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By Jonathan Stempel
(Reuters) -Delaware’s highest court on Tuesday threw out a judge’s order requiring Canadian pipeline operator TC Energy (NYSE:TRP) to pay $199.2 million of damages stemming from its $13 billion purchase of Columbia Pipeline Group in 2016.
The case was brought by Columbia shareholders who wanted TC Energy held liable for cutting the takeover price to $25.50 per share from $26, enabling former Columbia Chief Executive Robert Skaggs and Chief Financial Officer Stephen Smith to collect large change-of-control payments known as golden parachutes.
In May 2024, Vice Chancellor Travis Laster of the Delaware Chancery Court awarded the Columbia shareholders 50 cents per share, equal to $199.2 million.
But the Delaware Supreme Court cited its December 2024 ruling in another case that acquirers such as TC Energy could be liable for assisting a seller’s breach of fiduciary duty only if they knew about the breach and that their own conduct was wrong.
"For understandable reasons, that standard was not applied here," and despite a "mountainous trial record" the standard was not met, Justice Gary Traynor wrote in a 100-page decision for a unanimous five-judge panel.
"The Court of Chancery did not find that TransCanada had actual knowledge of Skaggs’s and Smith’s breach of duty of loyalty or that the Columbia board was failing to maintain meaningful oversight of the sale process," Traynor wrote.
"Lacking actual knowledge of the sell-side breaches, TransCanada could not have knowingly participated in them."
Lawyers for the Columbia shareholders did not immediately respond to requests for comment after business hours. TC Energy and its lawyers did not immediately respond to similar requests.
Skaggs and Smith agreed before trial to pay $79 million to settle with Columbia shareholders.
The case is In re Columbia Pipeline Group Inc Merger Litigation, Delaware Supreme Court, No. 281, 2024.