Williams Secures Delaware Supreme Court Victory Affirming Trial Win with $600 Million Judgment

On October 10, 2023, following a full trial on the merits and an appeal to the Delaware Supreme Court, Cravath client The Williams Companies, Inc. (“Williams”) secured a victory resulting in a judgment of more than $600 million.

The dispute between Williams and Energy Transfer, LP (“ETE”) began after ETE agreed to acquire Williams in September 2015, and the following June, ETE determined to terminate the deal. The parties had negotiated a $410 million breakup fee that ETE would be required to pay Williams in the event the merger failed, and ETE was out of compliance with certain covenants and representations on the closing date. Following a six‑day trial held in May 2021, the Court of Chancery issued a decision in December 2021 ordering ETE to pay Williams the $410 million termination fee, plus interest and reasonable attorneys’ fees and expenses. The Court of Chancery additionally held that ETE failed to prove each of its affirmative defenses and counterclaims. In another significant victory in August 2022, Cravath secured a ruling granting in full Williams’s motion for interest, attorneys’ fees and expenses—then totaling more than $190 million—and bringing the total award for Williams at that stage to $601.5 million.

On appeal, the Delaware Supreme Court, sitting en banc, affirmed the Court of Chancery decision, finding “no error with the Court of Chancery’s well‑reasoned opinions.” The Supreme Court found that the evidence at trial supported Williams’s interpretation of the merger agreement and the Court of Chancery’s finding that ETE’s issuance of convertible preferred units that preferenced ETE insiders breached various covenants. The Supreme Court also rejected ETE’s defense that Williams had breached the merger agreement and affirmed the Court of Chancery’s finding that Williams’s actions were in furtherance of the merger. Moreover, the Supreme Court rejected ETE’s counterclaim for a termination fee alleging that Williams had changed its board recommendation in favor of a merger, holding that such a change does not take place unless a board of directors withdraws, qualifies or modifies its resolutions in favor of the merger.

The Cravath team included partners Antony L. Ryan, who argued the appeal on Williams’s behalf, Kevin J. Orsini, Michael P. Addis and David H. Korn and associates Jonathan D. Mooney, Scott B. Cohen, Evan D. Siegel and Robert A. DeNunzio.

The case is Energy Transfer, LP, et al. v. The Williams Companies, Inc., No. 391, 2022 (Del. 2023).