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The Court of Chancery’s Inequity in Handling the WeWork Case

The Court of Chancery in Delaware handles corporate cases, as a top incorporation state in the United States. At the Chancery level, the court does not include juries, and the presiding judge has the final verdict in each case. Notably, with this type of system, and no watch dogs in place, there is room for judicial overreach and corruption. While the Delaware Court of Chancery is famous for incorporating 60% of Fortune 500 companies and countless businesses, the court has most recently been in the news for injustice that’s seeped into its handling of multiple cases, including office share space company WeWork.

The Court of Chancery and the WeWork Case

The Court of Chancery continues to make headlines alongside WeWork for the injustice that continues to seep into the case, but how did it start? Two independent directors in WeWork, Lew Frankfort, and Bruce Dunlevie, approached the Chancery Court through their lawyer William B. Chandler 111 due to its history of being a pro-business state. The primary aim of the current lawsuit that has landed in the court is to hold SoftBank accountable for its breach of contract with WeWork. WeWork’s contract with SoftBank required SoftBank to buy WeWork shares up to $3 billion from Chief Executive Officer Adam Neumann and other shareholders. Upon the completion of all the legal requirements of the contract, SoftBank will, in the future, have full control over the current WeWork’s management. However, SoftBank decided to end the contract on April 1, 2020, leading to the two directors filing for a lawsuit.

The Case Ruling by Andre Bouchard

The presiding judge, Chancellor Andre Bouchard, authorized the appointment of two new directors. The appointed directors’ role is to investigate if Lew Frankfort and Bruce Dunlevie have the right to sue SoftBank. The ruling offers the parent company access to the privileged company’s information through their representative Skadden Arps. William B. Chandler III argues that allowing the appointment of new directors is harmful to the case and Chancellor Bouchard is disregarding important laws and opting to side with the parent company. Both directors expect compensation of $250,000 each in two months.

Parallels Between the WeWork and TransPerfect Case

With the current state of press surrounding the case, those who are aware of the court’s history have drawn parallels between the WeWork case and other significant cases in the past where Chancellor Bouchard and the Court made harmful decisions that impacted the company. One company that took the brunt of the Court’s decision was global translation company, TransPerfect. In the TransPerfect case, Elizabeth Elting filed a lawsuit against business partner Phil Shawe. In the lawsuit, Elting makes a demand for the sale of the company. During the lawsuit, the company has an average of $470 million in total revenue. Shawe put forward a reasonable deal wanting to buy Elting’s shares for $300 million. Chancellor Andre Bouchard, the presiding judge on the case, discarded the offer and proceeded to use a strict and rare custodian appointment method to put the company up for auction. Bouchard granted the custodian, former employee of Skadden Arps, Robert Pincus, authority to oversee billings and hire consultants. Pincus did not allow Shawe to view any of the bills. The unjust rule led to the company’s auctioning, requiring Shawe and other bidders to buy out the company. Shawe won the bid and bought the company at a high price of $770 million. Both the WeWork and TransPerfect cases expose the Court of Chancery’s ignorance of the law and execution of unfair rules to Delaware businesses. Additionally, the fact that Andre Bouchard was an employee at Skadden Arps—the firm that gets the upper hand initially in both cases—illustrates favoritism to the firm.

Coastal Network

The Coastal Network is an outlet committed to providing a voice against corruption and advocating for transparency in the Delaware court system, business world and beyond. For more on corruption in the United States, including the Delaware Court system, visit www.coastalnetwork.com

A Brief History of the Delaware Chancery

The Delaware Chancery Court is one of the oldest legal institutions in the United States. Its history can be traced back to the Revolutionary war. The Delaware Court of Chancery bills itself as one of the most prestigious courts in the modern world, but even a court with such a long and distinguished history is not immune to corruption and nepotism.

What is the Delaware Court of Chancery?

A chancery court differs in concept from a criminal court, circuit court, or court of appeals. The Delaware Chancery deals in cases of equity. The equity issues that result in Delaware Chancery Court decisions rely solely on a judge’s jurisprudence in applying fairness and common sense rather than legality, rules, and strictures in order to resolve disputes. Chancery courts, like the system found in Delaware, deal with civil cases rather than criminal cases. Delaware Chancery Court decisions revolve around contract disputes and business law. Other types of cases that you might see in a chancery court include: The Delaware Chancery Court mainly deals with business law due to the sheer number of businesses that are incorporated in Delaware.

History of the Chancery

The Delaware Chancery’s long and storied history stretches all the way back to 1792. Delaware’s Chancery Court is a product of historical English law coupled with concepts derived directly from the first Constitutional Convention. Among the most notable figures in the court’s 230-year history include:

History of the Chancery’s Membership

The Delaware Chancery derives much of its power and prestige from its public image as one of the fairest, most experienced legal institutions in America, with profound expertise in business law. Just below the public facade, however, the Chancery has a deep history of being an “old boys club.” There has always been an air of nepotism and political manipulation when naming each successive chancellor, but scandal came to the forefront in 1916 when Josia Wolcott was named chancellor in what came to be known as the “Dirty Deal.” At the time, it was alleged that Wolcott was promoted to the position by a Republican governor despite Wolcott’s Democratic status in order to maneuver one of the governor’s allies into congress. The scandal passed quickly, but the court’s reputation has been stained with favoritism since.

Andre Bouchard: Current Delaware Chancellor

Andre Bouchard was named chancellor in 2014. One of his most controversial Delaware Chancery Court decisions involved TransPerfect, a case in which the chancellor eschewed the court’s historically business-friendly modus operandi, instead using his new platform to attack the company while making political contacts. Since his tenure began, Bouchard has done everything in his power to reinforce the public perception that the Delaware Chancery Court is merely an old boys club. 

Coastal Network

The Coastal Network is an outlet committed to providing a voice against corruption and advocating for transparency in the Delaware court system, business world and beyond. For more on corruption in the United States, including the Delaware Court system, visit www.coastalnetwork.com  

Who is Chancellor Andre Bouchard?

Andre Bouchard is a public figure and career politician from the elite of Delaware. After working as an attorney for many years, Bouchard joined the Court of Chancery and has been at the heart of a few Delaware business scandals. He is now Chancellor Andre Bouchard of the Delaware Chancery Court.

1. Chancellor Bouchard’s School and Education 

Chancellor Andre Bouchard, raised primarily in Delaware, dedicated himself to education early on. Bouchard first attended Salesianum High School, an all boys private Catholic school located in Wilmington, Delaware. Following his upbringing at Salesianum Catholic School, graduating in 1979, Andre Bouchard attended Boston College for his Bachelor’s degree and later attended Harvard Law School with his juris doctorate.

2. Andre Bouchard’s Career Summary

With a history of privilege among the Delaware elite, Andre Bouchard has a lengthy list of cushy jobs from working as a corporate litigator at Skadden Arps to starting his own law firm Bouchard, Margules & Friedlander. Now, Andre Bouchard sits as the Chancellor Bouchard at the Delaware Court of Chancery.

3. Chancellor Bouchard’s Additional involvements beyond the Court

With privilege comes connections, and Andre Bouchard has a network of very powerful friends. Because of this, Chancellor Bouchard has also had many opportunities to work in various government positions.

4. Notable Cases from Bouchard’s Chancery Role

There are multiple cases worth noting, both from Andre Bouchard’s time as an attorney and as the Chancellor for the Delaware Chancery, however, the following cases from the CBS Merger to custody battle over TransPerfect and Meso Scale Diagnostics, showcase a similar theme for Bouchard. A theme runs through all of these cases: unprecedented intervening and oversight from government to business/organizations. For more information, visit Delaware State CourtConnect and Courtroom View Network (CVN).

5. Andre Bouchard’s Firm Represents State in a Federal Lawsuit

As previously noted, Bouchard founded and worked for Bouchard, Margules & Friedlander, a law firm that was once used (before Bouchard became Chancellor) to defend the Delaware Chancery Court in 2011. This case was important, as the Delaware Coalition for Open Government was attempting to prevent the courts’ ability to use confidential arbitration, which would significantly invade the rights of businesses and individuals. The Coalition prevailed, and Bouchard lost the case.

6. Chancery Case: Meso Scale Diagnostics V. Roche Diagnostics

In the midst of the Delaware Coalition for Open Government litigation, Meso Scale Diagnostics was in the middle of a Chancery Court suit against Roche Diagnostics, a case where Bouchard had more bias than Meso Scale knew, including the following: Andre Bouchard never admitted any relationship, yet information was covered up until recently. Meso Scale was not given the chance to request an unbiased judge and therefore claims it was an unfair trial.

7. A Voice for the People? Conflict of Interest in the Chancery Court

Though Chancellor Bouchard claims that he desires more than anything to protect the vulnerable, his case history would suggest otherwise. He consistently rules in favor of those in power, while leaving Delaware citizens without unbiased representation. The TransPerfect case, the Koch case and the Meso Scale Diagnostics case demonstrate the conflicts of interest that have been present in the Delaware Chancery Court for years since Bouchard has taken over.

8. Andre Bouchard and Skadden Arps

Before his career as Chancellor and running his own practice, Andre Bouchard worked as an attorney for Skadden, Arps, Slate, Meagher, & Flom LLP for 10 years. It is important to note Bouchard’s close relationship with the firm, as it has monopolized businesses in Delaware for decades. Bouchard not only worked as an attorney there, but also kept in close contact with many of his previous coworkers and employers, including Robert Pincus—who he brought on as the custodian in the TransPerfect case.

9. Andre Bouchard and Robert Pincus 

Both of these men are seemingly part of the Delaware “Old Boys Club” and worked for Skadden Arps at the same time; Bouchard as an attorney and Pincus primarily as an arbitrator. Yet, the close relationship didn’t seem to be a ‘conflict of interest’ in Chancellor Bouchard’s eyes when he brought Robert Pincus on to be the custodian for the TransPerfect case.

10. Chancellor Bouchard’s role in the TransPerfect case 

In the TransPerfect case, Andre Bouchard seemed to utilize his personal connections when making decisions. He appointed his friend and previous coworker, Robert Pincus, as custodian of the case. This led to mishandling of the case—for years, Bouchard did not require Pincus to hand over receipts for millions of dollars in bills directed at the company.

Coastal Network

The Coastal Network is an outlet committed to providing a voice against corruption and advocating for transparency in the Delaware court system, business world and beyond. For more on corruption in the United States, including the Delaware Court system, visit www.coastalnetwork.comIn 2019, Chancellor Andre Bouchard of the Delaware Chancery Court said he was “sympathetic to some of the concerns [TransPerfect] has raised,” subsequently ordering Custodian Robert Pincus and Skadden Arps to provide itemized billing details in support of the many non-itemized fees charged back to Phil Shawe and TransPerfect. At the time of the ruling, TransPerfect CEO Phil Shawe said the ruling was “a major win for transparency and openness in the Delaware courts.” However, amidst court closures due to Coronavirus, Skadden Arps decided to hide more of its documentation, believing it would go unnoticed or that the Delaware Chancery Court would yield to its traditional practices. Finally, in a motion that upset Chancellor Bouchard, Skadden Arps submitted what it thought was an appropriately redacted motion that hid most everything. On June 8, after TransPerfect requested Skadden Arps to clarify its redacted petition, Chancellor Andre Bouchard ordered for Skadden Arps to provide an unredacted record for TransPerfect. In what seems will finally provide just results, the Delaware Chancery Court told Skadden Arps in is not the sole arbitrator of what is secret and what is open. TransPerfect, Skadden Arps and the Delaware Chancery, including Chancellor Andre Bouchard, have continued to go head to head for a fair outcome in what has now become a five year legal battle. A legal battle that started when TransPerfect co-founders Phil Shawe and Liz Elting went to court for custody over the translation company, which is now the world’s largest. Original story in Medium.