The Williams Companies and Directors Win Appeal Affirming Dismissal of Shareholder Derivative Suit Related to Terminated WPZ Merger

On December 18, 2017, the Delaware Supreme Court affirmed the Delaware Court of Chancery’s dismissal of a shareholder derivative suit alleging breach of fiduciary duty by certain current and former directors of The Williams Companies, Inc. with respect to the company’s now‑terminated $13.8 billion acquisition of Williams Partners L.P. (“WPZ”). The complaint alleged that the WPZ merger was an inappropriate defensive measure intended to prevent a takeover transaction by Energy Transfer Energy, L.P. Cravath represented The Williams Companies and individual defendants in the action.

Sitting en banc, the Supreme Court, in an order written by Chief Justice Leo Strine, Jr., affirmed Vice Chancellor Sam Glasscock III’s May 15, 2017 decision dismissing the suit, holding that the plaintiff failed to plead sufficient facts to excuse his failure to make a demand on the board to bring a suit prior to filing the derivative action. Chief Justice Strine further affirmed on the alternate ground that the dismissal was warranted based on Court of Chancery procedural rules, stating that the plaintiff’s decision to a file a direct damages recovery suit, then voluntarily withdraw it and refile a near‑identical derivative suit, was a waste of litigation and judicial resources.

The Cravath team included partner Antony L. Ryan, who argued both the motion to dismiss and the appeal, and associates Nick Friedman, John I. Karin and Alma M. Mozetic. The case is Ryan v. Armstrong, et al., No. 12717 (D. Del.), No. 230 (Del.).