Williams Wins Interest and Fee Motion Against ETE Following Judgment for $410 Million Contractual Breakup Fee

On August 25, 2022, the Delaware Court of Chancery granted in full Cravath client The Williams Companies, Inc.’s (“Williams”) motion for interest, attorneys’ fees and expenses, totaling more than $185 million at the time the motion was taken under submission. The decision followed post‑trial discovery, briefing and oral argument between January and May 2022.

The basis for Williams’ motion was its victory against Energy Transfer, LP (“ETE”) in a dispute over a contractual termination fee reimbursement following the parties’ unconsummated $37.7 billion combination. After a trial in May 2021, the Court issued a decision ordering ETE to pay Williams a $410 million termination fee, plus interest at the contractual rate, and its reasonable attorneys’ fees and expenses. More information on this victory is available in this news item.

The parties subsequently disagreed about whether prejudgment interest should be calculated on a simple or compound basis in light of the Merger Agreement’s silence on compounding; whether prejudgment interest should be tolled during certain periods of delay prior to trial; and whether Williams was entitled to recover its contingent attorneys’ fees from ETE under the fee‑shifting provision in the Merger Agreement. The Court ruled in Williams’ favor on each of these issues.

The Court found that quarterly‑compounded interest was appropriate in light of the parties’ sophistication and the “fundamental economic reality” that Williams would have been able to receive compound interest if it had use of the money ETE owed. The Court further concluded that tolling of prejudgment interest was unwarranted because Williams was not responsible for the delays at issue. Finally, the Court found that reasonable contingent attorneys’ fees are recoverable under contractual fee‑shifting provisions like the one in the Merger Agreement, and the particular contingent fee arrangement here was reasonable under the circumstances.

The Cravath team included partners Antony L. Ryan, who argued the motion, Kevin J. Orsini, Michael P. Addis and David H. Korn and associates Jonathan D. Mooney, Scott B. Cohen, Tyler D. Purinton and Robert A. DeNunzio.

The case is The Williams Companies, Inc. v. Energy Transfer, LP, et al., Nos. 12168‑VCG, 12337‑VCG (Del. Ch.).