Title: Energy Transfer, LP v. The Williams Companies, Inc.
Citation: N/A
Docket Number: 391, 2022
State: Delaware
Issuer: Delaware Supreme Court
Date: October 10, 2023

IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
ENERGY TRANSFER, LP, et al., 
§ 
 
§ 
No. 391, 2022 
 
Defendants and Counterclaim  
§ 
Court Below:  Court of Chancery 
 
Plaintiffs Below-Appellants, 
§ 
of the State of Delaware 
 
 
§ 
 
 
v. 
§ 
 
 
§ 
C.A. Nos. 12168 and 12337 
THE WILLIAMS COMPANIES, INC., § 
 
 
§ 
 
Plaintiff and Counterclaim  
§ 
 
Defendant Below-Appellee. 
§ 
 
 
 
Submitted: July 12, 2023 
 
 
Decided: 
October 10, 2023 
 
Before SEITZ, Chief Justice; VALIHURA, TRAYNOR, LEGROW, and 
GRIFFITHS, Justices, constituting the Court en banc. 
 
Upon appeal from the Court of Chancery of the State of Delaware.  AFFIRMED. 
 
James M. Yoch, Esquire, Alberto E. Chávez, Esquire, YOUNG CONAWAY 
STARGATT & TAYLOR, Wilmington, Delaware; Paul D. Clement, Esquire 
(argued), Matthew D. Rowen, Esquire, CLEMENT & MURPHY, PLLC, 
Alexandria, Virginia, for Appellants Energy Transfer Corp LP, Energy Transfer 
Equity GP, LLC, Energy Transfer Equity LP, ET Corp GP LLC and LE GP LLC. 
 
Kenneth J. Nachbar, Esquire, Susan Wood Waesco, Esquire, Matthew R. Clark, 
Esquire, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware; 
Antony L. Ryan, Esquire (argued), Kevin J. Orsini, Esquire, Michael P. Addis, 
Esquire, CRAVATH, SWAINE & MOORE LLP, New York, New York, for 
Appellee The Williams Companies, Inc. 
 
 
 
 
 
 
GRIFFITHS, Justice: 
 
2 
This marks the final chapter in a long-running legal saga stemming from a 
failed, multibillion-dollar merger (the “Merger”) of two fuel pipeline giants—The 
Williams Companies, Inc. (“Williams”) and Energy Transfer LP (“ETE”).  Although 
failed mergers are not uncommon, a failed merger without consequence is virtually 
unheard of.  Indeed, these collapses typically generate significant—typically, 
monetary—consequences.  This case is a perfect example.  
The parties have spent the better part of a decade litigating over various fees 
to which they argue they are entitled under the Merger Agreement.  ETE continues 
to assert its entitlement to a $1.48 billion breakup fee, despite being the party who 
terminated the Merger.  It also disputes that it must pay Williams a $410 million 
reimbursement fee, which it was required to pay if the Merger failed and certain 
conditions were met.  Finally, ETE argues that a related $85 million attorney’s fee 
award is unreasonable.  
But we find no error with the Court of Chancery’s well-reasoned opinions that 
hold that ETE is not entitled to an over-one-billion-dollar fee and find that ETE must 
pay Williams the $410 million reimbursement fee and the related $85 million in 
attorney’s fees.  The litigation between the parties over their failed merger has now 
come to an end. 
We affirm.  
 
 
3 
I. 
Background1 
 
A. The Parties2 
 
Appellant Energy Transfer LP, formerly known as Energy Transfer Equity, 
L.P.,3 is a Delaware limited partnership with its principal executive offices located 
in Dallas, Texas.  ETE’s family of companies owns and operates approximately 
71,000 miles of natural gas, natural gas liquids, refined products, and crude oil 
pipelines.  ETE is run by its Chairman and Chief Executive Officer Kelcy Warren 
(“Warren”).  Jamie Welch (“Welch”) served as its Chief Financial Officer during the 
relevant period.  
Appellant Energy Transfer Corp LP (“ETC”) is a Delaware limited 
partnership taxable as a corporation.  Pursuant to the Merger, Williams would have 
merged with and into ETC.  ETC is a party to the Agreement and Plan of Merger 
entered on September 28, 2015 (the “Merger Agreement”) and would have been the 
managing member of the general partner of ETE following the consummation of the 
Merger.   
 
1 Unless otherwise noted, the facts are taken from the Court of Chancery’s 2021 post-trial opinion.  
See Williams Companies, Inc. v. Energy Transfer LP, 2021 WL 6136723 (Del. Ch. Dec. 29, 2021), 
judgment entered sub nom. The Williams Companies, Inc. v. Energy Transfer LP (Del. Ch. 2022) 
(hereinafter, “Chancery Post-Trial Opinion”). 
2 Unless otherwise specified, we refer to Appellants collectively as “ETE.”   
3 On October 19, 2018, Energy Transfer, L.P. changed its name to “Energy Transfer LP.”  The 
parties agree that Energy Transfer Equity, L.P. is the same entity as Energy Transfer LP for the 
purposes of this litigation.  
 
4 
Appellant ETE Corp GP, LLC is a Delaware limited liability company, the 
general partner of ETC, and a party to the Merger Agreement. 
Appellant LE GP, LLC is a Delaware limited liability company, the general 
partner of ETE, and a party to the Merger Agreement.  
Appellant Energy Transfer Equity GP, LLC is a Delaware limited liability 
company and a party to the Merger Agreement.  Pursuant to the Merger, ETE GP 
would have merged with LE GP such that ETE GP would have been the surviving 
company and general partner of ETE.  
Appellee Williams is a publicly traded Delaware corporation with its principal 
executive offices located in Tulsa, Oklahoma.  The company specializes in energy-
infrastructure projects, and it owns and operates interstate gas pipelines, as well as 
gathering and processing operations throughout the country.  It is managed by its 
Chief Executive Officer, Alan Armstrong (“Armstrong”), and its Chief Financial 
Officer, Don Chappel (“Chappel”).  Williams is a party to the Merger Agreement.  
B. Factual Background  
 
1. Williams Agrees to the WPZ Transaction 
 
In May 2015, Williams agreed to acquire the publicly held units in its master 
limited partnership, Williams Partners, L.P. (“WPZ”).  The agreement required 
Williams to pay WPZ a termination fee of $410 million if it later terminated the WPZ 
 
5 
transaction (the “WPZ Termination Fee”).  When ETE made an offer to acquire 
Williams, ETE required Williams to terminate the WPZ transaction.   
2. The Merger Agreement Negotiations 
 
In May 2015, ETE submitted a bid to purchase Williams in an all-equity deal 
and merger negotiations ensued over the summer of 2015.  The parties elected to 
structure the merger as an “Up-C” transaction:  in exchange for their shares, 
Williams’ shareholders would not receive ETE common units; instead, they would 
receive stock in a newly formed entity called Energy Transfer Corp LP.  Following 
the transaction, ETC would own Class E Units representing roughly 57% of the 
limited partner interest of ETE, leaving the existing limited partners of ETE with the 
remaining 43% interest.  The former Williams shareholders, in turn, would own 
approximately 81% of ETC’s shares and would receive $6.05 billion in cash 
consideration.  ETE, for its part, would own all of Williams’ assets and the other 
19% of ETC’s shares. 
Given the unique equity component of the deal, “achieving economic 
equivalence” was paramount to Williams’ board of directors (the “Williams 
Board”).4  One cause for concern stemmed from the fact that Warren personally 
owned a significant number of ETE units—generating roughly $200 million in 
annual personal cash flow from the company’s quarterly distributions—and would 
 
4 Chancery Post-Trial Opinion at *3; see also App. to Opening Br. at A3241–42.  
 
6 
control the combined entity post-merger.  As such, he had both a reason and the 
ability to take actions benefitting ETE at the expense of ETC.  For example, if ETC 
shares traded at a discount to ETE units due to disproportionate distributions of ETE 
units, this would negatively affect the value of the merger consideration Williams’ 
shareholders had received.   
Several features of the deal reflected Williams’ concerns.  The $6.05 billion 
cash payment, used by ETE to purchase shares in ETC, was designed as a “hook 
stock” to align ETE’s and ETC’s financial interests.  ETE also committed to paying 
dividends on ETC shares equal to the distributions paid on ETE common units 
through 2018 and to providing ETC shareholders with a one-time equalizing 
payment at the end of two years if ETC shares were trading at a discount to ETE 
common stock.  Further, the Merger Agreement required that ETE maintain its 
existing capital structure—composed of three classes of equity—through closing.  
3. The Merger Agreement  
 
Williams and ETE executed the Merger Agreement on September 28, 2015 
and agreed to a closing date of June 28, 2016 (the “Closing Date”).  The Agreement 
contained several provisions that are at issue on appeal, including the Company 
Board Recommendation, the Company Board Recommendation Change, the parties’ 
Efforts Obligations, and the Attorney’s Fee provision, all of which are defined and 
described below.   
 
7 
a. The Company Board Recommendation and the Company 
Board Recommendation Change Provisions  
 
Under the Agreement, the Williams Board was required to pass a series of 
resolutions in support of the transaction (the “Company Board Recommendation”).5  
If the Williams Board adversely changed its recommendation in favor of the merger 
(the “Company Adverse Recommendation Change”),6 then Williams would be 
required to pay a $1.48 billion breakup fee (the “$1.48 billion Termination Fee”) to 
ETE if it chose to terminate the Merger on that ground.7  Under the Company 
Adverse Recommendation Change provision, “[n]either the Board of Directors of [] 
[Williams] 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[.]”8   
b. The Parties’ Efforts Obligations and the Interim Operating 
Covenants 
 
The parties also agreed to several covenants in the Merger Agreement 
regarding their conduct between signing and closing, all of which are subject to 
exceptions.9   First, they agreed to operate in the ordinary course of business in the 
 
5 See App. to Opening Br. at A434 (Merger Agreement § 3.01(d)). 
6 Id. at A464 (Merger Agreement § 4.02(d)). 
7 See id. at A480 (Merger Agreement § 7.01(e)); see also id. at A474 (Merger Agreement § 
5.06(d)(iii)). 
8 Id. at A464 (Merger Agreement § 4.02(d)). 
9 These exceptions are identified in Section 4.01 of the Parent Disclosure Letter.   See infra at § 
I.B.4.  
 
8 
period between signing and closing (the “Ordinary Course Covenant”).10  Second, 
the Agreement obligated the parties to use their reasonable best efforts to close the 
transaction (the “Best Efforts” provision, and collectively with the Ordinary Course 
Covenant, the “Efforts Obligations.”).11   
In addition to the general Ordinary Course Covenant, ETE made specific 
course-of-business covenants, which included agreements not to place distribution 
restrictions on its units, not to amend its organizational documents, and to limit its 
equity issuances (the “Interim Operating Covenants”).12  These were subject to an 
“all material respects” qualifier by the time of Closing.13  For its part, Williams 
agreed to cooperate with any reasonable request in furtherance of ETE’s financing 
of the transactions (the “Capital Structure Representation”).14   
Section 6.03(b) of the Merger Agreement required that ETE certify, as of 
closing, its material compliance with the provisions included in the Ordinary Course 
and Interim Operating Covenants.15  Were ETE to terminate the transaction while in 
violation of its covenants, Section 5.06(f) of the Merger Agreement required that it 
 
10 See App. to Opening Br. at A460–62 (Merger Agreement § 4.01(b)). 
11 See id. at A468–70 (Merger Agreement § 5.03). 
12 See id. at A460–62 (Merger Agreement § 4.01(b)).  
13 See id. at A478 (Merger Agreement § 6.03(b)) (“[ETE] shall have, in all material respects, 
performed or complied with all obligations required by the time of the Closing to be performed or 
complied with by it under this Agreement . . . .”). 
14 See id. at A476 (Merger Agreement § 5.14) (“[Williams] shall . . . provide cooperation 
reasonably requested by [ETE] that is necessary or reasonably required in connection with the 
Financing . . . .”). 
15 Id. at A478 (Merger Agreement § 6.03(b)).  
 
9 
reimburse Williams its $410 million payment to WPZ (the “WPZ Termination Fee 
Reimbursement”).16   
c. Attorney’s Fees Provision 
 
Section 5.06(g) of the Merger Agreement provided that Williams was entitled 
to “reasonable attorney[’s] fees and expenses” if it was the prevailing party in an 
action to recoup the WPZ Termination Fee Reimbursement.17  
4. The Parent Disclosure Letter & The $1 Billion Equity Issuance 
Exception Negotiation 
 
Separate from, but incorporated into, the Merger Agreement were disclosure 
letters the parties provided to one another that contained carveouts and exceptions 
to the terms of the Merger Agreement.  In ETE’s Parent Disclosure Letter (the 
“Parent Disclosure Letter” or “PDL”), the exceptions are organized under headers 
that correspond to specific sections within Section 4.01 of the Agreement.   For 
example, ETE’s Ordinary Course Covenant and Interim Operating Covenants, which 
are in Section 4.01(b) of the Merger Agreement, are subject to exceptions in Section 
4.01(b) of the Parent Disclosure Letter.18  The PDL states that “[t]he headings 
contained in this Parent Disclosure Letter are for reference only and shall not affect 
in any way the meaning or interpretation of the Parent Disclosure Letter.”19 
 
16 Id. at A474 (Merger Agreement § 5.06(f)). 
17 Id. (Merger Agreement § 5.06(g)).  
18 Id. at A460 (Merger Agreement § 4.01(b)).  
19 Chancery Post-Trial Opinion at *6.  
 
10 
 The exception at issue on appeal appears in Section 4.01(b)(v) of the PDL.20  
Section 4.01(b)(v) of the Merger Agreement restricts ETE’s ability to issue equity 
securities,21 but Section 4.01(b)(v) of the PDL (the “$1 Billion Equity Issuance 
Exception”) states that “[ETE] may make issuances of equity securities with a value 
of up to $1.0 billion in the aggregate.”22     
The $1 Billion Equity Issuance Exception was initially embedded within 
Section 4.01(b)(v) of the Merger Agreement itself.23  But on September 27, 2015, 
the day before signing, the parties moved that exception and several others from the 
Merger Agreement into their respective disclosure letters.24  In ETE’s case, it 
removed the $1 Billion Equity Issuance Exception from Section 4.01(b)(v) of the 
Merger Agreement and placed it under a header in Section 4.01(b) of the PDL titled 
“Section 4.01(b)(v).”  
The Court of Chancery later noted that “[t]he evidence presented at trial 
established that the parties moved the exceptions into the disclosure letters to 
maintain their confidentiality, and that they did not intend the moves to be 
 
20 See id. at A413 (Parent Disclosure Letter § 4.01(b)). 
21 See id. at A460 (Merger Agreement § 4.01(b)(v)).  
22 Id. at A413 (Parent Disclosure Letter § 4.01(b)(v)). 
23 See App. to Answering Br. at B459–50 (Merger Agreement August 2015 Draft). 
24 See App. to Opening Br. at A3308 (Van Ngo Tr.) (“[C]ertain of the exceptions to the interim 
operating covenants that the parties had negotiated have been removed from the body of the merger 
agreement and have been moved into the disclosure schedule.”). 
 
11 
substantive.”25  Williams’ counsel, Cravath, Swaine & Moore LLP (“Cravath”), 
communicated to Wachtell, Lipton, Rosen & Katz (“Wachtell”), ETE’s counsel, that 
they “were fine with this movement, with the understanding that it was 
nonsubstantive,” meaning that each exception would apply to the section from which 
it had been moved using corresponding headers.26  One of Williams’ attorneys also 
testified that he communicated to ETE’s counsel his understanding that the 
disclosure letters were “section-specific.”27  
5. The Williams Board Approves the Merger 
On September 25, 2015, the Williams Board voted to approve the Merger by 
a vote of 8-5.28  Three days later, the Williams Board approved and declared the 
Merger advisable.  Williams subsequently terminated the WPZ agreement and paid 
the WPZ Termination Fee.  Under the Merger Agreement, if the Merger failed and 
certain conditions were met, ETE was required to reimburse Williams for the $410 
million termination fee (the “WPZ Termination Fee Reimbursement”).  
 
 
25 Chancery Post-Trial Opinion at *7; see, e.g., App. to Opening Br. at A3121 (Chappel Tr.) 
(explaining that there would be “[n]o change in rights” based on moving provisions to the 
disclosure letters); id. at A3310 (Van Ngo Tr.) (“My experience with how disclosure schedules 
work as an M&A lawyer is that they are section-specific.”). 
26 Chancery Post-Trial Opinion at *7. 
27 App. to Opening Br. at A3310 (Van Ngo Tr.) (“During the first call we had regarding the 
representations and covenants, I noted to [ETE’s counsel] that . . . the disclosure letter is section-
specific and that I preferred the ‘reasonably apparent on its face’ formulation for the savings clause.  
And her response was, ‘That’s fine.’”).   
28 The day before, the Williams Board conducted a straw poll and preliminary rejected the Merger 
by a 6-7 vote.  See Chancery Post-Trial Opinion at *9.  Two directors—Janice Stoney (“Stoney”) 
and Joe Cleveland (“Cleveland”)—ended up changing their votes.  Id.  
 
12 
6. The Energy Market Craters & the Parties Have Reservations 
 
By the end of 2015, commodity prices dropped precipitously, and the energy 
market deteriorated as a result.  This led both ETE and Williams to take stock of the 
value of the Merger.   
ETE, for its part, grew concerned that its plan to finance the $6.05 billion cash 
component of the deal would harm its credit ratings.  Even the possibility of cutting 
distributions, a drastic step, appeared to be on the table.29  By early 2016, ETE’s 
CEO Kelcy Warren had begun looking for ways to restructure or “walk away” from 
the transaction and expressed this to Williams.30  He approached Williams with ideas 
for restructuring or abandoning the deal, which included cutting ETE’s historical 
distribution or waiving Williams’ walkaway fee were it to agree to terminate the 
Merger.31  
Williams had concerns as well.  Armstrong, Williams’ CEO, and dissenting 
Williams directors communicated their concerns about the merits of the Merger in 
internal emails and copied Stoney and Cleveland, the two directors who initially 
 
29 Id. at A3492 (Welch Tr.) (“[T]he value of an ETE unit or an ETC share was, in large part, driven 
by people’s perception of, in fact, . . . the viability of that enterprise to continue to pay a distribution 
. . . .”). 
30 Id. at A3518 (Welch Tr.); see also id. at A3391 (Warren Tr.) (“I felt very strongly that this was 
the wrong time to be incurring debt. . . . [I]f there’s any way that we could equitize or better equitize 
this transaction by using currency rather than cash, that would be a smart thing to do.”); id. at 
A3392 (noting discussions with Williams personnel to restructure the transaction).  
31 Id. 
 
13 
opposed the merger but later voted to approve it.32  This did not appear to be a 
campaign to turn the board against the deal, however, as Stoney later testified that 
she never felt pressured to change her position.33   
Although the Williams Board entertained some internal dissent about the deal, 
on January 15, 2016, it determined that the Merger Agreement was a “valuable asset” 
and issued a press release expressing its unanimous support for the deal.  Williams’ 
financial advisors, Lazard and Barclays, concluded, moreover, that, even after the 
financial downturn in the energy markets, the merger still represented a boon to 
Williams’ shareholders.  The Williams Board repeatedly recommended, throughout 
the period leading to the June 28 closing date, that its stockholders approve the deal, 
which they did on June 27, 2016, by a large margin.  
7. ETE’s Proposed Public and Preferred Offerings 
 
ETE, fearing a liquidity crunch, began exploring solutions to its potential 
leverage issues.  On January 27, 2016, ETE’s financial advisors proposed the idea 
of issuing a new class of preferred stock on the public market (the “Proposed Public 
Offering”).  ETE had floated the possibility of cutting distributions, and the Proposed 
Public Offering provided a solution that could limit the potential negative impacts 
of doing so.  The final form of the Proposed Public Offering included an 11-cent 
 
32 See, e.g., id. at A915–17 (internal Williams’ email discussing concerns over ETE transaction).  
33 See id. at A3960 (Stoney Tr.). 
 
14 
cash distribution and an additional 17½ cents of accrual credits for when the 
preferred units converted to common units.  The result was a solution that no longer 
served the purpose of conserving cash but rather “represent[ed] a wealth transfer 
from non-participating units to participating units.”34  
To proceed with the Proposed Public Offering, ETE needed Williams’ 
consent, but Williams refused.  If ETE cut distributions, no payments would flow to 
former Williams’ shareholders, and they also would suffer dilutive effects from the 
eventual conversion of the preferred ETE units.  If ETE did not cut distributions, 
ETC shareholders would still be disadvantaged by the distribution preference to 
holders of the preferred ETE units.  Williams’ financial advisors “advised the 
Williams [B]oard that this would have an extraordinary detrimental impact on 
Williams’ shareholders.”35  Williams offered to compromise if its shareholders were 
allowed to participate, but ETE declined.  
At the end of February 2016, ETE restructured the issuance as a private 
offering, creating a new class of equity—Series A Convertible Preferred Units with 
a higher distribution preference of 28½ cents—which it made available to ETE 
insiders, including Warren (the “Preferred Offering”). The Preferred Offering 
operated similarly to the Proposed Public Offering, but as a private placement it did 
 
34 App. to Answering Br. at B2698. 
35 App. to Opening Br. at A3149 (Chappel Tr.). 
 
15 
not require consent from Williams’ auditors.36  Indeed, it was exclusive to ETE 
insiders, with Warren and a small group received over 85% of the units, and was 
estimated to be valued at just under $1 billion.  Because the new stock featured an 
increased distribution preference, one market analyst wrote that “it looks to me (and 
the market, apparently) that [Warren] has insulated himself from a distribution cut, 
but ETE common holders are still on the hook for a potential distribution cut should 
one be required.”37   
ETE closed the Preferred Offering on March 8, 2016 without notifying 
Williams.  Unsurprisingly, the Williams Board and management were displeased 
with the Preferred Offering when they learned of it.  The Court of Chancery 
ultimately found, in an action brought by ETE unitholders, that the Preferred 
Offering was “a hedge meant to protect [ETE] insiders from the anticipated bad 
effects of the coming merger” and that it breached the company’s partnership 
agreement.38  
 
36 See In re Energy Transfer Equity, L.P. Unitholder Litig., 2018 WL 2254706, at *8 (Del. Ch. May 
17, 2018), aff’d sub nom. Levine v. Energy Transfer L.P., 223 A.3d 97 (Del. 2019) (hereinafter, 
“Unitholder Litig.”) (“Williams Co.’s refusal to obtain the necessary consents meant that ETE 
could not consummate the public offering.  Thus, on February 22, 2016, the Board decided to 
change course and pursue the Private Offering of securities.  Notably, a private placement would 
not require Williams Co.’s consent.”). 
37 Chancery Post-Trial Opinion at *15. 
38 Id. at *26 (quoting Unitholder Litig. at *1).  
 
16 
On April 6, 2016, Williams filed separate suits in the Court of Chancery39 and 
Texas state court to challenge the Preferred Offering.40 The Texas lawsuit was 
against Warren personally and alleged tortious interference with the Merger 
Agreement.41  It was dismissed in May 2016 based on a forum selection clause in 
the Merger Agreement.42  The Preferred Offering also became the subject of a 
separate unitholder action and the Court of Chancery found that it constituted a 
breach of the ETE limited partnership agreement.43   
ETE followed the Preferred Offering with an announcement on April 18, 2016 
that it would cut common unit distributions for two years.  The next day, Williams 
amended its complaint in the Court of Chancery to reflect the ETE announcement. 
8. Williams Grapples with Shareholder Litigation 
 
In the meantime, Williams was faced with a raft of shareholder lawsuits 
challenging the Merger.  Williams was able to obtain either a dismissal or settlement 
in each suit and successfully prevented any of the lawsuits from blocking the Merger. 
One of these lawsuits was brought by John Bumgarner (“Bumgarner”), a 
shareholder and former executive of Williams.44  Bumgarner initially took issue with 
certain synergy estimates provided in support of the Merger.  Armstrong, as a friend 
 
39 See App. to Answering Br. at B2743. 
40 See Williams Companies, Inc. v. Warren, No. DC-16-03941 (Dist. Ct. Dallas Cty.). 
41 See id. 
42 See App. to Opening Br. at A1175 (Williams v. Warren Dismissal Order). 
43 Unitholder Litig. at *2. 
44 See Bumgarner v. Williams Companies, Inc., 2016 WL 1717206 (N.D. Okla. Apr. 28, 2016). 
 
17 
and former colleague of Bumgarner, hoped to resolve the matter by engaging 
personally with Bumgarner to allay his concerns.  To prevent unintended escalation 
and contain the matter in a way that he could continue leveraging his personal 
relationship, Armstrong did not broadly disclose his communications with 
Bumgarner, though he did inform the Chairman of the Williams Board, Frank 
MacInnis.45  The Court of Chancery found that “the evidence presented at trial 
demonstrated that, although Armstrong did regularly communicate with Bumgarner, 
he did so in an attempt to allay Bumgarner’s opposition to the Merger, not in 
connection with a clandestine plot to thwart it.”46   
Armstrong and Bumgarner communicated frequently through personal email 
accounts beginning in November 2015.  They continued communicating even after 
Bumgarner filed a securities class action against Williams on January 14, 2016 and 
until shortly after the lawsuit was resolved in June 2016.   In 2016, two days after 
his deposition, during which Armstrong was asked if he communicated with 
Bumgarner, he deleted one of the emails accounts he used to communicate with 
 
45 See App. to Opening Br. at A3716–18 (Armstrong Tr.) (Armstrong explaining that he did not tell 
Williams’ counsel that Bumgarner was threatening a lawsuit because he “had a long relationship 
with John” and “did not think it would be in the company’s best interest to immediately get 
lawyered up” as this could lead to “a very aggressive fight”). 
46 Chancery Post-Trial Opinion at *18.  
 
18 
him.47  The Court of Chancery found that his actions constituted spoliation of 
evidence and awarded ETE monetary sanctions for his conduct.48   
9. Williams Encourages Shareholders to Approve the Merger 
 
Throughout the market downturn and internal debate over the merits of the 
transaction, Williams remained committed to closing the transaction and obtaining 
shareholder approval of the Merger.  On November 24, 2015, the Williams Board 
recommended that its shareholders vote for the deal.49  Then, in January and 
February 2016, it stated repeatedly that it was “unanimously committed” to 
closing.50  Directors who had voted against the deal internally expressed some 
discomfort with that wording, and Williams later acknowledged that there had been 
some disagreement among the board regarding the merger in an updated S-4 filing.51  
 
47 Chancery Post-Trial Opinion at *18. 
48 Id. at *36.  
49 See App. to Opening Br. A566 (Form S-4 Registration Statement) (“After careful consideration, 
the W[illiams] Board has (i) approved the merger agreement, (ii) declared the merger agreement 
and the transactions contemplated thereby, including the merger, to be advisable and in the best 
interests of [Williams] and its stockholders, (iii) directed that the adoption of the merger agreement 
be submitted to a vote at a meeting of [Williams’] stockholders and (iv) resolved to recommend 
that [Williams’] stockholders approve the adoption of the merger agreement and the transactions 
contemplated thereby, including the merger and the Compensatory Proposal.”). 
50 App. to Opening Br. at A768 (Williams January 15, 2016 Press Release); App. to Answering Br. 
at B2714 (Williams February 17, 2016 Press Release). 
51 See App. to Opening Br. at A840 (“My concern with saying unanimous is that it represents more 
trickery.”); id. at A1174 (May 26, 2016 Amendment No. 8 to Form S-4) (“As of the date of this 
proxy statement/prospectus, a majority of the [Williams] Board continue to recommend a vote 
‘FOR’ the Merger Proposal.  Certain members of the [Williams] Board voted on September 28, 
2015 against entering into the merger agreement and continue as of the date of this proxy 
statement/prospectus to disagree with the recommendation of a majority of the [Williams] Board 
that [Williams’] stockholders adopt the merger agreement.”).  
 
19 
The messaging, however, remained consistent, with the Williams Board continuing 
to reaffirm its support for the transaction throughout the spring of 2016 in press 
releases and during a week-long investor roadshow.52   In addition, Williams sued 
ETE in April and May 2016 seeking specific performance of the Merger Agreement. 
Williams’ efforts culminated in a shareholder vote on June 27, 2016, the day 
before the Closing Date.  Over 80% of shareholder votes cast were in favor of the 
Merger.  
10. 
  Latham Fails to Render the 721 Tax Opinion 
 
Williams may have been “ready, willing, and able to close” by the Closing 
Date, but this ultimately did not matter.53  In March 2016, ETE personnel flagged a 
potential issue with the tax treatment of the transaction under Section 721(a) of the 
Internal Revenue Code and forwarded the matter to Latham & Watkins.54  Latham 
conducted a thorough investigation of the matter and “devoted over 1,000 hours” to 
the issue.55 
 
52 See, e.g., id. at A1659 (Williams April 6, 2016 Press Release) (“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. ETE has no basis to avoid its obligations under the merger agreement.”); see also 
A1174 (May 24, 2016 Amendment No. 8 to Form S-4). 
53 Id. at B8148. 
54 As a condition precedent to the Merger, Latham was required to opine that the Merger “should” 
trigger favorable tax treatment under Section 721(a) of the Internal Revenue Code (the “721 
Opinion”).   
55 Chancery Post-Trial Opinion at *21.  
 
20 
On April 12, 2016, Latham reached a “tentative conclusion” that it could not 
provide an opinion stating the transaction “should qualify” under Section 721(a).56  
Back and forth discussions ensued with Williams’ attorneys at Cravath, who 
disagreed with Latham’s analysis, but a feasible workaround remained elusive.57  
Shortly after, on April 18, 2016, the parties announced Latham’s position that it 
would not be able to provide the 721 Opinion.   
11. 
 ETE Terminates the Merger 
 
Williams and ETE were already locked in litigation over the Preferred 
Offering when Latham announced it could not issue the 721 Opinion.  On May 13, 
2016, Williams filed another lawsuit to enjoin ETE from terminating the merger 
based on Latham’s inability to provide the 721 Opinion.  The Court of Chancery 
consolidated the actions and held a two-day expedited trial starting June 20, 2016.  
On June 24, 2016, the court ruled that the 721 Opinion was a condition precedent to 
the merger and its failure excused ETE’s performance.58   
Following the Court of Chancery’s decision, ETE’s counsel notified Williams 
that it would not close due to failure of the 721 Opinion condition.  On June 29, 2016 
 
56 App. to Opening Br. at A4472 (Stein Tr.).  
57 See Williams Companies, Inc. Energy Transfer Equity, L.P., 2016 WL 3576682, at *15–16 (Del. 
Ch. June 24, 2016), aff’d, 159 A.3d 264 (Del. 2017) (hereinafter, “Chancery Merger Termination 
Opinion”).  
58 See Chancery Merger Termination Opinion at *2 (“Because . . . Latham, as of the time of trial, 
could not in good faith opine that tax authorities should treat the specific exchange in question as 
tax free under Section 721(a) . . . I find that the Partnership is contractually entitled to terminate 
the Merger Agreement . . . .”). 
 
21 
ETE terminated the Merger.  This Court subsequently considered the case on appeal 
and upheld the Court of Chancery’s ruling in March 2017.59  Although we were also 
critical of ETE’s conduct and noted “there was evidence . . . from which [the Court 
of Chancery] could have concluded that ETE did breach its covenants,” we affirmed 
the Court of Chancery’s finding that Latham nevertheless operated in good faith and 
independent of ETE when it decided not to issue the 721 Opinion.60 
C. Procedural History 
 
The termination of the Merger Agreement was just the beginning of legal 
battles over damages stemming from the failed transaction, the most significant 
involving claims to contractual termination fees.  Williams sought payment of the 
$410 million WPZ Termination Fee Reimbursement.  Section 5.06(f) of the Merger 
Agreement, which covered the WPZ Termination Fee Reimbursement, triggered 
payment of the fee if ETE terminated the agreement due to passage of the outside 
date and, at the time of termination, was in breach of any enumerated provisions, 
including the Capital Structure Representation, the Ordinary Course Covenant, the 
Interim Operating Covenants, and efforts obligations.61  According to Williams, ETE 
was in breach of these provisions when it terminated.  Specifically, Williams argued 
that the Preferred Offering had resulted in inaccuracies in ETE’s representation that 
 
59 Williams Companies, Inc. v. Energy Transfer Equity, L.P., 159 A.3d 264, 267 (Del. 2017). 
60 Id. at 273. 
61 See App. to Opening Br. at A474 (Merger Agreement § 5.06(f)).  
 
22 
its capital structure was composed of three equity classes as well as breaches of its 
Ordinary Course Covenant and Interim Operating Covenants.  Williams also 
continued to make arguments related to the 721 Opinion and alleged that ETE 
breached its best efforts and tax representation obligations.   
ETE, despite having refused to close, filed a counterclaim seeking payment of 
the $1.48 billion Termination Fee alleging that Williams had caused a Company 
Adverse Recommendation Change that undermined the Merger.62  Williams moved 
to dismiss ETE’s counterclaims.  At this stage, Williams and Cravath also modified 
their fee arrangement.  The two previously worked with an hourly fee arrangement 
but shifted to a 15% contingent-fee arrangement in September 2017.63  In a 
December 2017 opinion, the Court of Chancery rejected the counterclaim.64   
Cross-motions for summary judgment on ETE’s liability for the WPZ 
Termination Fee Reimbursement followed.65  ETE argued that (1) the failure of the 
721 Opinion condition was not among the triggers for the WPZ Termination Fee 
Reimbursement; (2) the failure of the condition precedent excused it from further 
obligations under the Merger Agreement, including the payment of the WPZ 
 
62 See Williams Companies, Inc. v. Energy Transfer Equity, 2017 WL 5953513, at *2 (Del. Ch. 
Dec. 1, 2017) (hereinafter, “Chancery Motion to Dismiss Opinion”). 
63 See Williams Companies, Inc. v. Energy Transfer LP, 2022 WL 3650176, at *2 (Del. Ch. Aug. 
25, 2022) (hereinafter, “Chancery Fee Opinion”). 
64 See Chancery Motion to Dismiss Opinion at *8. 
65 See Williams Companies, Inc. v. Energy Transfer LP, 2020 WL 3581095, at *1 (Del. Ch. July 2, 
2020) (hereinafter, “Chancery Summary Judgment Opinion”). 
 
23 
Termination Fee; and (3) its breaches, if any, were concededly immaterial as 
Williams was willing to waive them in order to close the transaction.  ETE further 
sought summary judgment as to whether it had breached its efforts obligations.  Both 
parties moved for summary judgment focused on whether ETE had breached its tax 
representation obligations, ordinary course covenants, and capital structure 
representation. 
In its 2020 opinion, the Court of Chancery determined that most of the issues 
the parties raised were best resolved at trial and limited its ruling to matters of 
contractual interpretation.  Approaching trial, the primary unresolved issue was 
whether ETE, subject to materiality qualifiers, had breached any of the conditions 
enumerated in Section 5.06(f) that would trigger liability for the WPZ Termination 
Fee Reimbursement and if ETE had any legitimate defenses.66  After trial, the court 
found ETE had “failed to comply ‘in all material respects’” with the Ordinary Course 
Covenant and three Interim Operating Covenants through the Preferred Offering.67  
ETE’s breach of the Ordinary Course Covenant occurred through breach of its own 
LLC Agreement, as established in the separate securities litigation case stemming 
 
66 See id. at *21 (“[ETE] also asserts affirmative defenses based on several issues in those 
counterclaims, including that Williams failed to substantially comply with the Merger Agreement, 
that Williams has unclean hands, and that even if ETE’s Preferred Offering violated the Merger 
Agreement, it was Williams’ wrongful refusal to consent to the Public Offering that caused that 
breach.”) 
67 Chancery Post-Trial Opinion at *28. 
 
24 
from the Preferred Offering.68  The breaches of the Ordinary Course Covenant, the 
Interim Operating Covenants, and the Capital Structure Representation were 
sufficient for the court to find that the WPZ Termination Fee Reimbursement was 
triggered.69  The Court of Chancery considered and rejected ETE’s arguments 
concerning Williams’ alleged breaches of the Merger Agreement.   
The Court of Chancery awarded fees to Williams in line with the fee-shifting 
provision for WPZ Termination Fee Reimbursement in Section 5.06(g).70  Williams 
and Cravath had restructured their fee agreement into a 15% contingent fee 
arrangement, resulting in the payment of Cravath’s contingency fee by ETE.  This 
was a $74,846,161.32 fee over and above the WPZ Termination Fee 
Reimbursement.71  ETE opposed Williams’ attempt to shift payment of the 
contingency fee.  In its opinion addressing the fee award, the Court of Chancery 
found in favor of Williams.   
ETE has appealed the Court of Chancery’s 2017 dismissal of ETE’s breach-
of-contract counterclaim; portions of the Court of Chancery’s 2021 post-trial opinion 
awarding Williams the $410 million WPZ Termination Fee Reimbursement; and the 
 
68 Unitholder Litig. at *25 (“The securities, to the extent they were transferred to the General 
Partner or its affiliates, breached the LPA, and I find that the Defendant Directors caused the 
General Partner to breach the LPA by issuing these securities.”). 
69 See Chancery Post-Trial Opinion at *25. 
70 See id. at *36 (“For the foregoing reasons, judgment is entered in favor of the Plaintiff in the 
amount of $410 million, plus interest at the contractual rate, and its reasonable attorney[’s] fees 
and expenses.”). 
71 See Chancery Fee Opinion at *2. 
 
25 
Court of Chancery’s 2022 finding that Williams’ attorney’s fee award was reasonable 
under the Merger Agreement’s fee-shifting provision. 
II. 
Analysis 
 
This appeal presents four issues:  first, whether the Court of Chancery erred 
by dismissing ETE’s counterclaim for the $1.48 billion Termination Fee; second, 
whether the Court of Chancery erred in finding that Williams did not materially 
breach the Merger Agreement; third, whether the Court of Chancery erred in finding 
that the Preferred Offering breached the Merger Agreement and was not excused by 
the $1 Billion Equity Issuance Exception; and fourth, whether the Court of Chancery 
abused its discretion by awarding Williams attorney’s fees and expenses pursuant to 
a contingent fee agreement.  As described below, we find all of ETE’s arguments on 
appeal to be without merit.   
A. Williams 
Did 
Not 
Adversely 
Modify 
the 
Company 
Board 
Recommendation and ETE Cannot Recover the $1.48 Billion 
Termination Fee 
 
ETE first argues that the Court of Chancery erred in dismissing its 
counterclaim seeking the $1.48 billion Termination Fee.  ETE’s counterclaim alleged 
that Williams breached the Merger Agreement by making public statements—“in 
press releases, lawsuit pleadings, the Form S-4, and other sources”72—which 
 
72 App. to Opening Br. at A1568 (ETE’s Second Am. & Supplemental Affirm. Defenses & Verified 
Countercl. (the “Countercl.”) ¶ 54); see also id. at A1570–89 (Countercl. ¶¶ 60-96).   
 
26 
constituted a Company Adverse Recommendation Change, thus entitling ETE to the 
fee.  We review the Court of Chancery’s dismissal of a claim under Rule 12(b)(6) de 
novo.73  Dismissal of a claim based on contract interpretation is proper “if the 
defendants’ interpretation is the only reasonable construction as a matter of law.”74  
This issue turns on the interpretation of Sections 3.01(d) and 4.02(d) of the 
Merger Agreement.  Under Section 3.01(d), the Williams Board was required to 
adopt four resolutions in furtherance of the Merger (the “Company Board 
Recommendation”): 
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.75 
 
 
73 In re General Motors S’holder Litig., 897 A.2d 162, 167–68 (Del. 2006). 
74 Vanderbilt Income & Growth Assocs., LLC v. Arvida/JMB Managers, Inc., 691 A.2d 609, 613 
(Del. 1996) (internal citations omitted) (emphasis in original); VLIW Tech., LLC v. Hewlett–
Packard Co., 840 A.2d 606, 615 (Del. 2003) (emphasis in original).  
75 App. to Opening Br. at A434 (Merger Agreement § 3.01(d)) (emphases added).  
 
27 
Section 4.02(d) describes the actions that could constitute a withdrawal, 
modification, or qualification of the Company Board Recommendation (a 
“Company Adverse Recommendation Change”): 
(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 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.76  
 
Section 4.02(f) contains a safe harbor provision that permitted Williams to make 
certain disclosures: 
(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 
 
76 Id. at A464 (Merger Agreement § 4.02(d)) (emphases added). 
 
28 
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.77 
 
On appeal, ETE argues that the above-described statements constituted a 
Company Adverse Recommendation Change under Sections 3.01(d) and 4.02 of the 
Merger Agreement.  But as the Court of Chancery held, ETE’s reading of these 
provisions was unreasonable.  
The Court of Chancery properly applied Delaware contract interpretation 
principles and determined that the Company Board Recommendation refers to the 
four particular resolutions the Williams Board was required to adopt in favor of the 
Merger.  The grammatical construction of Section 3.01(d) is illustrative.78  In 
Sections 3.01(d), the noun “resolutions” gives meaning to the four adjectival phrases 
that follow to form the definition “Company Board Recommendation.”   Further, the 
dependent clause concluding the definition—which begins with the phrase “which 
resolutions”—explicitly denotes that that Company Board Recommendation 
consists of resolutions.  There is no language that would suggest the Company Board 
Recommendation is meant to be an expansive term or include anything other than 
 
77 Id. at A464–65 (Merger Agreement § 4.02(f)) (emphases added). 
78 See ITG Brands, LLC v. Reynolds Am., Inc., 2019 WL 4593495, at *4 (Del. Ch. Sept. 23, 2019) 
(citations omitted) (“In discerning the plain meaning of a contract, the court may look to the 
grammatical construction of a contractual provision.”). 
 
29 
the resolutions.79  Accordingly, we agree with the Court of Chancery that this 
Section, along with Section 4.02, is clear on its face.  Because ETE did not allege 
that Williams 
withdrew, 
modified, 
or 
qualified 
the 
Company 
Board 
Recommendation under Section 4.02(d) through the Closing Date, its claim 
necessarily fails.   
ETE separately argues that the Court of Chancery’s interpretation of Section 
4.02(d) and 3.01(d) would render Section 4.02(f) “inexplicable and rank 
surplusage.”80  We disagree.  The Court of Chancery correctly observed that ETE 
misunderstands how Sections 4.02(d) and 4.02(f) interact.  Because Section 4.02(d) 
is a fiduciary-out provision that prohibited certain board actions, while Section 
4.02(f) is a safe harbor provision that permitted certain company disclosures if 
certain conditions were met, Williams need not rely on the safe harbor to prevail 
against ETE’s counterclaim.81   By its plain language, Section 4.02(f) is not a safe 
harbor for making a modification or qualification of the Company Board 
Recommendation.  Because ETE does not allege that Williams made any statements 
in connection with the exercise of a fiduciary out, Section 4.02(f) is not applicable.  
 
79 ETE’s approach is further contradicted by the Merger Agreement’s own rules of interpretation, 
which indicate that the use of “[t]he words ‘hereof’, ‘herein’ and ‘hereunder’ . . . shall refer to this 
Agreement as a whole and not to any particular provision of this Agreement.”  App. to Opening 
Br. at A488 (Merger Agreement § 8.04 (b)).  It could have, for example, used the word “included,” 
which under Section 8.04 is “deemed to be followed by the words ‘without limitation.’”  Id.   
80 Opening Br. at 41; see also Reply Br. at 5–6, 9.  
81 See App. to Answering Br. at B3600–01. 
 
30 
We also separately observe that the public statements that ETE claims 
constitute a modification of the Company Board Recommendation include a 
reaffirmation by the Williams Board that it was committed to completing the 
Merger.82  Even if we found that these types of statements were the cause, or even 
related to, ETE’s exercise of its right to avoid the Merger, the statements themselves 
 
82 See App. to Opening Br. at A1172 (May 16, 2016 Amendment No. 7 to Form S-4) (“As of the 
date of this proxy statement/prospectus, a majority of the WMB Board continue to recommend a 
vote ‘FOR’ the Merger Proposal.”); id. at A1174 (May 26, 2016 Amendment No. 8 to Form S-4) 
(“As of the date of this proxy statement/prospectus, a majority of the [Williams] Board continue 
to recommend a vote ‘FOR’ the Merger Proposal.”); id. at A1659 (Williams April 6, 2016 Press 
Release) (“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 its stockholders. . . . Williams looks forward to completing the transaction 
and delivering its benefits to the Company’s stockholders.  The Williams Board has not changed 
its recommendation ‘FOR’ the merger agreement executed on September 28, 2015.”); id. at 1662 
(Williams April 14, 2016 Press Release) (“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. . . . Williams looks 
forward to completing the transaction and delivering its benefits to the Company’s stockholders. 
The Williams Board has not changed its recommendation ‘FOR’ the merger agreement executed 
on September 28, 2015.”); id. at 1665 (Williams May 13, 2016 Press Release) (“The Williams 
Board is unanimously committed to enforcing Williams’ 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.  This action was filed with that goal in mind.  The Williams 
Board has not changed its recommendation ‘FOR’ the Merger Agreement executed on September 
28, 2015.”); id. at A1769, 1799 (Williams’ Texas Litigation Complaint at ¶¶ 62, 177) (“Williams 
has taken all steps necessary and required under the Merger Agreement to consummate the 
Proposed Transaction;” “[Williams] has fulfilled its obligations under the Merger Agreement and 
is prepared to continue toward the consummation of the Proposed Transaction.”); C.A. No. 12168, 
Dkt. 48 (First Merger Action Am. Compl. ¶ 10) (“By contrast, Williams has taken all steps 
necessary and required under the Merger Agreement to consummate the Proposed Transaction.”); 
C.A. No. 12337, Dkt. 1 (Second Merger Action Compl. ¶ 41) (“By contrast, Williams has made 
every effort to have the Registration Statement declared effective, to enable counsel for Defendants 
to issue the 721 Opinion, to close the Proposed Transaction and to avoid this lawsuit.  Despite 
these best efforts, Defendants’ obstructionist conduct has left Williams with no choice but to bring 
this action in order to protect its rights, negotiated for the benefit of Williams’ stockholders, under 
the Merger Agreement.”)   
 
31 
do not appear to qualify the Company Board Recommendation.  And in any case, 
ETE does not and cannot rebut the undisputed facts that Williams sued ETE to 
compel the consummation of the Merger, that the Williams Board never acted 
formally to withdraw the resolutions and affirmed the Company Board 
Recommendation several times during the pendency of the Merger, and that an 
overwhelming majority of Williams’ shareholders voted in favor of the Merger. 
For the foregoing reasons, there is no reasonable reading of Sections 3.01(d) 
and 4.02(d) that supports ETE’s argument that it is entitled to the $1.48 billion 
Termination Fee for adversely modifying the Company Board Recommendation.   
B. The Court of Chancery Did Not Err in Finding that Williams Did Not 
Breach the Merger Agreement  
 
ETE’s next argument is that the Court of Chancery erred in awarding Williams 
the $410 million WPZ Termination Fee Reimbursement.  ETE argues that Williams 
materially breached the Merger Agreement in multiple respects and is therefore not 
entitled to the reimbursement.  ETE asserted this argument through three affirmative 
defenses presented at trial.  First, ETE argues that Armstrong’s interactions with 
Bumgarner (as well as other of his actions) breached Sections 5.03(a) and 4.01(b) of 
the Merger Agreement (the Efforts Obligations).  Next, ETE contends that the Court 
of Chancery erred by not drawing an adverse inference that Williams was in breach 
of the Merger Agreement due to Armstrong’s spoliation.  ETE finally charges that 
the Court of Chancery erred in finding that Williams’ refusal to cooperate with ETE’s 
 
32 
financing efforts satisfied the Capital Structure Representation, Section 5.14 of the 
Agreement.   We review the Court of Chancery’s findings for clear error.83 Errors of 
law are reviewed de novo.84 
1. The Court of Chancery Did Not Err in Finding that Williams 
Did Not Breach the Merger Agreements’ Efforts Obligations 
 
ETE first argues that the Court of Chancery erred in finding that Williams did 
not breach the Efforts Obligations and the Ordinary Course Covenant provisions of 
the Merger Agreement.  Section 5.03(a) provided that the parties were to use 
“reasonable best efforts” to consummate the merger, including the “taking of all acts 
necessary to cause the conditions to Closing to be satisfied as promptly as 
practicable” and cooperating with each other to “contest and resist any . . . litigation” 
challenging the merger.85  Section 4.01(a) required Williams to “carry on its business 
in the ordinary course.”86   ETE contends that Armstrong’s actions fell far short of 
what these provisions required and thus were material breaches of the Agreement. 
We disagree. 
 
 
 
83 Backer v. Palisades Growth Cap. II. L.P., 246 A.3d 81, 94-95 (Del. 2021).  We give substantial 
deference to factual determinations based on live testimony.  Schock v. Nash, 732 A.2d 217, 224 
(Del. 1999).  
84 Boyer v. Poole, 815 A.2d 348 (Del. 2003). 
85 App to Opening Br. at A468 (Merger Agreement § 5.03(a)). 
86 Id. at A456 (Merger Agreement § 4.01(a)). 
 
33 
a. Armstrong’s Actions Did Not Constitute a Material 
Breach of Williams’ Efforts Obligations 
 
ETE’s first argument is that the Court of Chancery failed to find that certain 
actions Armstrong took during the period between signing and closing amounted to 
a clandestine campaign to sabotage the Merger and thus were a breach of the Efforts 
Obligations.87  Specifically,  ETE argues that the Court of Chancery committed an 
error of law by reading an intent requirement into the provisions at issue to determine 
that Armstrong’s communications were intended to assuage Bumgarner’s concerns 
about the synergies estimates, not to thwart the Merger.88  The court did no such 
thing.  Rather, it carefully weighed the evidence and evaluated Armstrong and 
Bumgarner’s credibility at trial in reaching its finding that Armstrong’s actions did 
not constitute a breach of the Merger Agreement.   
The Court of Chancery relied on extensive trial testimony from Armstrong 
and Bumgarner in concluding that Armstrong’s actions did not breach the Efforts 
Obligations.  Armstrong and Bumgarner, as friends and former colleagues, 
communicated frequently.  When Bumgarner took issue with certain synergy 
estimates provided in a joint press release, Armstrong sought to leverage their 
relationship to ward off a legal fight with Bumgarner.89  Armstrong explained that 
 
87 Opening Br. at 44. 
88 Id. at 46.  
89 Chancery Post-Trial Opinion at *18. 
 
34 
he limited the number of people who were aware of these interactions in order to 
manage the situation with Bumgarner himself and avoid the matter escalating into a 
“very aggressive fight.’”90  Although Bumgarner then filed a lawsuit, his claims were 
all dismissed or settled prior to the closing date.91  Both Armstrong and Bumgarner 
testified that Armstrong did not assist with the lawsuit and sought to discourage 
Bumgarner from filing it in the first place.92  The court also credited testimony from 
Bumgarner that Armstrong “played it straight,” “behaved like a Boy Scout,” and 
“represented the Company” in their discussions.93  
The Merger Agreement did not enumerate specific steps a party had to take in 
response to litigation beyond requiring them to take “reasonable best efforts to 
contest and resist any such litigation.”94  So it was reasonable for Armstrong to have 
sought to leverage his personal and professional relationship with Bumgarner.  In 
retrospect, this proved to be successful as the litigation was resolved prior to the 
closing date.  There is sufficient evidentiary support in the record for the Court of 
Chancery’s finding that Armstrong sought to head off Bumgarner’s lawsuit and 
 
90 Id.  
91 See App. to Opening Br. at A744 (Bumgarner v. Williams Class Action Complaint); Bumgarner, 
2016 WL 1717206, at *6; App. to Answering Br. at B3352 (Bumgarner v. Williams Settlement 
Agreement). 
92 See id. at A3721 (Armstrong Tr.) (“I did not try to help him with his lawsuit by any stretch of 
the imagination.”); id. at A4066–67 (Bumgarner Tr.) (“[H]e didn’t like the idea of Williams being 
sued. . . . [H]e said we didn’t have a very good case.”). 
93 Chancery Post-Trial Opinion at *19.  
94 App. to Opening Br. at A468 (Merger Agreement § 5.03(a)).  
 
35 
Armstrong’s actions were in furtherance of the merger and in satisfaction of 
Williams’ obligation to “contest and resist” adverse litigation.   
b. None of Armstrong’s or Williams’ Other Actions 
Materially Breached the Agreement 
 
ETE also claims that several other of Armstrong’s and Williams’ actions 
constituted material breaches of the Agreement.  But this argument fairs no better, 
as the Court of Chancery’s well-founded factual findings show otherwise.  
First, ETE contends that Armstrong encouraged two swing vote directors, 
Cleveland and Stoney, to oppose the deal.  But the Court of Chancery found that this 
was not the case.  As the court noted, “ETE introduced no evidence that Cleveland 
or Stoney felt pressured to switch their votes; on the contrary, Stoney testified that 
she never felt pressure to reconsider her position.”95   
Second, ETE contends that Armstrong positioned Williams for a “walkaway 
payment,” but this does not overcome the actions Williams took to effectuate the 
Merger.96  As the trial court found, “although Williams did ask its financial advisors 
to assess the value of a potential breakup fee from ETE, the Williams Board resolved 
to support the Merger publicly, and ultimately sued to enjoin ETE from terminating 
the Merger Agreement.”97   
 
95 See Chancery Post-Trial Opinion at *34.  
96 Opening Br. at 50.  
97 Chancery Post-Trial Opinion at *34. 
 
36 
Third, ETE charges Armstrong with “‘working the press’ to write anti-ETE 
articles,” but this stems solely from an email from one of Williams’ attorneys at 
Cravath to Williams personnel, highlighting ETE’s attempt to turn hostile on the 
deal.98  In an email sharing news coverage of ETE’s “attempts to back out” of the 
Merger, Williams’ financial advisors at Lazard expressed relief that “[f]inally 
someone is throwing the [] flag on what ETE is doing.”99  Van Ngo responded with 
“Yes.  We’ve been working the press on this.”100  ETE’s argument is essentially that 
Williams, by calling out ETE’s own actions in opposition to the Merger, breached 
its obligations to use best efforts to close the Merger.  Not only is this not persuasive, 
but it stands against the Court of Chancery’s finding that Williams took affirmative 
steps to attempt to close the Merger.101   
Fourth, ETE takes issue with Williams’ lawsuit against Warren for tortious 
interference stemming from the Preferred Offering, characterizing it as “thinly-
veiled publicity stunt.”102  The Court of Chancery, however, rejected this claim, 
noting that “ETE has introduced no evidence that Williams’ Texas lawsuit . . . was 
intended to be a ‘publicity stunt.’”103  “Instead,” the court continued, “the lawsuit 
represented Williams’ view that the Preferred Offering breached the Merger 
 
98 Opening Br. at 50; see App. to Opening Br. at A889–90. 
99 App. to Opening Br. at A889–90. 
100 Id. 
101 See Chancery Post-Trial Opinion at *34. 
102 Opening Br. at 50.  
103 See Chancery Post-Trial Opinion at *34. 
 
37 
Agreement and was unfair to Williams stockholders.”104  ETE nevertheless continues 
to try to characterize the lawsuit as part of a smear campaign, but it continues to miss 
the mark.  As support, it points to how the complaint in that action referred to Warren 
as being “malicious.”105  ETE ignores that legal malice is an element of tortious 
interference under Texas law.106 The complaint did not call Warren “malicious” but 
rather that he acted with malice in satisfaction of the legal elements of its claim for 
tortious interference.107  ETE also contends that “were this not a publicity stunt, 
Williams would have refiled it after the Texas court dismissed it for violating the 
Merger Agreement’s forum-selection clause.”108  Williams, however, does not have 
the burden of proving a negative.  The burden of proof for an affirmative defense is 
on ETE, and it failed to carry that burden.109  
In the end, ETE has little response to the undisputed facts that the Williams 
Board resolved to support the merger, garnered stockholder approval for the deal, 
 
104 Id. 
105 Opening Br. at 51. 
106 See Powell Indus., Inc. v. Allen, 985 S.W.2d 455, 456 (Tex. 1998) (“The elements of tortious 
interference with a contract are:  (1) the existence of a contract subject to interference; (2) willful 
and intentional interference; (3) interference that proximately caused damage; and (4) actual 
damage or loss.”); Cont’l Coffee Prod. Co. v. Cazarez, 937 S.W.2d 444, 452 (Tex. 1996) (“[L]egal 
malice . . . exists when wrongful conduct is intentional and without just cause or excuse.”). 
107 See, e.g., App. to Opening Br. at A991 (Williams v. Warren Complaint) (“Mr. Warren tortiously 
interfered with the Merger Agreement when he willfully, intentionally[,] and maliciously 
orchestrated the Special Offering with the purpose and effect of siphoning value to himself and 
away from Williams’ stockholders and ETE’s other common unitholders, in breach of the Merger 
Agreement.”). 
108 Opening Br. at 51 (emphasis in the original).  
109 Medek v. Medek, 2008 WL 4261017, at *10 (Del. Ch. Sept. 10, 2008) (“Defendants have the 
burden of proof on each of their affirmative defenses.”). 
 
38 
and sued to enjoin ETE from terminating the transaction.  Thus, we see no error in 
the Court of Chancery’s conclusion that ETE failed to prove that Williams materially 
breached the Efforts Obligations and therefore is entitled to the $410 million WPZ 
Termination Fee Reimbursement.  Accordingly, we do not reach or address the Court 
of Chancery’s alternative holding that even if there were breaches of these 
provisions, they were cured at the time of the Closing Date.110  
2. The Court of Chancery Did Not Abuse Its Discretion by 
Declining to Draw an Adverse Inference that Williams 
Breached the Merger Agreement  
 
ETE next argues that the Court of Chancery erred by declining to draw an 
adverse inference that Williams breached the Merger Agreement due to Armstrong’s 
spoliation of evidence.  It claims that the sanction imposed—fees and costs 
connected with subpoenaing Bumgarner’s emails and bringing a discovery motion—
was “barebones.”111   
We review a trial court’s imposition of a discovery sanction for abuse of 
discretion.112  The Court of Chancery has broad discretion to fashion and impose 
discovery sanctions.113  “To the extent a decision to impose sanctions is factually 
based, we accept the trial court’s factual findings so long as they are sufficiently 
 
110 See Chancery Post-Trial Opinion at *34. 
111 Opening Br. at 54. 
112 See Genger v. TR Invs., LLC, 26 A.3d 180, 190 (Del. 2011). 
113 Id.  
 
39 
supported by the record, are the product of an orderly and logical reasoning process, 
and are not clearly erroneous.”114   
 “Although we do not condone [Armstrong’s] intransigence,”115 the Court of 
Chancery did not abuse its discretion in declining to draw an adverse inference here.  
The Court of Chancery appropriately considered the remedial, punitive, and 
deterrence goals sanctions serve116 and the factors of culpability, prejudice, and 
fairness that determine the appropriateness of sanctions.117  It then weighed the lack 
of prejudice to ETE against Armstrong’s culpability and Williams’ right to a fair 
proceeding, and found that an award of monetary sanctions was sufficient under the 
circumstances;118 namely that Williams had provided substantial evidence that any 
emails from Armstrong’s deleted account were recoverable from Bumgarner’s 
account and that Armstrong did not recall any other emails between himself and 
Bumgarner.  In addition, the court observed that to the extent Armstrong emailed any 
other individuals identified by ETE, such emails could be recovered by subpoenaing 
 
114 Shawe v. Elting, 157 A.3d 142, 149 (Del. 2017) (citation omitted).  
115 Zachman v. Real Time Cloud Servs. LLC, 251 A.3d 115, 2021 WL 1561430, at *5 (Del. 2021) 
(TABLE).  
116 See Beard Rsch., Inc. v. Kates, 981 A.2d 1175, 1189 (Del. Ch. 2009) (“Sanctions serve three 
functions: a remedial function, a punitive function, and a deterrent function.”)   
117 See id., 981 A.2d at 1189 (“[T]he Court will consider . . . (1) the culpability or mental state of 
the party who destroyed the evidence; (2) the degree of prejudice suffered by the complaining 
party; and (3) the availability of lesser sanctions which would avoid any unfairness to the innocent 
party while, at the same time, serving as a sufficient penalty to deter the conduct in the future.”); 
see also TR Invs., LLC v. Genger, 2009 WL 4696062, at *18 (Del. Ch. Dec. 9, 2009), aff’d, 26 
A.3d 180 (Del. 2011).  
118 Chancery Post-Trial Opinion at *35–36. 
 
40 
the receiver.119   ETE repeatedly argues that the Court of Chancery misapplied the 
burden of proof when it came to proving that ETE was not prejudiced, but regardless 
of the allocation of the burden, the factual findings support the sanction that the trial 
court awarded.   
3. The Court of Chancery Did Not Err in Find Finding that 
Williams Did Not Breach the Merger Agreement’s Financing 
Cooperation Provision 
 
ETE lastly argues that Williams materially breached Section 5.14 of the 
Merger Agreement—the Financing Cooperation Provision—by refusing to consent 
to ETE’s Proposed Public Offering.  Section 5.14 requires Williams to “provide 
cooperation reasonably requested by [ETE] that is necessary or reasonably required 
in connection” with the financing of the transaction.120  The Court of Chancery did 
not commit clear error in holding that Williams’ refusal to consent to the Proposed 
Public Offering was not a breach of the Merger Agreement, as it found that:  (1) 
Section 5.14 contained a reasonableness qualifier; and (2) ETE’s request was 
unreasonable given the unfair impact of the offering on Williams’ shareholders.121 
 
119 Id. at *35.   
120 App. to Opening Br. at A476 (Merger Agreement § 5.14).  
121 See Union Oil Co. of California v. Mobil Pipeline Co., 2006 WL 3770834, at *11 (Del. Ch. 
Dec. 15, 2006) (finding that a party “acted well within the relevant confines of reasonableness as 
courts have understood it in [the merger] context, which is that a party may properly withhold 
consent to a transaction when the decision is made for a legitimate business purpose—i.e., where 
it has a legitimate concern over the buyer’s financial abilities”). 
 
41 
ETE first argues that the reasonableness qualifier only attaches to its request 
itself, such that if the “requested cooperation [is] de minimis” in terms of the effort 
required, the duty to cooperate is absolute.122  Because its request was ministerial in 
nature, and because Williams’ duty to cooperate is not qualified by an “any-
legitimate-business-purpose out,”  ETE argues that Williams had no choice but to 
comply with its request.123  But such a reading would lead to an absurd outcome; 
namely, that Williams could be forced to engage in conduct that would potentially 
be damaging to the company or its shareholders.  
Further, the Court of Chancery’s well-grounded factual findings demonstrate 
that ETE’s request was patently unreasonable.  As the court points out, the Proposed 
Public Offering excluded Williams’ shareholders, and Williams’ financial advisors 
counseled the company to withhold its consent precisely for this reason.124  The 
Court of Chancery also found that Williams, instead of immediately withholding its 
consent, offered to proceed with the offering if ETE allowed Williams’ shareholders 
to participate.125  But ETE refused.126  And crucially, the Proposed Public Offering 
violated the Merger Agreement. “[A]n obligation to take reasonable actions . . . does 
not require a party ‘to sacrifice its own contractual rights for the benefit of its 
 
122 Opening Br. at 57. 
123 Reply Br. at 20.  
124 Chancery Post-Trial Opinion at *33.  
125 Id.  
126 Id.  
 
42 
counterparty.’”127  The Court of Chancery did not clearly err in finding that Williams 
did not breach Section 5.14 of the Merger Agreement.    
C. The Court of Chancery Did Not Err in Finding that the Parent 
Disclosure Letter’s $1 Billion Equity Exception Did Not Apply to ETE’s 
Preferred Offering  
 
ETE’s third argument on appeal is that the Court of Chancery erred in finding 
that the Parent Disclosure Letter’s $1 Billion Equity Exception provision—Section 
4.01(b)(v)—did not apply to ETE’s Preferred Offering, and thus did not excuse 
ETE’s material breach of the Ordinary Course Covenant and the Interim Operating 
Covenants.  We review unambiguous contract language de novo.128  That said, “[t]o 
the extent the trial court’s interpretation of contract language rests on findings 
concerning extrinsic evidence, . . . this Court must accept those findings unless they 
are unsupported by the record and are not the product of an orderly and logical 
deductive process.”129   
Under the Merger Agreement, the Ordinary Course Covenant and the Interim 
Operating Covenants are subject to exceptions “set forth in Section 4.01(b) of the 
Parent Disclosure Letter.”130  Section 4.01(b) of the PDL organizes these exceptions 
 
127 Williams Field Servs. Grp., LLC v. Caiman Energy II, LLC, 2019 WL 4668350, at *34 (Del. 
Ch. Sept. 25, 2019), aff’d sub nom. Williams Field Servs. Grp., LLC v. Caiman Energy II, LCC, 
237 A.3d 817 (Del. 2020) (quoting Akorn, Inc. v. Fresenius Kabi AG, 2018 WL 4719347, at *91 
(Del. Ch. Oct. 1, 2018), aff’d, 198 A.3d 724 (Del. 2018)).  
128  Sonitrol Holding Co. v. Marceau Investissements, 607 A.2d 1177, 1181 (Del. 1992) (citation 
omitted).  
129 Id. (citation omitted).  
130 App. to Opening Br. at A460 (Merger Agreement §4.01(b)). 
 
43 
under headers that correspond to specific sections within Section 4.01(b) of the 
Agreement.  The Parent Disclosure Letter states that “[t]he headings contained in 
this Parent Disclosure Letter are for reference only and shall not affect in any way 
the meaning or interpretation of this Parent Disclosure Letter.”131  The $1 Billion 
Equity Issuance Exception falls under a header titled “Section 4.01(b)(v).”132  The 
Merger Agreement includes a savings clause stating that the disclosures in any 
section of the Parent Disclosure Letter apply to the corresponding section of the 
Merger Agreement, as well as to any other section of the Agreement so long as the 
“relevan[ce]” to the other section “is reasonably apparent on its face”: 
[A]ny information set forth in one Section or subsection of 
the Parent Disclosure Letter shall be deemed to apply to 
and qualify the Section or subsection of this Agreement to 
which it corresponds in number and each other Section or 
subsection of this Agreement to the extent that it is 
reasonably apparent on its face in light of the context and 
content of the disclosure that such information is relevant 
to such other Section or subsection[.]133 
 
The Court of Chancery concluded that Section 4.01(b)(v) of the Parent 
Disclosure Letter is ambiguous as to whether it applied to the Preferred Offering.  
The court then looked to extrinsic evidence and found that it did not.  Accordingly, 
because Section 4.01(b)(v) of the Merger Agreement prohibits ETE from issuing 
 
131 Chancery Post Trial Opinion at *29.  
132 Id.  
133 App. to Opening Br. at A445 (Merger Agreement § 3.02).  
 
44 
equity between signing and closing, the court found that ETE was in breach.  We 
defer to the Court of Chancery’s factual findings, including its determinations about 
extrinsic evidence,134 and accept them here, as they are supported by the record and 
are the product of an orderly and logical deductive process.135  
1. ETE’s Contentions 
 
ETE argues that Section 4.01(b)(v) of the Parent Disclosure Letter is clear and 
unambiguous on its face.  ETE specifically contends that the Court of Chancery 
misinterpreted the Merger Agreement and Parent Disclosure Letter, which together, 
in ETE’s view, make clear that the $1 Billion Equity Issuance Exception in Section 
4.01(b)(v) applies to all of Section 4.01(b) and is not limited in application to the 
corresponding section in the Merger Agreement.   
ETE first points to the qualifying preambles to both the Ordinary Course 
Covenant and the Interim Operating Covenants and argues that refusing to cross-
apply the PDL exceptions contradicts the plain meaning of the agreement and results 
in surplusage since there are no corresponding exceptions to the Ordinary Course 
Covenant.  It then turns to language in Section 3.02 of the Merger Agreement that it 
claims allows for application of the PDL to “all provisions . . . to which ‘it is 
 
134 See Textron Inc. v. Acument Glob. Techs., Inc., 108 A.3d 1208, 1223 (Del. 2015) (finding that a 
trial court’s review of extrinsic evidence “is entitled to deference on appeal”). 
135 See Sonitrol Holding Co., 607 A.2d at 1181.  
 
45 
reasonably apparent’ that the disclosure ‘is relevant.’”136  ETE draws a distinction 
based on the use of “equity securities” in Section 4.01(b)(v) of the PDL rather than 
the use of the term “Common Units.”137  According to ETE, the use of the broader 
term “equity securities” rather than the narrower term “Common Units” was 
purposeful.  If ETE was limited to only issuing pre-existing classes of securities that 
did not require amendments to its partnership agreement, then it was effectively 
being limited to issuing only common units.  ETE argues that if this was the case it 
would result in a “complete rewrite of the parties’ agreement.”138 
2. Williams’ Contentions 
 
Williams also argues that Section 4.01(b)(v) of the Parent Disclosure Letter is 
unambiguous.  More pointedly, it argues that the $1 Billion Equity Issuance 
Exception applies only to the operating covenant in the corresponding Section 
4.01(b)(v) of the Agreement.139  Its interpretation, Williams notes, matches the 
structure of the PDL, which lists the exceptions to a given section or subsection of 
the Agreement beneath a reference to that section or subsection number.140  It also 
points to Section 3.02 of the Merger Agreement, which it claims “expressly sets out 
how to read the two contractual documents together.”141   
 
136 Opening Br. at 64 (quoting App. to Opening Br. at A445 (Merger Agreement § 3.02)).  
137 Opening Br. at 64–65. 
138 Id. at 65.  
139 Answering Br. at 56.  
140 Id. at 57. 
141 Id. (citing App. to Opening Br. at A445 (Merger Agreement § 3.02)). 
 
46 
3. The Court of Chancery’s Findings 
 
The Court of Chancery concluded that the “except as set forth in Section 
4.01(b) of the Parent Disclosure Letter” qualifier in the Merger Agreement was 
ambiguous.142  Contractual ambiguity exists “‘[w]hen the provisions in controversy 
are fairly susceptible of different interpretations or may have two or more different 
meanings.’ Where a contract is ambiguous, ‘the interpreting court must look beyond 
the language of the contract to ascertain the parties’ intentions.’”143  The court found 
that both parties’ interpretations were reasonable for the reasons the parties 
provided.144  
4. The Plain Language and Structure of the PDL and Merger 
Agreement 
 
A contract is ambiguous only when the provisions in controversy are 
reasonably or fairly susceptible of different interpretations or may have two or more 
different meanings.145  As discussed below, we agree with the Court of Chancery’s 
determination that the relevant provisions of the PDL and Merger Agreement are 
ambiguous as to whether the $1 Billion Equity Issuance Exception applies.    
 
142 Chancery Post-Trial Opinion at *28. 
143 Salamone v. Gorman, 106 A.3d 354, 374 (Del. 2014) (quoting GMG Capital Inv., LLC. v. 
Athenian Venture Partners I, L.P., 36 A.3d 776, 780 (Del. 2012) (quoting Eagle Indus., Inc. v. 
DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232 (Del. 1997))).  
144 Chancery Post-Trial Opinion at *29. 
145 Rhone-Poulenc Basic Chemicals Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1196 (Del. 
1992). 
 
47 
Section 4.01(b)(v) of the Parent Disclosure Letter states that “[ETE] may 
make issuances of equity securities with a value of up to $1.0 billion in the 
aggregate.”146  Although this would, on its face, appear to excuse the Preferred 
Offering, which fell below the $1 billion limit, the exception is located under the 
sub-header Section 4.01(b)(v), suggesting that it is only an exception to Section 
4.01(b)(v) of the Merger Agreement—which prohibits ETE from issuing equity 
between signing and closing.  If Section 4.01(b)(v) of the PDL only applied to this 
covenant, then ETE’s breach of the other Interim Operating Covenants contained in 
Section 4.01(b) of the Agreement would not be excused.  If, on the other hand, 
Section 4.01(b)(v) applied to all of Section 4.01(b), then ETE’s breach would be 
excused in its entirety, and Williams would not be entitled to the WPZ Termination 
Fee Reimbursement.  
We begin with Williams’ reading—that the $1 Billion Equity Issuance 
Exception in the PDL only modifies the prohibition on equity issuances in Section 
4.01(b)(v) of the Agreement.  We first note that that each of the headers used in the 
Parent Disclosure Letter correspond with a single covenant in the Merger 
Agreement.   A reasonable reading of this drafting structure is that by placing the $1 
Billion Equity Issuance Exception under the Section 4.01(b)(v) header, the exception 
was intended to be exclusive to that section.  Williams’ interpretation also finds 
 
146 App. to Opening Br. at A413. 
 
48 
support in Section 3.02 of the Merger Agreement, which provides that “any 
information set forth in one Section or subsection of the Parent Disclosure Letter 
shall be deemed to apply to and qualify the Section or subsection of this Agreement 
to which it corresponds in number[.]”147 
We then turn to ETE’s reading—under which the $1 Billion Equity Issuance 
Exception applies to Section 4.01(b) in its entirety.  Its reading finds support under 
Section 8.04 of the Agreement.  It provides that “[t]he table of contents and headings 
contained in this Agreement are for reference purposes only and shall not affect in 
any way the meaning or interpretation of this Agreement[,]”148 indicating that the 
headings used in the Parent Disclosure Letter were not intended to limit the cross-
sectional force of the exceptions therein.  Further supporting ETE’s interpretation, 
Section 3.02 of the Merger Agreement stipulates that any information in the Parent 
Disclosure Letter applies to “each other Section or subsection of this Agreement to 
the extent that it is reasonably apparent on its face in light of the context and content 
of the disclosure that such information is relevant to such other Section or 
subsection[.]”149   
Given that one could reasonably read Section 4.01(b)(v) of the PDL to apply 
to Section 4.01 of the Merger Agreement in its entirety or only to Section 4.01(b)(v) 
 
147 Id. at A445 (Merger Agreement § 3.02). 
148 Id. at A488 (Merger Agreement § 8.04(a)). 
149 Id. at A445 (Merger Agreement § 3.02). 
 
49 
of the Merger Agreement, we agree with the trial court that Section 4.01(b)(v) of the 
PDL is ambiguous.  Thus, the Court of Chancery properly undertook a review of the 
extrinsic evidence.150 
5. Extrinsic Evidence  
 
Where a contract is ambiguous, “the interpreting court must look beyond the 
language of the contract to ascertain the parties’ intentions.”151  We do so by 
employing a well-settled standard: 
If the contract is ambiguous, a court will apply the parol 
evidence rule and consider all admissible evidence relating 
to the objective circumstances surrounding the creation of 
the contract. Such extrinsic evidence may include overt 
statements and acts of the parties, the business context, 
prior dealings between the parties, [and] business custom 
and usage in the industry. After examining the relevant 
extrinsic evidence, a court may conclude that, given the 
extrinsic evidence, only one meaning is objectively 
reasonable in the circumstances of [the] negotiation.152 
 
Here the court found, through a logical and orderly deductive process, that the 
extrinsic evidence weighed in favor of Williams’ interpretation, relying heavily on 
testimony from both parties’ witnesses that “[u]p until the day before signing, the $1 
Billion Equity Issuance Exception was located within Section 4.01(b)(v) of the 
Merger Agreement, not the Parent Disclosure Letter.”153  And the court pointed to 
 
150 See Salamone v. Gorman, 106 A.3d at 374 (citations and internal quotation marks omitted). 
151 See id. at 369 (citations omitted).  
152 In re Mobilactive Media, LLC, 2013 WL 297950, at *15 (Del. Ch. Jan. 25, 2013) (alterations in 
original) (citations and internal quotation marks omitted). 
153 Chancery Post-Trial Opinion at *29. 
 
50 
the testimony of Minh Van Ngo, Williams’ lead-deal attorney, who testified that, at 
the time the change was made, his team at Cravath informed Wachtell, ETE’s 
counsel, “that we were fine with th[e] movement, with the understanding that it was 
nonsubstantive,” meaning, “just like it operate[d] if it were in the body of the merger 
agreement, . . . the exceptions in the disclosure schedule would apply only to the 
corresponding section of the merger agreement.”154  
For its part, ETE argues that testimony from Chappel, Williams’ CFO, is 
extrinsic evidence in its favor.  He testified that a goal of the equity issuance 
exception was to offer “some flexibility in dealing with the capital markets.”155  ETE 
construes this as a blank check and believes that the court “did not—and could not—
square its reading” with this testimony.156  But ETE misses the fact that the $1 Billion 
Equity Issuance Exception did provide flexibility by allowing issuances of existing 
classes of equity up to a value of $1 billion.  Chappel also provided testimony, which 
according to ETE, “admitted that ETE’s interpretation of the interplay between the 
disclosure letters and Merger Agreement was correct.”157  Specifically, Chappel 
commented on three exceptions in Williams’ Company Disclosure Letter that cross-
applied to non-corresponding Merger Agreement provisions.158  But each of these 
 
154 Id. at *9.  
155 App. to Opening Br. at A3171 (Chappel Tr.).  
156 Opening Br. at 66. 
157 Id. at 67. 
158 See App. to Opening Br. at A3164–70 (Chappel Tr.) (stating that Section 4.01(a)(ix) of the CDL 
is an exception to Williams’ ordinary course covenant; CDL Section 4.01(a)(v) is an exception to 
 
51 
would have been permissible under the “reasonably apparent on its face” language 
of Section 3.02.159  Chappel’s testimony is not the “admission” ETE hopes.  
There was sufficient record evidence, in our view, supporting the Court of 
Chancery’s reasoned determination that Section 4.01(b)(v) of the PDL was intended 
to qualify the covenants within Section 4.01(b)(v) of the Merger Agreement, but not 
the other Interim Operating Covenants or the Ordinary Course Covenant.  We 
therefore defer to that finding.  
D. The Court of Chancery Did Not Abuse Its Discretion in Finding that 
Williams’ Attorney’s Fees Were Reasonable  
 
ETE’s final argument is that the Court of Chancery incorrectly approved an 
$85,440,716.36 million attorney’s fees award (including prejudgment interest 
compounded quarterly) under a contractual fee-shifting provision in the Agreement.  
Principally, ETE argues that such an award was unreasonable because the Court of 
 
Section 4.01(a)(iv) of the Merger Agreement; and CDL Section 4.01(a)(ix) is an exception to 
Section 4.01(a)(vi) of the Merger Agreement).  
159 CDL Section 4.01(a)(v) allowed Williams to issue securities up to $1 billion in value in order 
to purchase WPZ units, and this necessarily applied to Section 4.01(a)(iv) of the Merger 
Agreement, which restricted Williams’ ability to acquire shares in its subsidiaries.  See App. to 
Opening Br. at A379; id. at A457.  CDL Section 4.01(a)(ix) allowed Williams to abandon 
properties not exceeding $100 million in value.  See id. at A380.  This exception necessarily 
applied to the ordinary course covenant, under which disposition of such properties would not be 
ordinary course.  See id. at A3165 (Chappel Tr.) (agreeing that abandoning an asset of up to a 
hundred million dollars would not be an event in the ordinary course of Williams).   CDL Section 
4.01(a)(ix) also allowed Williams to dispose of properties in connection with drop transactions to 
WPZ.  See id. at A380.  Drop down transactions, however, may “have required amendments to 
both WPZ and [Williams’] organizational documents,” meaning that this exception also 
necessarily applied to Section 4.01(a)(vi) of the Merger Agreement, which prohibited amendment 
of organizational documents.  Id. at A3168 (Chappel Tr.); see id. at A457. 
 
52 
Chancery shifted a contingent fee.  An award of attorney’s fees is reviewed for abuse 
of discretion.160  This Court “conducts a highly deferential abuse-of-discretion 
review by keeping in mind the nonexhaustive factors of Rule 1.5(a) of the Delaware 
Lawyer’s Rules of Professional Conduct.”161  And “[w]hile we review an award of 
attorne[y’s] fees for abuse of discretion, we review the trial court’s interpretation of 
a contractual fee-shifting provision de novo.”162 
Section 5.06(g) addresses fee shifting under the Merger Agreement:  
[I]f . . . Parent fails promptly to pay any amount due 
pursuant to Section . . . 5.06(f), and, in order to obtain such 
payment, . . . the Company commences a suit that results 
in . . . a judgment against Parent for the amount set forth 
in Section . . . 5.06(f) . . . Parent shall pay to the Company 
. . . the other party’s costs and expenses (including 
reasonable attorneys’ fees and expenses) in connection 
with such suit, together with interest on the amount of 
such payment from the date such payment was required to 
be made until the date of payment at the prime rate as 
published in the Wall Street Journal in effect on the date 
such payment was required to be made.163 
 
  Under this provision, ETE was required to pay Williams attorney’s fees and 
expenses because of Williams’ successful suit to collect the $410 million WPZ 
Termination Fee Reimbursement.  The wrinkle here is that, in 2017, Williams and 
 
160 William Penn P’ship v. Saliba, 13 A.3d 749, 758 (Del. 2011); see also RBC Cap. Mkts., LLC v. 
Jervis, 129 A.3d 816, 876 (Del. 2015); Bako Pathology LP v. Bakotic, 288 A.3d 252, 266 (Del. 
2022).  
161 Bako Pathology LP, 288 A.3d at 279 (citing TransPerfect Global, Inc. v. Pincus, 278 A.3d 630, 
653 (Del. 2022) (internal quotations, citations, and brackets omitted). 
162 Id. at 266–67 (internal quotations, citations, and brackets omitted). 
163 App. to Opening Br. at A474 (Merger Agreement §5.06(g)) (emphasis added).   
 
53 
its counsel Cravath switched to a contingency fee arrangement entitling Cravath to 
a 15% award on the WPZ Termination Fee Reimbursement judgment if Williams 
prevailed.  Accordingly, the Court of Chancery calculated Williams’ fee award based 
on the contingency agreement.   
ETE argues that the Court of Chancery’s fee award amounts to a 
misinterpretation of Section 5.06(g), because at the time the parties signed the 
Merger Agreement in 2015, every Delaware authority that awarded attorney’s fees 
pursuant to a contractual fee-shifting provision did so based on a reasonable-hours-
billed times reasonable-rates lodestar.  This uniform authority, ETE contends, 
reflects what would be understood by an objective, reasonable third party in 
interpreting the Section.  We disagree.  The only limitation contained in Section 
5.06(g) is that the attorney’s fees be reasonable, and in fee shifting cases, a judge 
determines whether the fees requested are reasonable.164  For the reasons described 
below, we see no abuse of discretion. 
The Court of Chancery largely based its reasoning on Shareholder 
Representative Servs. LLC v. Shire US Holdings, Inc., a decision in which then-Vice 
Chancellor McCormick observed that “there is nothing inherently unreasonable in 
enforcing a contractual fee shifting arrangement to cover a contingent fee award.”165  
 
164 See Mahani v. Edix Media Group, Inc., 935 A.2d 242, 245 (Del. 2007). 
165 2021 WL 1627166, at *2 (Del. Ch. Apr. 27, 2021), aff’d, 267 A.3d 370 (Del. 2021). 
 
54 
The Shire court looked to Rule 1.5(a) of the Delaware Rules of Professional 
Conduct, which contains eight factors Delaware courts can use to determine whether 
a fee award is reasonable in a fee-shifting case, 166 and concluded that “[a] one-third 
contingent fee arrangement is quite typical and commercially reasonable” and that 
“[t]here is nothing inherently unreasonable in including prejudgment interest when 
calculating the appropriate amount, particularly when the underlying agreement 
includes interest in the relevant proceeds.”167 
ETE first contends that the Court of Chancery erred in this case, and by 
implication in Shire, in looking to Rule 1.5(a) to determine the reasonableness of a 
fee award, because the rule does not cover contractual fee shifting and does not 
address the question of whether the parties in fact intended the fee-shifting provision 
to cover a contingency fee award.  ETE’s argument is without merit.  As the Court 
of Chancery noted, the Rule explicitly contemplates contingent fees, and thus when 
the parties entered into the Agreement, they should have been aware that “their 
 
166 See Del. Lawyers’ R. Prof’l Conduct 1.5(a) (listing the eight factors as:  “(1) the time and labor 
required, the novelty and difficulty of the questions involved, and the skill requisite to perform the 
legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the 
particular employment will preclude other employment by the lawyer; (3) the fee customarily 
charged in the locality for similar legal services; (4) the amount involved and the results obtained; 
(5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of 
the professional relationship with the client; (7) the experience, reputation, and ability of the 
lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent”). 
167 Shire, 2021 WL 1627166, at *2. 
 
55 
bargained for ‘reasonableness’ limitation on fee shifting did not automatically 
prohibit contingency fees.”168 
ETE next argues that the Court of Chancery’s reliance on Shire was in error, 
because, in ETE’s view, the case is functionally inapposite.  This argument does not 
hold water.  Even though Shire was decided before the Agreement was signed, Rule 
1.5(a) existed as a guidepost.169  Further, the circumstances in Shire are not so far 
afield from this case to deem it a poor analog.  As the Court of Chancery observed, 
both cases involve fee-shifting provisions that do not explicitly bar contingency fees, 
the parties in both cases made legitimate business judgments by switching fee 
arrangements mid-stream, and both involve common contingency fee percentages.   
There is therefore little to suggest that the contingent-fee arrangement adopted 
by Williams was unreasonable.  Contingent fees are reasonable when they utilize a 
reasonable lodestar multiple and are limited to a reasonable percentage of the 
recovery.170  Here Cravath produced a lodestar—hours reasonably expended times a 
reasonable hourly rate—of $47,116,996.73, putting its lodestar multiple at 1.7x.171   
A lodestar multiple of 1.7x, particularly when compared to the 2.5x multiple 
approved in Shire, is “on par with or less than awards [the Court of Chancery] has 
 
168 Chancery Fee Opinion at *3.  
169 Indeed, at that time, Delaware courts had consistently directed judges to consider the Rule when 
assessing a fee’s reasonableness.  See, e.g., Mahani, 935 A.2d at 246.  
170 See Americas Mining Corp. v. Theriault, 51 A.3d 1213, 1253 (Del. 2012). 
171 Chancery Fee Opinion at *5. 
 
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previously deemed reasonable in the post-trial or advanced-stage litigation 
context.”172  And, as the Court of Chancery noted below, 15% “is far below the 33% 
contingent fee approved in Shire and well within the range of contingent fees that 
have been approved as reasonable by [the court].”173  ETE appears to suggest that 
the timing of Williams’ decision to change its fee arrangement was somehow 
untoward, but there is no record evidence that it was anything other than an exercise 
of Williams’ business judgment.  
Next, ETE challenges the awarding of quarterly compound interest rather than 
simple interest.  Section 5.06(g) was silent on the matter and only stated that a 
judgment in connection with the WPZ Termination Fee Reimbursement would be 
due “with interest on the amount of such payment from the date such payment was 
required to be made until the date of payment at the prime rate.”174  ETE contends 
that Section 5.06(g) “should be interpreted in the same manner as Delaware’s 
prejudgment interest statute, which similarly makes no references to compounding 
and ‘has long been construed as providing for a simple interest calculation.’”175 
“[A] court of equity,” however, “has broad discretion, subject to principles of 
fairness, in fixing the rate [of pre-judgment interest] to be applied,” and “[i]n the 
 
172 Shire at *3. 
173 Chancery Fee Opinion at *4. 
174 App. to Opening Br. at A474 (Merger Agreement §5.06(g)). 
175 Opening Br. at 73 (quoting Rexnord Indus., LLC v. RHI Hldgs., Inc., 2009 WL 377180, at *9-
10 (Del. Super. Feb. 13, 2009)); see 6 Del. C. § 2301. 
 
57 
Court of Chancery the legal rate is a mere guide, not the inflexible rule.”176  Further, 
“the discretion to select a rate of interest higher than the statutory rate . . . includes 
the lesser authority to award compounding.”177  Considering the fact that ETE and 
Williams were sophisticated parties who dealt in compound interest in their day-to-
day operations, the court determined that this was the proper form of interest.178  ETE 
fails to show how the Court of Chancery abused its discretion by awarding quarterly 
compound interest.  
At bottom, ETE argues that affirming the Court of Chancery’s decision on this 
issue would constitute bad public policy for the State of Delaware.  ETE asserts that 
when two sophisticated parties contract to an attorney’s fees provision, there is an 
“obvious inference” that the “reasonable rates are going to be in a traditional, 
reasonable rates, reasonable hours lodestar.179    But ETE itself admitted that this 
could be contracted around.180  Indeed, it would be poor public policy to find that it 
is per se unreasonable that a generic fee-shifting provision contains a prohibition 
against the shifting of contingent fees.  
 
176 Summa Corp. v. Trans World Airlines, Inc., 540 A.2d 403, 409 (Del. 1988) (citations omitted).  
177 Gotham Partners, L.P. v. Hallwood Realty Partners, L.P., 817 A.2d 160, 173 (Del. 2002) 
(quoting Brandin v. Gottlieb, 2000 WL 1005954, at *29 n.83 (Del. Ch. July 13, 2000)). 
178 See Chancery Fee Opinion, at *3 (“It is thus ‘hard[ ] to imagine a corporation today that would 
seek simple interest on the funds it holds.’” (quoting ONTI, Inc. v. Integra Bank, 751 A.2d 904, 
926 (Del. Ch. 1999), as revised (July 1, 1999))).  
179 See Video of Oral Argument, Delaware Courts, at 18:21–18:42 (July 12, 2023) 
https://tinyurl.com/4waaxdur.  
180 Id. at 20:10-20:18.  
 
58 
The Court of Chancery’s award of attorney’s fees and interest was not an 
abuse of discretion.  
III. 
Conclusion 
 
For the above reasons, we conclude that the Court of Chancery correctly held 
that Williams did not adversely modify the Company Board Recommendation such 
that it would entitle ETE to the $1.48 billion Termination Fee.  The Court of 
Chancery correctly found that Williams did not breach the Merger Agreement’s 
Efforts Obligations.  The Court of Chancery also correctly found that Section 
4.01(b)(v) of the Parent Disclosure Letter did not apply to ETE’s Preferred Offering, 
and thus was in breach of the Agreement.  Finally, the Court of Chancery did not 
abuse its discretion in awarding Williams reasonable attorney’s fees under a 
contractual fee-shifting provision.  We therefore affirm the Court of Chancery’s 
judgment.