Wilmington, Del. (October 18, 2022) - Wilmington Managing Partner Francis G.X. Pileggi recently authored an article for the September/October 2022 issue of The Bencher, a bi-monthly publication of the American Inns of Court. The article, titled "Delaware Supreme Court Clarifies Standard to Hold Individual in Contempt for Actions of Entity She Controls," discusses a recent Delaware Supreme Court decision that provided clarification on the standard used to determine when a person who controls an entity can be personally responsible for contempt of court penalties.
In the article, Mr. Pileggi discusses the matter of TransPerfect Global Inc. v. Pincus, in which the First State's highest court reviewed the latest appeal in a long-running case that began with a petition under Delaware General Corporation Law Section 226 to appoint a custodian to resolve a deadlock between 50% co-owners of a translation and litigation-support company who were formerly engaged to be married.
After providing a brief summary of the procedural background of TransPerfect Global, Mr. Pileggi discusses the Delaware Supreme Court's analysis of the fundamentals on which a finding of civil contempt is based. He notes that the trial court "must explain how an individual personally violated a court order to satisfy the standard to hold a person in contempt of a court order. Specifically, there must be evidence in the record that a person who controls a company personally violated a court order, for example by directing a company he or she controls to violate that court order." In this case, since there was no such evidence on the record, the "controller" of the company could not be sanctioned.
Mr. Pileggi concludes the article by noting that this decision "will be helpful for anyone who needs to determine if a person who controls a company may also be personally liable for actions taken by the company that may violate a court order."
Mr. Pileggi is a member of Lewis Brisbois' Complex Business & Commercial Litigation Practice. He focuses primarily on high-stakes disputes of corporations, stockholders, members of boards of directors, members and managers of LLCs, and those with managerial or ownership interests in other forms of entities. In addition, since 2004, Mr. Pileggi has also maintained the Delaware Corporate & Commercial Litigation Blog, at www.delawarelitigation.com, in which he analyzes key corporate and commercial decisions from Delaware's Supreme Court and Court of Chancery.
You can read the full Bencher article here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
