In re TransPerfect Global, Inc.

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COURT OF CHANCERY OF THE STATE OF DELAWARE KATHALEEN ST. JUDE MCCORMICK CHANCELLOR LEONARD L. WILLIAMS JUSTICE CENTER 500 N. KING STREET, SUITE 11400 WILMINGTON, DELAWARE 19801-3734 September 22, 2023 Frank E. Noyes, II Offit Kurman, P.A. 222 Delaware Avenue, Suite 1105 Wilmington, DE 19801 Jeremy D. Eicher Eicher Law LLC 1007 N. Orange Street, 4th Floor Wilmington, DE 19801 Re: Douglas D. Herrmann Troutman Pepper Hamilton Sanders LLP 1313 Market Street, Suite 5100 Wilmington, DE 19899 Jennifer C. Voss Skadden, Arps, Slate, Meagher & Flom LLP 920 N. King Street, 7th Floor Wilmington, DE 19801 In re TransPerfect Global, Inc., C.A. Nos. 9700-CM, 10449-CM Dear Counsel: This letter resolves Respondent TransPerfect Global, Inc.’s motions for reargument, clarification, entry of partial final judgment, and stay pending appeal.1 The motions all target the August 7, 2023 letter decision (the “August 7 Decision”),2 which overruled most of TransPerfect’s objections to Custodian Robert Pincus’s fee petitions for legal expenses incurred from January 2021 through March 2023. C.A. No. 9700-CM, Docket (“Dkt.”) 1761 (“Aug. 7 Decision”); Dkt. 1767 (“Mot. for Rearg.”); Dkt. 1768 (“Mot. to Stay”). Civil Action Numbers 9700-CM and 10449-CM have been litigated in a coordinated fashion since their inception. Docket entries cited in this decision refer to C.A. No. 9700-CM. 1 2 In re TransPerfect Global, Inc., 2023 WL 5017248 (Del. Ch. Aug. 7, 2023). Terms not defined in this letter have the same meaning ascribed to them in the August 7 Decision. C.A. Nos. 9700-CM, 10449-CM September 22, 2023 Page 2 of 10 TransPerfect moves for reargument under Court of Chancery Rule 59(f), which provides that “[t]he Court will deny a motion for reargument ‘unless the Court has overlooked a decision or principle of law that would have a controlling effect or the Court has misapprehended the law or the facts so that the outcome of the decision would be affected.’”3 If a motion for reargument “merely rehashes arguments already made by the parties and considered by the Court” in rendering the decision for which reargument is sought, the motion must be denied.4 On a motion for reargument, the movant bears a “heavy burden.” 5 In support of its motion for reargument, TransPerfect contends that the court did not meaningfully consider its arguments that the fees incurred in connection with the Securities Action are not reimbursable.6 TransPerfect’s arguments toward this end merely rehash an argument rejected in the August 7 Decision. They are not a basis for relief under Rule 59(f). TransPerfect next argues that the August 7 Decision “misapprehended the distinction between blanket indemnification and advancement of legal fees because the Court refused to install any mechanism requiring the Custodian to repay the fees even if he 3 Nguyen v. View, Inc., 2017 WL 3169051, at *2 (Del. Ch. July 26, 2017) (quoting Stein v. Orloff, 1985 WL 21136, at *2 (Del. Ch. Sept. 26, 1985)). 4 Wong v. USES Hldg. Corp., 2016 WL 1436594, at *1 (Del. Ch. Apr. 5, 2016) (citation omitted). 5 In re ML/EQ Real Est. P’ship Litig., 2000 WL 364188, at *1 (Del. Ch. Mar. 22, 2000). 6 Mot. for Rearg. ¶¶ 15–35. C.A. Nos. 9700-CM, 10449-CM September 22, 2023 Page 3 of 10 is found liable.”7 In other words, by declining to impose a bond requirement at this extremely late stage, TransPerfect believes I erroneously conflated Pincus’s indemnification rights with advancement principles.8 Again, this argument rehashes a position the court already rejected. It also ignores the actual language of the Orders, which do not require a bond or undertaking.9 Relatedly, TransPerfect argues that the Orders were not “intended to override the statutory requirement” that fees are non-reimbursable for federal securities fraud actions.10 This argument is a new spin on an old argument, which the court already rejected. Federal securities law does not actually say that Pincus’s fees are non-reimbursable, as the August 7 Decision explained. TransPerfect further decries the August 7 Decision for not spending more time going one-by-one through the litany of objections that TransPerfect levied each month between January 2021 and March 2023.11 TransPerfect states that I “simply disregard[ed]” its objections in a manner that “defies logic” because I applied reasoning from the April 7 Id. ¶ 29. 8 Id. ¶¶ 29–39. See id. ¶¶ 22, 37–38; see also Dkt. 1243 (“Feb. 15, 2018 Order”) ¶ 7 (stating that TransPerfect shall pay legal fees incurred “in defending or prosecuting any civil, criminal, administrative or investigative claim, action, suit or proceeding reasonably related to the Custodian’s responsibilities . . . in advance of the final disposition of such claim” (emphasis added)). 9 10 Mot. for Rearg. ¶ 40. 11 Id. ¶¶ 44–52. C.A. Nos. 9700-CM, 10449-CM September 22, 2023 Page 4 of 10 30, 2021 decision to its latest round of fee objections.12 I did not disregard TransPerfect’s objections. I carefully reviewed them. The objections simply regurgitated old arguments that both this court and the Delaware Supreme Court have rejected. That TransPerfect employed them in response to new fee petitions does not change the equation, and there is no need to spill more ink on this point. TransPerfect moves for clarification about whether the August 7 Decision was final or interlocutory. As should be clear, the August 7 Decision was interlocutory. TransPerfect moves for entry of partial final judgment pursuant to Court of Chancery Rule 54(b)13 to allow it to appeal the August 7 Decision before the court resolves the currently pending objections to the fee petitions for April through June 2023. 14 “Rule 54(b) is an exception to the well-established policy against piecemeal appeals, and does not contemplate the entry of final judgment absent a showing of some degree of hardship or injustice through delay which would be alleviated by immediate appeal.” 15 Thus the court must exercise its discretion to find no just reason for delay under Rule 54(b) 12 Id. ¶¶ 49–50. 13 Id. ¶¶ 9–10. 14 See id. ¶ 11. 15 Zimmerman v. Home Shopping Network, Inc., 1990 WL 140890, at *1 (Del. Ch. Sept. 25, 1990) (internal quotation marks and citation omitted). C.A. Nos. 9700-CM, 10449-CM September 22, 2023 Page 5 of 10 “sparingly.”16 Rule 54(b) “is not an invitation for this Court to flood the Supreme Court’s docket.”17 In support of its motion for entry of partial final judgment, TransPerfect notes that the court entered partial final judgment in its prior decision from April 30, 2021. 18 The April 30, 2021 Order, however, memorialized a suite of rulings that covered issues beyond the fee petitions,19 and when the court entered the April 30 Order as a partial final judgment, the high court had not yet had an opportunity to provide guidance as to those issues. This is not true today. The sole dispute now is about fees, and the Supreme Court has now addressed the bulk of TransPerfect’s objections concerning fees.20 Because the parties and the court have guidance from the high court on the fee analysis, there is no reason to permit piecemeal appeals. Delaware law and policy directs that this court resolve all objections 16 In re Tri-Star Pictures, Inc., Litig., 1989 WL 112740, at *1 (Del. Ch. Sept. 26, 1989). 17 Sider v. Hertz Global Hldgs., Inc., 2019 WL 2501481, at *2 (Del. Ch. June 17, 2019) (citation omitted). 18 Mot. for Rearg. ¶ 9 (citing In re TransPerfect Glob., Inc., 2021 WL 1711797 (Del. Ch. Apr. 30, 2021), recons. denied, 2021 WL 2030094 (Del. Ch. May 21, 2021), aff’d sub nom. TransPerfect Glob., Inc. v. Pincus, 278 A.3d 630 (Del. 2022), cert. denied, 143 S. Ct. 574 (2023)). See Dkt. 1605 (“Apr. 30, 2021 Order”) ¶¶ 1–3, 6 (granting entry of partial final judgment for motions for contempt, preclusion, and bad faith). 19 20 See Pincus, 278 A.3d at 653–59 (stating that the court did not abuse its discretion in rendering its fee award). As discussed in the August 7 Decision, the Supreme Court overturned aspects of the court’s holding that are not relevant here. Aug. 7 Decision at 3. C.A. Nos. 9700-CM, 10449-CM September 22, 2023 Page 6 of 10 to the outstanding fee petitions before appellate review continues. TransPerfect will be able to appeal the court’s orders once it has ceased creating fee-generating work for Pincus. TransPerfect moves for a stay of enforcement of the August 7 Decision pursuant to Court of Chancery Rule 62(d).21 Having rejected TransPerfect’s request for entry of partial final judgment, TransPerfect’s request for a stay pending appeal is moot. TransPerfect’s Rule 62(d) motion also fails on its merits. Rule 62(d) provides that “[s]tays pending appeal and stay and cost bonds shall be governed by article IV, § 24 of the Constitution of the State of Delaware and by the Rules of the Supreme Court.” 22 Supreme Court Rule 32(a) provides that “a motion for stay must be filed in the trial court 21 Mot. to Stay at 1–2. 22 Ct. Ch. R. 62(d); see also Del. Const. art. IV, § 24 Whenever a person . . . appeals or applies to the Supreme Court for a writ of error, such appeal or writ shall be no stay of proceedings in the court below unless the appellant or plaintiff in error shall give sufficient security to be approved by the court below or by a judge of the Supreme Court that the appellant or plaintiff in error shall prosecute respectively his or her appeal or writ to effect, and pay the condemnation money and all costs, or otherwise abide the decree in appeal or the judgment in error, if he or she fail to make his or her plea good. C.A. Nos. 9700-CM, 10449-CM September 22, 2023 Page 7 of 10 in the first instance” and a “stay or an injunction pending appeal may be granted or denied in the discretion of the trial court.”23 The court considers the Kirpat24 factors in deciding whether to grant an injunction or stay pending appeal; those factors are: (i) the likelihood of success on the merits of the appeal; (ii) whether [the moving party] would suffer irreparable harm if the stay was not granted; (iii) whether [any interested party] would suffer substantial harm if the stay was granted; and (iv) whether the public interest would be served if the stay was granted.25 “No one factor is dispositive; rather, the Court will carefully weigh all relevant considerations.”26 A litigant that “seeks a stay pending appeal” also “bears the burden of showing the stay is warranted.”27 For the first factor, TransPerfect does not have a substantial likelihood of success on appeal. As stated earlier, the August 7 Decision merely implemented the rationale of the court’s prior April 30, 2021 decision as affirmed by the Supreme Court to a new array 23 Supr. Ct. R. 32(a). 24 Kirpat, Inc. v. Del. Alcoholic Bev. Control Comm’n, 741 A.2d 356 (Del. 1998). 25 Homestore, Inc. v. Tafeen, 886 A.2d 502, 504 (Del. 2005) (citing Kirpat, Inc., 741 A.2d at 357). 26 Wynnefield P’rs Small Cap Value L.P. v. Niagara Corp., 2006 WL 2521434, at *1 (Del. Ch. Aug. 9, 2006) (citation omitted). 27 In re AMC Ent. Hldgs., Inc. S’holder Litig., 2023 WL 5165606, at *42 (Del. Ch. Aug. 11, 2023) (citation omitted). C.A. Nos. 9700-CM, 10449-CM September 22, 2023 Page 8 of 10 of fee petitions. Furthermore, TransPerfect’s new federal preemption arguments rely on readily distinguishable case law and far-fetched constitutional challenges. For the second factor, TransPerfect argues that it may face irreparable harm if a stay is not granted because TransPerfect would have to “advance fees for [Pincus]’s defense in the Securities Action on an ongoing basis” without an apparent mechanism to “recover the advanced fees” in the face of success on the merits against Pincus.28 TransPerfect calls this a “minimum protection afforded other corporations when advancing litigation fees.”29 It is hard to follow TransPerfect’s arguments, which seem to rest on the misguided notion that it would not have claw back rights in the event it prevails in the underlying action. Even accepting for the sake of argument that TransPerfect would not be able to claw back a portion of the fees, the injury TransPerfect has alleged does not pass for irreparable. To be irreparable, the “alleged injury must be imminent and genuine, as opposed to speculative.”30 A harm the court “can remedy following a final determination on the merits” does not pass for irreparable.31 Delaware law does not require advancement 28 Mot. to Stay ¶ 28. 29 Id. ¶ 11. 30 Aquila, Inc. v. Quanta Servs., Inc., 805 A.2d 196, 208 (Del. Ch. 2002) (citation omitted). 31 Am. Gen. Corp. v. Unitrin, Inc., 1994 WL 512537, at *4 (Del. Ch. Aug. 26, 1994) (citations omitted). C.A. Nos. 9700-CM, 10449-CM September 22, 2023 Page 9 of 10 recipients to post bonds as a matter of course, unlike what TransPerfect argues.32 The harm is categorically monetary and thus reparable. For the third factor, TransPerfect argues that Pincus will suffer no harm from a stay because it has offered to place the total fee award in escrow “until any appeals have been decided.”33 TransPerfect appears bent on a spite campaign, where it is willing to pay the amount it has been ordered to advance, but not to the person entitled to advancement. It is unclear how Pincus would benefit from this arrangement or how the escrow account would weigh in favor of a stay pending appeal. Relatedly, for the fourth factor, TransPerfect argues that there is no harm to the public interest because TransPerfect is “willing to provide adequate security.”34 This ignores the fact that Delaware law has a long-standing preference for the prompt payment of advancement obligations. Respondent also argues that “it is in the public interest” that 32 See generally Carlson v. Hallinan, 925 A.2d 506, 541 (Del. Ch. 2006); William D. Johnston, et al., Indemnification and Insurance for Directors and Officers at A-29, Bloomberg BNA Portfolio Series No. 54–3rd (2014) (collecting cases). 33 Mot. to Stay ¶ 32. 34 Id. ¶ 36. C.A. Nos. 9700-CM, 10449-CM September 22, 2023 Page 10 of 10 Pincus not collect his fees because they are excessive.35 Again, Respondent ignores the plain language of the Orders and manifold decisions of the court holding to the contrary. In sum, none of the four Kirpat factors weigh in favor of granting a stay. The motions are denied. IT IS SO ORDERED. Sincerely, /s/ Kathaleen St. Jude McCormick Kathaleen St. Jude McCormick Chancellor cc: 35 All counsel of record (by File & ServeXpress) Id. ¶ 39.

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