In re: Shawe & Elting LLC ( 2015 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
ANDRE G. BOUCHARD New Castle County Courthouse
CHANCELLOR 500 N. King Street, Suite 11400
Wilmington, Delaware 19801-3734
Date Submitted: June 3, 2015
Date Decided: August 14, 2015
Kevin R. Shannon, Esquire Paul D. Brown, Esquire
Berton W. Ashman, Jr., Esquire Chipman Brown Cicero & Cole, LLP
Potter Anderson & Corroon LLP 1007 N Orange, Suite 1110
1313 North Market Street Wilmington, DE 19801
Wilmington, DE 19899
Peter B. Ladig, Esquire
Kurt M. Heyman, Esquire Brett M. McCartney, Esquire
Melissa N. Donimirsky, Esquire Morris James LLP
Proctor Heyman Enerio LLP 500 Delaware Avenue, Suite 1500
300 Delaware Avenue, Suite 200 Wilmington, DE 19801
Wilmington, DE 19801
Susan Wood Waesco, Esquire
Gregory P. Williams, Esquire Morris, Nichols, Arsht & Tunnell LLP
Lisa A. Schmidt, Esquire 1201 North Market Street
Richards, Layton & Finger, P.A. Wilmington, DE 19899
One Rodney Square
920 North King Street
Wilmington, DE 19801
RE: In re: Shawe & Elting LLC
Civil Action No. 9661-CB
Philip R. Shawe v. Elizabeth Elting, et al.
Civil Action No. 9686-CB
In re: TransPerfect Global, Inc.
Civil Action No. 9700-CB
Dear Counsel:
This letter opinion resolves one of the two pending motions for sanctions in the
lawsuits that Elizabeth Elting and Philip R. Shawe have filed against each other.
In re: Shawe & Elting LLC, et al.
C.A. Nos. 9661, 9686, 9700-CB
August 14, 2015
Page 2 of 5
On March 6, 2015, Shawe moved under Court of Chancery Rule 30(d) for
monetary sanctions against Elting and the law firm of Kramer Levin Naftalis & Frankel
LLP (“Kramer Levin”) for the conduct of Kramer Levin attorney Philip Kaufman in
defending the deposition of Ronald Greenberg, another Kramer Levin attorney, on
February 6, 2015. The basis for Shawe’s motion is that Mr. Kaufman inappropriately
instructed Mr. Greenberg not to answer many of the seventy-five questions for which Mr.
Kaufman gave that instruction, and that Mr. Kaufman terminated the deposition
prematurely.
Mr. Kaufman is admitted pro hac vice in these actions and thus is bound by the
Court of Chancery Rules. See Ch. Ct. R. 170; Paramount Commc'ns Inc. v. QVC
Network Inc., 637 A.2d 34, 53 (Del. 1994). Under Court of Chancery Rule 30(d)(1), “[a]
person may instruct a deponent not to answer only when necessary to preserve a
privilege, to enforce a limitation on evidence directed by the Court, or to present a motion
under [Rule 30](d)(3),” which may be made to this Court “or a Court of competent
jurisdiction in the state where the deposition is being taken.” Ch. Ct. R. 30(d)(3). Under
Court of Chancery Rule 30(d)(2), “[i]f the court finds . . . conduct that has frustrated the
fair examination of the deponent, it may impose upon the persons responsible an
appropriate sanction, including the reasonable costs and attorney’s fees incurred by any
party as a result thereof.”
In re: Shawe & Elting LLC, et al.
C.A. Nos. 9661, 9686, 9700-CB
August 14, 2015
Page 3 of 5
Having reviewed the complete transcript of Mr. Greenberg’s deposition, I
conclude that Mr. Kaufman’s defense of that deposition did not comport with the
standards required by the Court of Chancery Rules. Many of the questions that Mr.
Kaufman instructed Mr. Greenberg not to answer were benign and did not implicate any
privilege. There was no order from the Court limiting the scope of the deposition, and
neither Elting nor Mr. Greenberg moved for an order under Court of Chancery Rule
30(d)(3). The following examples are illustrative of Mr. Kaufman’s instructions:
Q. And in that e-mail you called Mr. Shawe’s e-mails foolish.
Correct?
Mr. Kaufman: Direction not to answer. He is not going to
characterize his communications. They say what they say. . . .
Q. When you wrote in Paragraph 2, the second line, “Given the
libelous statements you have made about her,” what did you mean?
Mr. Kaufman: Direction not to answer. . . .
Q. Mr. Greenberg, did you have oral communications with ADP
regarding TransPerfect in the period March and April and May 2014?
Mr. Kaufman: Direction not to answer. . . .
Q. Were the e-mails reflected here on Thursday, April 10, at 4:02
p.m., 4:54 p.m. and 6:07 p.m. between you and ADP from which Mr.
Graham and I were dropped sent and received by you?
Mr. Kaufman: Direction not to answer. . . .
Q. Mr. Greenberg, did you have any oral communications with Mr.
Gerber at Gerber & Co. in or around March and April 2014?
Mr. Kaufman: Direction not to answer.
Q. Who is Mr. Gerber?
In re: Shawe & Elting LLC, et al.
C.A. Nos. 9661, 9686, 9700-CB
August 14, 2015
Page 4 of 5
Mr. Kaufman: Direction not to answer. . . .
Q. Did you have communications with Mr. Burlant about
TransPerfect business from time to time?
Mr. Kaufman: Direction not to answer. . . .
Q. Mr. Greenberg, did you have communications with Julia Marsh
at the New York Post regarding this litigation?
Mr. Kaufman: Direction not to answer.
See Greenberg Dep. 126-27, 131-32, 134, 136-38, 141.
The litigation of these actions has been a heated affair to be sure, but that does not
excuse unprofessional conduct. Mr. Kaufman’s defense of this deposition crossed the
line between zealous advocacy and unprofessional conduct, and frustrated the fair
examination of Mr. Greenberg. The argument that Shawe was not prejudiced because he
elected not to elicit testimony from Mr. Greenberg at trial is unpersuasive. The fact that
Shawe later chose not to call Mr. Greenberg as a witness at trial does not relieve Mr.
Kaufman of his obligations under the Court of Chancery Rules, and the decision not to
call Mr. Greenberg appears to have been a legitimate strategic choice given how the
issues in the trial unfolded. Additionally, unclean hands does not apply here because
Shawe’s sanctions motion for misconduct during the deposition of Mr. Greenberg does
not directly relate to the very serious allegations of discovery misconduct that are the
subject of Elting’s pending motion for sanctions.
“Sanctions serve three functions: a remedial function, a punitive function, and a
deterrent function.” Beard Research, Inc. v. Kates, 981 A.2d 1175, 1189 (Del. Ch. 2009),
In re: Shawe & Elting LLC, et al.
C.A. Nos. 9661, 9686, 9700-CB
August 14, 2015
Page 5 of 5
aff’d sub nom., ASDI, Inc. v. Beard Research, Inc., 11 A.3d 749 (Del. 2010). “In the
event this Court determines that sanctions for discovery abuses are appropriate, the
sanction must be tailored to the culpability of the wrongdoer and the harm suffered by the
complaining party.” Cartanza v. Cartanza, 2013 WL 1615767, at *2 (Del. Ch. Apr. 16,
2013). In my opinion, and as contemplated by Court of Chancery Rule 30(d)(2), Shawe
is entitled to his reasonable costs and attorneys’ fees incurred in preparing and
conducting the deposition of Mr. Greenberg and in briefing the motion. The sanction will
be assessed solely against Kramer Levin because Mr. Kaufman was acting primarily as
counsel for the witness, Mr. Greenberg, during the deposition.
Shawe’s counsel is directed to file an affidavit within ten business days setting
forth his reasonable costs and attorneys’ fees as provided above, and a proposed order
awarding such costs and fees within ten business days of entry of that order.
IT IS SO ORDERED.
Sincerely,
/s/ Andre G. Bouchard
Chancellor
AGB/gp