El Paso Pipeline GP Company, LLC v. Brinckerhoff

Partners, L.P., El Paso Below, Nominal Defendant RETIREMENT SYS- EMPLOYEES v. LOUIS, OF TEM THE CITY ST. OF Below, Appellant, Plaintiff BRINCKERHOFF, Peter R. Trustee Brinckerhoff Rev. Tr. the Peter R. Below, 10/17/97, Ap DTD Plaintiff U/A GP, INC., pellee/Cross-Appellant. Transcanada TC PIPELINES Ltd., Investments, American No. Corporation, Defendant Transcanada Below, Appellees, Supreme Court of Delaware. 19, 2016 Submitted: October 20, 2016 Decided: December LP, Pipelines, Nominal Defendant TC Below, Appellee. 291, 2016

No.

Supreme Court of Delaware. 14, 2016 December

Submitted: 19, 2016

Decided: December

Court Below: Court Delaware, No.

State 11603-VCG

AFFIRMED.

EL PIPELINE COMPA PASO GP Below,

NY, L.L.C., Defendant

Appellant/Cross-Appellee, Corporation, Douglas

El L. Fosh Paso Suit, Kuehn, Jr.,

ee, L. John R. Ronald Leland, Arthur C.

D. Mark Reichstet

ter, A. and James C. William Smith

Yardley, Below, Cross-Ap Defendants

pellees, Walsh, Jr., Esquire, Brian C.

Peter J. Ashman, Ralston, Esquire, Berton W. Jr., Esquire, Potter Anderson & Corroon LLP, Bradley R. Wilmington, Delaware. Aronstam, Sirkin, Es- Esquire, S. Michael VALIHURA, Aronstam & Moritz LLP of Justice: quire, Ross Of Jo- Wilmington, Delaware. Counsel: I. INTRODUCTION Allerhand, (argued), seph Esquire S. Seth Pooler, Goodchild, Esquire, decision, K. detailed, Amanda In a well-reasoned Kaplanov, Es- Esquire, and Nikolei M. that a conflicts held LLP, Weil, Manges New conflict quire, approved Gotshal & committee transaction York; York, Gugliel- Di it in the best Christine T. did believe was New & mo, Weil, Manges partnership of the limited Esquire, interests was Gotshal fact, In Delaware, charged protecting. the court LLP, Wilmington, for Defen- com- found that the committee—and thе Below, El Appellant/Cross-Appellee dant particular— mittee’s financial advisor in and Company, Paso GP L.L.C. unduly the transaction knew was favorable Below, El Cross-Appellees Defendants partnership’s general to the part- limited Foshee, Douglas L. Corporation, Paso post-trial opinion, ner. the Court of Jr., Suit, Kuehn, D. John Ronald L. R. analysis ex- undertook detailed Reichstetter, Leland, C. Wil- Mark Arthur plaining why million was conserva- $171 Smith, Yardley. liam A. and James C. overpayment approved estimate of tive Rosenthal, Zeldin, Esquire, Jessica by figure used as the committee and Goddess, P.A., Wilmington, De- & Monhait damages the basis for its award. Jeffrey Squire, H. laware. Of Counsel: problem plain- But the for the derivative (argued), Eagel, P. Es- Esquire Lawrence tiff at trial is after the trial who won Stone, Esquire, Bragar quire, and J. David any judicial completed was and rul- before York, P.C., Eagel Squire, & New New merits, on ing partnership York, Below, Appellee/Cross- for Plaintiff Del. C. in a acquired merger. was Under Brinckerhoff, Appellant Peter R. Trustee 17—211(h)1 § analogous judicial and au- of the Peter R. Brinckerhoff Rev. Tr. U/A situations,2 thority governing these DTD 10/17/97. brought by of plaintiff claims behalf partnership limited were transferred Justice; STRINE, buyer Before Chief merger. plaintiffs VAUGHN, HOLLAND, standing only and extinguished, VALIHURA was his and Justices; RENNIE, Judge,* challenge and of recourse was fairness merger by alleging constituting the Court en Banc. of value * designation Sitting by pursuant to Del. surviving resulting Const. be or vested domes- 2(a) Supreme § Art. IV 12 and Court Rules partnership or limited other business enti- tic 4(a) quorum required. up to fill as added)). ty (emphasis 17-211(h) ("When any merger § 1. 6 Del. or C. 2, See, Anderson, e,g., Lewis v. shall become consolidation have effective un- 1984) ("A plaintiff who ceases to section, purposes der this for all of the laws shareholder, reason of a whether Delaware, lights, privi- all the State reason, merger any standing loses for other leges powers of each domestic limit- suit.”); to continue a derivative Ark. Teacher partnerships ed other business entities Sys. Countrywide Corp., Ret. consolidated, Fin. merged that have and all 2013) (en banc) ("[T]he real, mixed, deriva- property, personal and and all clаim—originally belonging ac- tive due to of said domestic limited debts quired corporation—is entities, be- transferred to and partnerships and other business acquiring corporation comes an asset things well as all other and causes action (citations belonging statutory of such as a law.” omit- to each domestic limited matter entities, ted)). partnerships other business shall merger sically his reflected derivative.3 We decline further expand that part- case law the consideration. context, especially in case like however, Chancery, reject- plausible argu- this when no there was argument to the defendants’ this effect ed ment that the transaction had the effect opinion thoughtful arguing and issued a increasing voting power or control claims, al- the derivative general partner expense at the though always treated him as derivative the unaffiliated From the unitholders. announced, merger could before the start, sought has direct, or, also be even deriv- considered only monetary relief ative, mеrger should survive the for the nership. policy core reason that would dismissal partners Likewise, leave unaffiliated limited part company with the general recompense part- without for the of Chancery on its determination prior dealing. ner’s unfair merger extinguish that the not did the claims; equi- derivative We understand case, troubling In this we reverse. We ty court’s to countenance reluctance the plaintiffs the find derivative possible extinguishment of claims when were and remain derivative nature. That is suggesting there record evidence bad often, partner a limited as is the case by persons controlling faith conduct the here, required entity’s to look to the foun- by limited a partnership and financial ad- agreement than to dational rather default visor, persons and when those knew principles equity law for does protection public relying the limited partners were every for breach of not mean good their' faith only protection as their agreements is direct. those foundational overreaching by genеral partner. Rather, to claim is determine a deriva- But, question to here whether requires tive the usual examina- change our settled law a substantial tion who owns the claim. way, question that to requires a us have Here, plain part- it is under the limited departure confidence that the benefits nership agreement part- the limited butweigh situations, In will the' costs. most nership itself in the first in- entitled was pending permitting claims to derivative recovery against to sue and stance obtain merger survive a would be inefficient and general partner and its co-defendants costly for overly public investors. Useful any- claim that transaction priced transactions would be deterred or economically part- unfair to a third-party lower value because ac- nership. partners That individual limited quirers having would find themselves might press partnership’s morasses, bought litigation persis- into rights plaintiffs as derivative they tence of cannot control. which belonging make the claims to them ones law, addition, In individually. the claims of the Under our holders confront- merger here were dual ed’ which derivative claims a to agree pass buyer right nature. that some recent case to We will have undercutting challenge merger law can be read as the tra- itself a breach of cases, they many ditional rule that claims are clas- are dilution duties owed.4 v, See, Rossette, e.g., Bally Corp., Gentile 4. See Parnes v. Entm't Pictures, Inc., (Del. (“In 2006); 1999) Li order to a In re Tri-Star state 1993), tig., respect merger, 634 A.2d 319 as corrected direct claim a stock with t (Dec. 8, 1993). challenge validity of the holder mus ship’s general El might allege partner difficult to the value sole Paso L.L.C., they receiving merger Company, are is unfair GP Delaware (the of the failure to consider simply as result liability company “General Partner”) associated with their derivative suit. subsidiary value El Cor- Paso reality may suggest But that also poration, publicly traded cor- Delaware according potential full (the “Parent”). even value poration The Parent indi- recovery in (rarely the derivative suit rectly owned 100% the General Partner. guarantee), рlaintiffs still fair received The General Partner in turn owned all of merger. general value in the To make the interest, Partnership’s general partner rule one where derivative can representing a 2% economic interest merger continue to after a sue would thus owned, Partnership. The Parent also ei- raise overall transaction costs and barriers through ther the General Partner or its mergers, public obvious costs affiliates, approximately 52% of the Part- investors, gain with no substantial enough nership’s outstanding plus common units Thus, compensate them. we adhere rights. all of its incentive distribution v, progeny Lewis Anderson5 Partnership through Parent controlled the Along reverse. with the rest of the through Partner the indi- assets, nership’s ownership the claim managed Partnership’s op- viduals who passed partnership’s successor erations, employ- all of whom Parent in operation merger. law the The deriva- ees.

tive money recourse was file a challenge to

damages merger the and A. The Transactions prove that the failure to accord value to the First Kinder and in partnership merger the Morgan Merger rights. of his somehow violative litigation This involves two transactions We conclude lost stand- in ownership “dropped which interests ing to continue this derivative action when Partnership down” from the Parent the merger as to the direct closed—both (the “Dropdowns”). Dropdown transactions appeal cross-appeal. and Because our hold- support typical partner- master limited ing litigation, terminates we do not (“MLP”) scheme, ship corpora- which a reach the other issues par- raised “sponsors” by contributing tion an MLP ties. MLP, assets to the then pub- which issues lic securities maximize the market value II. BACKGROUND time, spon- those assets. Over an MLP’s Partners, El Paso L.P. was a sor sells additional assets to the MLP publicly Delaware master traded dropdowns. transactions known as (the Houston, partnership based in Texas dropdown ap- The first issue this “Partnership”). plaintiff, The R. Peter (the (“Brinckerhoff’), peal “Spring Dropdown”) Brinckerhoff is the involved Trus- tee of the Peter R. Brinckerhoff Rev. Tr. sale 51% of the Parent’s interests (“South- 10/17/97, Company, DTD which was a Southern LNG L.L.C. U/A LNG”) partner Partnership. Exрress ern El Paso Partner- and Elba itself, Indus., Inc., merger usually by charging the di Pac. v. W. (Del. 1988) (additional omitted))). fiduciary duty citation rectors with breaches of result ing dealing price.” in unfair unfair and/or Lewis, n.10; (citing 477 A.2d at 1046 5. 477 A.2d 1040 Kramer (“Elba merger agreement into on Company, Express”). L.L.C. Be- entered Octo- 16, 2011, 24,May closed on ber which Par- presented cause of the conflict merger, long- no After the the Parent was Partnership, ent’s control Gen- public company, a separately er traded a conflicts committee eral Partner formed though Partnership continued Committee”) (the “Spring to seek special publicly traded. Brinckerhoffs units approval pursuant of the transaction Partnership not affected. 7.9(a) Partnership of the Limited Section (the Agreement governing Proceedings Initial B. “LPA”). Spring Committee met five times, obtaining legal advice from Akin 22, 2011, On December Brinckerhoff (“Akin Gump Strauss Hauer & Feld LLP complaint filed verified derivative chal- Gump”) analyses and valuation ‍​‌​‌‌‌​‌​‌‌‌​‌‌‌​​‌​‌​‌‌​​‌​​​‌​‌‌​‌‌​​‌​‌‌​‌‌​‌‍(the lenging Spring Dropdown “Spring advisor, Tudor, Pickering, financial Holt & Complaint”), naming defendants thе (“Tudor”). Co. Partner, Parent, members the General 24, 2010, Spring On March Commit- of the General Partner’s board di- unanimously approved Spring tee rectors, including the members (the “Defendants”). Dropdown as “fair and reasonable the Spring Committee Brinckerhoff, Partnership” “derivatively and recommended on behalf of Partnership],” alleged breach of ex- Partner the transac- consummate duties, implied aiding abet- press and tion. day, That same the General Partner interference, ting, unjust en- tortious adopted Spring Committee’s recom- hearing richment. After October mendation. the Part- On March unjust the trial court dismissed Spring Dropdown, announced the 6, 2012, enrichment claim. On March shortly the transaction thereaf- closed Brinckerhoff filed a verified derivative ter. against challenging complaint Defendants The second transaction involved (the Complaint”). “Fall Dropdown the Fall in remaining Parent’s 49% interests South- Complaint, Brincker- Spring As with the Express and a 15% ern LNG and Elba brought “derivatively on behalf of hoff suit Compa- interest Southern Natural Gas four Partnership],” аlleging the same (the 14, ny Dropdown”). “Fall On October claims. 2010, the General Partner reconstituted Chancery consolidated the The Court special ap- the conflicts committee to seek 4, Following two actions on March (the proval of the Fall “Fall parties filed cross-motions discovery, the 2010, Committee”). 12, On November 12, 2014, judgment. for On June summary approved Drop- Committee the Fall Fall granted summary judgment the court The Parent the transac- down. announced respect to the of all with favor Defendants 15, 2010, tion on November and closed Brincker- Spring Dropdown and denied shortly thereafter. grant- court also hoffs cross-motion.6 The August Morgan, In Inc. Kinder part the Defen- part ed and denied (“Kinder Morgan”) acquire summary judgment offered motion for with dants’ only Fall The Morgan respect Dropdown.7 Parent. Kinder and the Parent Partners, Partners, Pipeline Paso L.P. Deriva- In re El Paso L.P. Deriva- In re El 2014 WL 2641304 Ch. June Litig., Ch. June Litig., tive tive 12, 2014). 2014) (ORDER). 54(b) surviving against requested motion trial. prompt claim was General for The responded Partner breach of the LPA.8 court The Defendants that Brincker- trial proceed on ordered case standing extinguished by hoffs would be claims, remaining and Brinckerhoff Merger, requested but that the court pursuant moved for a final order to Court standing on the question. defer decision 54(b) appeal Rule the dis- Instead, the asked the court to Defendants implied of his faith good missal covenant of date, all, cognizant “set a trial if at dealing fair claims. reality may extinguished that the claims by year-end.” Morgan C. The Kinder Second Merger By Followed Trial 9, hearing September At a on De- fendants reiterated Brinckerhoffs July 2014, Morgan met with Kinder standing extinguished by would be members the General Partner’s board of Merger, standing ques- but stated acquire directors offered to the Part- tion not “properly up.” teed After (the “Merger”). The Part- noting that a trial November date was ner formed conflicts committee consid- expectations” “consistent (the Committee”). [its] Merger “Merger er the scheduling, the court deferred on Merger decision comprised The Committee was standing question, suggesting Spring the same as the direсtors and Fall win, Gump Committees and advised Akin Defendants were resolution of the complex and Tudor. direct versus derivative issue At would be obviated. trial November evening voting approve before proving Brinckerhoff “focused on Merger, Merger Committee con- damages by showing that [the Partner- impact Brinckerhoff sidered what s deriva- ship] overpaid Dropdown[.]”10 in the Fall litigation Merger. tive would have He did not introduce evidence individual Merger Committee assumed harm to himself or other limited extinguished by Merg- claim would be ner. er and decided its value was “not

sufficiently impact merger material” Proceedings D. Post-Trial 10, 2014, August Kinder consideration. On Morgan jointly an- trial, Shortly after on November Merger. Brinckerhoff chose nounced the 2014, Merger approval closed after challenge Merger not to in court.9 majority of a Partnership’s holders days Merger’s outstanding common units. Within announce- On December ment, 2, 2014, Brinckerhoff his withdrew Rule Defendants moved dismiss 87, ¶ Although secondary liability Compl. Brinckerhoff’s Pipeline at 27 El Edwards v. Paso summary judgment, L.P., Partners, 10160-VCL, theоries also survived No. 2014 WL meaningful Brinckerhoff to "devote ef- (Del. 23, 2014). failed Sept. They 4798234 Ch. vol- presenting” post-trial fort to these claims in untarily Stipulation dismissed that suit. See & briefing, of Chancery and the Court deemed Dismissal, Morgan, Order of In re Inc. Kinder Partners, Pipeline them El Paso waived. In re: Corporate Reorganization Litig., No. 10093- Litig. (Liability Op.), L.P. Derivative VCL, (Del. Apr. 2015 WL 1523364 Ch. (Del. 20, 2015). Apr. Ch. 2015). 9. Other unaffiliated unitholders in the Part- Partners, 10.In re El Paso L.P. Deriva- Merger, challenged specifically Litig. (Standing Op.), tive Merger regard with to the Committee’s failure (Del. Ch. to consider the value of Brinckerhoff’s deriva- litigation. tive See Verified Action Class First, on as moot the court stated that Brinckerhoffs Delaware it extinguished required law to choose between an grounds Merger had exclu- sively characterization an ownership direct exclu- his and that he therefore lacked characterization, sively derivative then the sought standing. Defendants holding that Brinckerhoff court’s was as- motion, arguing briefing defer claim for serted breach con- necessary not they did was believe distinguished court traсt.13 The Brincker- any party the motion brief unless indicated that, Tooley,14 hoffs stating claims from appeal following intent to an notice view, “Tooley apply not contract post-trial ruling. The Court of court’s rights[,]”15 partners and that limited can Chancery respond not to or rule on the did directly sue to enforce contractual con- time, motion to Defendants’ dismiss at partnership agree- straints the limited proceeded post-trial parties and the ment.16 briefing during Janu- December

ary Second, Chancery the Court of never- applied Tooley theless and held that 20, 2015, April the Court of Chan- On Brinckerhoff had asserted a “dual-na- opinion a detailed which it cery issued claim, allowing litigate tured” him to for breach held the General Partner liable directly trial post-Merger. The court (the “Liability Opinion”).11 of the LPA that, apart from “con- concluded even holding, the court that the Fall so found Dropdown Fall angle,” tractual had through Committee the motions” “went injury Partnership on both the inflicted ap- believe that subjectively and “did and the unaffiliated unitholders. Dropdown Fall in the best proving the was prong Tooley—who As the first The court Partnership.”12 interests alleged court ac- suffered harm—the Partnership mil- suffered found $171 knowledged the “most obvious conse- damages. lion in the in- quence of the Fall 2, 2015, the December On Partnership.”17 fliction of harm on the Defendants’ motion denied injury court also to the limited found (the “Standing Opinion”). dismiss ners in the “reallocat[ion] [of] value court held because the claim partners the unaffiliated limited exclusively Partner[,]” LPA “injured breach of the which all of General derivative, Partnership propor- enforce the Brinckerhoff the investors in the could Merger. liability irrespective tionately.”18 The court award determined that princi- holding, In so the court formed “both” the two partners harmed

pal conclusions. 2010); Co., Anglo Liability Op., Ch. WL at *14. Fund, Fund, Sec. S.R. Int’l Am. L.P. v. Global Id. at *16. L.P., 143, 151, 2003); Partners, Income L.P. Lit In re Cencom Cable Op., Standing at 95. (Del. 27, 130629, 2000 WL Ch. Jan. ig., 2000)). Donaldson, Jenrette, Tooley & 14. v. Lufkin Inc., 1031 845 A.2d at 104. 17. Id. Standing Op., 132 at 99. 15. A.3d (citing Pipeline Id. at Paso 18. Id. 16. 95 Allen v. El L.L.C., 1097, (Del. Co., GP 1109 E, 2014); v. Prods. Tex. Brinckerhoff

1256 distinguished party jurisdiction It of a court alleged breach. invoke the Partner’s transfers third-party insider between a grieva enforce redress a gains expense at the insider “[t]he where Accordingly, preliminary nce.”20 a “[a]s of investors.”19 The court rea- the other matter, party standing must have to sue that, received because insider soned jurisdiction in order to of invoke of the other inves- benefits to the exclusion Standing Delaware court.”21 is therefore tors, investors suffered a distinct the other properly as a viewed threshold issue injury. litigation “ensure that the before the tri Tooley’s prong—who second would -As to controversy’ ap bunal is a ‘case or that is recovery—the of a the benefit receive propriate for ju the exercise the court’s Chancery recovery by Court of stated powers.”22 party dicial has Whether the “most ob- partnership standing is a question is sub law However, remedy. the Court of vious” ject to de novo review.23 that, Part- because the decided partners nership and the limited were both standing is Derivative a “crea hаrmed, could recover for al- “either” equity”24 ture of that was to en created leged expressed court breach. The concern jurisdic able court exercise recovery, a direct absent Brincker- corporate tion over claims asserted again” hoff would to “start all over have “to prevent complete stockholders failure hold the General Partner accountable. The justice corporation.”25 behalf pro recovery by court allowed a rata all partners, though change have “[a] unaffiliated even We observed litigated the claim Brinckerhoff had deriv- parties’ may standing myriad result from a atively from no beginning, other limit- subsequent legal or factual causes that partners joined plaintiffs, ed as litigation progress.”26 occur while no class had been certified. instance, corporate For litiga tion, plaintiffs loss of a status as share

III. ANALYSIS generally extinguishes holder Standing A. is a Issue Threshold lost, standing.27 standing Once court matter,28 lacks power adjudicate concept standing,

“The in its sense, procedural right refers of a and the action will be dismissed moot (quoting at 105. 202 Cyclopedia Id. Id. at 13 Fletcher 5940). Corporations § the Law Private Smith, 196, (Del. 20. Schoon v. 200 2008) (en banc) (quoting ‍​‌​‌‌‌​‌​‌‌‌​‌‌‌​​‌​‌​‌‌​​‌​​​‌​‌‌​‌‌​​‌​‌‌​‌‌​‌‍Kingston, Stuart Inc. (footnote omitted). Id. at 208 Robinson, (Del. 1991)) 1382 v. (internal omitted), quotation marks Corp. Cnty., 26. Gen. Motors v. New Castle 701 Co., 1997) (citations Corp. (Del. omitted). By-Prods. 21. Ala. v. Cede & 657 A.2d (Del. 1995) (citing King- A.2d ston, Stuart 1382). at A.2d Lewis, 27. See 477 A.2d at 1049. Soc’y City v. Dover Dover Historical By-Prods., (citing 28. See Ala. 657 A.2d at 264 A,2d Comm'n, Planning 1382); Kingston, Stuart Gerber LLC, Holdings, EPE *12 Schoon, ("Because 18, 2013) ("If Ch. Jan. there is no stand Chancery’s Court of decision on director ing, justiciable no there is substantive contro law, standing implicates rulings of we review (citation omitted)). versy.” omitted)). (citation it de novo.” Accordingly, by or applies.29 implied equity, stated law or if the exception unless an standing is question of derivative respect or course of action in resolution question that “properly (i) a threshold of such of approved conflict interest is [cjourt may not avoid.”30 by Special Approval, .... The General Partner shall be not authorized but re- Partnеrship Agreement, B. Under quired in connection with its resolution Partnership Owned Claim of Spe- such conflict interest to seek In the context of conflicted transac resolution, Approval cial of such involving partner master tions may adopt Partner also reso- General “Conflicts ships, many of the cases involve lution or course of action that has may contain provisions of Interest” which Special Approval. If Special Ap- received features, in but are often different common proval sought, pre- then it shall be Thus, of en ways. prevalence nuanced decision, making sumed its in an of law tity-specific provisions area faith, Conflicts in good Committee acted by expansive contractual freedom defined in any proceeding brought ... by any requires analysis and renders a nuanced or Assignee Partner or or on Limited en deriving “general principles” a cautious of such or As- behalf Limited Partner terprise. signee any or other or Limited Partner has character- The Court Assignee or Partnership challenging allegation Brinckerhoffs as a breach ized approval, bringing Person or such provision LPA’s conflicts-of-interest prosecuting proceeding such shall have (“Section 7.9(a)”).31 7.9(a) provides Section overcoming pre- such burden part: relevant ...32 sumption. provided in expressly Unless otherwise 7.9(b) pro- Section is also relevant and any Group Agreement this or Member “[wjhenever Part- vides General potential con- Agreement, whenever or ner makes a or takes determination or flict of interest exists arises between any to take other action” in its declines any or of Affili- Partner Partner, “then, capacity unless as General ates, hand, on the one and the Partner- express provided another standard Member, any any Partner ship, Group Partner Agreement, this the General other, any reso- any Assignee, or on the or take ... shall make such determination lution or course of action the General in good action or decline take such other respect or Partner its Affiliates subject any оther faith shall not be permit- such conflict interest shall be fiduciary (including or different standards by all Part- approved ted and deemed ... imposed by Agreement this standards ners, and shall constitute breach any Act or other or the Delaware under Agreement, any Group this Member law, regulation equity.”33 or at rule contem- Agreement, agreement “[wjhenever therein, Likewise, Com- any duty or of the Conflicts plated herein Partners, L.P., ("A Motors, pro First 32. El Paso 29. See at 823 Gen. ceeding may Agreement in one of two become moot of Limited Amended and Restated ways: legal dispute longer 7.9(a), is no if the issue §at A922-23 [hereinafter resolution; or, judicial amenable to LPA], standing,”). party divested of has been 7.9(b), § A923. Id. at Gerber, at *12. Standing Op., 1258 or

mittee makes or takes Partner breach the Ac- [LPA].”37 a determination would action, any declines to take shall cordingly, other concluded that Brinck- court or or make such determination take de- erhoffs “claim General Partner good cline to take such other action in faith proceeded with the Fall without subjeсt not to or and shall other 7.9(a) complying with [Section ] thus a (including fiduciary different standards direct claim for breach of contract.”38 The standards) imposed by Agreement this then on court relied this decision Court’s 7.9(b) Importantly, .34 Section defines Holdings39 in NAF support to its view “good as faith” follows: Tooley distinguishing test for be- In for order a determination or other tween and derivative claims “does “good action to be faith” for purposes to apply rights.”40 contract Agreement, of this the Person or Per- Although the analysis Vice Chancellor’s making sons or such determination tak- 7.9(a) (b) of Section interest- presents ing declining or such other action take issues,41 ing interpretive need ad- must believe that the determination Instead, dress them here. we focus action other best interests question of narrow whether the Partnership.35 ' standing post-merger. had The Court concluded that standing analysis on the centers 7.9(a) Section “barred General Partner LPA’s duty good contractual faith. its from causing Partnership] engage [the Liability Opinion, the Court of Chancery (i) in any transaction that a poten- involved case, observed this “[i]n Section (ii) tial conflict of interest failed 7.9(b) established a the Com- duty: known comply one of the four with contractual subjective mittee had to form view, members paths.”36 In Part- General belief that Fall Dropdown was in satisfy ner one of four failed “contractu- ally specified best handling Partnership.”42 routes” a con- interests More (e.g., Special Approval) specifically, comport 7.9(b), flict of interest set with Section 7.9(a), forth in Section “then the General Partner and the Conflicts interest”) 34. Id. when confronted conflict of with a (quoting Transp. Norton K-Sea Partners L.P., 2013) (Del. (en 35. Id. 364-65 banc)); Norton, (rejecting 67 A.3d at 365 Standing Op., 36. 132 A.3d argument failing proce to meet a similar addressing "automatically dure for conflicts at 77. Id. put general partner] in breach” (footnote partnership agreement” 38. Id. at 97. omitted)); Morgan, Corporate In re Inc. Kinder Reorganization Litig., 2015 WL Holdings, Fung (Trading) LLC NAF v. Li & (Del. 20, 2015) Aug, (applying Ch. Norton to Ltd., 118 175 A.3d [gjeneral [p]artner determine that is not "the obligated comply similar safe har [a Standing Op., (citing NAF provision]; bor the choice it has whether 179). Holdings, 118 A.3d at so”), judgment not to do entered sub nom. In Inc., Morgan, re 2015 WL Kinder Partners, L.P., Energy Allen v. Encore Cf. 24, 2015), Aug. sub nom. aff'd (Del. 2013) (en banc) (describing G.P., Haynes Family Morgan Trust v. Kinder nearly provision identical set forth Inc., Supr. Mar. 7.9(a) "establishing] Section four 'safe harbors’ the [d]efendants use to dis- can charge duty good Op., their 42.Liability contractual faith WL at *16. to de- to the rules forth in [their] Committee had “believe demand excusal set § or other action [was] termination of Corpora- the Delaware General (cid:127) Partnership.”43 Law, best interest the Acc- Chancery 23.1, tion of Rule ordingly, duty good contractual the and related case law.48 Partnership, faith to not the was owed the Holdings, rejected In NAF the defen- partners.44 the limited But individual Tooley dant’s contention that “intend- was duty, entity’s source owed—the general ed to be a requiring statement all i.e., the LPA— agreement, constitutive claims, tort, contract, whether based question alone answer the as antitrust), statutory (e.g., cause of action claim was deriva- whether Brinсkerhoffs brought derivatively be whenever the direct, tive, or both.45 corporation of plaintiff which the is a The Court of read our discus- alleged stockholder suffered harm.”49 suggest sion in NAF Holdings Thus, in Holdings, NAF Tooley analy- Tooley apply alleged does not where sis was needed to determine whether rights.46 harm involves contract We believe the commercial-contract claim direct was Holdings the trial court too reads NAF there, explained derivative. As we when broadly. Holdings, In NAF that “a we held upon claim asserts based by party to a commercial contract to suit right, own such as a claim for rights not a enforce own contractual contract, breach of a commercial Tooley action under Delaware law.”47 apply.' does not explained that: We NAF Holdings does support .not not, Tooley progeny and its do and were sounding claim proposition to, subject intended commercial never by default, irrespective contract ato derivative suit re- contract actions Tooley. it mean Nor does that Brincker- quirement. body case was That law partner party hoffs status as a limited subject: a different intended deal with LPA him litigate directly to the enable determining the ac- line between direct every arising the LPA. fiduciary duty tions for Such breach suits essentially abrogate Tooley rule would stockholders and derivative actions fiduciary duty subject respect for merely breach suits alternative entities LPA, 7.9(b), (em- 8, 2014), aff'd, § supra July A923 43. note at WL 803053 added). phasis Feb. 7.9(a)'s 45. Brinckerhoff Section refer- reads Morgan, 44. See Kinder at "any proceeding brought by any ence Lim- [cjommittee ("[T]he *8 did members creating Partner” as ited a direct cause [mjerger not have to believe MLP that the was However, partners. action limited this ref- partners. best of the limited interests addressing erence is better viewed They good rather had to believe faith that partner’s manner in which a limited own [mjerger the MLP best interests of rights can be importantly enforced—which [pjartnership."); Allen v. El Paso challenging includes derivative claims con- Co., L.L.C., GP A.3d Ch. flicted transactions. 2014) ("Rather [cjonflicts requiring than [cjommittee subjective to reach a belief that A,3d Standing Op., 99. at Drop[d]own was in best interests of partnership] partners, [the and its limited 47. NAF Holdings, [cjon- [ajgreement requires only LP that the [cjommittee subjectively flicts believe omitted). (footnotes Id. at 179 Drop[d]own the best interests of entered, (Del. partnership].”), judgment Id. they partnerships.”54 of contract.50 limited While the test because are creatures same, governed by partnerships may substantially are in Limited cases agreements partnership volving their partnerships present often Revised Uniform Limited Part- Delaware unique relating provisions facts “DRULPA”). (the nership Act partnership agree structure forth rights sets agreement rights ment and how it defines the by the partners. and duties owed trial responsibilities partners.55 of the limited governing court instrument treated Tooley, Under whether a claim is Partnership separate as if it were solely may or derivative continue as a contract, being than it commercial rather claim solely dual-natured “must turn on Partnership the constitutive contract of the (1) questions: following who suffered that reality under the itself. The DRULPA (the harm alleged corporation or the partnership agreements gov- often stockholders, (2) suing individually); and in corporate ern the that law is territory would receive the re who benefit by equitable principles fiduciary covered (the covery remedy corporation or other or provisions duties not make all of a stockholders, individually)?”56 In addi partnership agreement enforceable tion, direct, prove a claim is by a claim. duty “must demonstrate Because in Brinckerhoffs sounds breached was owed to the stockholder duty breach of a contractual owed prevail can showing that he she without Partnership, employ two-pronged injury corporation.”57 to the Tooley51 analysis to determine whether Applying prong Tooley, the first “to [Partnership’s] the claim enforce the alleged harm in Brinckerhoffs rights complaint own must be asserted derivative 52 jg ¿uai {n ly» Fall solely Partnership. nature such that it affected thе can proceed directly.53 Complaint alleged injury to We have observed that Brinckerhoff Tooley only alleged terms of the harm to the “[t]he test is ‘sub direct/derivative stantially involving Partnership.58 theory” the same’ claims “core Norton, ("Limited part- guments greater 50. See 67 A.3d at 360 due to the often arise con- contract.”). nership agreements type given flexibility are a tractual to those entities un- law.”); Haynes Family statutory our der see 51. 845 A.2dat 1033. Trust, 912184, 2016 (rejecting WL limit- partnership ed unitholders' "contention that Citigroup P’ship, Inc. v. AHWInv. they ought litigate to be able this case as 1125, they corporation”), were investors in a Commc’ns, Space High- & 53. See Loral Inc. v. Tooley, orig- (emphasis 845 A.2d at 1033 Partners, (Loral land. Crusader L.P. Offshore inal). II), 2009) Space (stating "[b]oth [direct derivative] party invoking juris- 57. Id. at 1039. "The may litigated” claims where a claim is diction of a court bears the burden of estab- dual-nátured). lishing standing.” elements Dover His- (citing Lujan Soc’y, 838 A.2d at torical v. Co., 54. Culverhouse v. Paulson & 555, 561, Wildlife, U.S. (Del. 2016) (quoting Defenders 198 n.9 Atochem Elf (1992)). S.Ct. 119 L.Ed.2d 351 Am., Jaffari, 727 A.2d N. Inc. v. 293 n.40 omitted). (Del. 1999)) (citations ¶ 6, Compl. 58. See Verified Derivative at Al 18 LLC, Co., Holdings KKR Fin. El Paso GP Corwin v. No. Brinckerhoff (Del. 2015) ("[I]n 5, 2012) (alleging 306 n.3 cases 7141-VCL Ch. Mar. entities, involving distinctive ar- that the Fall benefited the [alternative] Parent only presented ‘the he of harm complaint Brinckerhoffs “was evidence as Partnership injured’ Partnership, when the defen to the individual unit- Defendants, trial, Partnership] pay too holders.63 The dants caused required Dropdown.59 respond proof present- much” the Fall Such claims normally corporate overpayment presented are ed. Based the evidence trial, solely as harm to the cor Court of causing treated found that the and, thus, regarded alleged overpayment poration are derivat “left the terms, Tooley million poorer.”64 Any ive.60 In the harm is economic harm $171 corporation, upon because to Brinckerhoff him such “natural devolved as an ly funds have holder the form of corporation’s propor- assert which, though tionally of his clas- wrongfully depleted, been reduced value units—a harming directly, sically injury. harms all of a corporation “Where only derivatively corporation’s so far аs are harmed and the stockholders stockholders pro rata recovery— proportion their stock loses would recover value.”61 The ownership corporation’s val stock improperly “restoration of the their of the reduced stockholders, solely they corporation.62 ue”—flows to the because are then claim is in nature.”65 ‍​‌​‌‌‌​‌​‌‌‌​‌‌‌​​‌​‌​‌‌​​‌​​​‌​‌‌​‌‌​​‌​‌‌​‌‌​‌‍the trial, sought prove At to Brinckerhoff harmed[,]” Ger- Chancery’s in Partnership] analysis “how Court of [the was The Gentile, including expense Partnership], 62. 906 A.2d at 99. “at the of [the expense the [Brinckerhoff] at the of other partners”); nonaffiliated limited id. at A144 ("Brincker- Standing Op., A.3d at (alleging Dropdown’s 1Í100 the Fall that damages by showing proving hoff focused on [the terms "were not fair and reasonable to overpaid Partnership] in that the Fall [the ¶ (seeking Partnership]”); id. at A145 sought Dropdown, General Partner to and the damages Partnership]”); "on behalf of [the theory. parties present rebut that did not (requesting id. at A147 that the court order regarding specific evidence at trial harm the "defendants to acсount to” the Partner- partners.”); see the unaffiliated limited Liabil- ship). (stating ity Op., at *25 2015 WL argued damages support of Brinckerhoff Standing Op., (quoting 132 A.3d at 78 Veri breach of due to the General Partner’s Compl., supra fied Derivative note at A119 LPA, Partnership paid too much the 8).¶ Stipulation Pre-Trial & Order at See also (discussing Dropdown); at *26-27 Fall id. A529, Partners, re El Paso L.P. In expert, presented who Brinckerhoffs trial (Nov. 10, Litig., 7141-VCL Derivative C.A.No. overpayment occurred calculation 2014) (contending Partnership "paid lev- in the Fall at unfairly high price" in the Fall [the Parent] el); (Tr. 289:17-24) (testimony see also A653 Dropdown); see Verified Derivative also 58, agreeing damages expert ¶ of Brinckerhoffs Compl., supra (alleging note at A144 100 opinion "limited to a determina- that his Dropdown] "the [Fall terms purchase price paid of whether Partnership]” not tion [the fair and reasonable Partnership] was fair and reasonable to because the General Partner caused the Part nership pay [Partnership dol “hundreds millions of and no less favorable to the assets”). being pro- [P]artnership generally lars more than the value of those than those from unrelated third vided to available Gentile, 99; Caspian see also parties”). Gohl, Select Credit Fund Ltd. v. Master 28, 2015) Sept. WL Ch. (emphasis Standing Op., 132 A.3d at 104 (noting general corpo- rule that "claims added). derivative”). overpayment rate are II), (Feldman 65. Feldman v. Cutaia Cavanagh, at Protas v. (Del. 2008) Gentile, 4, 2012) Gentile, (citing (citing May *6 99). Gerber, Holdings, persuasive. plaintiff EPE LLC66 is Like the ber v. Brinckerhoff overpayment alleged claim. The Gerber, asserts an In consid- overpayment resulted immediate harm that an partner’s ered a limited Partnership—a reduction general partner MLP’s caused the Partnership’s overall value. Here the con- purchase an asset hundreds right separate tract asserted of millions of dollars more than its fair rights entity. distinct partnership agreement value. The limited Partnership” “best interests of the stan- resolving provided a mechanism for con- provided separation” “no dard between the using provision.67 flicts harbor Fol- safe rights any contractual Partnershiр’s lowing merger, chal- the defendants rights partners. the limited lenged plaintiffs standing. The Court circumstances, unique this Court has Chancery, applying Tooley, held that recognized that some claims can be dual- derivative, plaintiffs claims were rea- is, natured—that both direct and deriva- soning “not had identified Again, simply tive.72 be- caution harm lim- independent suffered partners parties cause limited are Instead, partners. ited [the MLP] suffered LPA, rights poten- and duties and could all the too paid harm at issue—it much.”68 tially partners flow to either Notably, the court in Gerber declined Partnership, every mean that distinguish Tooley based the contractu- any provision breach the LPA claims, aspect al reasoning “dual.” Tooley apply “unless to lim- Here, Court of Chancery the noted that ited difficult to partnerships, see how “the decisions in which the Delaware Su- plaintiffs] anything claims are other preme recognized Court has dual-natured than It that “[i]f derivative.”69 observed claims been have controversial and stand rights the contractual in tension with othеr decisions that have ‘independent’ partnership’s ners are the purely characterized similar de- claims

rights, be then the will considered rivative.” It identified this Court’s deci- However, sep- direct.”70 the court saw “no sion Gentile as one such case. Gen- plaintiffs claim aration” between the and a tile, corporation’s controlling a CEO and MLP, noting belonging to the forgave portion stockholder com- a payment the effect of the MLP’s too pany’s exchange million debt to him in $3 “immediately discretely much and equity. applicable additional The con- Thus, upon” the claim was the MLP.71 tractual conversion rate was of debt $0.50 share, per company’s derivative. but the CEO and the 18, 2013). 66. 2013 WL 209658 Ch. Jan. 68. Id. at *12. ("A 69. Id.

67. conflict of interest between Id. [g]eneral [p]artner part and Am., (quoting Anglo 70. Id. A.2d at permitted ap and ners ‘shall deemed proved by [p]artners, and shall not all consti ..., any duty tute a or of 71. Id. [the LPA] breach implied by equity, law or if the stated See, Gentile, respect e.g., resolution or course action in 906 A.2d 99. at (i) approved by such conflict of interest " (alteration (footnote [sjpecial original [a]pproval.‘ Standing Op., added)). omitted). and (which species overpayment himself of corporate board of directors included claim” person) agreed other one and that is’“both and direct char- $0.05 disclosing the un- per Without debt share. This acter.” Court concluded “[u]n- transaction, derlying a board secured like typical ‘overpayment’ transac- authorizing the shares stockholder vote tion,” a dual-natured claim “arises equity. needed issue additional (1) where: having majority stockholder equity share increased CEO’s issuance corporation effective control causes the 93.49%, thereby from 61.19% to position to issue shares of its stock in ‘excessive’ in- decreasing minority stockholders’ exchange for assets of the controlling 38.81% 6.51%. When the terest value; that have a lesser stockholder and merger later between negotiated CEO (2) exchange an causes increase only competitor, corporation percentage outstanding shares generous put agree- the CEO received shareholder, controlling owned ment to other that was disclosed corresponding per- decrease share stockholders. trial court dismissed centage public (minority) owned ensuing litigation stockholder after deter- reversed, This shareholders.”76 al- exclusively mining that the claims were lowing proceed with direct derivative and that the stockhold- claims. merger. standing lost ers after Gentile concerned controlling share- recognized appeal, On this Court two holder transactions resulted com- independent aspects plaintiffs’ improper transfer both economic value claim and the mi- plaint—the overpayment minority from the voting power stock- nority’s significant loss of cash value and controlling voting power. claims constituted holders stockholder.77 These “a 99; Gentile, interpretation of see avoid an Gentile "would also Gatz Ponsoldt, general rule 1280-81 swallow the dilution derivative"), solely claims are Feldman aff'd Gentile, 906 100 n.21. A.2d at II, Here, Partner, already cоntrolled the II, Id. at 100. In Feldman this reiter suggestion no transac and there normally ated that “dilution are ‘not claims or Par increased the General Partner's tion direct, regarded as because dilution in expense control the of the ent’s at limited corporation’s merely of the stock is the value partners, or the affected the that transaction (from accounting stand unavoidable result an voting rights any way. partners’ limited point) of value the of the reduction of entity, corporate of of which each share entire equity represents " (“[T]he 77. Gentile, 906 A.2d at end result 100 equal fraction.’ Feld an type improper is an of this of transaction- II, Gentile, (quoting 906 man at expropriation—of economic val transfer—or at We commented further that "[i]n A.2d public voting power ’from the share ue and claim, plaintiff must order to state a direct controlling majority stock to the holders harm have suffered some individualized not added)); (noting (emphasis thát holder.” id. large.” suffered of the at all stockholders results, namely, "ex separate “a Gentile, 99) harm” an (citing Id. shareholders, public from the and a (citation omitted). traction We decline to extend Gen controlling shareholder redistribution to say tile further to that a direct claim arises voting portion of the economic value and of a controlling stockholder extracts wherever (em power minority interest” embodied in entity value from an to its benefit economic added); Gatz, phasis see also A.2d minority and to the detriment stock (determining was dual 1280-81 that claim Any interpretation holders. broader would fiduciary exercise[d] nature "the general where rule that dilution swallow the benefit, Cutaia, expropriate, for its control to stock are derivative. See Feldman claims (Del. 2007) power voting from the (seeking economic value and Ch. to poration satisfy transacts with a controller on al- Brinckerhoffs presented by legedly unfair unique circumstances terms.”79 corporate overpayment “species Gentile prong Tooley, As to the second alleged Brinckerhoff never claim[s][.]”78 аny recovery must solely benefit flow Partnership’s prove and did Partnership. Chancery The Court of overpayment increased Part- the General recognized “returning the full amount control at ner’s the Parent’s the ex- overpayment] entity” was the [of pense partners. Brinckerhoff remedy,80 “most obvious” and that Brinck- argues when the over- sought damages erhoff to recover “on be- paid for the assets involved the Fall Partnership.81 half of’ the Were Brincker- Dropdown, the Parent was enriched at the directly hoff alleged to recover for the expense of the He unaffiliated unitholders. Partnership’s decrease the value of the “expropriation” contends that this consti- assets, damages proportion- would be injury tuted unaffiliated ownership ate to his interest. The necessi- partners. ty pro recovery remedy of a rata alleged harm his claim indicates that Although Brinckerhoff concedes derivative.82 to a expropriation this economic value coupled any voting controller was not In dеviating entity-level from an reme- dilution, rights argues he that this distinc- dy, the Court of relied on cases tion is “immaterial.” We decline the invita- involving “insider transfers” stock and expand tion to further the universe cases[,]” “stock dilution which it read “dually” can be asserted level, permit “at remedies the stockholder that the extraction of eco- solely hold here any payment corporation, without minority by nomic value from the a con- such an adjusting rights order trolling inju- stockholder constitutes direct invalidating portion the stock or ry. Tooley above, To do so would deviate shares.”83 As discussed cases these “largely framework and the rule inapposite, swallow are as Brinckerhoff does not corporate overpayment that claims of are claim that the Fall affected his by permitting voting rights derivative” stockholders or the Parent’s relative con- directly cor- Partnership.84 “maintain a suit whenever the trol shareholders”); II, Op., public Standing (citing Feldman 132 A.3d at 111-12 Techs., Inc., (noting at 732 n.26 “Gentile Carsanaro v. Bloodhound Gatz 2013); controlling both situations with a involved 656-57 Ch. In re Loral (Loral I), and transactions that resulted in Space Space shareholder & Commc’ns Inc. improper 2008), transfer of both economic value Sept. WL voting minority II, 867; power from the stock Space 'd Loral v. Linton aff stockholder”). controlling 441189, (Del. Everett, holders to the July 1997 WL at *7 Ch. 31, 1997)). Gentile, A.2d at 99. 78. I, 4293781, Gohl, Space Loral 2008 WL at (citing 2015 WL at *5 Cf. (after agreeing minority *32 sharehold- 25 Health & Ins. Teamsters Union Servs. Plan Baiera, 2015)). controlling ers in a action a v. derivative 55-56 Ch. up majority ownership stockholder locked Standing Op., 132 A.3d at 111. unfair, company in an conflicted stock transaction, purchase reforming agree- Compl., supra 81. Verified Derivative note ment to convert controller’s new shares ¶ at A145 102. stock, nonvoting thereby pre- into common II, (citing serving degree voting previous power); See Feldman 951 A.2d at 733 Gentile, 99)). Linton, (invalidating A.2d at WL at *7 edy challenge presented Merger, never but he Finally, Brinckerhoff specific trial harm suffered elected not to so. do evidence partners, the Court as by Cross-Appeal D. The It that the Genеr- stated. follows for penalized al Partner should be holding Given our that Brinckerhoff of a at trial an element failing defend standing Dropdown, ‍​‌​‌‌‌​‌​‌‌‌​‌‌‌​​‌​‌​‌‌​​‌​​​‌​‌‌​‌‌​​‌​‌‌​‌‌​‌‍lacks to the Fall as di- (e.g., the unitholders were reasoning applies the same to his claims Dropdown) that rectly by harmed the Fall challenging Spring Dropdown—the attempted prove.85 plaintiff never subject cross-appeal. of his We therefore Thus, appeal. Brinckerhoffs cross overpayment claim dismiss Brinckerhoffs exclusively Tooley. under derivative CONCLUSION IV. Extinguished Merger

C. The Brinckerhoff’s Claim above, For the reasons set forth Chancery’s reverse Court of decision Anderson,86 v. this Court Lems standing that Brinckerhoff to continue req had ownership forth the continuous set following Merger. his do We that “[a] We held uirement.87 cross-appeal, reach Brinckerhoffs which is shareholder, a whether who ceases by his lack of standing. mooted merger or for other by reason a reason, continue a standing loses deriva Justice, STRINE, concurring: Chief from the suit.”88 This rule flows fact

tive merger, “the following derivative I jоin fully majority’s well-rea- belonging acquired claim—originally I opinion. separately just soned write be corporation—is transferred highlight reality exempli- that this case acquiring corpora comes an asset of the confusing fies. Gentile v. Rossette1 is a statutory tion as matter law.”89 decision, clarity muddies the of our which Here, important majori- as- Brinckerhoffs claims were an law an context. As the clear, Partnership. passed ty opinion The claims makes a claim set Morgan exchange for entity to Kinder has issued operation law Merger inadequate there- consideration—a so-called dilu- Merger. result of the example of standing quintessential tion claim—is a extinguished fore Brinckerhoffs But, purported Brinckerhoffs rem- claim.2 Gentile to assert these claims. Lewis, Teacher, (citing di- 75 A.3d at 894 stock issuance after the court determined 89. Ark. 1049-50; (2013)). § defendants did not establish that rector Del. C. 259 fair). entirely transaction was 1. 906 A.2d 85. See (stating Standing Op., at 80 present parties did not ‘‘[t]he evidence See, Holdings, e.g., Green LocatePlus regarding specific harm to the unaffiliat- trial (Del. May Corp., partners”). ed limited 15, 2009) ("Classically, has Delaware law 86. 477 A.2d 1040 derivative claims shareholders viewed as alleging they wrongly have been diluted 87. Id. statutory at 1049. The foundation shares.”); overpayment by corporation's ownership requirement in the continuous Cutaia, also, e.g., v. see Feldman corporate part- realm is echoed in (2008); 727, Morgan Chase 732-33 In re I.P. 259, Compare § nership context. 8 Del. C. Litig., 906 A.2d 774-75 & Co. S'holder 17-211(h). § 6 Del. C. (2006). Lewis, arena, entity to recognize implicit- a direct dilution claim the alternative when compa- was issued to a ly recognize additional that Gentile undercuts the already controlling ny’s CEO who was clarity Tooley brought and coherence that reasoning that this stockholder.3 the determination what claims are voting minority in power diminution majority derivative. lucid decision to direct gave stockholders somehow rise big step right is a di- therefore though they already injury even rection. company. in a

stockholders controlled

But, to reconcile that decision difficult doctrine. All

with traditional dilution definition, involve, by dilution. To that, in

suggest any situation where other voting power

investors have less after a transaсtion, a direct claim ex-

dilutive also type turns the traditional

ists most de- argument enti- rivative claim—an LLOYD, Andrew Defendant ty got exchange too little value Below, Appellant, always prose- one to be shares—into able directly. cuted Gentile cannot be recon- strong weight prece- ciled with the our Delaware, STATE Plaintiff overruled, to ought

dent to be Below, Appellee. extent that it allows for a context the dilution when the issuance No. subjecting entity stock does not involve voting power Supreme whose was held a diversi- Court Delaware. group public equity fied holders Submitted: October But, control of particular interest. even situation, no gap there is our law Decided: December for Gentile to fill. Revlon4 already accords

a direct claim to when stockholders company shifts control

transaction of a single

from a diversified investor base a

controlling agree I stockholder.5 with the

majority require that this case does not us ongoing viability consider Gentile’s corporate law context. Sufficient for

today is that we refuse extend Gentile

further, to situation a limited where already firmly under the con-

trol of general partner and where the

transaction attack no under had effect partner voting

whatsoever But,

rights. refusing Gentile extend Gentile, QVC at 99. 5.See Net- ‍​‌​‌‌‌​‌​‌‌‌​‌‌‌​​‌​‌​‌‌​​‌​​​‌​‌‌​‌‌​​‌​‌‌​‌‌​‌‍Commc’ns Inc. v. Paramount Inc., (Del. 1994). work Revlon, Inc. & v. MacAndrews Forbes Hold- Inc., ings,

Case Details

Case Name: El Paso Pipeline GP Company, LLC v. Brinckerhoff

Court Name: Supreme Court of Delaware

Date Published: Dec 20, 2016

Citation: 152 A.3d 1248

Docket Number: 103, 2016

Court Abbreviation: Del.