IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

THE WILLIAMS COMPANIES, INC.,

Plaintiff and 

Counterclaim Defendant,

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)

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v.

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C.A. No. 12168-VCG

ENERGY TRANSFER EQUITY, L.P. 

and LE GP, LLC,

Defendants and 

Counterclaim Plaintiffs.

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)

)

)

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THE WILLIAMS COMPANIES, INC.,

Plaintiff and 

Counterclaim Defendant,

)

)

)

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v.

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)

)

C.A. No. 12337-VCG

ENERGY TRANSFER EQUITY, L.P., 

ENERGY TRANSFER CORP LP, ETE 

CORP GP, LLC, LE GP, LLC, and 

ENERGY TRANSFER EQUITY GP, 

LLC,

Defendants and 

Counterclaim Plaintiffs.

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)

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MEMORANDUM OPINION

Date Submitted: August 29, 2017

Date Decided: December 1, 2017

Kenneth J. Nachbar and Zi-Xiang Shen, of MORRIS, NICHOLS, ARSHT & 

TUNNELL LLP, Wilmington, DE; OF COUNSEL: Sandra C. Goldstein, Antony L.
Ryan, and Kevin J. Orsini, of CRAVATH, SWAINE & MOORE LLP, New York, 

NY, Attorneys for the Plaintiff and Counterclaim Defendant.

Rolin P. Bissell, Tammy L. Mercer, and James M. Yoch, Jr., of YOUNG 

CONAWAY STARGATT & TAYLOR LLP, Wilmington, DE; OF COUNSEL: 

Michael C. Holmes, John C. Wander, Michael L. Charlson, and Craig E. Zieminski, 

of VINSON & ELKINS LLP, Dallas, TX, Attorneys for the Defendants and 

Counterclaim Plaintiffs.

GLASSCOCK, Vice Chancellor
1

What, Langston Hughes asked, becomes of a dream deferred?1 When the 

dream is a multi-billion-dollar merger that changing market conditions no longer 

favor, it seems, it becomes a carcass that, like those of millions of turkeys featured 

in the holiday feasts just past, is diligently picked over. The carcass here is the 

remnant of the dreamed-of merger of The Williams Companies, Inc. (“Williams”) 

and Energy Transfer Equity, L.P. (“ETE” or the “Partnership”). The matter came 

before me just before its demise, as Williams unsuccessfully fought for injunctive 

relief to force consummation, a result vigorously opposed by ETE. Thereafter, the 

parties pursued actions against one another for contractual damages under the

merger agreement. Before me now is Williams’ Motion to Dismiss ETE’s 

counterclaims. ETE, having successfully resisted Williams’ attempt to force 

consummation of the merger, is in the unlikely position of arguing that it is also

entitled to a billion-dollar breakup fee under the merger agreement. ETE, however, 

was able to walk away from the merger based on the failure of a condition precedent: 

the inability of its counsel to opine that the merger “should” trigger favorable tax 

treatment. Since none of the allegations of breach supporting ETE’s entitlement to 

the breakup fee caused, or even relate to, ETE’s exercise of its right to avoid the 

merger, and, fundamentally, because the contract language it relies on is not

 

1 Harlem, Langston Hughes, Collected Poems (1994).
2

supportive, I find ETE’s counterclaim seeking the breakup fee not viable. My 

analysis of ETE’s remaining counterclaims is mixed. My reasoning follows.

I. BACKGROUND

This Memorandum Opinion assumes familiarity with the facts outlined in the 

previous Opinions of both this Court and the Supreme Court. “The reader is 

forewarned that this case involves a maze of corporate entities and an alphabet soup 

of corporate names.”2 This Opinion includes only those facts necessary to my 

analysis. 

A. The Merger Agreement and Failure of a Condition 

The parties are significant players in the energy pipeline business.3 

Counterclaim Plaintiffs ETE and its affiliate Energy Transfer Corp LP (“ETC”) are 

Delaware limited liability partnerships.4 Counterclaim Defendant Williams is a 

Delaware corporation.5 

Williams and ETE negotiated a merger as set out in an Agreement and Plan 

 

2 Chester Cty. Emps.' Ret. Fund v. New Residential Inv. Corp., 2017 WL 4461131, at *1 (Del. 

Ch. Oct. 6, 2017) (quoting Veloric v. J.G. Wentworth, Inc., 2014 WL 4639217, at *2 (Del. Ch. 

Sept. 18, 2014)).

3 Williams Cos., Inc. v. Energy Transfer Equity, L.P. (Williams’ Second Action), 2016 WL 

3576682, at *1 (Del. Ch. June 24, 2016).

4 In addition, Counterclaim Plaintiffs LE GP, LLC (“LE GP”), ETE Corp GP, LLC (“ETE Corp”), 

and Energy Transfer Equity GP, LLC (“ETE GP”) are Delaware limited liability companies.

Defs.’ and Countercl. Pls.’ Second Am. & Supplemental Affirm. Defenses & Verified Countercl.

(the “Countercl.” or the “Counterclaim Complaint”) ¶¶ 41–45.

5 Id. ¶ 46.
3

of Merger dated September 28, 2015 (the “Merger Agreement” or “Agreement”).

6

 

Under the Merger Agreement, Williams would merge into ETC (the “Merger”) in 

exchange for ETC stock, $6.05 billion in cash, and certain other rights.7 Post-Merger 

ownership of ETC would be split, with 19% held by the Partnership and 81% by 

former Williams stockholders.8

After ETE and Williams signed the Merger Agreement, the energy 

industry―and particularly the outlook for ETE and Williams―declined

substantially.9 In reaction to this decline—although its precise motives are in 

dispute—ETE issued new units to certain large ETE equity holders after signing the 

Merger Agreement (the “Special Issuance”).10 Ultimately, ETE’s tax counsel, 

Latham & Watkins LLP (“Latham”), decided that it could not issue a tax-related 

opinion with the required confidence level to satisfy a condition precedent for the 

Merger to close.11 Relying on the failure of this condition precedent, ETE exercised 

its right to terminate the Agreement on June 29, 2016.12 

 

6 Id. ¶ 48 (including a Letter Agreement dated May 24, 2016 and noting that the Merger Agreement 

was amended on May 1, 2016); Williams’ Second Action, 2016 WL 3576682 at *1.

7 Countercl. ¶ 48; Williams’ Second Action, 2016 WL 3576682 at *3.

8 Williams’ Second Action, 2016 WL 3576682 at *3, 6. 9 Countercl. ¶ 3.

10 Id. ¶¶ 143–46, 149–50, 158–59; Williams’ Second Action, 2016 WL 3576682 at *4. 11 Countercl. ¶¶ 171–77; Merger Agreement § 6.01(h).

12 Countercl. ¶ 7; Williams Cos., Inc. v. Energy Transfer Equity, L.P., 159 A.3d 264, 275 (Del. 

2017) (denying Williams’ request to enjoin ETE from terminating the Merger Agreement).
4

B. Procedural History

The parties quickly became entangled in litigation. Williams challenged the 

Special Issuance and filed its first Verified Complaint against the Partnership and 

LE GP on April 6, 2016 (the “First Action”), arguing that equitable relief was 

necessary to preserve the Merger Agreement.13 Williams filed a Verified Amended 

Complaint on April 19, 2016 (the “Second Action”) against the Defendants to 

specifically enforce the Agreement and compel ETE to comply.

14 I found that ETE 

was entitled to terminate the Agreement because Latham’s inability to issue the tax 

opinion was a failure of a condition precedent under that Agreement.

15 Williams 

appealed to the Supreme Court, which affirmed, in pertinent part, the Opinion

below.

16 Williams also filed suit against ETE CEO and Chairman Kelcy Warren in 

Texas state court for tortious interference with contract, but the suit was dismissed

as incompatible with the forum selection clause in the Merger Agreement.

17

Williams seeks contract damages in the current litigation. ETE brought 

counterclaims and alleges that Williams breached provisions of the Agreement 

 

13 Williams Cos., Inc. v. Energy Transfer Equity, L.P., C.A. No. 12168-VCG (Del. Ch. Apr. 6, 

2016); a separate challenge to ETE’s issuance is also proceeding before me. In re Energy Transfer 

Equity L.P. Unitholder Litig. (ETE Unitholder Litig.), 2017 WL 782495, at *1 (Del. Ch. Feb. 28, 

2017). 14 The actions are now combined in the present matter. Williams Cos., Inc. v. Energy Transfer 

Equity, L.P., C.A. No. 12337-VCG (Del. Ch. Nov. 30, 2016).

15 Williams’ Second Action, 2016 WL 3576682 at *21.

16 Williams Cos., 159 A.3d at 275. 17 Countercl. ¶¶ 72, 168–69.
5

pertaining to (i) the board recommendation requirement, (ii) the forum selection 

clause, and (iii) the reasonable best efforts, disclosure, and financing cooperation

requirements. ETE contends that, as a result of these breaches, Williams owes ETE 

$1.48 billion (the “Termination Fee”) and other damages.

18 Currently before me is 

Williams’ Motion to Dismiss those counterclaims. Because these alleged breaches 

largely rely on my interpretation of the Merger Agreement, I include significant 

portions of that Agreement below. 

C. The Board Recommendation Claim

ETE alleges that Williams breached the board recommendation and 

reasonable best efforts provisions of the Agreement by making negative comments 

about Warren in press releases, public filings, pleadings in a lawsuit against Warren 

in Texas state court, and by “failing to reconsider the recommendation” of the 

Merger in light of changes “described in [Williams’] Form S-4” that “gutted the 

foundations for the original recommendation.”19 The required “Company Board 

Recommendation” (or the “Recommendation”) was defined in Section 3.01(d) of 

the Merger Agreement: 

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 

 

18 Countercl. ¶ 8.

19 Id. ¶ 23.
6

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.

20

ETE’s contention relies on interpreting the Agreement to mean that the public 

statements made by Williams, or Williams’ Board of Directors (the “Directors” or 

the “Board”), constitute a withdrawal of the Company Board Recommendation or 

designation as a “Company Adverse Recommendation Change” under Section 

4.02.21 Williams argues that a proper construction of Section 4.02 allows for a 

“Company Adverse Recommendation Change” only in the context of a formal board 

resolution and that no such board resolution was enacted.22 Section 4.02 reads in 

relevant part: 

(d) Neither the Board of Directors of the Company nor any committee 

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

to [ETE]), or publicly propose to withdraw (or modify or qualify in a 

manner adverse to [ETE]), 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”) or (ii) approve or recommend, or publicly 

 

20 Merger Agreement § 3.01(d) (emphases added). 

21 For ease of reference, any citation to a “section” refers to a section in the Merger Agreement, 

unless otherwise noted. 22 Pl.’s Br. in Supp. of Its Mot. to Dismiss & to Strike Defs. & Countercl. Pls.’ Second Am. & 

Supplemental Affirmative Defenses & Verified Countercl. (“Pl. Op. Br.”) at 23–30; Nov. 30, 

2016 Oral Arg. Tr. at 8:14–9:14.
7

propose to approve or recommend, or cause or permit the Company or 

any of its Subsidiaries to execute or enter into any Company 

Acquisition Agreement.

(f) Nothing contained in this Section 4.02 or elsewhere in this 

Agreement shall prohibit the Company or any of its Subsidiaries from 

(i) taking and disclosing to its stockholders a position contemplated by 

Rule 14d-9, Rule 14e-2(a) or Item 1012(a) of Regulation M-A 

promulgated under the Exchange Act or (ii) making any disclosure to 

its stockholders if the Board of Directors of the Company or any of its 

Subsidiaries determines in good faith (after consultation with and 

receiving advice of its outside legal counsel) that the failure to do so 

would reasonably be likely to constitute a breach of its fiduciary duties 

to its stockholders under applicable Law; provided, however, that any 

such action or statement or disclosure made pursuant to clause (i) or 

clause (ii) shall be deemed to be a Company Adverse Recommendation 

Change unless the Board of Directors of the Company reaffirms its 

recommendation in favor of the Merger in such statement or disclosure 

or in connection with such action.

23

ETE contends that violations of the Company Adverse Recommendation provision 

in Section 4.02(d), which fall outside of the safe harbor in Section 4.02(f), are 

necessarily a violation of the reasonable best efforts provision in Section 5.03, and 

that Williams―by breaching Section 4.02(d)―is also in breach of Section 5.03.24 

ETE also contends that violations of portions of Section 5.03 are “untethered to 

consummation of the Merger” and that such claims should remain even if the Merger 

 

23 Merger Agreement § 4.02(f) (emphases added). 

24 Countercl. ¶¶ 9, 32.
8

failed.25 As a result of these and other breaches, ETE seeks unspecified damages.26 

ETE also argues that Williams’ breach of the Company Adverse 

Recommendation provision in Section 4.02(d) allowed ETE to terminate the 

Agreement under Section 7.01(e), which permits termination by ETE “in the event 

that a Company Adverse Recommendation Change shall have occurred.”27 

Therefore, Williams became immediately liable for a $1.48 billion fee (the 

“Company Termination Fee”) under Section 5.06(d)(iii).28 Section 5.06(d)(iii) states 

that if the “Agreement is terminated by [ETE] pursuant to Section 7.01(e) [a 

Company Adverse Recommendation change], then . . . [Williams] shall pay [ETE] . 

. . an aggregate fee equal to $1.48 billion.”29 Thus, according to ETE, Williams’ 

breach of the Company Adverse Recommendation Change provision in Section 

4.02(b) allowed ETE to terminate the Agreement under the permissible termination 

provision in Section 7.01(e), but then required Williams to pay a $1.48 billion 

Company Termination Fee under Section 5.06(d)(iii).

30

 

25 Defs. & Countercl. Pls.’ Br. in Opp’n to Pl. and Countercl. Def.’s Mot. to Dismiss & to Strike 

Defs. and Countercl. Pls.’ Second Amended & Supplemental Affirmative Defenses & Verified 

Countercl. (“Defs. Ans. Br.”) 47–48.

26 The damages sought other than the $1.48 billion Company Termination Fee are left unclear in 

the Counterclaim Complaint. See Countercl. ¶¶ 32 (“By taking these actions, Williams breached 

Sections 4.01(b), 5.03, and 5.14 of the Merger Agreement, is not entitled to any post-termination 

relief, and is liable for damages.”), 86 (“Williams has, therefore, violated Sections 4.02 and 5.03 

of the Merger Agreement, owes ETE $1.48 billion, and is not entitled to any relief.”). 27 Merger Agreement § 7.01(e).

28 Id. § 5.06(d)(iii).

29 Id. § 5.06(d)(iii).

30 Countercl. ¶ 51.
9

According to Williams, ETE could receive the $1.48 billion Termination Fee 

only if ETE “validly terminated the Agreement under Section 7.01(e) because the 

Williams Board effected a Company Adverse Recommendation Change.”31 Thus, 

Williams contends, to the extent that ETE maintains that violations of the reasonable 

best efforts clause in Section 5.01—or any other violations besides those under 

Section 7.01(e) and Section 5.06(d)(iii)—could lead to Williams paying the 

Company Termination Fee, those contentions are based on an inaccurate reading of 

the Merger Agreement.

32 Sections 5.06(b) and (c) specify the fees and expenses 

owed to the parties when the Agreement is terminated under other circumstances.33

Williams argues that it does not owe ETE the $1.48 billion Termination Fee because 

it did not effect a Company Adverse Recommendation Change under the 

Agreement,

34 which is, according to Williams, the only way for Williams to owe 

ETE the $1.48 billion Termination Fee.

D. The Forum Selection Clause 

ETE alleges that Williams’ lawsuit against Warren in Texas for tortious 

interference with the Agreement (the “Texas Merger Action”) violates the forum 

selection clause in Section 8.10(b) of the Merger Agreement.35 Section 8.10(b) 

 

31 Pl.’s Reply Br. in Further Supp. of Its Mot. to Dismiss & to Strike Defs. and Countercl. Pls.’ 

Second Am. & Supplemental Affirmative Defenses & Verified Countercl. at 6.

32 Nov. 30, 2016 Oral Arg. 16:22–17:5.

33 Merger Agreement §§ 5.06(b)–(c).

34 Nov. 30, 2016 Oral Arg. Tr. 15:9–17:5.

35 Countercl. ¶ 33.
10

states that: 

Each of the parties hereto irrevocably submits to the exclusive 

jurisdiction of the Court of Chancery of the State of Delaware for the 

purposes of any suit, action or other proceeding arising out of or relating 

to this Agreement and the rights and obligations hereunder or the 

Transactions or for the recognition and enforcement of any judgment 

in respect of this Agreement and the rights and obligations arising 

hereunder or the Transactions.36

Williams contends that it did not breach the clause because it sued Warren in his 

personal capacity and Warren is not a party to the Merger Agreement.37 Regardless, 

argues Williams, any such breach was immaterial and therefore not subject to 

liability because Section 7.02 limits post-termination liability for everything except 

“willful and material breach[es] of any of its representations, warranties, covenants 

or agreements.”38 Even if a breach were material, according to Williams, ETE 

suffered no cognizable damages.39 Alternatively, if there were damages, then 

Williams argues that recovery would be prohibited because Section 5.02(a) of the 

Agreement states that “all fees and expenses incurred in connection with this 

Agreement and the Transactions shall be paid by the party incurring such fees or 

expenses, whether or not the Transactions are consummated.”40

 

36 Merger Agreement § 8.10(b) (emphasis added).

37 Pl. Op. Br. at 52–53.

38 Merger Agreement § 7.02 (emphases added). 

39 Pl. Op. Br. at 52.

40 Merger Agreement § 5.06(a).
11

E. The Additional Breach of Contract Claims

ETE argues that Williams breached Section 5.01 of the Agreement by failing 

to disclose: (i) information about an internal proxy contest that may have influenced 

Williams’ vote in approving the Agreement and for failing to promptly notify ETE 

of the same,

41 (ii) “the self-interests of the Williams Board and/or beliefs concerning 

those self-interests,”42 and (iii) the “material fact that members of [Williams’]

[B]oard considered the possibility of a board-member-led proxy contest when voting 

in favor of the [Merger]” in the Form S-4.43 Williams argues that it disclosed the 

relevant facts and that, in any case, ETE “has pleaded (and can plead) no injury” 

from any disclosure violations.44 

Section 5.01 pertains to the preparation of the Form S-4 and the proxy 

statement and states in pertinent part: 

(a) If at any time prior to receipt of the Company Stockholder Approval 

any information relating to [ETE] or the Company, or any of their 

respective Affiliates, directors or officers, should be discovered by 

[ETE] or the Company which is required to be set forth in an 

amendment or supplement to either the Form S-4 or the Proxy 

Statement, so that either such document would not include any 

misstatement of a material fact or omit to state any material fact 

necessary to make the statements therein, in light of the circumstances

under which they are made, not misleading, the party that discovers 

such information shall promptly notify the other parties hereto and an 

appropriate amendment or supplement describing such information 

 

41 Countercl. ¶ 29. 

42 Id. ¶ 130. 43 Id. ¶ 112. 44 Pl. Op. Br. at 42–48.
12

shall be promptly filed with the SEC and, to the extent required by Law, 

disseminated to the stockholders of the Company.45

The success of ETE’s allegations rest on whether I find that these omissions are 

material and, if material, resulted in compensable damages. 

ETE further alleges that Williams breached Sections 4.01(b) (carrying on 

business in the ordinary course), 5.03 (reasonable best efforts), and 5.14 (reasonable 

cooperation in financing arrangements) of the Agreement by refusing to provide the 

information required―including certain financial information and a consent from 

Williams’ auditor to include its audit reports related to that financial 

information―for ETE to file a Form S-3 and complete a public equity offering.46 

ETE’s contention is that Williams’ obligation to not unreasonably withhold consent 

for ETE to “carry on its business in the ordinary course” under Section 4.01(b), 

combined with the Letter Agreement’s allowance for “issuances of equity securities 

with a value of up to $1.0 billion in the aggregate,”

47 should be read together to mean 

that a proposed issuance, by which ETE intended to finance the Merger in part, was 

allowable. Williams’ consent was improperly withheld, placing Williams in breach 

of Section 4.01(b).48 ETE alleges that this violation also breaches the reasonable 

best efforts provision in Section 5.03 and a provision requiring cooperation in 

 

45 Merger Agreement § 5.01(a) (emphasis added).

46 Countercl. ¶¶ 31–32. 47 Id. ¶ 154.

48 Id. ¶¶ 148–56.
13

financing arrangements in Section 5.14.49 Williams argues that Section 5.14 was not 

triggered because its consent was not unreasonably withheld.50 Section 5.14 states 

in relevant part: 

Prior to the Effective Time, the Company shall, and shall cause its 

Subsidiaries and their respective Representatives to, provide 

cooperation reasonably requested by [ETE] that is necessary or 

reasonably required in connection with the Financing or any other 

financing that may be arranged by [ETE].

51

The viability of these contentions depends on my finding that Williams’ 

consent was withheld improperly and that any such withholding of consent caused 

injury to ETE. 

In addition, Williams argues that alleged violations of Section 5.01(b)―which 

pertains to preparing the Form S-4 and the proxy statement―did not result in 

damages to ETE. Section 5.06 states in pertinent part: 

(b) If this Agreement is terminated (i) by either the Company or [ETE]

pursuant to Section 7.01(b)(iii) or (ii) by [ETE] pursuant to Section 

7.01(c), then in each case of clauses (i) and (ii) the Company shall 

promptly upon written demand by [ETE] (and in any event no later than 

two business days after such written demand is delivered to the 

Company) reimburse [ETE], by wire transfer of same day federal funds 

to the account specified by [ETE], for all out-of-pocket fees and 

expenses incurred or paid by or on behalf of [ETE] or their respective 

Subsidiaries and Affiliates in connection with the Merger or related to 

the preparation, negotiation, execution and performance of this 

Agreement, the Commitment Letter, the Fee Letter and related 

transaction documents, including all fees and expenses of counsel, 

 

49 Id. ¶¶ 32, 136; Merger Agreement §§ 4.01(b), 5.03, 5.14.

50 Pl. Op. Br. at 48–52.

51 Merger Agreement § 5.14 (emphases added). 
14

financial advisors, accountants, experts and consultants retained by 

[ETE] or their respective Subsidiaries and Affiliates, such amount not 

to exceed $50.0 million in the case of clause (i) and $100.0 million in 

the case of clause (ii).

(c) If this Agreement is terminated by the Company pursuant to Section 

7.01(d), then [ETE] shall promptly upon written demand by the

Company (and in any event no later than two business days after such 

written demand is delivered to [ETE]) reimburse the Company, by wire 

transfer of same day federal funds to the account specified by the 

Company, for all out-of-pocket fees and expenses incurred or paid by 

or on behalf of the Company or its Subsidiaries and Affiliates in 

connection with the Merger or related to the preparation, negotiation, 

execution and performance of this Agreement and related transaction 

documents, including all fees and expenses of counsel, financial 

advisors, accountants, experts and consultants retained by the Company 

or its Subsidiaries and Affiliates, such amount not to exceed $100.0 

million.

52

II. ANALYSIS 

The Counterclaim Defendants have moved to dismiss the counterclaims under 

Court of Chancery Rule 12(b)(6). When reviewing such a motion,

(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 

unless the plaintiff would not be entitled to recover under any 

reasonably conceivable set of circumstances susceptible of proof.53

I need not, however, “accept conclusory allegations unsupported by specific facts or 

. . . draw unreasonable inferences in favor of the non-moving party.”54 In addition, 

 

52 Merger Agreement §§ 5.06(b)–(c).

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

marks omitted).

54 Price v. E.I. DuPont de Nemours & Co., 26 A.3d 162, 166 (Del. 2011).
15

I refer to certain documents and public filings that are incorporated by reference in 

the Counterclaim Complaint.55 

A. The Board Recommendation Claim

The most serious contention in the ETE counterclaims―from a damages 

perspective, at least―is that Williams violated its contractual obligations regarding 

the Board Recommendation in favor of the Merger, after which ETE terminated the 

Agreement, triggering an obligation on Williams’ part to pay ETE a $1.48 billion 

Termination Fee. ETE seeks specific performance of this provision.

The syllogism under which ETE seeks the Termination Fee is rather 

complicated. First, ETE points out that under Section 3.01(d)(1), the Williams’ 

Board of Directors is required to cause the Company to adopt resolutions (a) 

approving the Merger; (b) declaring that the Merger is in the best interest of its 

stockholders; (c) directing a stockholder vote; and (d) recommending that the 

stockholders adopt the Merger Agreement in that vote. Resolutions comprising (a), 

(b), (c) and (d) are defined as the “Company Board Recommendation.”56 All parties 

agree that the Williams’s Board initially complied with the Merger Agreement by 

making this required Company Board Recommendation. Second, ETE points out 

that Section 4.02(d)(i)(A) provides that neither Williams’ Board, “nor any 

 

55 See Amalgamated Bank v. Yahoo! Inc., 132 A.3d 752, 797 (Del. Ch. 2016).

56 Merger Agreement § 3.01(d).
16

committee thereof,” shall “withdraw (or modify or qualify in a manner adverse to 

[ETE], or publicly propose to withdraw, or modify or qualify in a manner adverse to 

[Williams], the Company Board Recommendation.”57 ETE argues that, even though

the Williams Directors did not formally withdraw the Company Board 

Recommendation, the Directors informally decided (in light of ETE’s perceived 

disinclination to merge) that it was more lucrative to Williams to pursue negotiation 

of a walk-away payment from ETE than to consummate the Merger. Third, ETE 

contends that, in pursuit of the strategy just described, the Company took the 

following actions during the pendency of the Merger: it (1) issued press releases

that signaled Williams’ pessimism about the Merger to the market; (2) sued ETE 

CEO Kelcy Warren in Texas state court and used the pleadings to damage investor 

confidence in Warren; (3) used the media to portray ETE in a negative light; and (4)

released a Form S-4 that undermined the financial projections used to initially 

recommend the Merger to Williams’ stockholders. The actions described above, 

according to ETE, amount to a de facto “withdrawal” of the Company Board 

Recommendation sufficient to qualify as a breach of Section 4.02(d). Fourth, after 

that breach, ETE exercised its right to terminate the Merger. Fifth, and finally, under 

the remedies described in Section 5.06 of the Merger Agreement, termination in this 

scenario entitles ETE to the Termination Fee.

 

57 Id. § 4.02(d)(i)(A).
17

ETE presses this argument despite the following undisputed facts: 1) Williams 

sued ETE to specifically enforce consummation of the Merger, which ETE 

strenuously (and successfully) opposed; 2) notwithstanding the supposed de facto

withdrawal of the Company Board Recommendation in favor of the Merger, 

Williams’ Directors never acted formally to withdraw the resolutions; 3) the Board 

affirmed the Company Board Recommendation several times during the pendency

of the Merger; 4) an overwhelming majority of Williams’ stock was voted in favor

of the Merger, after which ETE—not Williams—terminated the Merger upon failure 

of a condition precedent.

Williams notes that ETE did not purport to terminate the Merger based on 

breach of the Company Board Recommendation provision; instead, it relied on the 

failure of the tax opinion to avoid the deal. Williams then makes the common-sense 

observation that it would be passing strange for two parties to a merger agreement

to structure the agreement so that a party which desired to exit the agreement could 

do so, over the other party’s objections, and at the same time receive the windfall of 

a substantial termination fee. ETE does not suggest that it is not seeking a windfall 

in the form of the Termination Fee; it simply notes that Delaware is a contractarian 

state that leaves parties to the benefits of their bargains, good, bad, and indifferent. 

ETE argues that Williams breached its duty not to modify the Company Board 

Recommendation, after which breach ETE terminated the Merger, thereby 
18

qualifying for the $1.48 billion Termination Fee. Accordingly, ETE asserts that if it 

is entitled to the Termination Fee under the negotiated terms of the Agreement, our 

Courts will enforce the contract, windfall or no. ETE is correct in noting that this is 

a contractarian jurisdiction;58 however, I find the contract language, as written, fatal 

to ETE’s contention here.

That is because the Agreement itself carefully defines the Company Board 

Recommendation as a series of four recommendations to be made, via board 

resolution, by the Williams’ Directors. It is undisputed that the Williams Board 

created, via resolutions, a contractually compliant Company Board 

Recommendation. There are no allegations in the Counterclaim Complaint that the 

Directors, or any subcommittee thereof, ever formally modified (or expressed the 

intent to so modify) the Recommendation. In fact, the Recommendation remained 

in place through the vote on the Merger, which was overwhelmingly approved by 

Williams’ stockholders. ETE, therefore, received what it bargained for. ETE has 

not alleged facts which make it reasonably conceivable that the Board withdrew the 

Recommendation.

ETE’s argument is really that the Board adopted a strategy under which the 

 

58 Martin Marietta Materials, Inc. v. Vulcan Materials Co., 56 A.3d 1072, 1075 (Del. 

Ch.), aff'd, 68 A.3d 1208 (Del. 2012), as corrected (July 12, 2012) (“I conclude that . . . consistent 

with Delaware's pro-contractarian public policy, the parties' agreement . . . should be entitled to 

specific performance and injunctive relief should be respected.”).
19

Company took a number of actions which ETE deems inimical to consummation of 

the merger. As will be discussed below, those efforts may be contractually 

meaningful in terms of the “best efforts” requirement that the Merger Agreement 

imposed on Williams. However, the Agreement was careful to cabin ETE’s 

entitlement to the Termination Fee to those situations in which Board (or 

subcommittee) action modified (or proposed to modify) the required Company 

Board Recommendation, after which ETE terminated the Merger.

Because I find the Merger Agreement sections discussed to be clear on their 

face, I will not discuss further the parties’ various attempts to construe those 

provisions in light of other provisions in the Agreement. Suffice it to say that ETE’s 

reference to other contract provisions, attempting to demonstrate that the plain 

reading of the sections I have described above is incompatible with the balance of 

the Merger Agreement, I find unconvincing.

B. The Forum Selection Clause

During the pendency of the Merger, Williams brought an action against Kelcy 

Warren, ETE’s principal, in Texas. The parties dispute the motive behind the 

litigation, which involved ETE’s issuance of equity in ETE to insiders. The purpose 

for that issuance is itself disputed. Williams characterizes the Texas litigation as in 

aid of consummation of the Merger; ETE characterizes it as posturing in favor of 

Williams’ negotiating a payment from ETE in return for Williams’ consent to 
20

terminate the merger. In any event, ETE argues that the Texas litigation violated 

Section 8.10(b), which provides that no party shall bring “actions relating to this 

Agreement or the Transactions in any court other than the [Court of Chancery]” and 

that each such party “irrevocably submits with regard to any such action or 

proceeding . . . generally and unconditionally, to the personal jurisdiction of the 

aforesaid courts.”59 According to ETE, the Texas court dismissed the suit for 

violating the forum selection clause in Section 8.01(b) of the Merger Agreement.

60 

ETE seeks damages here, which it describes as the fees and costs of the Texas action, 

arising from breach of the forum selection clause.

The parties argue forcefully about whether Warren was a party to the Merger 

Agreement, and thus whether Section 8.01(b) applied to the Texas action, and 

whether this Court had jurisdiction over Warren under the terms of the Merger 

Agreement. Even if I assume that ETE has the best of that argument, and that ETE 

is the proper party to seek as damages fees and costs incurred in a suit against Warren 

in his personal capacity, ETE cannot recover those fees and costs here, because 

Section 5.06(a) of the Agreement is, in that case, dispositive. That Section provides 

that “all fees and expenses incurred in connection with this Agreement and the 

Transactions shall be paid by the party incurring such fees or expenses, whether or 

 

59 Merger Agreement § 8.10(b).

60 Defs. Ans. Br. 16. 
21

not the Transactions are consummated.”61 In adopting that language, the parties 

waived any right to receive fees and expenses for a breach of the Agreement—if a 

breach it was—of the type ETE describes here.

I note that in addition to fees and costs, ETE argues that it suffered other 

damages in connection with the representations made by Williams in the Texas 

litigation, violating Merger Agreement provisions independent of the forum 

selection clause. Those damages claims are incorporated in the discussion below.

C. The Additional Breach of Contract Claims

Aside from its arguments concerning the Termination Fee and breach of the 

forum selection clause, ETE alleges other supposed breaches of the Agreement by 

Williams. 

ETE argues that, as market conditions changed, the Williams’ Board failed to 

obtain an updated fairness opinion from its financial advisors and failed to make 

disclosures to its stockholders concerning changes in market conditions. In addition, 

ETE contends that Williams’ disclosures were materially incomplete concerning its 

reasons for agreeing to the Merger in the first instance. According to ETE, those 

include the threat of a proxy fight or consent solicitation―which caused some 

Williams Directors to change their vote to favor the Merger―that was inadequately 

disclosed. ETE next alleges that Williams failed to disclose various self-interests of 

 

61 Merger Agreement § 5.06(a).
22

Williams’ Directors. Also, ETE alleges that Williams failed to update its Form S-4 

to reflect that at least one of the potential proxy contests could have been led by at a 

sitting Williams’ Board member, which according to ETE, influenced the other 

Directors’ votes in the Merger. These disclosures, according to ETE, would have 

been material to stockholders in making an informed vote concerning the Merger. 

The disclosures—in addition to being required under common law—were required 

under Section 5.01 of the Agreement. 

Whether Williams’ Board breached duties to its stockholders either under 

common law or the Agreement is a question of fact. Here, however, ETE seeks its 

own damages under the Agreement. While failure of material disclosures may have 

posed a threat of damages to the combined entity if the Merger had been 

consummated, the Merger was in fact terminated by ETE. Damages are an element 

of a breach of contract action.62 It is simply not reasonably conceivable that any 

breach of the Williams Directors’ responsibility to obtain an updated fairness 

opinion63 or make required disclosures to Williams stockholders could lead to 

damages to ETE, in light of the failure of the Merger. Therefore, the Motion to 

Dismiss must be granted with respect to this issue.

 

62 H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129, 140 (Del. Ch. 2003) (“Under Delaware law, 

the elements of a breach of contract claim are: 1) a contractual obligation; 2) a breach of that 

obligation by the defendant; and 3) a resulting damage to the plaintiff.”). 63 I make no finding here that Williams was under a common law obligation to obtain an updated 

fairness opinion, as a duty to its stockholders.
23

Next, ETE notes that Williams failed to consent to a nearly $1 billion public 

offering, by which ETE intended to finance, in part, the Merger. ETE argues that 

Williams had a responsibility to cooperate with this equity financing, which required 

Williams to submit certain financial information and a consent from Williams’ 

auditor to include certain audit reports related to that financial information. 

According to Williams, the public offering was discriminatory to Williams’ 

stockholders, and it had a proper business purpose for withholding its consent. As 

noted above, I have another action pending64 concerning this Special Issuance and 

its effect on other non-participating stockholders. The contractual language 

regarding Williams’ obligation in this situation is not clear to me, and my analysis 

would benefit from extrinsic evidence regarding that obligation. A more serious 

question is whether damages can flow from any breach, given that ETE terminated 

the Agreement for failure of the unrelated condition precedent regarding tax 

consequences. ETE also argues that Williams failed to use best efforts to 

consummate the Merger as required by the Merger Agreement. To the extent that 

ETE can prove such, again, damages are problematic. However, we are at the 

motion to dismiss phase of this litigation. ETE argues that its willingness to exercise 

its option to terminate the Merger Agreement, based on the failure of the condition 

precedent, was informed by the results of Williams’ breach of the obligation to 

 

64 See ETE Unitholder Litig., 2017 WL 782495, at *1.
24

approve the equity offering and failure of best efforts. It seeks, at a minimum, to 

offset Williams’ own damages claims accordingly. While I am dubious that ETE 

will ultimately prevail in demonstrating that Williams breached the Agreement in 

this regard, and that damages flowed as a result, such an outcome is reasonably 

conceivable. Therefore, resolution of these issues awaits a developed record and the 

Motion to Dismiss this claim is denied. 

III. CONCLUSION

For the foregoing reasons, the Plaintiff’s Motion to Dismiss the counterclaims

is granted in part and denied in part. I note that Williams has a motion outstanding 

to strike ETE’s affirmative defenses, which rest on the same allegations as do the 

counterclaims. The parties should consult and inform me whether any portion of 

that Motion to Strike needs further judicial resolution. The parties should also 

provide a Form of Order consistent with this Memorandum Opinion.