraphs 10 and 11 of the Appointment Order.30 Paragraph 10
provides that “[t]he Custodian shall be compensated at the usual hourly rate he
charges as a partner of Skadden” and “reimbursed for reasonable travel and other
expenses incurred in the performance of his duties.”31 Paragraph 11 allows Pincus
to retain advisors, whose fees “shall be calculated on the same hourly rates charged
26
Id. ¶ 8, A935.
27
Id. ¶ 10, A936.
28
Shawe III, 185 A.3d 694.
29
May 7, 2018 Letter Agreement, A943; Contempt Op., 2019 WL 5260362, at *6; Letter from
Custodian to the Hon. Andre G. Bouchard at 2 (May 10, 2018), App. to Answering Br. at B502.
30
Contempt Op., 2019 WL 5260362, at *6 n.36.
31
Appointment Order ¶ 10, A751; see Custodian’s Sept. 2015 Status Rep. at 5, Ch. Dkt. No. 640.
10
by such counsel or advisors to clients represented outside this matter.” 32 After the
sale, Pincus initially exercised his discretion to bill his fees directly to an escrow
fund (the “Escrow”) that was created by the SPA and funded evenly by Shawe and
Elting as a “non-exclusive source of funds” for Pincus’s expenses.33 The court
restated Pincus’s right to recover fees in its Sale and Final Orders.34
For about a year after the sale closed, relative calm prevailed. Pincus sought
fees from the Escrow, and neither Shawe nor TPG objected.35 This all changed for
the worse in May 2019. In his monthly status report, Pincus advised the court that
he intended to begin seeking fees directly from TPG, rather than the Escrow, for bills
related to two lawsuits involving TPG but not Elting.36 In the first lawsuit, Cypress
Partners sued Shawe in New York for his purported failure to pay bills related to
advisory services Cypress provided Shawe during his bid for TPG (the “Cypress
Action”).37 In the second case, TPG sued H.I.G., which had finished second to
32
Appointment Order ¶ 11, A751.
33
Id.; SPA § 2.2, A789.
34
See Sale Order ¶ 14, A770 (“The Custodian shall be compensated at the usual hourly rate he
charges [and] reimbursed for reasonable travel and other expenses incurred in the performance of
his duties. . . . Any fees and expenses approved by the Court shall be paid promptly by the
Company.”); Final Order ¶ 7, A934 (“[F]ees and expenses incurred by the Custodian or
Skadden . . . in defending or prosecuting any civil, criminal, administrative or investigative claim,
action, suit or proceeding reasonably related to the Custodian’s responsibilities under the Sale
Order or this Order, shall be paid by the Company[.]”).
35
See, e.g., May 2018 Order Approving Fees and Expenses at 1, A969.
36
Custodian’s May 2019 Status Rep. at 10, A1003.
37
Cypress Partners LLC v. Shawe and John Does Nos. 1-10, Compl. ¶ 1, A1008.
11
Shawe in the auction, alleging that it had stolen TPG’s trade secrets during the sale
process (the “H.I.G. Action”).38
Pincus cited Paragraph 7 of the Final Order and Paragraph 14 of the Sale Order
as authorities that permitted him to request fees directly from TPG for time spent
“defending or prosecuting” legal actions.39 True to his word, in June and July 2019
he sought $65,203.85 in fees directly from TPG for his work responding to the
Cypress and H.I.G. Actions.40 TPG did not object to these requests, and the court
issued orders approving them (the “2019 Fee Orders”).41
D. TPG Sues Pincus in Nevada
After failing to object in the Court of Chancery, TPG challenged the 2019 Fee
Orders by suing Pincus in Nevada state court on August 13, 2019 (the
aforementioned “Nevada Action”).42 Shawe was not a named plaintiff.43 Invoking
the Appointment Order and the Final Order, TPG’s complaint alleged that it was not
required to indemnify Pincus for his time spent as a witness in the Cypress and H.I.G.
38
TransPerfect Glob.l, Inc. v. Lionbridge Techns., Inc., and H.I.G. Middle Market, LLC, 19-cv-
03283, Compl. ¶ 1, A1019.
39
Custodian’s May 2019 Status Rep. at 10–11 n.7, A1003–04; see Contempt Op., 2019 WL
5260362, at *7.
40
Custodian’s June 2019 Status Rep. at 2, A1107 (“According to the records, as of May 31, 2019,
I incurred $58,767.71 in unbilled fees and expenses, primarily related to the two new lawsuits
referred to in the May 8th report.”); Custodian’s July 2019 Status Rep. at 2, A1115 (requesting
$6,436.14 from TPG and $83,753 in accounting fees from the Escrow).
41
Jun. 28, 2019 Order Approving Fees and Expenses, A1109; July 17, 2019 Order Approving Fees
and Expenses, A1117.
42
Nev. Compl. ¶ 1, A1119. The Nevada Action was captioned “TransPerfect Global, Inc. v.
Robert B. Pincus, No. A-19-800185-B.”
43
Id. at 1, A1119.
12
Actions.44 The complaint asked the Nevada court to determine “whether TPG has a
duty to indemnify Pincus for the time expended in preparation as a third-party
witness” and alleged that Pincus had breached his fiduciary duties as a director of
TPG.45 It also attached copies of the Appointment Order,46 the Sale Order,47 and the
2019 Fee Orders.48 A week after TPG filed the Nevada Action, Pincus submitted a
new fee petition to the Court of Chancery, and Shawe formally opposed it.49
E. The Court of Chancery Finds TPG and Shawe in Contempt for
Violating the Final Order, But Not for Violating the 2019 Fee Orders
Pincus moved the Court of Chancery to find Shawe and TPG in contempt on
August 26, 2019.50 Pincus’s motion asserted that Shawe and TPG violated
Paragraph 10 of the Final Order when TPG filed the Nevada Action outside the Court
of Chancery and violated the 2019 Fee Orders by refusing to pay the awarded fees.51
The motion requested a per diem sanction against TPG and Shawe for each day the
44
Id. ¶ 14–16, A1122. “The Delaware Chancery Court further stated in the [Appointment Order]
that TPG was under [an] obligation to indemnify to the fullest extent permitted by law Pincus and
Skadden for “fees and expenses incurred by the Custodian and Skadden in defending any civil,
criminal, administrative or investigative claim, action, suit or proceeding reasonably related to the
Custodian’s responsibilities under the [Appointment Order] . . .” (emphasis added by TPG in the
Nevada Complaint). The Nevada Complaint identifies the respective orders by their dates of issue.
Id.
45
Id. ¶¶ 46, 52, A1127–28.
46
Id. Ex. 2, A1173.
47
Id. Ex. 3, A1176.
48
Id. Ex. 6, A1213; id. Ex. 7, A1217; id. Ex. 9, A1221.
49
Contempt Op., 2019 WL 5260362, at *8.
50
Custodian’s Mot. for an Order to Show Cause Why TransPerfect Global, Inc. and Philip R.
Shawe Should Not Be Held in Contempt, A1319 [hereinafter Custodian’s Mot. for Contempt].
51
Id. ¶ 8, A1323; id. ¶ 18, A1327.
13
Nevada Action remained pending, a sanctions award covering Pincus’s fees for
litigating the Nevada Action and the contempt motion, and an injunction barring
further suits outside the court’s jurisdiction.52
In response, TPG amended its Nevada Complaint to include a claim under the
Director Indemnification Agreement (the “DIA”), which the parties had executed
when Pincus became custodian.53 The additional claim asserted that the DIA
allowed TPG to sue Pincus in any court of competent jurisdiction.54
i. The Court Finds Shawe and TPG in Contempt of the Final
Order
On October 17, 2019, the Court of Chancery issued an opinion and order (the
“Contempt Opinion” and “Contempt Order,” respectively) finding Shawe and TPG
in contempt for violating the Final Order.55 After determining that the parties were
bound by the Final Order and had notice of it, the court held that “the Custodian . . .
has established by clear and convincing evidence that Shawe and TransPerfect
violated paragraph 10 of the Final Order in a meaningful way.”56 The court
explained that “the Nevada action specifically puts at issue[,] and thus deprives this
52
Id. ¶ 21, A1328–29.
53
See DIA § 14N, A761–62.
54
Amd. Nev. Compl. ¶¶ 51, 65, A1527–30. Additionally, on October 7, 2019, TPG moved for
summary judgment in the Nevada action, triggering a 10-day deadline for the Custodian to
respond. Contempt Op., 2019 WL 5260362, at *9. The Nevada court stayed the action the next
day. Id. n.72.
55
Contempt Op., 2019 WL 5260362, at *10; Contempt Order ¶ 1, Ex. A to Opening Br.
56
Contempt Op., 2019 WL 5260362, at *13.
14
court of exclusive jurisdiction over parties to these actions with respect to” the SPA
and the Sale and Final Orders.57 Throughout its analysis, the court discussed TPG
and Shawe collectively and did not find that Shawe directed TPG to file the Nevada
Action.
Along with its contempt findings, the court imposed a fine of $30,000 for each
day the Nevada Action was not dismissed and, as a sanction, ordered Shawe and
TPG to pay the fees incurred by Pincus in litigating the Nevada Action and contempt
motion (the “Contempt Sanction”).58 The court also issued an anti-suit injunction
against Shawe and TPG covering the Nevada Action.59 TPG dismissed the Nevada
Action the day before the fine was to take effect.60
ii. The Court Determines that Shawe and TPG Violated the Fee
2019 Orders but Does Not Find Them in Contempt
Although the court determined that Shawe and TPG had violated the 2019 Fee
Orders by failing to pay Pincus’s bills for June and July 2019—a contested amount
of $65,203.85—it declined to make an additional contempt finding.61 The court
explained that “some practical concerns” related to the fee-request process informed
57
Id. at *11.
58
Contempt Order ¶ 2–4, Ex. A to Opening Br.
59
Id.
60
Not. of Voluntary Dismissal at 2, A2568.
61
Telephonic Rulings on Mot. for Contempt of Fee Orders at 4–5, A2503–04.
15
its decision.62 In response to these concerns, the court made slight modifications to
the fee-petition process in a November 2019 Order (the “Fee Process Order”).63
The Fee Process Order required Pincus to provide additional billing
documentation and also established an objection procedure, subject to language in
Paragraph 3(e) allowing the court to shift fees in the event that a party “acted in bad
faith regarding the fee petition and objection process.”64 Paragraph 3(e) clarified
that any fee-shifting “shall be in addition to, and without prejudice to, the
Custodian’s right to recover such amounts pursuant to the Court’s orders or any other
agreement or entitlement.”65 The Fee Process Order provided that, except for the
additions described above, “this Order does not modify, invalidate or otherwise alter
any provision of the Sale Order [or] the Final Order[.]”66
Shawe and TPG appealed the Contempt Order and the Fee Process Order to
this Court. We declined to hear these interlocutory appeals because they implicated
several open issues, including a monetary award—the Contempt Sanction—that had
62
Id. at 6–8, A2505–07.
63
Fee Process Order, Ex. B to Opening Br.
64
Id. ¶ 3(e), Ex. B to Opening Br. “To the extent that any party is found to have acted in bad faith
regarding the fee petition and objection process set forth in Paragraph 3(c) herein, the Court may
order that such party pay fees and expenses incurred by the other party or parties in connection
with the objection process at issue. For the avoidance of doubt, any such order shall be in addition
to, and without prejudice to, the Custodian’s right to recover such amounts pursuant to the Court’s
orders or any other agreement or entitlement. Nothing in this Paragraph shall be construed to allow
the Custodian a double recovery of fees and expenses, unless the Court otherwise orders.” Id.
65
Id.
66
Id. ¶ 2.
16
not yet been calculated.67 Shortly after we declined to accept the appeals, the
parties—at the Court of Chancery’s request—agreed to mediate their remaining
disputes before former Chancellor Chandler.68 Mediation stalled by November
2020.69
F. The Court of Chancery Discharges Pincus as Custodian and Awards
Him $3.2 Million in Fees and Expenses
After mediation failed, the court asked Pincus to petition “for attorneys’ fees
and expenses that were not included in any prior fee petition” and to move for
discharge.70 The court also directed Pincus to answer motions from TPG and Shawe
that demanded that Pincus be held in contempt for failing to timely file fee petitions
and challenged previous fee petitions.71 Pincus answered the motions and provided
a proposed order of discharge on December 15, 2020.72 He then filed petitions that
collectively sought $3,868,363 in fees and expenses for the period spanning May
2019 to December 2020.73
67
Shawe IV, 2019 WL 7369433, at *3.
68
In re TransPerfect Global, Inc., 2021 WL 1711797, at * 16 (Del. Ch. Apr. 30, 2021) [hereinafter
Fee Op., 2021 WL 1711797, at *__].
69
Id. at *17.
70
Letter from the Hon. Andre G. Bouchard at 2, A3702.
71
Id.; see Joint Mot. for an Order to Show Cause Why Pincus and Skadden Should Not Be Held
in Contempt and Precluded from Submitting Untimely Fee Petitions at 1–2, A3552–53.
72
Custodian’s Opp. to Mot. for Contempt, A3706; Custodian’s Opp. to Mot. to Preclude Custodian
from Recovering Fees and Expenses, A3722; Custodian’s Mot. for Order of Discharge, A3738.
73
See Ex. A to Fee Op. at 1, Ex. D to Opening Br.
17
i. The Court Discharges Pincus
Pincus proposed a 17-paragraph order of discharge. His proposal provided
that he would retain “all of, and not less than all of, the protections” granted to him
by Delaware law and the orders and agreements related to the custodianship.74 The
proposal also sought to provide illustrative examples of these protections “[f]or the
avoidance of doubt[.]”75 One of Pincus’s requests was that the order of discharge
clarify that TPG was required to release all potential claims of liability against him.76
TPG and Shawe argued that this proposal “would revise and override the provisions
of the SPA” as well as prior orders of the Court of Chancery.77 In its place, they
suggested a one-paragraph order terminating the custodianship and providing that
“going forward the Custodian . . . shall retain the same protections and
indemnification rights granted to him under the [SPA], the Sale Order and the Final
Order[.]”78
The Court of Chancery rejected much of Pincus’s proposal but agreed that “a
nuanced discharge order”—rather than the single paragraph proposed by Shawe and
TPG—was “necessary to provide clarity on the terms of discharge.”79 Specifically,
74
Custodian’s Proposed Order of Discharge ¶ 3, A3753.
75
Id. ¶¶ 6–15, A3755–3764.
76
Id. ¶ 15, A3762–63; see Custodian’s Mot. for Discharge at 3, A3740.
77
Joint Opp’n to Mot. for Order of Discharge ¶¶ 1, 4, A3880–3881.
78
Shawe’s and TPG’s Proposed Order of Discharge, A3901.
79
Discharge Op., 2021 WL 1401518, at *1.
18
the court repeated the primary protections of the SPA, Sale Order, and Final Order.80
It also included language requiring TPG to waive all claims against Pincus in his
capacity as Custodian.81
ii. The Court Awards Pincus $3.2 Million in Fees and Expenses
In an order issued on April 30, 2021, and accompanied by a 135-page opinion
(the “2021 Fee Order” and “Fee Opinion,” respectively), the Court of Chancery
awarded Pincus $3,242,251 in fees and expenses for the period spanning May 2019
to December 2020.82 This was approximately 84 percent of the $3,868,363 that
Pincus initially requested.83 The 2021 Fee Order separated the award into three
parts: $1,907,039 to be paid by TPG, $186,291 to be paid by the Escrow funded
evenly by Shawe and Elting, and $1,148,291 to be paid by Shawe and TPG in
fulfillment of the Contempt Sanction issued by the court after TPG filed the Nevada
Action.84
80
Discharge Order ¶ 3, Ex. C to Opening Br. at 11.
81
Id. ¶ 9, Ex. C to Opening Br. at 14–15.
82
2021 Fee Order at 1–2, Ex. D to Opening Br.; Fee Op., 2021 WL 1711797, at *52.
83
Fee Op., 2021 WL 1711797, at *18. After oral argument on this fee motion, Pincus voluntarily
withdrew $204,485 in “fees on fees” at the trial court’s suggestion. Id.; Mar. 2, 2021 Oral Arg.
Tr. at 138–140 (THE COURT: “I’m going to give you a reaction on one issue concerning fees that
gives me some pause, which is the notion of fees on fees. . . . I am not aware that it would be
ordinary to bill a client for the administrative work of sending a bill, which is akin to filing a
petition, if you will. . . . If you want to carve that out, it might be prudent to do so.”).
84
2021 Fee Order ¶ 4, Ex. D to Opening Br. The 2021 Fee Order also denied Shawe’s and TPG’s
motion to find Pincus in contempt for delayed fee petitions, a decision Shawe and TPG do not
directly appeal. Id. ¶ 1, Ex. D to Opening Br.
19
In evaluating Pincus’s request, the court conducted an exhaustive analysis of
his submissions and the related objections from Shawe and TPG. In at least six
areas, it rejected or reduced Pincus’s fees.85 After working through the manifold
objections lodged by Shawe and TPG, the court concluded that the $3.2 million
award was reasonable under Rule 1.5(a) of the Delaware Lawyers’ Rules of
Professional Conduct.86 The court required Shawe and TPG to pay Pincus by May
7, 2021.87 This deadline came and went, but TPG completed the payment in
September 2021 in the face of another contempt motion from Pincus.88
II. ANALYSIS
Shawe and TPG bring three claims on appeal.89 First, they challenge the
October 17, 2019 order (again, the “Contempt Order”) and maintain that the trial
court erred by finding each of them in contempt of the Final Order for TPG’s filing
of the Nevada Action. We affirm the Contempt Order as it applies to TPG but hold
85
See Fee Op., 2021 WL 1711797, at *32 (reducing fees for clerical and administrative work); id.
at *41 (excluding fees for defending confidentiality motions); id. at *43 (excluding fees for the
preparation of billing statements); id. at *44 (excluding fees for the preparation of monthly update
letters); id. at *46 (partially excluding fees for preparation of a proposed discharge order); id. at
*47–48 (excluding fees for preparation of a settlement offer and reducing fees for a large Westlaw
charge).
86
Id. at *48.
87
2021 Fee Order ¶ 4, Ex. D to Opening Br.
88
See Ex. A to Appellants’ Mot. to Supp. the R. at 2–4. The final piece of the payment cleared in
October 2021 when it was released from the Escrow. Id. Having reviewed this motion to
supplement the record filed by Shawe and TPG, and noting that it is unopposed, the Court hereby
GRANTS the motion.
89
Shawe and TPG initially filed three separate appeals. We consolidated the cases on June 29,
2021. Order Consolidating Appeals, TransPerfect Glob., Inc. v. Pincus, Nos. 154, 167, and 175,
2021 (Del. June 25, 2021).
20
that the court erred when it sanctioned Shawe. Second, Shawe and TPG assert that
the April 14, 2021 order (the “Discharge Order”) improperly expanded Pincus’s
protections. We affirm the Discharge Order as a sound exercise of the trial court’s
discretion. Finally, Shawe and TPG appeal the April 30, 2021 order (the “2021 Fee
Order”) and contend that the Court of Chancery abused its discretion by awarding
an unreasonable amount of fees. We disagree and affirm the 2021 Fee Order, subject
to a qualification discussed below. Our reasoning follows.
A. The Court of Chancery Appropriately Found TPG in Contempt for
Filing the Nevada Action but Erred in Sanctioning Shawe
The Court of Chancery found Shawe and TPG in contempt for TPG’s filing
of the Nevada Action, which the court determined violated the exclusive jurisdiction
provision—Paragraph 10—of the Final Order.90 This finding had two monetary
consequences: first, TPG had to—and did—dismiss the Nevada Action by a certain
date to avoid a daily fine of $30,000; and second, the court charged Shawe and TPG
with a Contempt Sanction of $1,148,291 in fees payable to Pincus.91 TPG paid the
Contempt Sanction in September 2021, but along with Shawe still contests its
validity.92
90
Contempt Op., 2019 WL 5260362, at *10.
91
2021 Fee Order ¶ 4, Ex. D to Opening Br.
92
See Ex. A to Mot. to Supp. the R. at 1.
21
Civil contempt is a weighty sanction that can be accompanied by a range of
punishments, including fines and imprisonment.93 Court of Chancery Rule 70(b)
authorizes the court to make a contempt finding “[f]or failure . . . to obey or to
perform any order[.]”94 In Gallagher v. Long, we held that “[a] trial judge has broad
discretion to impose sanctions for failure to abide by [court] orders” subject to the
requirement that the “decision to impose sanctions must be just and reasonable.”95
When an asserted violation of a court order is the basis for contempt, the party to be
sanctioned must be bound by the order, have clear notice of it, and nevertheless
violate it in a meaningful way.96 The burden of proof rests with the movant—here,
Pincus—who must “establish[] [the] contemptuous conduct by a preponderance of
the evidence[.]”97 If the movant makes out a prima facie case, “the burden then
93
State ex rel. Buckson v. Mancari, 223 A.2d 81, 82 (Del. 1966); see also Am. Jur. 2d
Contempt § 191 (“Incarceration for contempt may be either civil or criminal; the distinguishing
factor is whether the incarceration is for a definite period of time, which is the hallmark of criminal
contempt, or whether the contemnor may avoid or cut short the incarceration by complying with
the court’s directive, which indicates civil contempt.”).
94
Ch. Ct. R. 70(b).
95
Gallagher v. Long, 940 A.2d 945, 2007 WL 3262150, at *2 (Del. 2007) (TABLE) (citing
Lehman Cap. v. Lofland, 906 A.2d 122, 131 (Del. 2006)).
96
Trascent Mgmt. Consulting, LLC v. Bouri, 2018 WL 6338996, at *1 (Del. Ch. Dec. 4, 2018);
Gallagher, 2007 WL 3262150, at *2; Mother Afr. Union First Colored Methodist Protestant
Church v. Conf. of Afr. Union First Colored Methodist Protestant Church, 1992 WL 83518, at *9
(Del. Ch. Apr. 22, 1992), aff’d, 633 A.2d 369, 1993 WL 433524 (Del. 1993) (TABLE) (requiring
“clear” and “definite” notice); Dickerson v. Castle, 1991 WL 208467, at *4 (Del. Ch. Oct. 15,
1991) (requiring that a violation be “meaningful” rather than “a mere technical one[.]”).
97
Wilmington Federation of Teachers v. Howell, 374 A.2d 832, 838 (Del. 1977); see also Hurley,
257 A.3d at 1018 & n.32 (explaining the distinction between civil contempt and criminal contempt,
the latter of which requires a showing of clear and convincing evidence.). Writing before our
decision in Hurley, the Court of Chancery found Shawe and TPG in civil contempt of the Final
Order by clear and convincing evidence. Contempt Op., 2019 WL 5260362, at *10. Although we
22
shifts to the contemnors to show why they were unable to comply with the order.”98
After that, the court must make findings of fact and determine whether each party
carried its burden.99 Critically, these fact findings must be specific to each
defendant.100
We review contempt findings for abuse of discretion and respect the court’s
factual determinations unless they are clearly erroneous.101 Our review of claimed
errors of law—including the application of the legal standard for contempt—is de
novo.102 Shawe and TPG argue that contempt was improper because the court’s
orders “did not provide the clear, definite, and specific notice required to issue
restate that the preponderance standard is the appropriate burden for findings of civil contempt,
the evidentiary burden does not otherwise affect our analysis in this case.
98
TR Invs., LLC v. Genger, 2009 WL 4696062, at *15 (Del. Ch. Dec. 9, 2009), aff’d, 26 A.3d 180(Del. 2011); accord Gorman v. Salamone, 2015 WL 4719681, at *9 (Del. Ch. July 31, 2015).
99
TR Invs., 2009 WL 4696062, at *15–16 (“Genger Acted in Contempt of Court By Directing his
Agent to Delete Company-Related Documents”); Electr. Workers Pension Tr. Fund of Local
Union 58, IBEW v. Gary’s Electr. Serv., 340 F.3d 373, 382–385 (6th Cir. 2003) (holding that after
movants meet their initial burden, “the burden of production shifts to [the defendant]” and
remanding to the District Court to “make specific findings with respect to whether the parties
satisfied their respective burdens.”).
100
Wilson v. United States, 221 U.S. 361, 385 (1911) (holding that corporate officer defendants in
contempt actions related to the failure to produce corporate books and records “may demand that
any accusation against them individually be established without the aid of their oral testimony or
the compulsory production by them of their private papers.”); City of Wilmington v. Gen.
Teamsters Loc. Union 326, 321 A.2d 123, 127 (Del. 1974) (“[S]ome nexus must be established
between the acts complained of [] and defendants in order to support a finding of contempt.”); Int’l
Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 833–34 (1994) (“Contempts
involving out-of-court disobedience to complex injunctions often require elaborate and reliable
factfinding.”); see also 17 Am. Jur. 2d Contempt § 116 (“Generally, to support a finding of civil
contempt for violation of a court order, the evidence must establish that . . . the alleged contemnor
violated the order[.]”).
101
Hurley, 257 A.3d at 1017.
102
Id. (citing Fink v. State, 817 A.2d 781, 788 (Del. 2003)).
23
sanctions.”103 They also claim that contempt cannot run against Shawe personally
because he did not file the Nevada Action and the court did not find that he directed
TPG to do so.104 Pincus responds that the Final Order clearly barred the Nevada
Action and that “Shawe controls TransPerfect and thus is responsible” for TPG’s
contemptuous conduct.105 We affirm the Contempt Order and Sanction as they apply
to TPG but hold that the Court of Chancery committed legal error when it sanctioned
Shawe without sufficient findings of fact.
i. The Court of Chancery Did Not Err in Finding TPG in
Contempt of the Final Order
Paragraph 10 of the Final Order provides that “the Court retains continuing
and exclusive jurisdiction over the parties to the Actions for all matters relating to
the Actions[.]”106 The Court of Chancery found that TPG was in contempt of the
Final Order because it was bound by the order, had notice of it, and meaningfully
violated it by filing the Nevada Action.107 TPG does not contest the notice prong.108
It argues that the Final Order did not forbid the filing of the Nevada Action or even
103
Opening Br. at 32.
104
Id.105
Id. at 57.
106
Final Order ¶ 10, A936. The Court of Chancery issued this order on February 15, 2018. Id. at
18, A936. TPG does not contest that it filed the Nevada Action against Pincus on August 13, 2019,
and that the Final Order was in effect on that date. See Nev. Compl. at 1, A1119.
107
Contempt Op., 2019 WL 5260362, at *13.
108
See id. at *10; Opening Br. at 38 (“TPG did not act pro se. At least half a dozen lawyers
researched and advised on the issues, read the different orders, and determined that there was
nothing inherently sanctionable about filing the Nevada Action.”).
24
apply to TPG and that the Company had a good-faith basis to file the Nevada Action
under the Director Indemnification Agreement (again, the “DIA”). We disagree and
affirm the trial court’s contempt finding against TPG.
The Final Order’s reservation of “exclusive jurisdiction over the parties to the
Actions for all matters relating to the Actions” clearly proscribed any lawsuit by
TPG against Pincus in any forum except the Court of Chancery. This is because
TPG was a party to both actions covered by the Final Order: In re TransPerfect
Global, Inc. (C.A. No. 9700) and Elting v. Shawe and TransPerfect Global, Inc.
(C.A. No. 10449).109 These captions appear conspicuously at the top of the first page
of the Final Order.110 Moreover, there can be no serious doubt that TPG’s suit
against Pincus was “relat[ed] to the Actions.” TPG’s complaint challenged the
validity of the Court of Chancery’s 2019 Fee Orders, which awarded Pincus
$65,203.85 in fees he requested under provisions in the Sale and Final Orders.111 At
the risk of stating the obvious, Pincus would not have petitioned for these fees had
the court not named him Custodian, so they are clearly related to the actions in the
Court of Chancery.
109
Final Order at 1, A919. TPG’s status as a nominal defendant in C.A. No. 10449 does not change
the fact that it was a “party.” See Brookstone Partners Acquisition XVI, LLC v. Tanus, 2012 WL
5868902, at *3 & n.34 (Del. Ch. Nov. 20, 2012) (explaining that “Woodcrafters is not a party to
the Texas Action, but is a Nominal Defendant in the Delaware Action.”).
110
Final Order at 1, A919.
111
Jun. 28, 2019 Order Approving Fees and Expenses, A1109; July 17, 2019 Order Approving
Fees and Expenses, A1117; Contempt Op., 2019 WL 5260362, at *8 & n.60.
25
TPG also claims that it was not bound by the Final Order because “the Final
Order expressly listed out the parties that were subject to its provisions, and TPG is
not included.”112 For support, TPG cites Paragraph 3 of the Final Order, which
identifies various parties who are required to release claims of liability and does not
include TPG.113 But Paragraph 3 relates to claim releases, not jurisdiction, and does
not purport to override any other provision of the Final Order. Thus, it cannot be
fairly read to negate the plain text of Paragraph 10, which, again, provides that “the
Court retains continuing and exclusive jurisdiction over the parties to the Actions
for all matters relating to the Actions.”114 TPG is a “part[y] to the Actions” and is
bound by Paragraph 10.
TPG seeks refuge from the text of the Final Order by arguing that the Nevada
Action actually sought relief from a different source, the DIA. The Company asserts
that the Nevada Action attacked Pincus’s right to request fees under the DIA, which
included a non-exclusive jurisdiction provision.115 This argument was doomed from
the start because TPG’s original Nevada Complaint did not even mention the DIA;
it did, however, invoke the SPA and the Appointment, Sale, and Final Orders.116
112
Opening Br. at 37 (emphasis removed).
113
Final Order ¶ 3, A926–928.
114
Id. ¶ 10, A936.
115
DIA § 14N, A761–762 (“The Company and Indemnitee hereby (i) agree that any action or
proceeding arising out of or in connection with this Agreement may be brought in the Delaware
Court of Chancery[.]”).
116
See Nev. Compl., A1119. After Pincus moved for contempt sanctions, TPG amended its
Nevada complaint to add a claim under the DIA. See Amd. Nev. Compl. ¶ 65, A1530. But the
26
Additionally, Pincus never requested fees under the DIA, which he would have had
to do in writing to trigger its other provisions. Finally, any notion that the challenged
fees were related to Pincus’s service as a director is undercut by the record, which
includes an email from TPG’s general counsel stating that “Pincus has not been
involved in the Cypress or [H.I.G.] litigation in his capacity as an officer or director
of TransPerfect[.]”117 In sum, the DIA did not provide a valid basis to file the
Nevada Action because it had nothing to do with the 2019 Fee Orders TPG sought
to challenge.
It is clear to us that TPG’s violation was “meaningful” rather than “a mere
technical one[.]”118 TPG does not argue otherwise, and we agree with the trial court
that that the Nevada Action put at issue not only the Final Order, but also various
terms of other orders that the Nevada courts would have needed to interpret in order
to adjudicate the case.119 Thus, we conclude that the Court of Chancery did not err
in determining that the Final Order bound TPG and that the Nevada Action
meaningfully violated the exclusive jurisdiction provision in Paragraph 10. Because
amended complaint still challenges Pincus’s right to seek reimbursement through the orders issued
by the Court of Chancery in C.A. Nos. 9700 and 10449. Thus, even if we were to only consider
the amended Nevada complaint, it, too, would plainly be “related to the Actions” in violation of
Paragraph 10 of the Final Order. See Opening Br. at 43.
117
Email from A. Mimeles to J. Voss, July 22, 2019, A1255. Indeed, the amounts in question
were charged for time worked more than eleven months after Pincus resigned from the TPG board.
See Contempt Op., 2019 WL 5260362, at *11.
118
Dickerson, 1991 WL 208467, at *4.
119
Contempt Op., 2019 WL 5260362, at *11.
27
TPG does not contest that it had notice of the Final Order when it filed the Nevada
Action, we hold that the Court of Chancery did not abuse its discretion when it found
TPG in contempt.
ii. The Court of Chancery Erred When it Found Shawe in
Contempt of the Final Order
Shawe was not a party to the Nevada Action.120 Nevertheless, the Court of
Chancery found him in contempt because “the filing of the Nevada Action violated
paragraph 10 of the Final Order[.]”121 On appeal, Shawe observes that TPG was the
only plaintiff in the Nevada Action and that the Contempt Opinion lacks “any factual
finding sufficient to impute liability onto Shawe for the actions of TPG.”122 Pincus
responds that “Shawe controls TransPerfect and thus is responsible for
TransPerfect’s filing of the Nevada Action.”123 We hold that the Court of Chancery
failed to make the specific, individualized findings of fact that were required to hold
Shawe in civil contempt. Hence, we vacate the finding of contempt against him.
In the Contempt Opinion, the court explained why the Nevada Action was
sanctionable, offering that “TransPerfect sued the Custodian in Nevada state
120
The case was captioned TransPerfect Global, Inc. v. Robert B. Pincus, Esq., and the complaint
identified Shawe as a “relevant non-party.” Nev. Compl. ¶ 7, A1121.
121
Contempt Op., 2019 WL 5260362, at *10.
122
Opening Br. at 32, 34; see also Reply Br. at 4 (“[T]he trial court never made any finding of fact
to support a finding of contempt against Shawe for having ordered the filing of the Nevada
action.”).
123
Answering Br. at 57.
28
court”124 and “the filing of the Nevada Action violated paragraph 10 of the Final
Order.”125 Throughout the Contempt Opinion, the court was careful to distinguish
between Shawe’s conduct and TPG’s conduct, especially as it related to the filing of
the Nevada Action. For example, the court stated that “Shawe advocated for entry
of the Final Order before the Delaware Supreme Court in 2018, and TransPerfect
specifically references the Final Order in the Nevada complaint.”126 The court never
identified a specific action taken by Shawe personally that violated the Final Order,
nor does Pincus point to one in his briefing. Nevertheless, the court found Shawe in
contempt.
This was error. Although contempt is a discretionary power of the Court of
Chancery, sanctions must still comply with the applicable legal standard. The
standard for contempt of a court order is that a party “(1) is bound by an order, (2)
has notice of the order, and (3) nevertheless violates the order.”127 Here, the trial
court had the authority to sanction Shawe under Court of Chancery Rule 70(b), but
to do so it was required to explain how he personally violated the Final Order.
Issuing a contempt order without such a determination misapplied the law.
124
Contempt Op., 2019 WL 5260362, at *8 (emphasis added).
125
Id. at *10.
126
Id. (emphasis added).
127
Trascent Mgmt. Consulting, 2018 WL 6338996, at *1; see Gallagher, 2007 WL 3262150, at
*2.
29
We are not announcing a new principle. In fact, the Court of Chancery
embraced the same reasoning when it addressed a similar contempt motion brought
against Shawe and TPG in December 2020 for other purported violations of court
orders. The context for this motion was a legal malpractice lawsuit that TPG filed
against Ross Aronstam Moritz, LLP in New York state court.128 Ross Aronstam
argued that the suit violated claim releases and antisuit covenants in the Sale Order
and exclusive jurisdiction provisions in the Sale and Final Orders.129 The court
observed that TPG was the only named plaintiff in the New York case and that
Shawe was not a party.130 For this and other reasons, it declined to hold Shawe in
contempt, explaining that
[a]lthough it is indisputable that Shawe controls the
Company through his 99% ownership of the Company,
and although it is hard to imagine given the history of these
proceedings that Shawe did not direct the Company to file
the New York Action, there is no record before the court
that he actually did so.131
For good measure, the court reiterated twice more that Shawe’s involvement in the
New York cases “implicates a question of fact for which there is no record.”132 This
128
Intervenors’ Mot. to Enforce the Orders of the Court and for Contempt ¶ 1, A3793.
129
April 2021 Contempt Op., 2021 WL 1415474, at *5.
130
Id.131
Id. at *6 (emphasis in original).
132
Id. (“[D]emonstrating that Shawe caused the Company or acted in concert with the Company
to initiate or pursue the claims in the New York Action would implicate a question of fact for
which there is no record.”).
30
analysis was sound: it correctly insisted upon record evidence that Shawe personally
violated a court order as a predicate for a contempt finding.133
Pincus maintains that the preceding analysis is irrelevant because Shawe
failed to raise this argument below and consequently is barred from raising it in this
Court. This is a fair point. The thrust of Shawe’s personal opposition to Pincus’s
contempt petition below was not that he had no hand in the filing of the Nevada
Action but, rather, that the Nevada Action, as filed (and amended), did not violate
the Final Order.134 To put it differently, Shawe did not explicitly contest what at the
time seemed apparent to all—that he had directed TPG to file the Nevada Action.
Instead, he defended the allegations of contempt on the ground that the filing of the
action did not run afoul of the Final Order. Implicit in this defense was that it didn’t
matter who filed—or directed the filing of—the Nevada Action.
On the other hand, Shawe was not entirely silent on the question of his
personal responsibility for the Nevada Action. For instance, in his opposition below,
he explicitly contended that “Shawe and TPG [were] not in violation of the
circumscribed exclusive jurisdiction provision of the Final Order.” 135 He likewise
133
See, e.g., Wilson, 221 U.S. at 385 (corporate officers facing a contempt motion “may demand
that any accusation against them individually be established without the aid of their oral testimony
or the compulsory production by them of their private papers.”); City of Wilmington, 321 A.2d at
127 (“[S]ome nexus must be established between the acts complained of [] and defendants in order
to support a finding of contempt.”); Bagwell, 512 U.S. at 833–34 (“Contempts involving out-of-
court disobedience to complex injunctions often require elaborate and reliable factfinding.”).
134
See, e.g, Shawe Opp’n ¶ 41, A1724–25.
135
Id. ¶ 41, A1724 (emphasis added).
31
argued that Pincus “fail[ed] to meet his high burden to justify the extraordinary
remedy of contempt . . . ,”136 which arguably put Pincus on notice that he would be
held to his burden of proving each element of civil contempt by a preponderance of
the evidence. As discussed above, Pincus failed to do so, because the Court of
Chancery ultimately did not find the specific, individualized facts required to hold
Shawe in contempt.
For present purposes, we will assume—without deciding—that Shawe did not
fairly present this argument in the Court of Chancery and thus deprived the
Chancellor of the opportunity to evaluate it. Nevertheless, we have considered
Shawe’s argument on appeal because, under Rule 8, we may do so if we determine
that “the trial court committed plain error requiring review in the interests of
justice.”137 As we explained in Shawe I:138
When reviewing for plain error, “the error complained of
must be so clearly prejudicial to substantial rights as to
jeopardize the fairness and integrity of the trial
process.”139 “Furthermore, the doctrine of plain error is
limited to material defects which are apparent on the face
of the record; which are basic, serious and fundamental in
their character, and which clearly deprive an accused of a
substantial right, or which clearly show manifest
injustice.”140
136
Id.
137
Shawe I, 157 A.3d at 168 (citing Smith v. Del. State Univ., 47 A.3d 472, 479 (Del. 2012)).
138
Shawe I, 157 A.3d at 168.
139
Smith, 47 A.3d at 479 (quoting Wainwright v. State, 504 A.2d 1096, 1100 (Del. 1986)).
140
Wainwright, 504 A.2d at 1100.
32
As discussed above, the Court of Chancery’s contempt findings in this case contain
a stark inconsistency: when fairly presented with the relevant arguments in response
to Ross Aronstam’s December 2020 contempt motion, the Chancellor concluded that
he could not hold Shawe in contempt without evidence that Shawe personally filed
or directed the New York lawsuit that violated the Court’s orders.141 This conclusion
was based on the correct principle of law. Recognizing this, we cannot let the
Contempt Order stand against Shawe because doing so would preserve an error that
deprived him of the right to have each of the elements of contempt proved against
him personally and found by the court. Given the seriousness of a civil contempt
sanction, which may be accompanied by large fines and even imprisonment, this
result would be “so clearly prejudicial to substantial rights as to jeopardize the
fairness and integrity of the trial process” and would not, therefore, comport with
the interests of justice.
We hold that to find a corporate officer or shareholder in civil contempt of a
court order, the trial court must specifically determine that the officer or shareholder
bore personal responsibility for the contemptuous conduct. This is consistent with
requirement that, when an asserted violation of a court order is the basis for
contempt, the party to be sanctioned must be bound by the order, have clear notice
141
April 2021 Contempt Op., 2021 WL 1415474, at *6.
33
of it, and nevertheless violate it in a meaningful way.142 As a result, we vacate the
Contempt Order and Sanction only as they apply to Shawe.
B. The Court of Chancery Did Not Abuse Its Discretion by Discharging
Pincus Via the Discharge Order
Shawe and TPG next assert that the Discharge Order was unsound because,
when compared to the SPA, it “expand[ed] the scope of claims to be released” and
classified TPG as a releasor.143 We disagree. As discussed in further detail below,
the Court of Chancery has discretionary authority to manage a custodianship.
Hence, we review the Discharge Order for an abuse of discretion and find no abuse
here.
i. The Terms of a Custodian’s Discharge Are Subject to the Court
of Chancery’s Sound Discretion
The Court of Chancery’s discretion to supervise receivers and custodians
flows from 8 Del. C. § 226, which governs their appointment. Section 226 provides:
A custodian appointed under this section shall have all the
powers and title of a receiver appointed under § 291 of this
title, but the authority of the custodian is to continue the
business of the corporation and not to liquidate its affairs
and distribute its assets, except when the Court shall
otherwise order[.]
142
Trascent Mgmt. Consulting, 2018 WL 6338996, at *1; see Gallagher, 2007 Wl 3262150, at *2.
143
Opening Br. at 4, 81–82; see also Answering Br. at 72–77; Discharge Op., 2021 WL 1401518,
at *1 (“The discharge of a court-appointed custodian, as with the appointment of one, generally
rests within the discretion of the appointing court.”).
34
Section 226 refers to Section 291, which similarly imparts discretion to the trial
court. It states that “[t]he powers of the receivers . . . shall continue so long as the
Court shall deem necessary.”144 Thus, as we explained in Giuricich v. Emtrol Corp.,
“under §§ 226 and 291, the Court of Chancery may determine the duration of the
appointment and the specific powers to be conferred on the custodian.”145 Supported
by this sturdy backdrop, in Shawe I we approved the appointment of Pincus as
Custodian and explained that “the remedy to address the deadlock is ultimately
within the Court of Chancery’s discretion.”146
Swimming against the current, Shawe and TPG maintain that the Court of
Chancery enjoyed no discretion to establish the terms of Pincus’s discharge because
the terms were set in stone by the SPA.147 This argument falls flat, for starters,
because by approving the SPA, the trial court did not—and could not—relinquish
its statutory authority to “determine the duration of the appointment and the specific
144
8 Del. C. § 291 (emphasis added).
145
Giuricich v. Emtrol Corp., 449 A.2d 232, 240 (Del. 1982). This discretion is consistent with
the Court of Chancery’s equitable authority to establish remedies. Thus, in Jagodzinski v. Silicon
Valley Innovation Co., LLC, the Court of Chancery explained that “appointment and discharge of
a receiver is ordinarily a matter resting within the sound discretion of the appointing court[.]”
2015 WL 4694095, at *6 (Del. Ch. Aug. 7, 2015) (quoting Ralph Ewing Clark, A Treatise on the
Law and Practice of Receivers 1270 (3d ed. 1959)). We have also observed that the Court of
Chancery enjoys “broad discretion . . . to fashion such relief as the facts of a given case may
dictate[.]” Weinberger v. UOP, Inc., 457 A.2d 701, 715 (Del. 1983). And we have stated that we
“defer substantially to the discretion of the trial court in determining the proper remedy[.]” Int’l
Telecharge, Inc. v. Bomarko, Inc., 766 A.2d 437, 439 (Del. 2000); Gotham Partners, L.P. v.
Hallwood Realty Partners, L.P., 817 A.2d 160, 175 (Del. 2002) (“This Court reviews the Court of
Chancery’s fashioning of remedies for abuse of discretion.”).
146
Shawe I, 157 A.3d at 166.
147
Opening Br. at 71–72.
35
powers to be conferred upon the custodian.”148 Put differently, a contract—even if
court-approved—cannot prospectively constrain a court’s existing statutory
powers.149 Helpfully, Section 12.18 of the SPA recognized this principle when it
provided that, “[n]otwithstanding anything to the contrary set forth in this
Agreement, the duties and responsibilities of all parties subject to the Sale Order and
all other orders of the Court . . . shall remain in full force and effect in accordance
with their terms.”150 Applying this text is straightforward: the Discharge Order
controls “[n]otwithstanding anything to the contrary set forth in this Agreement.”151
In sum, the contract that Shawe and TPG seek to invoke expressly recognizes
the primacy of court orders. This is consistent with the Court of Chancery’s
discretionary authority to manage custodianships under 8 Del. C. § 226. We will
therefore review the Discharge Order for an abuse of discretion.
148
Giuricich, 449 A.2d at 240.
149
See, e.g., In re Appraisal of Metromedia Intern. Grp., Inc., 971 A.2d 893, 900 (Del. Ch. 2009)
(“[A] valid contract will be enforced unless the contract violates public policy or positive law[.]”).
In their Reply Brief, Shawe and TPG make a cursory, late breaking, and completely unsupported
argument that the Discharge Order “materially decreas[es] the value of TransPerfect to the buyer
after the transaction has closed [and] amounts to an unconstitutional taking.” Reply Br. at 33–34.
Shawe and TPG did not articulate this argument in their Opening Brief. It is therefore waived.
Sup. Ct. R. 14(b)(vi)(A)(3) (“The merits of any argument that is not raised in the body of the
opening brief shall be deemed waived and will not be considered by the Court on appeal.”).
150
SPA § 12.18, A848 (emphasis added).
151
Id.
36
ii. The Court of Chancery Did Not Abuse Its Discretion in
Establishing the Terms of Pincus’s Discharge
The Court of Chancery did not abuse its discretion when it established the
terms of Pincus’s discharge through the Discharge Order. An abuse of discretion
occurs “when the trial judge exceeds the bounds of reason in view of the
circumstances and has so ignored recognized rules of law or practice so as to produce
injustice.”152 We have also identified a reversible abuse of discretion “when a
relevant factor that should have been given significant weight is not considered[.]”153
Beyond their attempt to recast this issue as a question of contract law, Shawe and
TPG do not identify a specific abuse of discretion by the trial court.154 Nor do we
see any. As such, we affirm the Discharge Order.
The Court of Chancery issued the Discharge Order after reviewing proposals
from all parties and hearing oral argument. Shawe and TPG proposed a single
paragraph stating that Pincus was discharged “and shall retain the same protections
and indemnification rights granted to him under the Securities Purchase Agreement,
the Sale Order and the Final Order in his individual capacity as he has had in his
capacity as Custodian.”155 Pincus’s proposal was 17 paragraphs and contained
152
Wright, 131 A.3d at 320.
153
Homestore I, 886 A.2d at 506.
154
See Reply Br. at 30–31 (“Indeed, the abuse of discretion standard, as outlined by Pincus, does
not apply, as Appellants are not challenging Pincus’ discharge, but rather are challenging the
modification of the SPA contained in the discharge order.”).
155
Shawe’s and TPG’s Proposed Order of Discharge at 1, A3901.
37
numerous purported illustrations of his protections “[f]or the avoidance of
doubt[.]”156 One of Pincus’s requests was that TPG be required to release all
potential claims of liability against Pincus.157
The trial court concluded that the single paragraph offered by Shawe and TPG
was “inadequate for the task” and that Pincus’s proposal was “worded in a manner
that could be construed as expanding upon pre-existing protections[.]”158 The court
deleted many of Pincus’s proposed clarifications, but it clarified that TPG was
required to release any claims against Pincus related to his work as Custodian.159
The court explained that this clarification was consistent with the SPA and that the
additional detail was required “[g]iven the lengthy and fractious history of these
actions [and] the numerous (and often frivolous) collateral litigations spawned from
the sale process that have embroiled the Custodian and many others[.]”160
In our view, it was sensible for the trial court to clarify the scope of Pincus’s
protections. This appeal is just one example of the litigation risk Pincus has been
compelled to navigate during his time as Custodian. Because Shawe and TPG have
not identified even a purported abuse of discretion on appeal—and reiterated in their
Reply Brief that they are not attempting to do so—we affirm the Discharge Order.
156
Custodian’s Proposed Order of Discharge ¶¶ 6–15, A3755–63.
157
Id. ¶ 15, A3763.
158
Discharge Op., 2021 WL 1401518, at *1–2.
159
Id. at *3, A5181; Discharge Order ¶ 9, Ex. C to Opening Br. at 15–16.
160
Discharge Op., 2021 WL 1401518, at *1.
38
C. The Court of Chancery Did Not Abuse Its Discretion or Otherwise Err
by Awarding Pincus $3.2 Million in Fees and Expenses
Finally, Shawe and TPG argue that the Court of Chancery committed various
errors in the 2021 Fee Order, which awarded Pincus $3,242,251 in fees and expenses
he incurred from May 2019 to December 2020.161 Shawe and TPG divide their
objections into three groups. First, they challenge the $365,127 that the trial court
awarded Pincus for his efforts to enforce the 2019 Fee Orders, which TPG refused
to comply with.162 Second, they assert that $594,793 in fees awarded to Pincus were
not recoverable absent a showing of bad faith, which Pincus never made.163 Third,
they bring eight distinct objections to the reasonableness of the entirety of the
$3,242,251 award, including that the trial court failed to properly apply its own
orders.164
When an award of attorneys’ fees is grounded in a contract or court order, we
review the authorizing provisions de novo.165 If an award is legally permissible,
however, the determination of the appropriate amount is a classic matter for the trial
161
2021 Fee Order ¶ 2, Ex. D to Opening Br.; Fee Op., 2021 WL 1711797, at *48.
162
Opening Br. at 53–58.
163
Id. at 53–54, 58–61.
164
Id. at 53–54, 61–70.
165
Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund, 68 A.3d 665,
675 (Del. 2013) (“While we review an award of attorneys’ fees for abuse of discretion, we review
the Vice Chancellor’s interpretation of a contractual fee-shifting provision de novo.”) (internal
citations omitted); Town of Cheswold v. Central. Del. Bus. Park, 188 A.3d 810, 813, 818 (Del.
2018) (interpreting stipulated court orders “like contracts.”); accord Harley–Davidson, Inc. v.
Morris, 19 F.3d 142, 148 (3d Cir. 1994); see also Am. Jur. Mots. § 48 (“[W]here necessary, the
proper interpretation of a court order is a matter of law.”).
39
court’s discretion.166 We conduct a highly deferential abuse-of-discretion review by
keeping in mind the non-exhaustive factors of Rule 1.5(a) of the Delaware Lawyers’
Rules of Professional Conduct.167 To prevail on their challenges, Shawe and TPG
“must establish either that the Chancellor failed to assess the reasonableness of the
fees and expenses or that his determination that the fees and expenses were
reasonable was capricious or arbitrary.”168 It is clear that the Court of Chancery
carefully considered Pincus’s requests and the related objections and painstakingly
assessed the reasonableness of the fees and expenses at issue. In our view, the
Court’s award was reasonable and not an abuse of discretion. We therefore affirm
the 2021 Fee Order.
i. The Court of Chancery Did Not Abuse Its Discretion by
Awarding Pincus $365,127 Related to the 2019 Fee Orders
Shawe’s and TPG’s first target is the $365,127 that the trial court awarded to
Pincus for fees incurred during his efforts to enforce the 2019 Fee Orders.169 As
discussed above, after TPG failed to pay these bills—which totaled $65,203.85—
166
Scion Breckenridge, 68 A.3d at 675.
167
Mahani v. Edix Media Grp., Inc., 935 A.2d 242, 245–246 (Del. 2007). These factors are “(1)
the time and labor required, the novelty and difficulty of the questions involved, and the skill
requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the
acceptance of the particular employment will preclude other employment by the lawyer; (3) the
fee customarily charged in the locality for similar legal services; (4) the amount involved and the
results obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the
nature and length of the professional relationship with the client; (7) the experience, reputation,
and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or
contingent.” Id. at 246.
168
Id.169
Opening Br. at 54; Fee Op., 2021 WL 1711797, at *40 & n.386.
40
Pincus filed a motion for civil contempt and sanctions to recover them, as well as
the costs of litigating the issue.170 The court declined to make a contempt finding as
to the unpaid fees but explained that Pincus retained the right to seek reimbursement
under the court’s previous orders.171 Accordingly, in his December 15, 2020 Fee
Petition, Pincus requested $425,127 “in connection with disputes over the [2019]
Fee Orders, prior fee petitions, and billing records.”172 Of this amount, the trial court
awarded Pincus $365,127.173 We affirm this award.
Shawe and TPG assert that the court “abused its discretion by finding that
despite successfully defending against Pincus’s Contempt Motion, TPG was
nevertheless responsible for those fees.”174 This argument treats the court’s denial
of Pincus’s contempt motion as to the unpaid fees and costs as the final word on
whether those amounts could be awarded at all.175 The Court of Chancery was
prescient on this point: the order denying the motion explained that, but for changes
not at issue here, it “[did] not modify, invalidate or otherwise alter any provision of
170
Custodian’s Mot. for Contempt ¶ 79, A1351.
171
Fee Process Order at 2, Ex. B to Opening Br.
172
Custodian’s Dec. 15, 2020 Fee Petition at 11, A3779.
173
2021 Fee Op., 2021 WL 1711797, at *40 & n.386. The court overruled the various objections
brought by Shawe and TPG against these fees but subtracted $60,000 for work relating to drafting
and implementing confidentiality restrictions, which the court found not to be recoverable. Id.Pincus does not cross-appeal this or any other reduction.
174
Opening Br. at 54.
175
Id. at 55.
41
the Sale Order [], the Final Order, the First Order, or any other orders[.]”176 Thus,
the court explicitly preserved Pincus’s right to seek reimbursement under these
orders.177
Shawe and TPG also argue that Pincus should not have been reimbursed for
the approximately $25,000 he billed to allocate his unpaid fees between the Final
Order and the 2019 Fee Orders.178 We agree with the trial court that this split was
required because the Contempt Sanction made Shawe personally liable for fees
related to the Final Order, while the 2019 Fee Orders only bound TPG.179 Thus, an
allocation was required in part to determine the extent of Shawe’s personal liability.
Indeed, this is particularly salient on appeal given our conclusion that the trial court
erred by extending the Contempt Sanction to Shawe.
We conclude that the Court of Chancery did not abuse its discretion when it
awarded Pincus $365,127 in fees and expenses related to his efforts to enforce the
2019 Fee Orders.
176
Fee Process Order ¶ 2, Ex. B to Opening Br. The Fee Process Order required Pincus to furnish
additional billing information—at Shawe’s and TPG’s request—and clarified the Contempt
Sanction related only to fees incurred by Pincus in connection with “TPG’s and Shawe’s contempt
of the Final Order.” Id. ¶¶ 3(a), 7.
177
For example, and as discussed above, Paragraph 14 of the Sale Order provides in pertinent part
that “[t]he Custodian shall be compensated at the usual hourly rate he charges [and] reimbursed
for reasonable travel and other expenses incurred in the performance of his duties.” Sale
Order ¶ 14, A770. Under Paragraph 14, “[a]ny fees and expenses approved by the Court shall be
paid promptly by the Company.” Id.; see Contempt Op., 2019 WL 5260362, at *3 & n.36.
178
Opening Br. at 55–56.
179
See, e.g., Jun. 28, 2019 Order Approving Fees and Expenses at 1, A1109 (“[T]he petition is
approved and TransPerfect Global, Inc. shall make prompt payment[.]”).
42
ii. The Court of Chancery Did Not Err in Awarding Pincus
$594,793 in Fees Related to the Omnibus Objection
Shawe and TPG next attack the Court of Chancery’s award of $594,793 to
Pincus for the fees and expenses he incurred in responding to their 202-page
objection to his fee petitions from May to October 2019 (the “Omnibus
Objection”).180 According to Shawe and TPG, the trial court’s November 2019 Fee
Process Order provides that such fees are only recoverable if the petitioning party
shows that the objections were made in bad faith.181 Because Pincus did not allege
bad faith, the argument goes, none of these fees were validly awarded.182 This
challenge requires us to interpret a court order, so our review is de novo.183 The
Court of Chancery rejected the argument that the Fee Process Order required Pincus
to prove bad faith to recover these fees.184 We agree and affirm the award.
Shawe and TPG urge us to apply Paragraph 3(e) of the Fee Process Order,
which provides:185
To the extent that any party is found to have acted in bad
faith regarding the fee petition and objection process set
forth in Paragraph 3(c) herein, the Court may order that
such party pay fees and expenses incurred by the other
180
Fee Op. at Ex. A, Ex. D to Opening Br.; Omnibus Objection, A2862–3064. Pincus initially
sought $605,793 for his response to the Omnibus Objection. Fee Op., 2021 WL 1711797, at *43.
The court excluded from this request $11,000—most of which Pincus withdrew voluntarily—
relating to the preparation of billing statements. Id.181
Opening Br. at 58.
182
Id. at 61.
183
Scion Breckenridge, 68 A.3d at 675.
184
Fee Op., 2021 WL 1711797, at *44–45.
185
Fee Process Order ¶ 3(e), Ex. B to Opening Br. at 4 (emphasis added).
43
party or parties in connection with the objection process at
issue. For the avoidance of doubt, any such order shall be
in addition to, and without prejudice to, the Custodian’s
right to recover such amounts pursuant to the Court’s
orders or any other agreement or entitlement. Nothing in
this paragraph shall be construed to allow the Custodian a
double recovery of fees and expenses, unless the Court
otherwise orders.
The underlined language—unhelpfully omitted by Shawe and TPG in their
briefing—clearly provides that that the court’s authority to order bad-faith fee-
shifting “shall be in addition to, and without prejudice to, the Custodian’s right to
recover such amounts pursuant to the Court’s orders or any other agreement or
entitlement.”186 Even if read in isolation, the first sentence of Paragraph 3(e) says
nothing about precluding Pincus’s other methods of reimbursement, such as under
the Appointment, Sale, and Final Orders.
For these reasons, it is clear to us that Paragraph 3(e) did not eliminate
Pincus’s right to petition for fees under, for example, Paragraph 14 of the Sale Order.
Thus, we affirm the award of $594,793 to Pincus for the fees and expenses he
incurred in responding to Shawe’s and TPG’s objections.
186
Id.; Opening Br. at 59. Shawe and TPG also allege that the Escrow was the “Default Payor”
and that, as a result, and charges directly to TPG must be accompanied by a showing of bad faith.
This position relies on the incorrect reading of Paragraph 3(e) discussed above and on a
classification of the Escrow as the “default” source of funds that does not appear to be grounded
in any order or ruling of the court. Opening Br. at 59.
44
iii. The Court of Chancery’s Award Was Reasonable
In addition to the piecemeal objections discussed above, Shawe and TPG
challenge the reasonableness of the entire $3,242,251 award on eight distinct
grounds. As an initial matter, we note that the Court of Chancery’s analysis of the
disputed fees was exhaustive. In his 135-page Fee Opinion, the Chancellor
considered objections from Shawe and TPG that numbered in the dozens. These
challenges attacked “virtually every time entry in the fee petitions” and incorporated
a seventeen-part “Tagging Guide” of purportedly “Generally Objectionable Billing
Practices.”187 Although the court generally found that Pincus’s billing was
reasonable, it sustained some of Shawe’s and TPG’s objections and rejected or
reduced Pincus’s requests in at least six areas.188 The final award was for 84 percent
of the amount Pincus initially sought.189
For simplicity, we address Shawe’s and TPG’s arguments in three buckets:
(1) challenges to Skadden’s hourly rates, (2) allegations that Skadden billed
improperly, and (3) claims that Skadden’s fees in certain areas should have been
paid by the Escrow, which was funded evenly by Shawe and Elting. As above,
187
Fee Op., 2021 WL 1711797, at *18, 31; see Ex. B to Omnibus Objection at Ex. 4, A3024.
188
Fee Op., 2021 WL 1711797, at *32 (reducing fees for clerical and administrative work); id. at
*41 (excluding fees for defending confidentiality motions); id. at *43 (excluding fees for the
preparation of billing statements); id. at *45 (excluding fees for the preparation of monthly update
letters); id. at *46 (partially excluding fees for preparation of a proposed discharge order); id. at
*47 (excluding fees for preparation of a settlement offer and reducing fees for a large Westlaw
charge).
189
See Ex A. to Fee Op., Ex. D to Opening Br.
45
although we review an award of attorneys’ fees for abuse of discretion, we consider
the court’s interpretation of relevant orders and contractual provisions de novo.190
Also, we do not disturb the trial court’s factual determinations unless they are clearly
erroneous.191 Applying these standards, we conclude that Shawe and TPG have
failed to show that the trial court did not assess the reasonableness of the fees it
awarded to Pincus or that it acted arbitrarily in doing so.192
a. Skadden’s hourly rates were reasonable
When the Court of Chancery installed Pincus as Custodian, it provided in
Paragraph 11 of the Appointment Order that “[t]he fees of any counsel or advisors
. . . shall be calculated on the same hourly rates charged by such counsel or advisors
to clients represented outside this matter.”193 In the Fee Opinion, the court found as
a matter of fact that “Skadden’s rates . . . complied with this court’s orders.”194
Shawe and TPG claim that this was error because Skadden only certified that its
rates were “consistent” with those charged to other clients, not “the same.”195 Shawe
and TPG additionally argue that Skadden’s rates were “outrageous” and that a
190
Scion Breckenridge, 68 A.3d at 675.
191
Bäcker, 246 A.3d at 95.
192
Mahani, 935 A.2d at 245.
193
Appointment Order ¶ 11, A751.
194
Fee Op., 2021 WL 1711797, at *24.
195
Opening Br. at 62–64.
46
“reasonable client” discount should have been applied.196 We reject each of these
arguments about Skadden’s hourly rates.
We review the trial court’s determination that Skadden’s hourly rates were
“the same” as those it charged other clients for clear error.197 The court considered
three sources of evidence. The first was an affidavit sworn by Skadden partner
Jennifer Voss stating that the firm’s rates “are consistent with the hourly rates
charged by Skadden (including by the Delaware office of Skadden) to clients
represented outside this matter.”198 The second was a series of filings in which
“federal courts approved applications in 2019 to compensate Skadden at rates in line
with the rates [charged in this case].”199 The third consisted of filings “for twelve
other firms whose hourly rates were in line with the rates Skadden charged here.”200
These data, especially when considered alongside Voss’s affidavit, support the
determination that Skadden complied with the court’s orders regarding hourly rates.
Even if it were possible to view this evidence differently, “[w]hen there are two
permissible views of the evidence, the factfinder’s choice between them cannot be
clearly erroneous.”201 We therefore affirm the trial court’s finding that Skadden’s
rates satisfied Paragraph 11 of the Appointment Order.
196
Id. at 69.
197
Bäcker, 246 A.3d at 95.
198
Voss Aff. ¶ 6, A5066.
199
Fee Op., 2021 WL 1711797, at *24.
200
Id.201
Bäcker, 246 A.3d at 95.
47
We turn next to the claim that “Skadden’s attorneys billed at outrageous
rates[.]”202 In determining the appropriate amount of fees to award, the trial court
found that Skadden’s rates were reasonable.203 We review this for an abuse of
discretion.204 As an initial matter, the evidence discussed above regarding the rates
charged by comparable firms in other cases runs contrary to the claim that Skadden’s
rates in this matter were “outrageous.” Moreover, although Shawe and TPG retained
an expert to challenge Skadden’s fees, the trial court observed that the expert focused
primarily on only one of the eight non-exhaustive factors articulated by Rule 1.5(a),
“the fee customarily charged in the locality for similar legal services[.]”205
Consistent with our guidance, the court considered other Rule 1.5(a) factors,
including “the amount involved and the results obtained” and “the novelty and
difficulty of the questions involved[.]”206 The court concluded that Pincus and
Skadden faced a complex task and navigated significant obstacles, further justifying
the hourly rates charged.207 In our view, the court’s reasonableness determination
was adequately supported.
202
Opening Br. at 67.
203
Fee Op., 2021 WL 1711797, at *27.
204
Mahani, 935 A.2d at 245–246.
205
Fee Op., 2021 WL 1711797, at *27.
206
Id.207
Id.48
Shawe and TPG also assert that Skadden should have discounted its rates.208
As above, this claim is undercut by the trial court’s finding that Skadden’s rates were
similar to what it and peer firms charged in other matters. In any case, Shawe and
TPG cite no controlling authority that requires a “reasonable client” discount. In
fact, in In re RegO, Chancellor Allen awarded fees to a court-appointed guardian ad
litem and explained that the “position that work of this sort is a quasi-public service
that deserves to be paid at a discount is without authority.”209 We agree and conclude
that none of Shawe’s and TPG’s challenges to Skadden’s hourly rates has merit.
b. Skadden did not bill improperly
Next, Shawe and TPG allege that Skadden billed improperly by producing
vague entries and charging in full for overstaffed matters and simple research tasks.
The trial court considered and rejected these challenges in calculating the overall fee
award.210 Thus, once again, we review for an abuse of discretion.211 We reject these
objections.
Shawe and TPG first contend that “many of the billing entries were far too
vague to categorize the work performed in any meaningful or accurate way.”212 Yet,
Shawe and TPG provide no examples of this in their appellate briefing. In the Fee
208
Opening Br. at 69.
209
In re RegO, 19 Del. J. Corp. L. 858, 1993 WL 488240, at *3 (Del. Ch. 1993).
210
Fee Op., 2021 WL 1711797, at *31–36.
211
Mahani, 935 A.2d at 245–246.
212
Opening Br. at 68.
49
Opinion, the Court of Chancery rejected this claim.213 Among other things, the court
noted that Shawe’s and TPG’s “Tagging Guide” appeared to be over-inclusive, as it
tagged as “vague” an entry for 12 minutes of billed time with this description:
“confer with B. Pincus re: Cypress subpoena and follow up re: subpoena.”214 Our
review of the record reveals other questionable challenges.215 For these reasons, we
reject the objection.
Next, Shawe and TPG assert that Skadden billed in full for matters that were
overstaffed. They provide two examples. In the first, Skadden sent five timekeepers
to a hearing that was attended by at least four attorneys for Shawe and TPG, as well
as at least one attorney representing Shirley Shawe.216 In the second, 12 timekeepers
billed for the response to Shawe’s and TPG’s 202-page Omnibus Objection.217 The
complaint by Shawe and TPG that Pincus billed approximately $600,000 to defend
about $240,000 in contested fees may have some intuitive appeal, but it is a concrete
cold fact that a 202-page onslaught of objections is going to force a detailed and
213
Fee Op., 2021 WL 1711797, at *32 & n.313.
214
Id.215
See Ex. H to Omnibus Objection at 14, A2966 (classifying as “vague” an entry for 3 hours with
the following description: “Attention to Cypress subpoena to Pincus; attention to court’s order []
re: confidentiality and parties’ brief re: same; draft notes for response (including defenses); review
Cypress engagement letter; confer with Cypress counsel re: meet and confer; attention to CPLR
and services/jurisdiction issues.”).
216
Opening Br. at 68; see Oct. 21, 2019 Ch. Ct. Tr. at 2–3, A2501–2502. As the trial court
observed, this hearing—during which the court delivered an oral ruling on Pincus’s 2019 motion
for contempt—“was not a minor matter.” Fee Op., 2021 WL 1711797, at *33.
217
Opening Br. at 68; see Omnibus Objection, A2862–3064.
50
exhaustive response. To restate an observation that has unique applicability to the
current dispute, “it is more time-consuming to clean up the pizza thrown at a wall
than it is to throw it.”218
Third, Shawe and TPG complain that “Skadden billed hundreds of hours and
hundreds of thousands of dollars for ‘research,’ despite the issues at hand being
relatively straightforward.”219 The Court of Chancery fully considered and rejected
this claim, and Shawe and TPG do not develop specific examples of the purported
impropriety in their appellate briefing.220 Our own review of the record confirms
that the Court of Chancery correctly dismissed this objection.221 For example, in the
Omnibus Objection, Shawe and TPG attacked Skadden “for researching ‘indemnity
rights’” for seven hours.222 Of course, Pincus’s right to indemnification was a hotly
contested issue in this case, so the suggestion that Skadden’s research into the matter
constituted an overreach pays scant heed to reality. We conclude that Shawe’s and
TPG’s challenges to Skadden’s billing practices lack merit.
c. Skadden did not improperly charge TPG instead of the Escrow
Shawe and TPG argue that Pincus and Skadden should have exclusively used
the Escrow—which was funded evenly by Shawe and Elting—to cover fees, instead
218
Fee Op., 2021 WL 1711797, at *1 (quoting Auriga Cap. Corp. v. Gatz Props., LLC, 40 A.3d
839, 882 n.184 (Del. Ch. 2012) (Strine, C.)).
219
Opening Br. at 70.
220
Fee Op., 2021 WL 1711797, at *34.
221
Id.222
Omnibus Objection at 35–36 & n.16, A2898–2899.
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of charging TPG directly.223 Shawe and TPG make the same argument specifically
as to the fees related to the Cypress and H.I.G. Actions.224 This question concerns
the court’s authority to grant Pincus direct reimbursement from TPG, so our review
is de novo.225 As discussed at length, provisions in the Appointment, Sale, and Final
Orders authorize Pincus to charge TPG directly for his fees, rather than the Escrow.
For example, Paragraph 14 of the Sale Order, which we affirmed, provides that
“[t]he Custodian shall be compensated at the usual hourly rate he charges [and]
reimbursed for reasonable travel and other expenses incurred in the performance of
his duties” and that “[a]ny fees and expenses approved by the Court shall be paid
promptly by the Company.”226 Although Pincus was also authorized to charge the
Escrow directly under Section 2.2 of the SPA, this was a “non-exclusive source of
funds” and Pincus adequately and repeatedly explained his reasons for charging TPG
for certain post-sale fees that had little to do with Elting’s conduct. The Court of
Chancery did not abuse its discretion in allowing him to do so.
223
Opening Br. at 69.
224
Id.225
Scion Breckenridge, 68 A.3d at 675.
226
Sale Order ¶ 14, A770.
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III. CONCLUSION
For the reasons stated above, we reverse and vacate the Court of Chancery’s
October 17, 2019 Contempt Order and Sanction only as they apply to Philip R.
Shawe. We affirm the Contempt Order and Sanction as they apply to TransPerfect
Global, Inc. Additionally, we affirm the court’s April 14, 2021 Discharge Order
terminating the custodianship of Robert B. Pincus. Finally, we affirm the April 30,
2021 Fee Order awarding Pincus $3,242,251 in fees, subject to the qualification that
TransPerfect Global, Inc. is the only party liable for the $1,148,291 Contempt
Sanction.
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