Delaware Supreme Court Rules for ETE in Williams Dispute
In a significant win
for V&E client Energy Transfer Equity, L.P., on March 23, 2017, the Delaware Supreme Court affirmed the Delaware
Chancery Court’s June 2016 post-trial opinion confirming the company’s
right to terminate a proposed $38 billion merger with The Williams Companies
due to the failure of a condition precedent.
lawsuit was initiated by Williams in May 2016 after Latham & Watkins
LLP determined that it could not issue a written tax opinion that was a
condition precedent to the parties’ obligations under the merger
agreement. Williams filed suit, asserting that ETE had breached its
obligations to use commercially reasonable efforts to obtain the tax opinion
and that Latham’s determination was not reached in good faith. Williams
sought specific performance of ETE’s merger agreement obligations and an order
estopping ETE from terminating the merger.
ETE counter-claimed, seeking
declarations that it was not required to close due to the failure of the tax
condition and that it had not breached the tax representation and warranty. ETE
also alleged that Williams had breached various provisions of the merger
highly expedited discovery, the matter was tried on June 20-21, 2016. In
the Court’s post-trial opinion, the Court found for ETE, concluding that the
evidence and testimony at trial demonstrated that Latham had reached its
determination in good faith and ETE had not breached its obligations under the
affirming the Chancery Court, the Delaware Supreme Court held that “ETE did
meet its burden of proving that any alleged breach of covenant did not
materially contribute to the failure of the Latham condition” and that ETE was
not estopped from terminating the transaction on that basis.
Other claims in the case remain
pending. Michael Holmes is lead counsel for ETE. The ETE trial team
included partners John Wander, Harry Reasoner, George Gerachis, Gary Huffman,
David Cole, Michael Charlson, Cliff Thau, Jennifer Poppe, Craig Zieminski,
Lande Spottswood and Mike Rosenwasser; counsel Andy Jackson; senior associate Olivia
Howe; and associates Margaret Terwey, Meredith Jeanes and Juliana Hunter.