COURT OF CHANCERY 

OF THE

SAM GLASSCOCK III 

VICE CHANCELLOR

STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE

34 THE CIRCLE

GEORGETOWN, DELAWARE 19947

Date Submitted: March 19, 2018 

Date Decided: April 16, 2018 

Kenneth J. Nachbar, Esquire 

Susan W. Waesco, Esquire 

Matthew R. Clark, Esquire 

Zi-Xiang Shen, Esquire 

Morris, Nichols, Arsht & Tunnell LLP 

1201 N. Market Street, P.O. Box 1347 

Wilmington, DE 19899 

Rolin P. Bissell, Esquire 

Tammy L. Mercer, Esquire 

James M. Yoch, Jr., Esquire 

Benjamin M. Potts, Esquire 

Young Conaway Stargatt & Taylor, LLP 

Rodney Square 

100 North King Street 

Wilmington, DE 19801 

Re: The Williams Companies, Inc. v. Energy Transfer Equity, L.P., et al., 

Cons. Civil Action Nos. 12168-VCG and 12337-VCG 

Dear Counsel: 

The underlying action arose from a failed multi-billion-dollar merger between 

The Williams Companies, Inc. (“Williams”) and Energy Transfer Equity, L.P. 

(“ETE”), both major participants in the energy pipeline business. That failure 

resulted in a number of legal actions, in this Court and elsewhere.1

 I initially heard 

this matter when Williams sought injunctive relief to force consummation of the 

Merger, which ultimately failed. Both parties thereafter pursued claims against each 

other in this action for contractual damages under the Merger Agreement. By 

 

1

 This Letter Opinion assumes familiarity with the facts outlined in the previous Opinions of both 

this Court and the Supreme Court and includes only those facts necessary to my decision here. All 

defined terms have the same meaning as those described in my most recent Memorandum Opinion. 

Williams Cos., Inc. v. Energy Transfer Equity, 2017 WL 5953513, at *1 (Del. Ch. Dec. 1, 2017). 
2 

Memorandum Opinion of December 1, 2017 (the “Memorandum Opinion”), I 

dismissed a portion of a counterclaim by ETE by which ETE sought a large breakup fee. I also dismissed ETE’s claim for fees and costs incurred in Texas litigation, 

as damages for breach of a forum selection clause of the Merger Agreement. ETE 

now seeks reargument of those decisions. 

The Merger Agreement required the Board to enact four board 

recommendations, together known as the Company Board Recommendation, that 

approved the Merger and declared the Merger Agreement advisable to the 

stockholders. These were the resolutions necessary to consummate the Merger. The 

Board was forbidden to threaten or take action to withdraw, modify, or qualify the 

Company Board Recommendation in a way adverse to ETE. Any such action would 

lead to liquidated damages. I found that the Williams Board had not taken “formal” 

action―by which I meant action by the directors as a Board―committing any of the 

contractually forbidden actions. ETE’s primary ground for reargument is that I 

misapprehended the facts regarding the Board’s action, or misconstrued the 

contractual prohibition in light of the facts. 

ETE’s second ground for reargument arises from my dismissal of a claim by 

ETE for expenses and fees incurred when Williams filed suit in Texas against a 

principal of ETE, allegedly breaching a forum selection clause. I dismissed the claim 

based on language in the Merger Agreement requiring all parties to bear their own 
3 

fees and expenses in connection with the Agreement. ETE argues that my 

interpretation of this provision of the Merger Agreement is erroneous as a matter of 

law. 

I find that I did not misapprehend the law or the facts and accordingly deny 

the Motion for Reargument. My reasoning follows. In addition, I adopt the 

reasoning stated in the Memorandum Opinion. 

I. THE BREAK-UP FEE 

ETE’s Motion for Reargument of its liquidated damages claim hinges on my 

interpretation of several provisions of the Merger Agreement. By way of brief 

background, according to ETE, changed economic conditions made the agreed-to 

union of Williams and ETE economically unattractive for both parties. Rather than 

renegotiate the Merger terms, Williams—in ETE’s view—feigned fidelity to the 

Agreement, while working to undermine it, for the purpose of extorting a walk-away 

payment from ETE. Part of Williams’ plan, presumably, was litigation in this Court 

seeking specific performance of the Agreement, which ETE successfully defended 

by invoking failure of a condition precedent. Nonetheless, ETE here claims that it 

was Williams that materially breached the Merger Agreement, entitling ETE to 

liquidated damages. In my Memorandum Opinion, I found this claim untenable. 

Section 4.02(d) of the Merger Agreement provides that: 

Neither the Board of Directors of the Company nor any committee

thereof shall (i)(A) withdraw (or modify or qualify in a manner adverse 
4 

to Parent), or publicly propose to withdraw (or modify or qualify in a 

manner adverse to Parent), the Company Board Recommendation or 

(B) recommend the approval or adoption of, or approve or adopt,

declare advisable or publicly propose to recommend, approve, adopt or 

declare advisable, any Company Takeover Proposal (any action 

described in this clause (i) being referred to as a “Company Adverse 

Recommendation Change”).2

 “Company Board Recommendation” is defined in Section 3.01(d)(i): 

The Board of Directors of the Company duly and validly adopted 

resolutions (A) approving and declaring advisable this Agreement, the 

Merger and the other Transactions, (B) declaring that it is in the best 

interests of the stockholders of the Company that the Company enter 

into this Agreement and consummate the Merger and the other 

Transactions on the terms and subject to the conditions set forth herein, 

(C) directing that the adoption of this Agreement be submitted to a vote 

at a meeting of the stockholders of the Company and (D) 

recommending that the stockholders of the Company adopt this 

Agreement ((A), (B), (C) and (D) being referred to herein as the 

“Company Board Recommendation”), which resolutions, as of the date 

of this Agreement, have not been rescinded, modified or withdrawn in 

any way.3

ETE contends that the remedy for a breach of Section 4.02(d) is liquidated damages 

of $1.48 billion.4

By contrast, Section 5.01(b) requires that Williams “shall use reasonable best 

efforts to obtain from its stockholders the Company Stockholder Approval in favor 

of the adoption of this Agreement.”5

 The remedy for a breach of this provision is 

 

2

 Merger Agreement § 4.02(d) (emphases added). 

3 Id. § 3.01(d)(i) (emphases added). 

4

 Countercl. Compl. ¶¶ 8, 28, 51, 86. ETE cites to Sections 5.06(d)(iii) and 7.01(e) of the Merger 

Agreement as support for its interpretation that breach of Section 4.02(d) triggers a $1.48 billion 

termination fee. 

5

 Merger Agreement § 5.01(b). 
5 

actual damages arising from the breach itself.6

 ETE alleges that Williams violated 

Sections 4.02(d) and 3.01(d)(i) through several actions described below. Williams 

denies any breach, and argues that ETE’s allegations, at most, implicate Section 

5.01(b). 

A. Alleged Actions 

ETE points to the following actions, individually and cumulatively, as 

breaches of Section 4.02(d): 

1. Press Releases 

ETE argues that the Williams Board used press releases “as a weapon to 

extract a walk-away payment” despite splits in opinion among the directors about 

the value of the Merger.7

 ETE tries to convert these facially positive statements into 

negative statements about the transaction by highlighting changes through time, such 

as:8

 

January 15, 2016 press release April–May 2016 press releases 

The [Williams Board] is unanimously 

committed to completing the 

transaction with Energy Transfer 

Equity, L.P. (NYSE: ETE) per the 

merger agreement executed on 

September 28, 2015 as expeditiously 

as possible and delivering the benefits 

of the transaction to Williams’ 

stockholders. 

The Williams Board is unanimously 

committed to enforcing its rights under 

the merger agreement entered into with 

ETE on September 28, 2015 and to 

delivering the benefits of the merger 

agreement to Williams’ stockholders. 

 

6 Id.; Nov. 30, 2016 Hr’g Tr. 14:9–17:5. 

7

 Countercl. Compl. ¶¶ 60–62. 

8 Id.
6 

ETE argues that the press releases from April to May 2016 violated Section 4.02(d) 

by omitting the “commit[ment] to complet[e] the transaction” language of the 

January press release. According to ETE, against a “backdrop” of internal director 

dissension, “the Williams Board’s public statements regarding unanimity cannot be 

understood as anything but a litigation-driven attempt to obtain a walk-away 

payment.”9

 ETE makes a similar argument for press releases issued by Williams 

regarding litigation in this Court and in Texas.10

2. Media Campaign 

ETE alleges that Williams engaged in a “media campaign” against the 

Merger.11 Williams purportedly did this by “planting media reports disfavoring 

ETE” through its attorney and through interactions with the Wall Street Journal by 

a Williams public relations employee.12 ETE also contends that “Williams made a 

number of disparaging statements concerning ETE’s management team in multiple 

public lawsuits and (upon information and belief) through its public relations firm, 

Joele Frank.”13 ETE argues that “Williams or its public relations consultant, Joele 

Frank, leaked confidential information to the media in a further effort to denigrate 

ETE and its managers.”14 To the extent these media statements disparaged Warren, 

 

9 Id. ¶ 65. 

10 Id. ¶ 75. 

11 Id. ¶¶ 16, 22, 78. 

12 Id. ¶ 78. 

13 Id. ¶ 69. 

14 Id. ¶ 79. 
7 

ETE suggests they were especially egregious in light of the Form S-4 Williams filed 

regarding the Merger, which touted Warren’s anticipated leadership of the combined 

entity.15 ETE makes the same argument with respect to disparaging statements in 

various lawsuits, described below. 

3. Lawsuits 

In response to an issuance of equity by ETE during the pendency of the 

Merger, Williams sued Warren in Texas state court (the “Texas action”). The 

complaint—which ETE avers was approved by Williams’ Board—described 

Warren as a “‘malicious’ executive who has ‘exploited’ his leadership position at 

ETE.”16 According to ETE, the litigation and its averments constitute a Company 

Adverse Recommendation Change. ETE makes a similar allegation regarding the 

Merger Actions filed in this Court, by which Williams sought to enforce the Merger 

Agreement, noting that filings by Williams accuse ETE of “sabotage,” “fabrication,” 

“illegitimate” avoidance of contractual obligations, and other unethical behavior.17 

ETE states that these “extreme and unnecessary descriptions are contrary to the 

Company Board Recommendation and inconsistent with Williams’ obligations 

under the Merger Agreement” and “violate[] Section[] 4.02 . . . of the Merger 

Agreement.”18

 

15 Id. ¶¶ 18, 90–95. 

16 Id. ¶ 16. 

17 Id. ¶¶ 80–81. 

18 Id. ¶¶ 81, 86. 
8 

4. SEC Filings 

ETE alleges that certain of Williams’ Form S-4 filings independently 

constitute modifications or withdrawals of the Company Board Recommendation.19 

In a May 4, 2016 amendment to the Form S-4, Williams explained that: 

The WMB Board believes it is appropriate to continue to rely on the 

fairness opinions dated September 28, 2015 for purposes of its original 

decision to enter into the merger agreement. However, the WMB Board 

acknowledges that [its] fairness opinions only address fairness of the 

consideration to be received by WMB stockholders as of September 28, 

2015 and the WMB Board no longer believes that the projections 

underlying those fairness opinions are valid. Accordingly, the WMB 

Board is not relying on those fairness opinions in evaluating its 

recommendation to Williams’ stockholders to adopt the merger 

agreement in light of the developments described in this section. . . . 

The WMB Board believes it has, with the assistance of WMB 

management and the WMB Board’s financial advisors, the necessary 

expertise to evaluate the impact of changed economic conditions on the 

merits of the merger transaction. After carefully reviewing the 

developments described in this section, including those noted above, 

the WMB Board has not changed its recommendation from its vote on 

September 28, 2015 that WMB stockholders adopt the merger 

agreement.

20

This statement, in ETE’s view, is sufficient to trigger Section 4.02 and result in 

liquidated damages of $1.48 billion because “the Company Board Recommendation 

 

19 Id. ¶¶ 23–34, 89–90; Defs.’ & Countercl. Pls.’ Br. in Opp’n to Pl. & Countercl. Def.’s Mot. to 

Dismiss & to Strike Defs. & Countercl. Pls.’ Second Am. & Suppl. Affirmative Defenses & 

Verified Countercl. (“Defs.’ Ans. Br.”) 2–3, 12; Mar. 19, 2018 Oral Arg. Tr. 9:19–10:2. 

20 Pl.’s Br. in Support of its Motion to Dismiss & to Strike Defs. & Countercl. Pls.’ Second Am. 

& Supp. Affirmative Defenses & Verified Countercl. Ex. E (Am’t No. 5 to Form S-4 Reg’n 

Statement, dated May 4, 2016) 24–25 (emphases added). I consider the SEC filings referred to in 

the Complaint to be incorporated by reference. See, e.g., Amalgamated Bank v. Yahoo! Inc., 132 

A.3d 752, 797 (Del. Ch. 2016). 
9 

was weakened by the absence of a fairness opinion. If a disclosure is weakened, it 

is modified or qualified.”21 ETE argues that Williams also modified or qualified the 

Company Board Recommendation when the Form S-4 amendment stated that certain 

material factors previously relied on were no longer reliable, such as projections for 

dividends, certain synergies, and an “ongoing presence in Tulsa, Oklahoma.”22

B. Discussion 

“To prevail on a motion for reargument under Rule 59(f), the moving party 

must demonstrate that the Court either overlooked a decision or principle of law that 

would have controlling effect or misapprehended the facts or the law such that the 

outcome of the decision would be different.”23 ETE “bear[s] a heavy burden on a 

Rule 59 motion. Such motions are not a mechanism for litigants to relitigate claims 

already considered by the court.”24 The Motion for Reargument addresses an 

underlying Motion to Dismiss under Rule 12(b)(6).25 When reviewing a motion to 

dismiss, 

(i) all well-pleaded factual allegations are accepted as true; (ii) even 

vague allegations are well-pleaded if they give the opposing party 

notice of the claim; (iii) the Court must draw all reasonable inferences 

in favor of the non-moving party; and (iv) dismissal is inappropriate 

 

21 Countercl. Compl. ¶¶ 23–24, 90; see also Defs.’ Ans. Br. 2–3; Mar. 19, 2018 Oral Arg. Tr. 9:19–

10:2. 

22 Defs.’ Ans. Br. 12–13; Countercl. Compl. ¶ 93. 

23 In re Zale Corp. S’holders Litig., 2015 WL 6551418, at *1 (Del. Ch. Oct. 29, 2015).

24 In re ML/EQ Real Estate P'ship Litig., Consol., 2000 WL 364188, at *1 (Del. Ch. Mar. 22, 

2000). 

25 Williams Cos., Inc., 2017 WL 5953513, at *2. 
10 

unless the plaintiff would not be entitled to recover under any

reasonably conceivable set of circumstances susceptible of proof.26

“Dismissal of a claim based on contract interpretation is proper if the defendants’ 

interpretation is the only reasonable construction as a matter of law.”27 

ETE contends that I misinterpreted the Merger Agreement when I found that 

Williams’ actions, adumbrated above, failed to state a claim under Section 4.02(d) 

for liquidated damages. That is, ETE argues that my interpretation of the contract, 

holding that the actions alleged in the Complaint did not constitute the withdrawal, 

modification, or qualification of the Company Board Recommendation in favor of 

the Merger, was in error. 

Williams’ Board, via resolution, complied with the Company Board 

Recommendation requirement. The Board never explicitly withdrew, modified, or 

qualified this recommendation, or threatened to do so. Subsequently, Williams’ 

stockholders voted overwhelmingly in favor of the Merger. ETE’s view, however, 

is that the Company Board Recommendation does not serve only to maintain board 

resolutions sufficient for closing. ETE argues that this clause, together with Section 

4.02(d), instead serves as an anti-disparagement clause. I note that Section 5.01 is a 

separate best efforts provision that would also presumably prohibit disparagement 

 

26 Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002) (footnotes and internal quotation 

marks omitted). 

27 Caspian Alpha Long Credit Fund, L.P. v. GS Mezzanine P’rs 2006, L.P., 93 A.3d 1203, 1205 

(Del. 2014) (internal quotation marks omitted). 
11 

of the kind that ETE alleges.28 Section 5.01 allows the counterparty, upon breach of 

the best efforts clause, to recover actual damages; by contrast, Sections 3.01(d)(i) 

and 4.02(d) provide liquidated damages where the Board threatens or acts to 

withdraw, modify, or qualify the Company Board Recommendation. 

The latter two sections of the Merger Agreement are aimed at maintaining a 

resolution without which the Merger may not close. It is not reasonably conceivable, 

reading the contract as a whole, that the parties meant that other acts, which might 

reasonably be seen to disparage the transaction or which might cool stockholder 

ardor for the Merger, should come under this liquidated damages clause relating to 

a requirement that the Board resolve those things necessary to the Merger. Section 

4.02(d) refers to Section 3.01(d)(i), which requires certain resolutions by Williams’ 

Board; it then prohibits Board action undoing the resolutions. Williams’ Board 

explicitly took no such action; ETE argues that actions Williams did take should be 

interpreted, practically, as incompatible with Williams’ undertaking in the Merger 

Agreement. But it is ETE’s construction that leads to an impractical result. Under 

ETE’s reading, where a board enacted the required recommendation, but the 

company then disparaged the counterparty or its chairperson or amended certain 

assumptions about the merger through SEC filings, after which the company’s 

stockholders nonetheless accepted the board’s favorable recommendation and voted 

 

28 Merger Agreement § 5.01. 
12 

to approve the merger, the company is liable for the full amount of liquidated 

damages as if the board had withdrawn its recommendation and torpedoed the 

merger. In other words, actions by Williams that led to a consummated transaction 

leave it liable as though it had withdrawn from the transaction. This is a nonsensical 

reading of the language of the Merger Agreement, and is not consistent with the 

language the parties themselves chose.29 

ETE points out that the “safe harbor” provision in the Merger Agreement at 

Section 4.02(f) allows Williams to make certain disclosures to stockholders—

provided it reaffirms its recommendation in favor of the Merger

contemporaneously—notwithstanding the prohibition against a Company Adverse 

Recommendation Change. Therefore, ETE argues, some statements or disclosures 

short of an explicit withdrawal or negative modification of the Company Board 

Recommendation are so inimical to the consummation of the Merger that they would 

nonetheless amount to a breach of Section 4.02(d). Otherwise, the safe harbor 

reference would be surplusage. Assuming this is so, ETE has not pled such 

disclosures here.

 

29 See, e.g., Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1160–61 (Del. 2010) (rejecting “an 

absurd interpretation of [a] contract” and stating that “[a]n unreasonable interpretation produces 

an absurd result or one that no reasonable person would have accepted when entering the 

contract”). 
13 

The Merger Agreement required the Board to adopt the Company Board 

Recommendation, without which a confirmatory vote by Williams’ stockholders 

could not take place. Withdrawal or adverse change to these resolutions, or a threat 

to do so, would trigger liquidated damages. By contrast, statements by Williams 

adverse to the Merger would presumably violate the best efforts clause, entitling the 

counterparty to actual damages, if any. The acts taken by Williams (in some cases 

in an effort to consummate the Merger), if actionable, fall in the second category, 

not the first. 

II. ETE’S PURSUIT OF FEES AND COSTS INCURRED IN THE TEXAS 

ACTION AS DAMAGES FOR BREACH OF THE MERGER AGREEMENT 

During the pendency of the Merger, Williams brought an action in Texas 

against Warren, ETE’s principal, regarding ETE’s issuance of equity in ETE to 

insiders.30 The Texas Court—per ETE—dismissed the suit as in violation of the 

forum selection clause in Section 8.01(b) of the Merger Agreement.31 Accordingly, 

ETE seeks the fees and costs it incurred in the Texas action as damages for violation 

of Section 8.01(b).32 

Section 5.06(a) of the Merger Agreement states that “all fees and expenses 

incurred in connection with this Agreement and the Transactions shall be paid by 

 

30 Williams Cos., Inc., 2017 WL 5953513, at *8. 

31 Id. at *2. 

32 Id. at *8. 
14 

the party incurring such fees or expenses.”33 In the Memorandum Opinion, I found 

that the parties “waived any right to receive fees and expenses for a breach of the 

Agreement” in Section 5.06(a).34 ETE argues that this finding is erroneous because 

Section 5.06(a) “says nothing about the recovery of damages for a breach of the 

Merger Agreement”35 and posits that the parties would have used different language

to achieve that result, such as: “in connection with . . . disputes or controversies 

arising out of or relating to” the Agreement.36 Williams, by contrast, points to case 

law stating that, with regard to a fee-shifting provision, the phrase “in connection 

with” is “paradigmatically broad” and “unquestionably broad.”37 Williams argues 

that “[f]ees allegedly incurred as a result of a purported breach of the Merger 

Agreement are obviously a subset of all fees . . . incurred in connection with th[e 

Merger] Agreement.”38 These arguments were presented to me and considered in 

the Memorandum Opinion. 

In ETE’s view, Section 5.06(a) is, at best, ambiguous, and in dismissing its 

claim for fees and costs by relying on the plain language of Section 5.06(a), I have 

 

33 Merger Agreement § 5.06(a). 

34 Williams Cos., Inc., 2017 WL 5953513, at *8. 

35 Defs. & Countercl. Pls.’ Mot. for Reargument on Pl. & Countercl. Def.’s Mot. to Dismiss or 

Strike (“Defs.’ Mot. for Reargument”) 10. 

36 Id.; see Wilcox & Fetzer, Ltd. v. Corbett & Wilcox, 2006 WL 2473665, at *3 (Del. Ch. Aug. 22, 

2006) (determining the scope of “in connection with” in the context of an arbitration clause). 

37 Pl.’s Opp’n to Defs.’ Mot. for Reargument 11–12 (quoting Lillis v. AT & T Corp., 904 A.2d 325, 

331 (Del. Ch. 2006)). 

38 Id. at 11 (internal citations omitted). 
15 

made an error of law. ETE’s disagreement with my conclusion, however wellfounded, does not amount to a proper ground for reargument. 

III. CONCLUSION 

Upon careful review of ETE’s arguments, I find that I did not misapprehend 

the facts or the law in dismissing ETE’s claims for liquidated damages or for 

damages arising from breach of the forum selection clause. Therefore, the Motion 

for Reargument is DENIED. To the extent the foregoing requires an Order to take 

effect, IT IS SO ORDERED. 

 Sincerely, 

/s/ Sam Glasscock III 

 Sam Glasscock III