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Court of Chancery Awards $690M+ in Damages Based on Controller’s Reliance on Outside Counsel’s “Contrived” Legal Opinion–Boardwalk Pipeline

M&A/PE Briefing | November 18, 2021

In Bandera v. Boardwalk (Nov. 12, 2021), the Delaware Court of Chancery ordered Loews Corporation, which controlled the general partner of Boardwalk Pipeline Partners, to pay the partnership’s former limited partners more than $690 million in damages, in connection with Loews’ $1.56 billion take-private of Boardwalk. The partnership agreement provided that Loews could effect a take-private at any time it received an opinion of counsel that Boardwalk had suffered or likely would suffer a certain regulatory-related “material adverse effect.” During a time of uncertainty about the effects of certain announced regulatory changes, Loews obtained the opinion of counsel and effected the take-private. The court found that the legal opinion, which was rendered by a national, highly regarded law firm, was “contrived” to produce the result that Loews wanted. As the opinion thus was delivered in “bad faith,” the opinion condition had not been satisfied and Loews had breached the partnership agreement by effecting the take-private, the court held. The court further held that Loews was not protected from liability under the partnership agreement because its efforts to obtain the “sham opinion” constituted “willful misconduct.” In the attached Briefing, we analyze the case and offer related practice points.

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