Elizabeth Elting and Philip Shawe had been both business and romantic partners. Operating from their dorm room at the New York University business school, they founded TransPerfectGlobal, Inc. (TPG or the Company) in 1992. They both owned half of TPG’s stock, were co-chief executive officers, and were the only directors. By the time of this litigation, the company was providing translation, website localization, and litigation support services at 92 offices in 86 cities worldwide, operating in 170 different languages.

In 1997, when Elting broke off the couple’s plan to marry, Shawe promised to “create constant pain” for her (which certainly confirmed the wisdom of her decision). His systematic harassment campaign included:

• Intercepting Elting’s mail, monitoring her phone calls, and breaking into her email accounts.
• Circulating an email to company employees wrongly accusing her of financial misdeeds.
• Hiring numerous employees without her knowledge by creating “off book” arrangements and fabricating documents.
• Interfering with TPG’s audit process.
• Telling the police that she had assaulted him during a disagreement in the office. When he filed the police report, he deliberately referred to her as his “ex-fiancée” (17 years after their break up) knowing that, in domestic violence cases, the police had to arrest the assaulting party.
• Taking a flight to Paris just so he could surprise her by sitting across the aisle and then bragging that she changed seats to get away from him.

Shawe and Elting also engaged in “mutual hostaging.” For example, Elting would not allow Shawe to hire employees or pay a lawyer’s bill unless he agreed to the profit distribution she wanted. Senior officers who took sides were threatened with firing, huge fines, or the withholding of compensation and promotions.

As a result of this turmoil, major clients became reluctant to renew contracts. TPG executives called the feud the “biggest business issue” facing the Company. Shawe himself acknowledged the conflict’s “potential for grievously harming” the Company.

Elting filed suit asking the Delaware Court of Chancery to order the sale of TPG. After mediation efforts failed, the court appointed a custodian to sell the Company. Shawe appealed.

Questions:

1. Should the court have ordered the sale of a highly profitable business?

2. What possible remedies were available to the Court of Chancery to resolve the dispute between the founders? Why did the Court adopt the sale of the business? 

3. If Elting had not filed suit, asking the court to intervene, what was likely to happen?