Delaware Chancery Court Sides With S&C, Tosses Suit Challenging $13 Billion Columbia Pipeline Acquisition

March 7, 2017

S&C successfully represented former members of Columbia Pipeline Group Inc.'s (CPG) board of directors and its former chief financial officer in defeating a putative class action brought by former CPG stockholders in Delaware Chancery Court. Plaintiffs' claims challenge CPG's 2015 spinoff from former parent NiSource Inc. and CPG's subsequent $13 billion acquisition by TransCanada Corporation, which was completed in July 2016. The complaint alleges that the board members breached their fiduciary duties in connection with the TransCanada merger by improperly favoring the interests of the board members and certain of CPG's executives and by failing to obtain a higher sales price, among other allegations.

Under Delaware law, if a deal is approved by a fully informed and uncoerced shareholder majority, the business judgment rule applies. The Court adopted S&C's position that CPG's board disclosed all material information to stockholders required under Delaware law and that the CPG stockholder vote on the TransCanada merger was fully informed and uncoerced. Therefore, the business judgment rule applied and Vice Chancellor J. Travis Laster dismissed the consolidated amended complaint in its entirety with prejudice. In summing up his ruling, Vice Chancellor Laster stated that “[t]he material facts were disclosed. That is all that Delaware law requires.”

The S&C team was led by Brian Frawley, who argued the motion. A large S&C team of general practice, tax and litigation lawyers represented CPG in the TransCanada transaction.