Vice Chancellor Sam Glasscock III ruled in favor of Williams a second time, about eight months after he found in December that Dallas-based Energy Transfer—owned by billionaire Kelcy Warren—was responsible for walking away from the 11-figure deal.
Glasscock, writing for Delaware’s Chancery Court, rejected Energy Transfer’s argument that the 15% contingency fee Williams agreed to pay its lawyers was incompatible with a merger agreement clause shifting the cost of any court dispute to the losing side.
“These sophisticated parties surely were aware that post-merger-agreement litigation, seeking a break fee, could likely include representation on a contingent basis,” the judge wrote. “They had every opportunity, therefore, to contract against use of a contingent fee.”
“This, they failed to do,” he added.
The decision also resolved a second issue: Interest on the $410 million fee, dated from the time Energy Transfer scuttled the merger, should be compounded quarterly rather than simple, Glasscock found, again ruling in favor of Williams.
“ETE has had the use of the funds to which Williams was entitled, and presumably used these funds for purposes it found advantageous in the interim,” he wrote, referring to Energy Transfer by its former name, Energy Transfer Equity LP.
The judge also denied Energy Transfer’s request to have the interest tolled for the duration of the litigation, which was delayed first by an error on the part of a discovery vendor for Williams and then by the pandemic.
“The discovery error was inadvertent, made by a third-party vendor, and was remedied within six months,” Glasscock wrote. “And Williams had nothing to do with the subsequent delays caused by Covid-19.”
Williams is represented by Morris, Nichols, Arsht & Tunnell LLP and Cravath, Swaine & Moore LLP. Energy Transfer is represented by Young Conaway Stargatt & Taylor LLP and Vinson & Elkins LLP.
The case is Williams Cos. v. Energy Transfer LP, Del. Ch., No. 12168, 8/25/22.
—With assistance from Jef Feeley.
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