Summary
The Delaware Supreme Court affirmed sanctions imposed against Philip R. Shawe for litigation misconduct in disputes with Elizabeth Elting. The Court upheld findings that Shawe intentionally deleted laptop files, failed to preserve his cell phone, accessed Elting’s emails, and repeatedly made false statements under oath. It also upheld the award of $7,103,755 in attorneys’ fees and expenses to Elting.
Topics
Practice areas
Questions Presented
- Whether the Court of Chancery properly found that Shawe acted in bad faith by deleting files from his laptop and failing to safeguard his cell phone.
- Whether the Court of Chancery could impose civil sanctions for Shawe's repeated falsehoods under oath without providing criminal due process protections for perjury.
- Whether the Court of Chancery abused its discretion by awarding Elting $7,103,755 in attorneys' fees and expenses.
Holdings
- The Court of Chancery acted within its discretion by sanctioning Shawe for intentionally deleting files from his laptop after litigation holds and an expedited discovery order required preservation and forensic production.
- A court may impose monetary sanctions when a litigant had a duty to preserve potentially relevant evidence and breached that duty; the Court of Chancery properly found that Shawe recklessly failed to safeguard his cell phone.
- Criminal due process protections were not required because the Court of Chancery did not charge or convict Shawe of perjury; it imposed a civil sanction for litigation misconduct consisting of repeated lies under oath that wasted judicial resources and complicated the proceedings.
- The Court of Chancery did not abuse its discretion by awarding Elting all fees associated with the sanctions motion and 33% of the fees and expenses associated with litigating the merits.
Key quotations
“Shawe’s behavior was “unusually deplorable,” and thus the Court of Chancery acted well within its discretion by sanctioning him for his bad faith conduct.” (157 A.3d 142)
“A party in litigation has an affirmative duty to preserve potentially relevant evidence.”
“To impose monetary sanctions, [a court] need only find that a party had a duty to preserve evidence and breached that duty.”
Factual background
During litigation with his business partner and former romantic partner, Elizabeth Elting, Shawe accessed approximately 19,000 of Elting's emails, including privileged communications, and concealed the involvement of a third party in extracting them. After litigation holds and an expedited discovery order were issued, Shawe deleted approximately 41,000 files from his laptop and failed to preserve a cell phone containing potentially relevant text messages. He later gave false interrogatory, deposition, trial, and affidavit testimony regarding who accessed Elting's emails, who deleted the files, and what happened to the phone.
Procedural history
After an evidentiary hearing, the Court of Chancery found that Shawe acted in bad faith by deleting files from his laptop, failing to safeguard his cell phone, and repeatedly lying under oath to conceal misconduct. The court shifted 100% of Elting's fees incurred on the sanctions motion and 33% of her fees incurred litigating the merits, entering a final judgment for $7,103,755. The Delaware Supreme Court affirmed.