In re Columbia Pipeline Group, Inc. Merger Litigation

• Court: Supreme Court of Delaware
• Decided: June 17, 2025
• Docket: 281, 2024
• Status: Published

Opinion

IN THE SUPREME COURT OF THE STATE OF DELAWARE

IN RE COLUMBIA PIPELINE § GROUP, INC. MERGER § No. 281, 2024 LITIGATION § § Court Below–Court of Chancery § of the State of Delaware § § C.A. No. 2018-0484

Submitted: March 12, 2025 Decided: June 17, 2025

Before SEITZ, Chief Justice; VALIHURA, TRAYNOR, LEGROW and GRIFFITHS, Justices, constituting the Court en banc.

Upon appeal from the Court of Chancery. REVERSED.

David E. Ross, Esquire, S. Michael Sirkin, Esquire, Roger S. Stronach, Esquire; Thomas A. Barr, Esquire, ROSS ARONSTAM & MORITZ LLP, Wilmington, Delaware; James M. Yoch, Jr., Esquire, YOUNG CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware; Brian J. Massengill, Esquire, Matthew C. Sostrin, Esquire, MAYER BROWN LLP, Chicago, Illinois; Nicole A. Saharsky, Esquire (argued), Minh Nguyen-Dang, Esquire, Carmen N. Longoria-Green, Esquire, MAYER BROWN LLP, Washington, DC, for Defendant Below/Appellant TC Energy Corp.

Gregory V. Varallo, Esquire (argued), BERNSTEIN LITOWITZ BERGER & GROSSMAN LLP, Wilmington, Delaware; Ned Weinberger, Esquire; Brendan W. Sullivan, Esquire, LABATON KELLER SUCHAROW LLP, Wilmington, Delaware; Stephen E. Jenkins, Esquire; Marie M. Degnan, Esquire, ASHBY & GEDDES, P.A., Wilmington, Delaware, Jeroen van Kwawegen, Esquire; Christopher J. Orrico, Esquire, Thomas G. James, Esquire, BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP, New York, New York, for Co-Lead Plaintiffs Below/Appellees. TRAYNOR, Justice:

A Canadian energy company acquired a Delaware corporation in a merger

that resulted in lucrative change-in-control payments to three of the acquired

corporation’s C-suite officers. Two of those officers negotiated the transaction on

behalf of the corporation. Stockholders of the acquired corporation sued, alleging

that the officers and the corporation’s board of directors breached their fiduciary

duties during the sale process. In particular, the operative complaint alleged that the

officers initiated and timed the merger in a way that favored their own self-interest

at an inopportune time for the corporation’s stockholders. This, the plaintiffs

alleged, deprived the corporation’s stockholders of a value-maximizing transaction.

The stockholder plaintiffs alleged further that the officers breached their duty of

disclosure when they issued a misleading proxy statement. But most relevant to the

issues we must decide in this appeal is the plaintiffs’ claim that the acquiror aided

and abetted the officers’ breaches, as well as exculpated breaches of the duty of care

by the corporation’s board.

On a mountainous trial record, the Court of Chancery found that the plaintiffs

had proved their aiding-and-abetting claims—that is, they had proved not only the

underlying breaches of fiduciary duty but also that the acquiror constructively knew

of, and culpably participated in, the breaches. The court then assessed damages,

entering a judgment of approximately $200 million against the acquirors.

2 For the reasons set forth below, we reverse the Court of Chancery’s judgment.

In our recent decision in In re Mindbody, Inc., Stockholder Litigation,1 which we

issued after the Court of Chancery decided this case, we held that for an acquiror to

be held liable for aiding and abetting a sell-side breach of fiduciary duty, the acquiror

must have actual knowledge of both the target’s breach and the wrongfulness of its

own conduct. For understandable reasons, that standard was not applied here. And

our independent review of the record, which includes a deferential consideration of

the trial court’s findings, leads us to conclude that the standard was not met.

I

The Court of Chancery made extensive factual findings following a five-day

trial at which 15 fact witnesses and four expert witnesses testified and 1,928 exhibits,

including deposition transcripts from 29 individuals, were introduced. And before

that, the parties had submitted a pretrial stipulation, which included over 180 pages

of undisputed facts. The court also relied on factual findings made in a related

appraisal action that concerned the same transaction2—findings that are binding on

TC Energy Corp. (“TransCanada”) in this case via collateral estoppel. Of the court’s

detailed findings and the parties’ stipulated facts, we endeavor here to summarize

1 332 A.3d 349 (Del. 2024). 2 In re Appraisal of Columbia Pipeline Grp., Inc., 2019 WL 3778370 (Del. Ch. Aug. 12, 2019) [hereinafter “Appraisal Decision”].

3 those most relevant to our analysis. Still, our account is lengthy, and thus we beg

the reader’s indulgence in advance.

A

Until July 2015, Columbia Pipeline Group, Inc. (“Columbia”) was a wholly

owned subsidiary of NiSource, Inc., a publicly traded utility. Columbia owned and

operated natural gas pipelines, storage facilities, and other “midstream” assets

necessary to transport natural gas. Robert Skaggs Jr. served as NiSource’s chief

executive officer and chair of its board of directors. Stephen Smith was NiSource’s

chief financial officer, and Glenn Kettering served as the Columbia business unit’s

chief executive officer. The facts surrounding Columbia’s spinoff from NiSource

as found by the Court of Chancery—and in particular the roles and motivations of

Skaggs, Smith and, to a lesser extent, Kettering—are worth recounting here as they

are relevant to the process by which the spun-off entity was eventually sold to

TransCanada.

As of 2014, Skaggs, Smith, and Kettering were, in the Court of Chancery’s

words, “aging executives”3 and, as such, had their eyes on retirement. The year 2016

was an apt target year for retirement for all three. And although all three had

3 In re Columbia Pipeline Grp., Inc. Merger Litig., 299 A.3d 393, 410 (Del. Ch. 2023) [hereinafter “Liability Decision”].

4 lucrative change-in-control agreements with NiSource under which a sale of the

company would trigger the vesting of their unvested equity, a sale of Columbia

would not qualify as a change in control.4 But if Columbia were to be spun off from

NiSource and if Skaggs, Smith, and Kettering were to join the new entity with

change-in-control agreements comparable to those they had with NiSource, the three

executives could reap their benefits and retire upon a sale of the new entity. And

that is the course they charted.

In September 2014, upon Skaggs’s recommendation, NiSource announced its

intention to spin-off Columbia. Three months later, the NiSource board approved

Skaggs, Smith, and Kettering’s request to join Columbia. Each received a change-

in-control agreement comparable to their agreements with NiSource. Smith’s and

Kettering’s new change-in-control agreements—thanks to Skaggs—also increased

the amount they would receive if they were no longer employed following a change

in control from two times their annual salaries and bonuses to three times their

annual salaries and bonuses.5 Notably, their agreements were to expire in 2018.

Skaggs, Smith, and Kettering anticipated that Columbia would become an

acquisition target and, accordingly, readied themselves to address inbound inquiries.

4 Each change-in-control agreement provided that the change-in-control benefits would vest upon a transfer of at least “50% of the aggregate book value of assets of NiSource and its Affiliates.” App. to Opening Br. at A173, A176, A181. Before the spinoff, Columbia comprised less than 50% of the aggregate book value of assets held by NiSource. 5 Under both his NiSource and Columbia change-in-control agreements, Skaggs would receive a payment equal to three times his annual salary and bonus. Id. at A173–74.

5 These preparations included the retention of Lazard Frères & Co. and Goldman,

Sachs & Co. to provide financial advice. Lazard identified potential acquirors before

the spinoff was completed, placing them in four tiers according to their ability to pay

and likelihood of interest. One such firm was TransCanada, a Canadian

conglomerate that owns and operates a network of oil and gas pipelines, as well as a

number of nuclear and gas-fired power plants, across North America. Lazard

situated two potential acquirors—Kinder Morgan, Inc. and Energy Transfer Equity

L.P.—in the first tier; TransCanada occupied the second tier with Berkshire

Hathaway Energy, Dominion Resources, Inc., Spectra Energy Corp., NextEra

Energy, Enbridge, Inc., and The Williams Companies.

In May 2015, Lazard contacted TransCanada, disclosing that Columbia

“might be put into play” and that “social issues may not be a significant

consideration.”6 Lazard was signaling to TransCanada, via this message, that

Skaggs, Smith, and Kettering all intended to retire with their change-in-control

benefits at the conclusion of any future transaction.

With the completion of the spinoff on July 1, 2015, Columbia became an

independent, publicly traded company. Its board consisted of Skaggs and six

independent outside directors. Sigmund Cornelius, an oil-and-gas industry veteran,

6 Liability Decision, 299 A.3d at 412.

6 was the board’s lead outside director. Each of the other directors had significant

business experience and were unsaddled by any relevant conflicts of interest.

B

TransCanada began assessing the possibility of acquiring Columbia soon after

the spinoff was completed. François Poirier, TransCanada’s Senior Vice President

for Strategy and Corporate Development—described by the Court of Chancery as “a

savvy former investment banker and repeat player in the M&A game”7—took the

lead for TransCanada. Wells Fargo Securities, LLC served as TransCanada’s

investment banker.

Two potential acquirors, Spectra and Dominion, had already reached out to

Skaggs to discuss the possibility of a transaction when TransCanada began its pursuit

of Columbia. Unlike those firms, TransCanada approached Smith instead of Skaggs.

Poirier had known Smith since 1999, when Smith was the Treasurer of American

Electric Power, Inc. and Poirier was an investment banker at JP Morgan Chase &

Co. Poirier had met with Smith “approximately a dozen times per year” between

1999 and 2007, and the pair remained in touch after Smith joined NiSource.8

The Court of Chancery found TransCanada’s decision to approach Smith

instead of Skaggs to be tactical. In the court’s words, Smith was “an experienced

7 Id. at 405. 8 Id. at 413.

7 CFO”9 who was “detail-oriented and a team player[,]” but his collaborative nature

meant that he was also “fully transparent” and “lack[ed] guile or artifice.”10 Smith

“shared information freely[,]” “ha[d] no poker face[,]” and was an “M&A

neophyte.”11 This made Smith, according to the court, “a compliant informant” for

Poirier.12

Eric Fornell, Wells Fargo’s lead investment banker on the TransCanada team,

visited Smith three times in September and October 2015. At these meetings,

Fornell told Smith that TransCanada was interested in acquiring Columbia, and he

eventually facilitated a call between Smith and Poirier in early October. After the

October call, Poirier assembled his team to develop an analysis of a potential

acquisition of Columbia. Poirier’s analysis described Columbia as “[c]urrently for

sale.”13 The Court of Chancery found that Smith was the source of this information.

The analysis also characterized Columbia’s management as “individuals who were

seen as ‘ineffective’ at NiSource”14 and calculated the value of any change-in-

control payments that Skaggs, Smith, and Kettering would receive at the conclusion

9 Id. at 405. 10 Id. at 414. 11 Id. at 405. 12 Id. 13 App. to Opening Br. at A206. 14 Liability Decision, 299 A.3d at 413.

8 of any contemplated transaction. At no point did TransCanada consider retaining

Skaggs, Smith, or Kettering.15

C

Energy markets deteriorated throughout the second half of 2015. In October,

Skaggs sent a memorandum to the Columbia board, noting that, to support

Columbia’s growth and maintain its investment grade credit ratings, the company

would need to “issue between $3 billion and $4 billion of equity . . . over the next

three years[,]” one billion of which needed to be issued by early 2016.16 This was

not an easy task. Columbia’s key vehicle for raising capital was Columbia Pipeline

Partners LP (“CPPL”), a master limited partnership formed in advance of the spinoff

and controlled by Columbia.17 CPPL would occasionally issue equity and use the

proceeds to purchase Columbia assets via drop-down transactions. By the fall of

2015, however, CPPL’s unit price had declined substantially following its initial

public offering earlier that year, undercutting CPPL’s capacity to raise capital for

Columbia.18

15 App. to Answering Br. at B178 (Poirier Trial Testimony) (“Q. . . . [T]here was never a consideration of keeping on Mr. Smith or Mr. Skaggs following the transaction; right? A. No. . . .”). Nor did any of TransCanada’s synergies analyses contemplate keeping Skaggs, Smith, or Kettering as part of Columbia’s management. Id. at B181. 16 App. to Opening Br. at A206–07. 17 See id. at A192. 18 Columbia had “originally assumed . . . that CPPL would be [its] primary and most efficient equity raising vehicle.” Id. at A207. By October 2015, that assumption no longer held. Id.

9 Because CPPL equity issuances would be insufficient to meet Columbia’s

capital needs, Skaggs proposed a “two-track strategy.”19 Under this plan, on one

track, Columbia would pursue a near-term equity offering of “~$1.0+ billion” in

Columbia stock.20 On the other track, Columbia would “[e]xplore whether . . . a

select group of blue chip strategic players[,]” including TransCanada, “would have

a legitimate interest in [Columbia] - - at a price that’s within [Columbia]’s intrinsic

value range.”21 The Columbia board approved the two-track strategy at its October

meeting.

With the Columbia board’s blessing, Skaggs contacted Dominion’s CEO on

October 26. He explained that Columbia would be pursuing an equity offering, and

that, if Dominion had interest in completing a deal, it should move quickly.

Meanwhile, at a dinner meeting later that evening, Poirier expressed to Smith

TransCanada’s interest in acquiring Columbia. Smith relayed TransCanada’s

expression of interest to Columbia’s management.

Later that week, the Columbia board heard updates from Skaggs and Smith

concerning their discussions with Dominion and TransCanada, respectively. At this

meeting, the board set the stage for a sale process beginning in November 2015. The

board, perceiving that Dominion was more likely to make an acceptable offer,

19 Liability Decision, 299 A.3d at 414; Appraisal Decision, 2019 WL 3778370, at *6. 20 App. to Opening Br. at A209. 21 Id.

10 instructed management to pursue a deal with Dominion, but permitted management

to engage with TransCanada if Dominion failed to make an attractive offer. The

board decided further that Columbia would pursue an equity offering unless it could

find an acquiror willing to pay at least $28 per share.

D

In keeping with the two-track strategy, Columbia management and its

advisors ran a sale process spanning most of November 2015. Three circumstances

surrounding this sale process are of particular moment in this appeal. First,

Columbia executed NDAs with TransCanada and other potential buyers containing

“don’t-ask-don’t-waive” standstills. Second, despite receiving two offers, Columbia

refused to sell at a price it viewed as inadequate. Third, at the conclusion of the

November sale process, Poirier used his relationship with Smith to obtain

information about the possibility of future discussions concerning a sale, likely in

violation of the standstill agreement between Columbia and TransCanada. We turn

next to an expanded discussion of these circumstances.

Skaggs met with Dominion’s CEO again on November 2, 2015, and offered

exclusivity in exchange for a cash deal at $28 per share. Dominion indicated that

this was not feasible; instead, Dominion suggested either a three-way merger-of-

11 equals consisting of an all-stock agreement between Dominion, Columbia, and

NextEra, or an equity investment in some Columbia subsidiaries and joint ventures.

Over the next week, Columbia began preparations for the provision of

nonpublic information to interested buyers. On November 6, Smith contacted

Poirier and offered to enter into an NDA and provide nonpublic information to

TransCanada. Three days later, on November 9, Columbia and TransCanada

executed an NDA containing a “don’t-ask-don’t waive” standstill provision (the

“Standstill”). Specifically, the Standstill read:

Standstill. In consideration for being furnished with Evaluation Material by the other Party, each Party (each such party in such context, the “Standstill Party”) agrees that until the date that is twelve months after the date of this Agreement, unless the other Party’s board of directors otherwise so specifically requests in writing in advance, the Standstill Party shall not, and shall cause its Representatives not to . . . directly or indirectly,

(A) acquire or offer to acquire, or seek, propose or agree to acquire, by means of a purchase, tender or exchange offer, business combination or in any other manner, beneficial ownership . . . or constructive economic ownership . . . of the other Party . . .

(B) seek or propose to influence, advise, change or control the management, board of directors, governing instruments or policies or affairs of the other Party, including by means of . . . contacting any person relating to any of the matters set forth in this Agreement . . . or making a request to amend or waive this provision . . . or

12 (C) make any public disclosure, or take any action that could require the other Party to make any public disclosure, with respect to any of the matters that are the subject of this Agreement.22

The NDA was negotiated on TransCanada’s behalf by its Vice President of

Law and Corporate Secretary, Christine Johnston. Johnston negotiated the length of

the Standstill down from 18 months, as initially suggested by Columbia, to 12

months. The Court of Chancery found that this fact demonstrated that “TransCanada

focused on the [Standstill] provision.”23 The topic of the Standstill also came up at

a meeting of the TransCanada deal team the day after the NDA was executed.

Fornell’s handwritten meeting notes state: “standstill → 12 months can’t make run

at them.”24 Poirier also confirmed at trial that the Standstill had been discussed at

this meeting and agreed that he “understood . . . that TransCanada could not pursue

a potential transaction with Columbia Pipeline without receiving a written invitation

from the Columbia Pipeline board.”25

Columbia also executed NDAs with NextEra and Dominion and gave them

permission to share information with each other to evaluate the feasibility of the

three-way merger suggested by Dominion’s CEO. On behalf of Columbia, Goldman

also invited Berkshire to participate in the sale process. Columbia and Berkshire

22 Id. at A827–28. 23 Liability Decision, 299 A.3d at 415. 24 App. to Answering Br. at B1. 25 Id. at B195–97.

13 subsequently executed an NDA. These agreements contained 18-month “don’t-ask-

don’t waive” standstills that were “functionally identical” to the TransCanada

NDA.26

Columbia’s board was not informed of the standstills. Lead outside director

Cornelius heard the term “don’t-ask-don’t-waive” for the first time during this

litigation.27

ii

Throughout November, Columbia provided diligence materials to Dominion,

NextEra, TransCanada, and Berkshire. The interested bidders also received

management presentations. TransCanada received a presentation from Smith and

Kettering on November 13, 2015.

Despite inbound interest in an acquisition, Columbia was not wed to the

prospect of a sale in the near term. In a memorandum to the Columbia board, Skaggs

provided an update on the two-track strategy. He wrote that Columbia had “engaged

in interesting exploratory discussions with three of the four credible inbound

strategic players (Dominion, TransCanada, Spectra, and Berkshire Hathaway).”28

He also stated that the sale process was “in the early stages and has not yet generated

a solid (credible) proposition that warrants delaying our Track 1 effort.

26 App. to Opening Br. at A220. 27 Liability Decision, 299 A.3d at 415. 28 App. to Opening Br. at A219 (internal quotation marks omitted).

14 Consequently, we are preparing to launch the [Columbia] equity raise during the

week of November 30—subject to your endorsement.”29 Columbia’s board met on

November 17. At this meeting, Skaggs presented the same update on the two-track

strategy that he had outlined in his memorandum. The board endorsed his approach.

Because Berkshire and TransCanada appeared more willing to provide the all-

cash offer that Columbia management was seeking, management guided the

November sale process toward those prospects. After the Columbia board meeting,

Skaggs contacted Berkshire and invited a bid by November 24. Skaggs and Smith

also invited TransCanada to bid by the November 24 deadline. They urged

TransCanada to “focus on three criteria: an all-cash transaction, closing certainty,

and price.”30 Both potential acquirors were told that Columbia planned to proceed

with an equity offering if no suitable offer was received.

Poirier updated the TransCanada board of directors on November 19 and 20.

Poirier informed the TransCanada board that “[Columbia] management appears to

prefer a sale of the company and ha[s] indicated to us that there will be no social

issues.”31 Poirier’s team also explained the financial value of Skaggs’s, Smith’s, and

Kettering’s change-in-control benefits were Columbia to accept a bid at a 20%

premium to its stock price in November 2015. TransCanada was aware that the large

29 Id. 30 Liability Decision, 299 A.3d at 415–16. 31 Id. at 416 (quoting JTX 337 at 5).

15 change-in-control agreements meant that Columbia management was “motivated to

sell.”32 Outside the board meeting, Poirier also mentioned to senior management at

TransCanada that, because of Columbia’s capital needs and desire to avoid future

equity issuances, its management “cannot afford for a sale process to fail in the near

term.”33

Columbia ultimately received offers from both Berkshire and TransCanada by

the November 24 deadline, but both were below the $28-per-share target set by the

Columbia board. Berkshire proposed an acquisition at $23.50 per share and

TransCanada offered an all-cash deal at $25 to $26 per share. Skaggs relayed these

offers to the board, along with the message that Dominion and NextEra had not

submitted bids.34 At a board meeting the next day, the Columbia board rejected both

indicative offers as “too low to pursue” and, concerned about the risk of undermining

the effectiveness of an equity offering by waiting too long, instructed management

to conclude the sale process and proceed with an equity offering.35

Skaggs called Russ Girling, TransCanada’s CEO, after the Columbia board

meeting to update him on the board’s decision. Girling asked what would happen if

TransCanada was able to “close the gap between $26 and $28 . . . and get it done by

32 Id. (quoting JTX 306 at 1). 33 Id. (quoting JTX 371 at 3–4). 34 The Court of Chancery considered this statement misleading in light of the fact that neither Dominion nor NextEra had been given notice of the November 24 deadline and thus had no indication that they needed to act. Id. 35 Id.

16 Christmas.”36 Skaggs responded that the Columbia board did not want to take that

risk and reaffirmed Columbia’s intention to pursue an equity offering the week of

November 30. Skaggs had a similar conversation with Berkshire, which had

previously informed Goldman that a decision to proceed with an equity offering by

Columbia would “kill our conversation.”37 That day, Columbia also sent “pencils

down” letters to Dominion, NextEra, Berkshire and TransCanada and requested that

nonpublic information provided to each potential acquiror under the NDAs be

returned to Columbia or destroyed. The letters came as a surprise to Dominion and

NextEra, neither of which had been informed of the November 24 deadline. As

NextEra put it, “[t]his was news to us.”38

iii

Girling passed Skaggs’s message along to the TransCanada deal team, and

Poirier called Smith for “additional color.”39 During this call, Smith told Poirier that

Columbia’s management would likely want to resume merger talks “in a few

months.”40 Assuming that TransCanada would prefer to complete an acquisition

before any additional drop-down transactions or equity offerings, Smith added that

Columbia’s “planned window for the next drop-down would be in the March to June

36 App. to Opening Br. at A229. 37 Id. at A230. 38 Id. at A229. 39 Liability Decision, 299 A.3d at 417. 40 Id. (quoting JTX 392).

17 timeframe.”41 Columbia’s board did not authorize Smith to share this information,

and Smith did not provide it to any other bidders.

The Court of Chancery concluded that this conversation breached the

Standstill. The court found that Smith was “happy” to backchannel with Poirier and

that this call “was one of many occasions when Poirier would extract information

from Smith and attempt to draw inferences from his words and body language.”42

The court added that “[w]hether communicating consciously or subconsciously,

Smith gave Poirier lots of signals.”43 But, importantly, the court also noted that

“Poirier did not always read [those signals] correctly.”44 Nor did Poirier know

whether Smith had provided this information to other bidders; in fact, the court found

that TransCanada “suspected that other potential bidders could have engaged, and it

was possible that Smith or other representatives had given similar messages to other

bidders.”45 Nor does the record show that Poirier—or any other member of the

TransCanada deal team—knew that Smith was acting outside the mandate given to

Columbia’s management by the Columbia board.

Poirier reported the content of his call with Smith to the TransCanada deal

team. He suggested “reengaging in January, with an eye to concluding an agreement

41 Id. (quoting JTX 409 at 2). 42 Id. at 418. 43 Id. 44 Id. 45 Id.

18 by March[,]”46 before Columbia undertook its next drop-down transaction. The plan

was for Poirier to reach out to Smith following the equity issuance and for Girling

to call Skaggs before the end of the year. Poirier also suggested that there might be

a disconnect between the Columbia board and Columbia management’s appetite to

sell, the board not being wed to a sale while management had “enthusiasm” for a

deal.47

Columbia announced its equity offering after market close on December 1,

2015. The offering was oversubscribed, with Columbia taking advantage of high

demand to sell over 20 million more shares than initially planned and its

underwriters exercising their full option to purchase over 10 million shares. At its

completion on December 7, the proceeds from the equity offering totaled

“approximately $1.4 billion.”48

E

TransCanada, following Poirier’s suggestion, reached out to Columbia after

the announcement of the equity offering, leading to a number of calls and meetings

between Columbia management and the TransCanada deal team in December and

January 2016. These conversations, all of which the Court of Chancery found to be

46 Id. (quoting JTX 411 at 3). 47 Id. (quoting JTX 409 at 2; Appraisal Decision, 2019 WL 3778370, at *8). 48 App. to Opening Br. at A231.

19 in violation of the Standstill, culminated in TransCanada submitting a proposal for

an acquisition of Columbia in late January 2016.

Poirier and Fornell exchanged a series of emails in the lead-up to the

Columbia equity offering. The emails showed that Fornell wanted to reengage but

that he was concerned about the Standstill. He asked Poirier if “your legal guys

[have] talked to [Columbia’s] legal guys to see if they are OK with my calling

[Smith]?”49 The Court of Chancery found that Poirier knew that the Standstill

prohibited an approach by Fornell but that Poirier was “willing to push the limits.”50

Johnston—TransCanada’s in-house counsel—sent Poirier an email

summarizing the Standstill on December 1. This email specified that, without

written consent from the Columbia board, TransCanada could not:

1) Acquire, offer or agree to acquire ownership of equity securities or material assets 2) Seek to influence, advise, change or control [Columbia’s] management or the board (including by soliciting proxies), or request amendment to the standstill provisions 3) Make any public disclosure or take actions that requires [Columbia] to make public disclosures with respect to matters that are the subject of this agreement.51

49 Liability Decision, 299 A.3d at 418 (quoting JTX 418). 50 Id. 51 App. to Opening Br. at A834.

20 Poirier then forwarded this email to Girling, adding:

See below. We basically must get [Columbia’s] acquiescence to pursue this transaction, or even to seek to influence them. Under item 2, this extends to reaching out to board members without Bob[] [Skaggs’s] knowledge or consent . . . . This is a standard provision in my experience . . . . I think this restricts our alternatives to you going through Bob [Skaggs], but as we discussed, that is the best option from a relationship standpoint.52

Girling called Skaggs the next day. The Court of Chancery found that this

call was made despite Girling’s understanding of the Standstill’s prohibitions, but

the email from Poirier indicates that Girling had been told that a call to Skaggs might

be the only permissible outreach under the Standstill. Fornell also called Smith

twice. The calls lasted just “40 seconds.”53 The Court of Chancery found that the

circumstances surrounding these calls suggest that they touched on a potential

transaction, meaning that they violated the Standstill.

The court further found that TransCanada “plainly understood what the

Standstill prohibited” because the TransCanada board had asked its counsel to

“review potential litigation exposure” following an update given by TransCanada

management concerning these interactions with Skaggs and Smith.54 A review of

an opinion letter provided to TransCanada on December 15 suggests, however, that

the TransCanada board’s primary concern was Columbia’s litigation exposure for

52 Id. 53 Id. at A234. 54 Liability Decision, 299 A.3d at 419.

21 failing to disclose TransCanada’s $26-per-share offer in the prospectus for its equity

offering and whether that exposure could create leverage for TransCanada in future

negotiations.55 The opinion letter also stated that TransCanada’s outside counsel

“saw little risk” that TransCanada would be a named defendant in a stockholder

lawsuit targeting Columbia.56

TransCanada and its advisors interacted with Columbia management twice

more in December 2015. First, on December 8, Skaggs and Smith met Fornell at an

energy conference organized by Wells Fargo. The record provides few details of the

conversation that took place at this meeting, but once the meeting was over, Fornell

called Poirier. Poirier then sent a text to Girling stating that he had “more intel on

[Columbia].”57 Based on this circumstantial evidence, the Court of Chancery found

that the December 8 meeting at least “touched on” the topic of a transaction and

violated the Standstill.58

The next week, on December 17, Poirier called Smith. There is no doubt that

this call touched on the topic of a transaction. Poirier suggested that Smith meet

with him in early January. He also “indicated that [TransCanada] could be at

55 See App. to Answering Br. at B16. 56 Id. at B21. 57 App. to Opening Br. at A235. 58 Liability Decision, 299 A.3d at 419–20.

22 $28/share.”59 The Court of Chancery found that this call, too, breached the

Standstill. Poirier called and text-messaged Smith on January 4, confirming that the

pair would meet on January 7, 2016, and requesting new confidential information so

that he could prepare for the meeting.60 The Court of Chancery found that these

communications again breached the Standstill.

Poirier also noted that TransCanada would want access to a new electronic

data room. Smith passed this information along to Robert Smith,61 Columbia’s

general counsel, who, with help from Columbia’s outside counsel, Sullivan &

Cromwell LLP, began preparing a data room for TransCanada’s benefit. Next day,

without approval from the Columbia board, Smith emailed 190 pages of confidential

information to Poirier. This information, except for updated financial projections,

was largely duplicative of the information provided during the November sale

process.

The Court of Chancery noted that “Poirier also wanted comfort on the

standstill” in advance of the January 7 meeting.62 This concern led to an exchange

of emails and a call between Robert Smith and Johnston. The court found that in

this call, “the attorneys reasoned themselves into concluding that the January 7

59 App. to Opening Br. at A236. 60 TransCanada had properly complied with Columbia’s late-November return-or-destroy instruction. 61 To avoid any confusion, this opinion refers to Robert Smith by his full name and Stephen Smith by his surname. 62 Liability Decision, 299 A.3d at 421.

23 meeting could go forward, even though TransCanada was clearly seeking to acquire

Columbia.”63

Goldman prepared a list of talking points for Smith to use at the January 7

meeting with Poirier and emailed them to both Smith and Skaggs. Skaggs described

the talking points as “[g]ood stuff.”64 The talking points instructed Smith to mention

that Columbia was “pleased with the execution” of the equity offering, but would

“do what’s right for shareholders” by “keeping this dialogue open.”65 They also

instructed Smith to inform TransCanada that as far as the Columbia board was

concerned, “it will come down to two issues: 1) price; and 2) certainty.” 66 As to

price, the talking points noted that “TC was at $26 and CPG was at $30.00, and

[Poirier] or [Girling] indicated you could be at $28.00 before our equity offering.”67

The notes further instructed Smith to tell Poirier that, to avoid an auction process,

TransCanada should “lean in on price as much as possible (‘don’t get penny wise

and pound foolish’) as every dollar matters a lot to [the Columbia] board.”68 Lastly,

the talking points instructed Smith to tell Poirier that “if [TransCanada’s] interest is

63 Id. 64 App. to Opening Br. at A837. 65 Id. 66 Id. 67 Id. 68 Id.

24 real, I’d suggest that you have [Girling] meet with [Skaggs] and make a proposal

well in advance of our Board meeting on January 28th.”69

At the January 7 meeting, Smith began walking through the talking points

from Goldman, before he “literally pushed the page across the table and gave it to

Poirier.”70 Doing so was “uncharacteristic” for an M&A negotiator, and in the

court’s view, sent another signal that Smith “trusted Poirier and was open to a

deal.”71

For the rest of the meeting, “Smith shared information freely.”72 He

confirmed that there was some disconnect between management’s and the board’s

appetite for a sale. He also reiterated that Skaggs wanted a proposal on or before

January 27 so that he would have something to present to the Columbia board on

January 28. At one point, Poirier stated that TransCanada would want 30 to 45 days

of exclusivity to which Smith responded that TransCanada would be unlikely to face

competition in its bid to acquire Columbia. The court found this to be yet another

statement made by Smith that signaled his inexperience and further revealed the

Columbia management team’s desire to sell.

69 Id. 70 Liability Decision, 299 A.3d at 422. 71 Id. 72 Id.

25 The court also found that, like previous meetings, the January 7 meeting

breached the Standstill. Shortly after the meeting, Columbia granted TransCanada

access to the data room, and TransCanada spent the following weeks engaged in due

diligence. Much of TransCanada’s due diligence focused on the size of the

Columbia management’s change-in-control payments, which, in the price range

TransCanada intended to pay, totaled roughly $112 million dollars. Around the

same time, to drum up support for a deal at the January 28 board meeting, Skaggs

conducted a series of one-on-one meetings with Columbia directors.

iv

In response to Smith’s request that TransCanada make a proposal in advance

of the January 28 board meeting, Girling planned to call Skaggs with an expression

of interest on January 25. Other than the brief exchange between Robert Smith and

Johnston in advance of the January 7 meeting, neither Columbia nor TransCanada

appear to have considered that an expression of interest by TransCanada might

violate the Standstill until TransCanada’s in-house counsel raised the point on

January 25—the day Girling was scheduled to call Skaggs. Recall that, under the

Standstill, TransCanada had agreed not to “acquire or offer to acquire, or seek,

propose or agree to acquire” Columbia absent written consent from the Columbia

board.73 Yet in advance of Girling’s call, Johnston, on behalf of TransCanada,

73 App. to Opening Br. at A827–28.

26 emailed Robert Smith to confirm that an “offer or proposal” from Girling to Skaggs

would not breach the Standstill. She also added “I expect you can appreciate that

we don’t want to be in a position where we contravene our agreement with your

company.”74

Robert Smith forwarded the email to the lead partner on the Columbia team

at Sullivan & Cromwell with the message “see below. Will call Chris shortly

acknowledging that an offer is not in contravention with the standstill agreement.

Let me know if you have any questions.”75 The partner responded simply, “agree.”76

Robert Smith then replied to Johnston. He wrote, “Thanks Chris, I confirm

by this email that receipt of an offer to purchase our securities in this context would

not violate or be in contravention with the terms of the NDA, including the standstill

provision.”77 Johnston responded that she was comfortable with Girling calling

Skaggs that day, but in her view, moving forward would “appear to require more

explicit Board direction.”78 Robert Smith forwarded this email to Sullivan &

Cromwell with the message “pls let me know your thoughts on Chris’

comment . . . .”79 The lead partner replied “I think a formal proposal they are right,

but what we’re doing now is fine. Just emphasize that what we approve them doing

74 Id. at A839. 75 Id. 76 Id. 77 Id. at A841. 78 Id. (emphasis in original). 79 Id. at A841.

27 is making a private, non-public indication for discussion of a negotiated transaction

and discussion of whether the board wants to initiate negotiations.”80

To summarize these back-and-forth communications concerning the propriety

of further discussions in light of the Standstill, Columbia’s general counsel, after

consulting with Columbia’s outside counsel, advised TransCanada’s general counsel

that an informal offer would not violate the Standstill. Even so, the court found that

Johnston’s email seeking confirmation that a call from Girling would not breach the

Standstill was itself a breach of the Standstill.

v

Following the parties’ general counsel’s apparent resolution of the Standstill

issue, Girling called Skaggs. He told Skaggs that, to avoid violating the Standstill,

Skaggs should not view this proposal as an offer.81 He then reported to Skaggs that

TransCanada remained interested in acquiring Columbia at a price between $25 and

$28 per share. Girling also asked for 45 days of exclusivity. Skaggs told Girling

that he would take the proposal to the Columbia board but warned Girling that the

board would be pushing for the top of the price range. The day after this call—

January 26—Skaggs relayed to the Columbia board that he had received a

proposition from TransCanada to acquire Columbia.

80 Id. 81 The court found that, regardless of the language Girling used, the proposal by TransCanada violated the plain language of the Standstill. See Liability Decision, 299 A.3d at 427.

28 The Columbia board met over two days on January 28 and 29. At this

meeting, Skaggs presented TransCanada’s $25 to $28 proposal and characterized it

as sufficiently “firm” to warrant granting TransCanada exclusivity.82 The board also

discussed succession planning with Skaggs, a discussion in which the “implicit

message” was that a deal would avoid the expense and risks associated with finding

someone to replace Skaggs as CEO.83 The Columbia board ultimately granted

TransCanada exclusivity until March 2, 2016.

F

After the board meeting, Skaggs called Girling and told him that the board

had agreed to exclusivity. Columbia’s counsel at Sullivan & Cromwell suggested

an informal exclusivity agreement to avoid creating a “thread for plaintiffs’ lawyers

to pull on[,]” but TransCanada insisted on a written document.84 The parties

executed an addendum to the NDA that gave TransCanada access to Columbia’s

agreements with its customer-producer counterparties—documents critical to

understanding Columbia’s business—before executing an exclusivity agreement on

February 1, 2016 that was to run for 30 days. In brief, the agreement granted

TransCanada exclusivity until March 2 so long as TransCanada was interested in

acquiring Columbia at $25 to $28 per share. It also granted the Columbia board a

82 Id. at 429. 83 Id. 84 Id.

29 good-faith fiduciary out, enabling the board to entertain an inbound proposal if

failing to do so would be reasonably expected to result in a breach of the board’s

fiduciary duties.

With the exclusivity agreement in place, merger negotiations resumed. On

February 3, the two management teams held a conference call to discuss merger

structure and agreed to target a February 29 announcement date. Columbia sent

TransCanada a draft merger agreement the next day.

Skaggs and Smith asked Fornell if he could schedule a meeting for February

9. The purpose of the meeting was to confirm that TransCanada could successfully

finance an acquisition and find the quickest path to close a deal. After hearing about

the meeting request, Poirier called Fornell and others at Wells Fargo to ask why, in

his view, Skaggs and Smith were behaving strangely. Smith had repeatedly

commented to Poirier that despite the turmoil in energy markets and Columbia’s

depressed stock price that “this is not a wasted effort [of] due diligence.”85 Poirier

thought this could be a signal that Columbia would run a competitive process if

TransCanada failed to meet the bottom of the range it had suggested. Fornell, on the

other hand, thought that this comment signaled that Columbia was open to a deal

below $25 per share.

85 Id. at 431 (quoting JTX 708) (internal quotation marks omitted).

30 At the February 9 meeting, Skaggs expressed concern that TransCanada

would struggle to secure financing for a deal. Poirier attempted to allay these

concerns, and his comments were backed up by Smith. Because of Smith’s support

for TransCanada’s position, Poirier came away from the meeting thinking that

Columbia’s management remained enthusiastic about a deal. Smith and Poirier

spoke the next day. Smith’s talking points for that meeting suggested that he should

again emphasize that this opportunity for TransCanada would be “unburdened by

the ‘typical’ social issues.”86

Momentum toward a deal slowed in mid-February. On February 12, Girling

called Skaggs to tell him that, although TransCanada’s valuation of Columbia had

not changed, he was becoming uneasy with the premium over Columbia’s market

price—then around $17 per share—of a deal in the $25 to $28 range. On February

19, credit agencies informed TransCanada that its proposal for financing the merger

would cause its credit rating to drop from A- to BBB-. Poirier informed Smith that

this rating assessment made it impossible for TransCanada to proceed with its

existing financing plan for the acquisition.

Poirier and Smith spoke again on February 24. Porier repeatedly suggested a

deal at a lower price, without any pushback from Smith. Poirier took this silence to

86 Id. (quoting JTX 715 at 23).

31 mean that “management wants to get this done” and that Skaggs and Smith would

be willing to present a lower price to the board and “dare them to turn it down.” 87

Girling called Skaggs later that day. He reported that TransCanada needed more

time to secure financing for a deal at $25 to $28 per share and warned that a cash

deal might not be achievable within this range. Skaggs did not terminate discussions

with TransCanada; he instead informed Girling that he would like to “get done with

this in a week.”88

Skaggs passed Girling’s concerns on to the Columbia board, suggesting that

TransCanada might present an offer below the range it had proposed or an offer

backed by a different financing arrangement than the all-cash deal initially

contemplated. In an email exchange with Cornelius, Skaggs floated the idea of a

mixed-consideration deal with less than $25 per share in cash. Cornelius stated that

he had little interest in a deal with a cash component of less than $25 per share and

might not even counter such an offer.

With exclusivity set to expire at midnight on March 2, TransCanada asked for

an extension until March 14 to finalize an offer. Columbia management

recommended, and the Columbia board agreed, to extend exclusivity until March 8

87 Id. at 432. 88 Id.

32 because Skaggs was confident from his conversations with the TransCanada deal

team that he would receive a proposal from Girling on March 5.

On March 3, Robert Smith emailed Johnston about the impending offer,

asking her whether she still had any concerns about the Standstill. In the meantime,

Johnston had asked TransCanada’s outside counsel whether there was “anything we

should do [concerning the Standstill] to ensure that we are not offside.”89

TransCanada’s outside counsel recommended that Johnston confirm that the

Columbia board consents to the discussion. Johnston emailed Robert Smith seeking

this confirmation.

The Columbia board met on March 4 and heard a presentation on the Standstill

agreement from Sullivan & Cromwell. At this meeting, the Columbia board

formally authorized management to send a written request to TransCanada asking

for a merger proposal. Robert Smith sent this written request to Johnston the same

day. It read: “The Board has authorized me to advise you that the board of

[Columbia] requests an offer from TransCanada for a Transaction . . . at the meetings

or calls between the CEOs scheduled for March 5, 2016 . . . .”90 The Columbia board

also recommended waiving the NDAs and standstill agreements binding any other

89 Id. at 433 (quoting JTX 813 at 1). 90 App. to Opening Br. at A256.

33 prospective acquirors at the conclusion of TransCanada’s exclusivity period on

March 9.

On March 5, Poirier called Smith and suggested a transaction at $24 per share

in cash. Smith responded with “colorful language” and accused Poirier of “wasting

his time.”91 Girling then called Skaggs and formally made an offer at $24 per share.

Skaggs testified at trial that, upon hearing the offer, he “absolutely lost it” with

Girling.92 Smith, without authorization from the Columbia board, called Poirier later

that day and told him that TransCanada needed to increase its offer before the

Columbia board meeting scheduled for that evening. He further told Poirier that

TransCanada would need to be at $26.50 per share to “get the board’s attention.”93

After that, Girling called Skaggs to make a new offer of $25.25 per share, the

midpoint between the initial $24 offer and Smith’s $26.50 suggestion. This was the

highest price that Girling had authority from the TransCanada board to offer.

The Columbia board met that evening. Skaggs reported the initial $24 per

share offer as well as his and Smith’s disappointment with it. Smith also related that

he had conveyed to TransCanada that $26.50 per share was a more acceptable price

91 Liability Decision, 299 A.3d at 434. 92 Id. 93 Id.

34 that management would feel comfortable recommending to the board. Skaggs then

presented the $25.25 offer and recommended against accepting it.

The Columbia board directed management to reject the offer. Skaggs called

Girling to relay the news to which Girling responded “I guess that’s it.” 94 Poirer

tried to salvage the deal by calling Smith and stating that $25.25 was the highest

price TransCanada could offer.

The prospect of a deal was revived by Goldman and Wells Fargo. Fornell told

Goldman on March 6 that, were TransCanada to receive a counter, it might consider

a deal between $25.25 and $26.50. Goldman informed Skaggs, Smith, and Kettering

that TransCanada was still open to a deal. During a conference call, Skaggs, Smith,

and Kettering agreed that they could recommend a price of $26 per share. Skaggs

then reached out to Cornelius. Based on this conversation, management instructed

Goldman to tell Wells Fargo that the Columbia board would “do 26. Not a penny

less.”95 Smith separately called Poirier to convey the same message. A few days

later, Smith heard from two investment banks that there were “credible rumors” on

the street that “TransCanada was in advanced discussions with Columbia.”96 One

banker also reported that The Wall Street Journal was preparing a story.

94 Id. at 435 (quoting JTX 863). 95 Id. (quoting JTX 885). 96 Id. at 436.

35 The TransCanada board met on March 9 to consider how to respond to

Columbia’s $26 counter. The board’s reception was positive. At the meeting, Wells

Fargo presented a valuation analysis that placed $26 per share in the lower half of

its suggested range. The board also noted that TransCanada’s exclusivity had

expired on March 8 but that interloper risk was low. The board, aware of the rumors

about a Wall Street Journal article, next discussed how a potential media leak might

affect the parties’ stock prices. At the conclusion of the meeting, the TransCanada

board unanimously authorized an offer of $26 per share, comprising 90% cash and

10% TransCanada stock.

G

Poirier called Smith to relay the $26-per-share offer. But he told Smith that

there were three things that might jeopardize a transaction at this price. First, if the

rating agencies did not view the transaction favorably; second, if TransCanada’s

stock price fell below $49 per share CAD; and third, whether TransCanada’s

underwriters would support a “bought deal”97 on the equity issuance needed to

finance the cash portion of the deal.

97 “A bought deal is a securities offering in which an investment bank commits to buy the entire offering from the client company[,] . . . eliminat[ing] the issuing company's financing risk [and] ensuring that it will raise the intended amount.” Investopedia, Bought Deal: Meaning in Initial Public Offerings, (June 4, 2023), https://www.investopedia.com/terms/b/boughtdeal.asp (last visited June 6, 2025).

36 i

The Court of Chancery found that at the end of this call, “Smith orally

accepted the $26 offer[,]” and “[f]rom that point on, both sides acted as if they had

an agreement in principle.”98 The court based this conclusion on “three strands of

circumstantial evidence.”99

First, the court considered Wells Fargo’s understanding of the status of the

transaction. An email circulated among the Wells Fargo deal team stated, “they

accepted $26 with 10% stock but are trying to negotiate down the break fee.”100 The

materials used by the Wells Fargo committee working on a fairness opinion for the

final deal stated that the “[Columbia] board accepted this preliminary offer on the

morning of March 10, 2016.”101 Other sections of the materials used by the

committee also stated that Columbia had “accepted” the $26 deal.

Second, the court relied on an exchange of text messages between

TransCanada’s senior executives. One described TransCanada as having a “done

deal.”102 The court also noted that Skaggs had sent the Columbia deal team a note

treating the price term as settled, leaving only the break fee and fixed share

conversion ratio for negotiation.

98 Liability Decision, 299 A.3d at 437. 99 Id. 100 Id. at (quoting JTX 956 at 1). 101 Id. (quoting JTX 1120 at 1). 102 App. to Opening Br. at A855.

37 Third, the court focused on the fact that TransCanada’s exclusivity had

expired at midnight on March 8, but Columbia’s management had not released the

other bidders from their standstills on March 9 despite instructions to do so from the

Columbia board. In the court’s view, this was “[b]ecause [Columbia’s management]

thought they had a deal.”103

Skaggs scheduled a Columbia board meeting for the next day, March 10.

Before the meeting, Skaggs emailed the board an agenda to guide the deliberations

concerning TransCanada’s March 9 offer. Skaggs’s email also shared his

understanding of the rationale underlying TransCanada’s offer. More specifically,

he understood that the offer purported to address Columbia’s primary deal

requirements: “(a) $26.00/share of value; (b) predominantly a cash transaction; and

(c) certainty of close.”104 Skaggs also noted in his email that TransCanada did not

request an extension of exclusivity.

Before the board could meet, however, The Wall Street Journal that morning

published an article reporting that TransCanada was in “takeover talks” with

Columbia.105 It is not clear how news of the transaction was leaked. As the Court

103 Liability Decision, 299 A.3d at 437. 104 App. to Opening Br. at A265. 105 Id. at A869. See also Ben Dummett, Dana Cimilluca, and Dana Mattioli, Keystone Pipeline Operator TransCanada in Takeover Talks, Wall St. J. (Mar. 10, 2016), https://www.wsj.com/articles/keystone-pipeline-operator-transcanada-in-takeover-talks- 1457627686 (lasted visited June 6, 2025).

38 of Chancery noted, both TransCanada and Columbia each had their own incentives

for leaking the news. In the court’s opinion, however, TransCanada “was a more

likely source” of the leak because “news of a bid can cause arbitrageurs to enter the

target company’s stock, which puts pressure on the target board to take a deal.”106

In any event, after the story broke, the New York Stock Exchange briefly halted

trading in Columbia’s common stock, and both the New York Stock Exchange and

the Toronto Stock Exchange briefly halted trading in TransCanada’s common stock.

The Columbia board nevertheless met as planned. At the meeting, Skaggs

outlined TransCanada’s offer to acquire Columbia at $26 per share and

recommended that the board accept the offer. Skaggs also informed the board that

the exclusivity period with TransCanada had expired two days earlier, on March 8.

The board also considered that the Wall Street Journal article could lead to “inbound

inquires” from other potential buyers.107 Notably, the board did not vote to accept

TransCanada’s offer.

After the meeting, Smith called Poirier. Poirier asked Smith if Columbia

could give TransCanada another two weeks of exclusivity. In response to Poirier’s

request, Smith told him that, because of the leak, the Columbia board was “freaking

106 Liability Decision, 299 A.3d at 436. 107 App. to Opening Br. at A266.

39 out and told the management team to get a deal done with [TransCanada] ‘whatever

it takes.’”108 At trial, Fornell testified that Smith’s statement “struck [him] as odd”

because it was unusual for a “counterparty to tell you that their board is freaking

out.”109 Fornell told his team at Wells Fargo that “[o]ddly, the [Columbia] team has

relayed this info to [TransCanada],” to which one of his team members responded,

“Turmoil provides opportunity. [TransCanada] would appear to be well

positioned.”110 Thinking along the same lines, two TransCanada executives—the

chief operating officer and the president—stated in text messages that TransCanada

and Columbia “had a deal as offered[,]” but given the leak, there “may be an

opp[ortunity] to go back to [Columbia] with a lower price.”111 In sum, given Smith’s

statement to Poirier and the Wall Street Journal article, an opportunity emerged for

TransCanada to craft a better deal for itself, and, as will be developed more fully

below, that is exactly what it did.

108 Liability Decision, 299 A.3d at 438 (quoting JTX 952 at 1). At trial, TransCanada argued that Smith never made this statement to Poirier. The court, however, “[a]fter taking into account Smith’s candor and his belief that he and Poirier were working together to get a deal done, [determined] that when Poirier asked for an extension of the exclusivity agreement, Smith responded that it would not be a problem because ‘[t]he [Columbia] board is freaking out’ and had told the management team ‘to get a deal done.’” Id. (citing JTX 952 at 1). Regardless of the exact words Smith used, the court found that he had conveyed a message of this nature to Poirier. Id. 109 App. to Answering Br. at B139–40. 110 Liability Decision, 299 A.3d at 438 (quoting JTX 952 at 1). 111 Id. at 439; App. to Opening Br. at A855.

40 iv

Next day—March 11—the Columbia board met again. Smith informed the

board of TransCanada’s request for an additional two weeks of exclusivity, and

Skaggs recommended granting the request on the condition that it lead to “a tight

Critical Path to [a merger agreement] signing.”112 The board, rather than granting

two weeks exclusivity, agreed to a one-week extension. Before signing the extended

exclusivity agreement, Skaggs recommended that the board release the other bidders

from their standstills. The board authorized the release, and letters releasing the

other bidders from their standstills were delivered via email later that evening.

At the same meeting, Skaggs informed the board that he had received an email

from Spectra’s CEO earlier that morning, expressing Spectra’s interest in acquiring

Columbia and initiating discussions with the Columbia deal team. According to the

Court of Chancery, the “Columbia management team had never been interested in a

deal with Spectra and had little interest in engaging” with Spectra now.113 The board

simply “told Goldman to handle any interactions”114 Working with Goldman,

Skaggs developed a “script” for Columbia to use in response to any inbound merger

inquiries, including from Spectra. The script, in its entirety, read: “We will not

comment on market speculation or rumors. With respect to indications of interest in

112 App. to Opening Br. at A268. 113 Liability Decision, 299 A.3d at 439. 114 Id.

41 pursuing a transaction, we will not respond to anything other than serious written

proposals.”115

When Spectra’s CFO and head of M&A contacted Goldman the following

day—March 12—about a potential deal, Goldman delivered the script. Unsatisfied

with that response, Spectra replied that it could not be more specific about a potential

deal unless Columbia agreed to give it access to non-public information so that more

due diligence could be done. Goldman informed Skaggs and Smith that Spectra was

“get[ting] serious” about an offer.116 Spectra’s CFO also made a follow-up call to

Goldman, saying to “expect something formal, absent a ‘major bust’ in the ‘next few

days’”117 and engaged Morgan Stanley & Co. LLC as its financial advisor.

Spectra’s renewed interest led to the Columbia board meeting on March 12.

During the meeting, the board engaged in discussions with management—including

Skaggs—and representatives from Sullivan & Cromwell as to how, if at all, it should

respond to Spectra’s inquiries and apparent appetite for a deal. Specifically, Skaggs

recommended that the board refrain from engaging with Spectra because Spectra

was unlikely to pay more than TransCanada and that Columbia should instead devote

its resources to “buttoning down” a deal with TransCanada.118 The board ultimately

115 Id. at 440 (quoting JTX 1025 at 1). 116 Id. at 441; App. to Opening Br. at A274. 117 Liability Decision, 299 A.3d at 441; App. to Opening Br. at A274. 118 Liability Decision, 299 A.3d at 441.

42 determined “there was no reason to believe, based on the information available to it

and taking into account the views of management, that engaging with Spectra was

likely to lead to a transaction offering greater value to Columbia stockholders than

TransCanada’s most recent proposal.”119 Additionally, the board concluded that

“pursuing discussions with Spectra would not be worth the risk of losing the

potential transaction with TransCanada.”120 Therefore, the board approved the script

and planned to focus on a deal with TransCanada.

After the March 12 meeting, Columbia’s general counsel emailed Johnston to

explain that Columbia would extend exclusivity to TransCanada for one more week

and that Columbia wished to use the script to respond to any incoming inquiries from

other potential buyers. After receiving the script, Poirier forwarded it to Wells

Fargo. One of Fornell’s colleagues at Wells Fargo questioned the phrase “serious

written proposal,” remarking that the phrase could entail anything from a formal

financial bid subject only to confirmatory due diligence or “a per share price on a

cocktail napkin.”121 Poirier, intending to “sniff out any issues” with the script, called

Smith.122

119 App. to Opening Br. at A273. 120 Id. 121 Liability Decision, 299 A.3d at 441 (quoting JTX 1029 at 1). 122 App. to Answering Br. at B346.

43 After his call with Poirier, Smith texted a “real-time report”123 to Skaggs,

Kettering, and Robert Smith, which said:

I think we are done. [Poirier] wanted to know the rationale [for the script] – I explained it and pointed out how important the Fiduciary protections were for our Board. Told him we wanted to get this deal done with them and this would help us achieve that goal. They were circling the wagons one last time and [Poirier] said he would have Chris [Johnston] reach out to Bob [Skaggs] to get it signed up once their meeting was concluded.124

Based on trial testimony from Poirier and Fornell, the court determined that,

as a result of his call with Smith, “Poirier understood that Smith had made a

‘commitment to the deal with TransCanada.’”125 After the call, Poirier instructed

TransCanada’s counsel to sign off on the script, and Columbia’s general counsel sent

the exclusivity agreement to TransCanada later that day. Smith, convinced that the

deal was “done[,]” went on vacation with his family and left Kettering to handle the

transaction with TransCanada.126

As the court noted, “[t]he combination of Columbia’s decision to extend

exclusivity combined with management’s commitment to a deal with TransCanada

stunned Wells Fargo.”127 One banker at Wells Fargo remarked to a colleague that

that he “[c]an’t for the life of [him] figure out why [Columbia] would keep

123 Liability Decision, 299 A.3d at 441. 124 App. to Answering Br. at B347. 125 Liability Decision, 299 A.3d at 441 (quoting Poirier Tr. 257; citing Fornell Tr. 74–75). 126 Id. at 442 (citing JTX 1777 at 2). 127 Id.

44 [TransCanada] exclusive.”128 To the court, the reason was obvious: “Skaggs, Smith,

and Kettering wanted a deal.”129

On March 13, a large Columbia stockholder—Capital Research—responded

to the news that Columbia was considering a deal with TransCanada. Capital

Research suggested that, given the bid from TransCanada, Columbia “should start a

strategic review and test the market” and informed Columbia that it would not be

averse to owning stock in TransCanada, Enbridge, Spectra, or NextEra as a result of

a deal.130 After receiving this statement from Capital Research, Kettering emailed

Skaggs and Smith, suggesting that, “[a]t some point, we may want to let [Poirier]

know a large shareholder is suggesting a process.”131 This message was never passed

along to Poirier or anyone else at TransCanada.

H

The following day—March 14—was, as the Court of Chancery described it,

“eventful.”132 First and foremost, Columbia and TransCanada executed a new

exclusivity agreement granting TransCanada exclusivity through 5:00 p.m. Central

time on March 18, 2016.

128 Id. (quoting JTX 1065). 129 Id. 130 App. to Opening Br. at A276. 131 Id. 132 Liability Decision, 299 A.3d at 442.

45 That same morning, the TransCanada board met to discuss the potential deal

with Columbia. TransCanada’s underwriters confirmed that they would support a

deal price of $26 per share, and the TransCanada’s management team informed the

board that “the market appeared to view the acquisition positively.”133 Despite this,

Poirier and other members of the deal team saw “an opportunity to lower

TransCanada’s bid.”134 Girling chimed in, telling directors that he “would engage

in discussions with [Columbia]’s management regarding an all-cash offer at

US$25.50 per common share.”135

After the TransCanada board meeting, Poirier reached out to Smith to see if

they could set up a call around lunchtime. When Smith asked Poirier what the call

would be about, Poirier vaguely responded that he wanted to give Smith “a thorough

update” of where TransCanada was regarding the deal.136 Smith, who was on

vacation and scheduled to be on the golf course, assumed that the call would be

uneventful and referred it to Kettering. Poirier, who was joined by TransCanada’s

chief operating officer, then called Kettering to give him the update. Contrary to

what Smith had anticipated, this call was very eventful.

133 Id. at 443. 134 Id. 135 Id. (quoting JTX 1092 at 2). 136 Id. (quoting JTX 1777 at 2).

46 During the call, Poirier told Kettering that TransCanada’s underwriters

“thought including stock consideration was going to make the transaction

challenging.”137 Poirier also pointed out to Kettering that TransCanada’s stock price

had dropped below the $49 CAD price point that TransCanada had identified as a

condition in its $26 offer. This statement was true—on Friday, March 11,

TransCanada’s stock price had fallen to $47 CAD. Poirier then informed Kettering

that, in light of these developments, TransCanada was now offering to acquire

Columbia at $25.50 per share in cash. Poirier also told Kettering that if Columbia

did not accept the offer, “TransCanada planned to issue a press release within the

next few days indicating its acquisition discussions [with Columbia] had been

terminated.”138

The Columbia board met that evening to discuss the unanticipated $25.50 all-

cash offer. According to the board minutes, Skaggs informed the board that

“TransCanada’s final proposal was to acquire the Company at a price of $25.50 per

share in cash.”139 The meeting minutes indicate that the board discussed Spectra’s

recent statement that it would send a formal proposal in a few days and how

accepting an offer from TransCanada might preempt any proposal from Spectra.

The board decided to defer a formal response to TransCanada’s offer until the

137 Id. (citing JTX 1493 at 419). 138 App. to Opening Br. at A278. 139 Liability Decision, 299 A.3d at 444 (quoting JTX 191 at 16).

47 directors could meet in person on March 16 and receive full presentations and

fairness opinions from their financial advisors. Until then, the board authorized

management and Columbia’s advisors to “continue working with TransCanada in

the interim.”140

Columbia’s board met on March 16, 2016, to discuss TransCanada’s latest

offer. After considering fairness opinions from Goldman and Lazard, Columbia’s

board voted to approve the proposed merger at $25.50 per share. Skaggs called

Girling and then let Smith and Kettering know that there was “an agreement in

principle.”141

The following day, TransCanada’s board met to formally approve the

transaction. During the meeting, Wells Fargo presented a discounted cash flow

analysis that valued Columbia as a standalone business at $26.51 per share. Taking

into account projected annual costs and revenue synergies by 2018, Wells Fargo

valued Columbia’s shares at an additional $1.93 per share. As the court noted,

“[f]rom TransCanada’s standpoint, they were buying an asset valued at [about]

$28.45 per share” for $25.50 per share.142 TransCanada’s board voted to approve

the merger. Later that day, Columbia and TransCanada executed an agreement and

140 Id. (quoting JTX 191 at 17). 141 Liability Decision, 299 A.3d at 446 (quoting JTX 1686). 142 Liability Decision, 299 A.3d at 446.

48 plan of merger (the “Merger Agreement”) and issued a press release announcing the

merger.143 In response to a congratulatory text from his financial advisor about the

merger, Smith wrote, “Thanks, Rick, do you think I can retire now?”144

After the Merger Agreement was signed, Columbia’s sale process began its

final phase, which, as the court observed, was “uneventful.”145 The Merger

Agreement contained a standard no-shop provision that prohibited Columbia from

engaging with competing bidders.146 The no-shop provision did, however, provide

a fiduciary out, allowing Columbia to respond to a “Superior Proposal” from a

competing bidder.147 Under the Superior Proposal carveout, Columbia was

permitted to engage with a competing bidder if its board determined that failing to

engage “would reasonably be expected to result in a breach of the directors’ fiduciary

duties.”148 In the event that Columbia received a Superior Proposal, the Merger

Agreement entitled TransCanada to a four-day, unlimited right to match it. As the

court noted, “[b]ecause TransCanada could match any competing bidder, an overbid

could succeed only by driving the bidding beyond TransCanada’s reserve price.”149

143 See App. to Opening Br. at A898–995. 144 Liability Decision, 299 A.3d at 446 (quoting JTX 1138). 145 Id. 146 App. to Opening Br. at A286–87. 147 Id. at A942–43. 148 App. to Opening Br. at A943. 149 Liability Decision, 299 A.3d at 446.

49 TransCanada developed concerns about interloper risk in early April when

Poirier informed the board that he had “received credible information” that Enbridge

was considering making a bid.150 Poirier, concerned with the possibility of a

competing bid raising the deal price, encouraged his team to “put pressure” on banks

that TransCanada worked with to not provide any financing for an Enbridge bid.151

With the lingering threat of possible interlopers, TransCanada’s board held a two-

day meeting at the end of April at which TransCanada’s management presented a

“detailed interloper strategy.”152 At the meeting, management was told that there

was a “positive market reaction” to the merger and that “TransCanada can afford to

increase its offer” if needed.153 The court observed that the materials relied on by

management at this meeting “analyzed financing strategies for paying up to $28 per

share.”154 In the end, no other bidders emerged.

J

Under the Merger Agreement, TransCanada had a role to play in Columbia’s

preparation of its proxy statement (the “Proxy”). Section 5.01(a) of the Merger

Agreement required TransCanada to “furnish all information concerning themselves

150 Id. at 447 (quoting JTX 1184 at 1). 151 Id. 152 Id. (citing JTX 1244 at 242). 153 Id. (citing JTX 1244 at 243). 154 Id. (citing JTX 1244 at 253).

50 and their Affiliates that is required to be included in the Proxy Statement.”155 In that

same section, TransCanada agreed that none of the information that it provided

for inclusion or incorporation by reference in the Proxy Statement will, at the date of mailing to stockholders of the Company or at the time of the Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.156

Building on those disclosure obligations, Section 5.01(b) of the Merger Agreement

stated that if

any information relating to the Company, Parent, US Parent or any of their respective Affiliates, officers or directors is discovered by the Company or Parent which should be set forth in an amendment or supplement to the Proxy Statement so that the Proxy Statement or the other filings shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, the party that discovers such information shall promptly notify the other parties . . . .157

Before the Proxy was disseminated to Columbia’s stockholders, TransCanada

management—including, Girling, Johnston, and Poirier—had the opportunity to

review and comment on it.158 Poirier and other TransCanada executives promised

Columbia that they would read the background section of the Merger Agreement

155 App. to Opening Br. at A947. 156 Id. at A947–48. 157 Id. at A948 (emphasis added). 158 Id. at A286.

51 “carefully.”159 The court found that, “[a]t Johnston’s request, Poirier and Girling

focused specifically on the ‘Background of the Merger’ and the description of their

interactions with Smith and Skaggs.”160 At trial, it came to light that Poirier had

provided Johnston with comments on the draft proxy statement, including comments

about interactions that Poirier and Girling had had with Smith and Skaggs. When

Poirier and Johnston discussed these comments with Girling, Girling simply said, “I

am not worried about it, this is [Columbia’s] document.”161 Joint exhibits at trial

demonstrated that TransCanada’s outside counsel also reviewed and commented on

the Proxy.

On May 18 Columbia issued the Proxy and recommended that its stockholders

approve the merger. Skaggs signed the Proxy on behalf of Columbia; Girling and

Johnston, among others, signed on behalf of TransCanada.

Columbia held a special meeting of stockholders on June 22, 2016, to vote on

the Merger Agreement. At the meeting, holders of 73.9% of the outstanding shares

voted in favor of the merger. Just over a week later, on July 1, the merger closed.

Skaggs, Smith, and Kettering all retired shortly after that. Based on the merger’s

closing price of $25.50 per share, Skaggs received retirement benefits of $26.84

million—$17.9 million more than he would have received absent a change-in-control

159 Liability Decision, 299 A.3d at 447 (quoting JTX 1276 at 1). 160 Id. at 447–48 (citing JTX 1183; JTX 1185; JTX 1187). 161 Id. (quoting JTX 1210).

52 transaction. Similarly, Smith received $10.89 million in benefits—$7.5 more than

he would have otherwise received—and Kettering received $8.38 million—$5.58

million more than would have received without the merger.

In September 2017, Columbia investors holding 963,478 shares—worth $203

million at the deal price—petitioned the Court of Chancery for appraisal.162 The

court held a five-day trial in October 2018. In August 2019, the court issued its

decision in the appraisal action, finding that the fair value of Columbia’s common

stock on the effective date of the merger was $25.50 per share.163 Despite finding

that the deal price was fair, the court concluded that the Proxy contained material

misstatements and omissions. In the court’s own words, “[i]n light of the flawed

Proxy, this decision does not give any weight to the stockholder vote for the purpose

of elevating the reliability of the deal price.”164

While the appraisal action was pending in the Court of Chancery, a Columbia

stockholder filed a separate complaint alleging that Skaggs, Smith, and all the former

Columbia board members had breached their fiduciary duties in connection with the

merger. The complaint also alleged that TransCanada had aided and abetted the

162 See Appraisal Decision, 2019 WL 3778370. 163 Id. at *1. 164 Id. at *36.

53 fiduciary breaches and was therefore jointly and severally liable. Once the appraisal

litigation concluded, the stockholder filed an amended complaint, dropping its

claims against all directors other than Skaggs. At the same time, a second

stockholder filed almost identical claims, and the two cases were consolidated into

the action that went to trial and is before us now.

In this action, only Skaggs, Smith, and TransCanada were named as

defendants. During discovery, however, the plaintiffs entered into a settlement

agreement with Skaggs and Smith, under which those defendants agreed to pay $79

million in return for dismissal of the claims against them. This left only

TransCanada to defend the claims that it aided and abetted any breaches of fiduciary

duty by Skaggs, Smith, and the Columbia board of directors arising from the merger.

At trial, plaintiffs pressed two distinct claims against TransCanada for aiding and

abetting. First, plaintiffs argued that TransCanada aided and abetted fiduciary

breaches during the sale process. And second, plaintiffs alleged that TransCanada

aided and abetted breaches of the duty of disclosure in relation to the Proxy.

After holding a five-day trial, the Court of Chancery issued a comprehensive

opinion, finding that the plaintiffs prevailed on both the sale-process claim and the

disclosure claim. Applying an enhanced-scrutiny standard of review to the

54 plaintiffs’ sale-process claim, the Court of Chancery found that Skaggs and Smith

breached their duty of loyalty as corporate officers and that the Columbia board

breached its duty of care. The plaintiffs proved, the court wrote, that “Skaggs and

Smith . . . were motivated by self-interest tied to their change-in-control agreements

and their desire to retire in 2016, and . . . [that] their conflict of interest led them to

take steps that fell outside the range of reasonableness.”165 According to the court,

the plaintiffs also proved that the directors failed “to provide sufficiently active and

direct oversight of the sale process[]”166 and thus breached their duty of care.

The Court of Chancery then turned to the plaintiffs’ aiding-and-abetting claim

against TransCanada, beginning with what the court described as “[t]he most critical

element of an aiding-and-abetting claim:”167 the defendant’s knowing participation

in the breach. As will be discussed in greater detail below, as to this element, the

court found that the plaintiffs proved that TransCanada had constructive knowledge

of and culpably participated in Skaggs’s and Smith’s fiduciary-duty breaches.

The Court of Chancery then assessed damages for the sale-process claim at

$1.00 per share or $398,436,581 based on findings that “but for the sell-side

fiduciaries’ breaches of duty, aided and abetted by TransCanada, the parties would

165 Liability Decision, 299 A.3d at 460. 166 Id. 167 Id. at 470.

55 have executed a merger agreement based on the $26 Deal. . . .[and that] the $26 Deal

was worth $26.50 per share at closing[.]”168

The Court of Chancery also found TransCanada liable for aiding and abetting

the Columbia directors’ and officers’ breaches of the duty of disclosure. As the court

saw it, because TransCanada had a right under the Merger Agreement to review the

Proxy and an obligation to inform Columbia of any material omissions but remained

silent when the draft Proxy failed to disclose the full panoply of Skaggs’s and

Smith’s interactions with TransCanada in the sale process, it “knowingly

permit[ted]”169 Columbia to issue a misleading proxy statement. This, according to

the court, amounted to knowing participation in the Columbia directors’ and

officers’ issuance of a proxy statement that contained material misstatements and

omissions.

As to damages for the disclosure claim, the court found that, because the

plaintiffs had not introduced any evidence of reliance as required under Dohmen v.

Goodman,170 it could not award plaintiffs the compensatory damages they sought.171

The court observed, however, that “equity will not suffer a wrong without a

168 Id. at 481–82. 169 Id. at 408. 170 234 A.3d 1161 (Del. 2020). 171 Liability Decision, 299 A.3d at 490–94.

56 remedy”172 and awarded plaintiffs nominal damages of $0.50 per share or

approximately $199,218,290.50.173

One year later, the Court of Chancery issued its decision determining the

proper allocation of damages among TransCanada, Skaggs, and Smith under the

Delaware Uniform Contribution Among Tortfeasors Act (“DUCATA”).174 The

court determined that TransCanada was entitled to a credit against its liability equal

to the greater of Skaggs and Smith’s settlement amount with the plaintiffs, which

was $79 million, or the proportionate share of damages for which Skaggs and Smith

were responsible. In allocating the damages under DUCATA, the court determined

that TransCanada bore responsibility for 50% of the sale-process claim damages and

42% of the disclosure claim damages. Because the damages were noncumulative,

the court clarified that the plaintiffs were only entitled to the larger of the two

awards—the sale-process claim damages. Consequently, the court determined that

TransCanada was liable to the tune of $199,218,290 for its role in aiding and abetting

Skaggs’s, Smith’s, and the Columbia board’s fiduciary breaches during the sales

172 Id. at 494. 173 Id. at 496. 174 See In re Columbia Pipeline Grp., Inc. Merger Litig., 316 A.3d 359 (Del. Ch. 2024).

57 D

TransCanada now appeals the Court of Chancery’s post-trial decision, as well

as the court’s decision allocating the damages under DUCATA. Specifically,

TransCanada raises four issues on appeal. TransCanada argues that the court erred

in (1) finding that TransCanada aided and abetted any sale-process breach by

Skaggs, Smith, or the Columbia board; (2) finding that TransCanada aided and

abetted any disclosure breach by Skaggs, Smith, or the Columbia board; (3)

awarding over $199 million in nominal damages for the disclosure claim; and (4)

allocating fault among Skaggs, Smith, and TransCanada under DUCATA.

Because we reverse the Court of Chancery’s finding that TransCanada aided

and abetted the sale-process breaches and disclosure breaches, we need not address

the issues of nominal damages for the disclosure claim or the allocation of damages

under DUCATA.

Whether an acquiror aided and abetted fiduciary breaches by a target

company’s management and board involves both factual findings and questions of

law.175 We “afford the trial court’s factual findings a ‘high level’ of deference” 176

and will not disturb them “so long as they are sufficiently supported by the record,

175 Mindbody, 332 A.3d at 389. 176 RBC Cap. Mkts., LLC v. Jervis, 129 A.3d 816, 861 (Del. 2015) (quoting United Techs. Corp. v. Treppel, 109 A.3d 553, 557 (Del. 2014)).

58 are the product of an orderly and logical reasoning process, and are not clearly

erroneous.”177 One such factual finding is whether the acquiror acted with

scienter.178 We review questions of law, such as the Court of Chancery’s

“formulation and application of legal principles,” de novo.179

The courts of this State have long recognized that a third party may be liable

for aiding and abetting a breach of a corporate fiduciary’s duty to stockholders.180

When confronted with such a claim, our courts are guided by this Court’s

formulation of the tort in Malpiede v. Townson.181 In that opinion, we recognized

that “the four elements of aiding and abetting claim: (1) the existence of a fiduciary

relationship, (2) a breach of the fiduciary’s duty, . . . (3) knowing participation in

that breach of the defendants, and (4) damages proximately caused by the breach.”182

Claims of aiding and abetting a breach of fiduciary duty are a particular

instantiation of the more general principle under which secondary tort liability is

177 Energy Transfer, LP v. Williams Cos., Inc., --- A.3d ---, 2023 WL 6561767, at *15 (Del. Oct. 10, 2023) (quoting Shawe v. Elting, 157 A.3d 142, 149 (Del. 2017)). 178 Mindbody, 332 A.3d at 391 (quoting RBC, 129 A.3d at 862). 179 Sunder Energy, LLC v. Jackson, 332 A.3d 472, 483 (Del. 2024) (quoting Reddy v. MBKS Co., Ltd., 945 A.2d 1080, 1085 (Del. 2008)). 180 Malpiede v. Townson, 780 A.2d 1075, 1096 (Del. 2001) (citing Gilbert v. El Paso Co., 490 A.2d 1050, 1057 (Del. Ch. 1984)). 181 780 A.2d 1075 (Del. 2001). 182 Id. at 1096 (quoting Penn Mart Realty Co. v. Becker, 298 A.2d 349, 351 (Del. Ch. 1972)).

59 imposed on actors—sometimes referred to accessories—for another actor’s breach

of duty to a third person. Here, the Court of Chancery relied on the Restatement

(Second) of Torts’ explanation of this concept. Specifically, the court turned to

§ 876 of the Restatement (Second) of Torts, which states:

§ 876 Persons Acting in Concert

For harm resulting to a third person from the tortious conduct of another, one is subject to liability if he

(a) does a tortious act in concert with the other or pursuant to a common design with him, or

(b) knows that the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other so to conduct himself, or

(c) gives substantial assistance to the other in accomplishing a tortious result and his own conduct, separately considered, constitutes a breach of duty to the third person.

Whereas § 876 of the Restatement (Second) of Torts treats liability for both

aiding and abetting and civil conspiracy, the Restatement (Third)183 of Torts § 28

focuses more narrowly on aiding and abetting as a form of secondary liability:

183 We have previously declined to adopt sections of the Restatement (Third) of Torts in this state where those sections define concepts “in a way that is inconsistent with this Court’s precedents and traditions[,]” in particular where our development of the common law via the Restatement (Third) would conflict with our deference to the primacy of the legislative branch on issues of social policy. Riedel v. ICI Americas Inc., 968 A.2d 17, 20–21 (Del. 2009), overruled on other grounds by Ramsey v. Ga. S. Univ. Advanced Dev. Ctr., 189 A.3d 1255 (Del. 2018). In later cases, where we have no such concerns, we have considered and adopted parts of the Restatement (Third). See, e.g., State ex rel. Jennings v. Monsanto Co., 299 A.3d 372, 384 (Del. 2023); Rogers v. Christina School Dist., 73 A.3d 1, 16 (Del. 2013).

60 § 28 Aiding and Abetting

A defendant is subject to liability for aiding and abetting a tort upon proof of the following elements:

(a) a tort was committed against the plaintiff by another party;

(b) the defendant knew that the other party’s conduct was wrongful;

(c) the defendant knowingly and substantially assisted in the commission or concealment of the tort; and

(d) the plaintiff suffered economic loss as a result.

TransCanada does not challenge the Court of Chancery’s finding that Skaggs

and Smith breached their duty of loyalty as corporate officers by favoring their self-

interest over the interests of Columbia and its shareholders. Nor does TransCandaa

contest the court’s finding that the Columbia board breached its duty of care by

failing to provide sufficient oversight of the sale process. Instead, TransCanada’s

position on appeal is that neither the law nor the record support the Court of

Chancery’s conclusion that it knew of the breaches or culpably participated in them.

As mentioned, the Court of Chancery found that “[t]he plaintiffs proved that

TransCanada knowingly participated in the breaches of duty that took place during

the sale process.”184 The court also held TransCanada liable for aiding and abetting

breaches of the duty of disclosure. As to the sale process finding and, in particular,

184 Liability Decision, 299 A.3d at 406.

61 its findings as to TransCanada’s knowing participation, the court correctly bifurcated

its analysis. It first addressed whether TransCanada knew that the sell-side

fiduciaries were breaching their duties and was correspondingly aware that its own

conduct was wrongful. It then focused on whether TransCanada culpably

participated in the breach. Our analysis is sequenced accordingly.

In our recent decision In re Mindbody, Inc. Stockholder Litigation, we

clarified that under the first prong of the “knowing participation” element of a claim

that a buyer aided and abetted a sell-side fiduciary breach—the putative aider-and-

abettor’s knowledge—the plaintiff must prove “two types of knowledge.”185 First,

the plaintiff must prove that the buyer knew of the sell-side breach. The plaintiff

must also prove that the buyer knew that “its own conduct regarding the breach was

improper.”186 Under this formulation, a buyer cannot participate in a breach of

which it is unaware.

As this Court recognized in RBC Capital Markets, LLC v. Jervis187 and

reiterated recently in Mindbody, the requirement that an aider and abettor act

knowingly—that is, with knowledge that the primary party’s conduct constitutes a

breach of fiduciary duty and that its own conduct is legally improper—“makes an

185 Mindbody, 332 A.3d at 390. 186 Id. at 392 (emphasis omitted). 187 129 A.3d 816 (2015).

62 aiding and abetting claim among the most difficult to prove.”188 This is especially

so when the claim is brought against a buyer who is alleged to have aided and abetted

a breach by a sell-side fiduciary. Indeed, as in Mindbody, the parties here have not

cited any other cases in this jurisdiction in which a third-party buyer has been found

liable for aiding and abetting a sell-side breach of fiduciary duty. This is not

surprising given the nature of the negotiation process. In that setting, a buyer has

limited visibility into the seller’s internal governance dynamics. That limitation,

coupled with the buyer’s fiduciary duty to its own stockholders to extract the best

reasonably available price, erects a formidable obstacle to proving “knowing

participation.”

Here, the Court of Chancery concluded that TransCanada need not have

actually known that Columbia’s fiduciaries were breaching their duties if it had

constructive—as opposed to actual—knowledge of the breaches. The court

similarly concluded that, as to its participation in those breaches, TransCanada need

only to have had constructive knowledge that its own conduct was wrongful.

Relying on this Court’s opinion in RBC, the court equated constructive knowledge

with actions performed “knowingly, intentionally, or with reckless indifference.”189

188 Mindbody, 332 A.3d at 391 (quoting RBC, 129 A.3d at 865–66). 189 Liability Decision, 299 A.3d at 471 (quoting RBC, 129 A.3d at 862).

63 In RBC, a 2015 opinion in which this Court affirmed the Court of Chancery’s

judgment against a corporate board’s financial advisor for aiding and abetting the

board’s breach of fiduciary duty during the sale of the corporation, we held that, to

establish the element of scienter for aiding-and-abetting claims, “the plaintiff must

demonstrate that the aider and abettor had actual or constructive knowledge that their

conduct was legally improper.’”190 We likened this to a showing that the aider and

abettor acted “knowingly, intentionally, or with reckless indifference,”191 that is

“with an ‘illicit state of mind.’”192

In Mindbody, however, a case decided after the court’s opinion in this case,

we limited the aider and abettor’s knowledge to “actual knowledge.” The “actual

knowledge” requirement is consistent with the comments to § 28 of the Restatement

(Third) of Torts. According to comment c of § 28, it is not “enough to prove that

the defendant should have known of the primary actor’s wrongful conduct. The

defendant’s knowledge must be actual.”193 This requirement stands to reason: For

a defendant to have actual knowledge of the wrongful nature of its own conduct, the

190 RBC, 129 A.3d at 862 (quoting Wood v. Baum, 953 A.2d 136, 141 (Del. 2008)). We note that Wood v. Baum is not an aiding-and-abetting case. Wood cites Malpiede for the proposition that, when pleading a non-exculpated claim against directors, the pleading of scienter must allege particularized facts that demonstrate that the directors had actual or constructive knowledge that their conduct was legally improper. We note further that Malpiede does not include constructive knowledge in its limited discussion of scienter. 191 Id. (quoting Metro Comm. Corp. BVI v. Advanced Mobilecomm Techs., Inc., 854 A.2d 121, 143 (Del. Ch. 2004)). Metro Comm. does not mention constructive knowledge. 192 Id. (quoting In re Oracle Corp., 867 A.2d 904, 931 (Del. Ch. 2004)). 193 Restatement (Third) of Torts § 28, cmt. c. (Am. Law. Inst. 2020) (Oct. 2024 update).

64 defendant must already have actual knowledge of the underlying tortious conduct.

Actual knowledge is “clear and direct knowledge.”194 Of course, circumstantial

evidence—“such as the defendant’s possession of documents or presence during

relevant conversations”—might suffice to establish the defendant’s knowledge of

the underlying breach, but that knowledge must still be actual.195

With the benefit of the Mindbody decision and the “actual knowledge”

requirement, we turn next to a review of the conduct during the sale process that, for

the Court of Chancery, evidenced TransCanada’s constructive knowledge and assess

whether it could support a finding of actual knowledge. We first address whether

TransCanada actually knew that Skaggs and Smith were breaching their fiduciary

duties to Columbia’s stockholders and, after that, whether it knew that the Columbia

board was breaching its duty of care by providing insufficient oversight of Skaggs

and Smith.

194 In Deutsche Bank v. Nat’l Tr. Co. v. Goldfeder, this Court recognized the distinction between actual and constructive knowledge: “Actual knowledge is defined as ‘direct and clear knowledge.’ Constructive knowledge is defined as ‘knowledge that one using reasonable care and diligence should have, and therefore that is attributed by law to a given person.’” 2014 WL 644442, at *2 (Del. Feb. 14, 2014) (TABLE) (quoting Knowledge, Black’s Law Dictionary 950 (9th ed. 2009). To put it differently, constructive knowledge is “impute[d]” by law “to a person who fails to learn something that a reasonably diligent person would have learned[,]” whereas actual knowledge is “[r]eal knowledge” that is “clear and direct.” Intel Corp. Inv. Pol’y Comm. v. Sulmya, 589 U.S. 178, 184–85 (2020) (cleaned up). 195 Restatement (Third) of Torts § 28, cmt. c. (Am. Law. Inst. 2020) (Oct. 2024 update).

65 In assessing TransCanada’s knowledge of the sale-process breaches, the Court

of Chancery trained its attention on Poirier. Pointing first to Poirier’s considerable

experience in the M&A field, the Court of Chancery then catalogued “a series of

signals” from which Poirier should have realized that his negotiating counterparts—

Skaggs and Smith—“were focused on selling at a defensible price and retiring with

their change-in-control benefits, rather than seeking the best transaction reasonably

available.”196 Those signals included: their message that there would be no social

issues in the deal; their lack of interest in enforcing the Standstill; Smith’s behavior

during the January 7 meeting; Smith’s communications with Poirier before and after

each communication between Skaggs and Girling; Smith’s encouragement of a bid

during February 2016; Smith’s reassurances that Columbia management wished to

get a deal done with TransCanada; and Smith’s statement, in the wake of the Wall

Street Journal article, that Columbia’s board was “freaking out” and had instructed

management to get a deal done “whatever it takes.”

These “signals” viewed collectively led the Court of Chancery to infer

Poirier’s constructive knowledge of foul play on the part of Skaggs and Smith,

summing up as follows:

Poirier . . . knew that Skaggs and Smith had powerful financial motivations to sell. They seemed to want an exit badly and kept committing unforced errors. Poirier and TransCanada had constructive knowledge that Smith and Skaggs were breaching their duty of loyalty

196 Liability Decision, 299 A.3d at 476.

66 by trying to lock in their change-in-control benefits and retire. At a minimum, TransCanada knew that Skaggs and Smith were breaching their duty of care by acting like a bunch of noobs who didn’t know how to play the game.197

That a bidder in a complex negotiation should, in the exercise of reasonable

care and diligence, know—and thus possess constructive knowledge—that its sell-

side counterpart’s self-interest and eagerness to conclude a deal is reliable evidence

of a breach of fiduciary duty is, in our estimation, a questionable proposition. Yet

this, as a practical matter, is what the Court of Chancery found as a factual matter

and, as such, it is, as mentioned previously, entitled to deference. But whether these

same facts support a finding of actual knowledge—a finding the Court of Chancery

did not make198—is another matter; we conclude that they do not suffice.

On this point, our analysis of the knowledge element of the plaintiffs’ claim

bleeds into our consideration—to be taken up later—of whether TransCanada

culpably participated in the sell-side breaches. It does so because our test for

determining whether a defendant substantially assisted, and thus culpably

197 Id. at 476–77. 198 The plaintiffs seem to contend that the Court of Chancery found that TransCanada actually knew that Skaggs, Smith, and the Columbia board were breaching their fiduciary duties. We disagree. Each statement in the court’s opinion regarding TransCanada’s knowledge is qualified with a reference to constructive knowledge. See, e.g., Liability Decision, 299 A.3d at 476 (“The plaintiffs proved that TransCanada knew that Skaggs and Smith were engaging in a breach of the duty of loyalty and that the Board was failing to provide meaningful oversight. At a minimum, TransCanada had constructive knowledge of those breaches of duty.”); id. at 477 (“TransCanada also had constructive knowledge that the Board was breaching its duty of care.”).

67 participated in, another’s breach considers, among other things, the defendant’s

knowledge of the underlying breach.

In Mindbody, we adopted the Court of Chancery’s formulation in In re Dole

Food Co., Inc. Stockholder Litigation,199 derived from Restatement (Second) of

Torts § 876 comment d, of a list of factors that shed light on whether a secondary

actor has substantially assisted the primary actor in its wrongful conduct. Those

factors are:

• The nature of the tortious act that the secondary actor participated in or encouraged, including its severity, the clarity of the violation, the extent of the consequences and the secondary actor’s knowledge of these aspects;

• The amount, kind, and duration of assistance given, including how directly involved the secondary actor was in the primary actor’s conduct;

• The nature of the relationship between the secondary and primary actors; and

• The secondary actor’s state of mind.200

We recognized that these factors provide “a helpful analytical framework for

assessing substantial assistance, knowledge, and participation.”201 Indeed, the

interplay of these elements is, we think, self-evident. We noted in Mindbody,

however, that the “relevance of each factor depends on the facts of the case.”202 Here

199 2015 WL 5052215, at *41–42 (Del. Ch. Aug. 27, 2015). 200 Mindbody, 332 A.3d at 395–96. 201 Id. at 396. 202 Id.

68 we confine our discussion to the factor that bears most directly on TransCanada’s

knowledge that Skaggs, Smith, and the Columbia board were breaching their

fiduciary duties: the clarity of the breach.

In discerning the clarity of the breach, we must view the facts from the

perspective of TransCanada’s negotiators in “real time,” that is, during the

negotiations. The Court of Chancery’s opinion provides helpful hints as we look

back at what TransCanada knew at the relevant time.

First of all, the court found that “TransCanada did not actually know of Skaggs

and Smith’s plans to retire, but . . . had constructive knowledge[]” 203 from the

surrounding circumstances. Although Skaggs and Smith wanted to retire with their

change-in-control benefits in hand, the court also perceived that, they “wanted to do

the right thing when selling the company,”204 but allowed their self-interest to

“undermine[] their ability to achieve the best value reasonably available for the

[Columbia] stockholders.”205 Even so, “[t]he plaintiffs did not seek to prove that

Skaggs and Smith were so conflicted that they would sell at any price,” 206 and the

court found that they “were focused on selling at a defensible price . . . . ”207 This is

consistent with the court’s depiction of Skaggs and Smith in its appraisal decision as

203 Liability Decision, 299 A.3d at 488. 204 Id. at 462 (emphasis added). 205 Id. 206 Id. 207 Id. at 496.

69 “professionals who took pride in their job and wanted to do the right thing.” 208 That

Skaggs and Smith wanted to “do the right thing” in a professional manner would

have manifested itself to Poirier and TransCanada when they rejected several of

TransCanada’s proposals even though they were at a premium to the current

Columbia share price.

Admittedly, Skaggs and Smith were eager to strike a deal, and TransCanada

presented the most attractive option given their personal objectives. But given the

“countervailing incentives [they had] to pursue the best deal possible”209—

incentives the Court of Chancery recognized in its appraisal decision—and their

pushing back against premium offers from TransCanada, we see Skaggs’s and

Smith’s eagerness as sending ambiguous signals at best. An inference that such

subtle and unintentional signals should arouse suspicion—much less constitute clear

and direct knowledge—that a sell-side fiduciary is acting disloyally or in bad faith

would not, in our view, be justifiable.

Likewise, we place less emphasis on the Court of Chancery’s reliance on

Skaggs’s and Smith’s “lack of interest in enforcing the Standstill”210 as providing a

signal that they were breaching their fiduciary duties. As set forth in the factual

discussion above, neither TransCanada nor Columbia thought that TransCanada’s

208 Id. at 462 (quoting Appraisal Decision, 2019 WL 3778370, at *28). 209 Id. (quoting Appraisal Decision, 2019 WL 3778370, at *28). 210 Id. at 476.

70 communications violated the Standstill. To the contrary, at a critical juncture in the

negotiations, TransCanada, through its counsel, exhibited its awareness of and

respect for the Standstill by confirming via Columbia’s counsel that an expression

of interest from Girling to Skaggs would not violate the Standstill.

The breach of the duty of care by the Columbia board—a breach the Court of

Chancery found was “inadvertent”—would have been even less clear to

TransCanada. This conclusion is evidenced by the court’s brief finding:

“TransCanada also had constructive knowledge that the Board was breaching its

duty of care. Although TransCanada did not have direct interaction with any Board

members and was not inside the boardroom for any meetings, TransCanada saw the

results.”211 While this imputation of knowledge might suffice to establish

constructive knowledge, it does not support a finding that TransCanada actually

knew of the board’s breach.

In sum, 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. And we have

concluded that the record would not have supported such a finding. Absent the

requisite actual knowledge of the underlying breaches, TransCanada could not know

that its own conduct was legally impermissible. Put differently, lacking actual

211 Id. at 477.

71 knowledge of the sell-side breaches, TransCanada could not have knowingly

participated in them. 212

Although we could end our inquiry with our determination that the trial record

does not support a finding that TransCanada actually knew of Skaggs’s, Smith’s,

and the Columbia board’s sale-process breaches, for the sake of completeness, we

review the Court of Chancery’s finding that TransCanada culpably participated in

the breaches.

Our case law justifiably views with caution aiding-and-abetting claims against

potential acquirors negotiating at arm’s length. The dynamic of arm’s-length

negotiations, in which both sides are striving for the most favorable price, should

render such claims “the most difficult to prove.”213 As this Court explained in

Malpiede,

a bidder’s attempts to reduce the sale price through arm’s-length negotiations cannot give rise to liability for aiding and abetting, whereas a bidder may be liable to the target’s stockholders if the bidder attempts to create or exploit conflicts of interest in the board. Similarly, a bidder may be liable to a target’s stockholders for aiding and abetting

212 Mindbody, 332 A.3d at 404 (“In assessing scienter, the less obvious the violation, the harder it is to find that a third-party buyer, acting at arms’-length, acted with scienter as to both the primary party’s conduct and its own conduct.”). 213 Id. at 391 (quoting RBC, 129 A.3d at 865–66).

72 a fiduciary breach by the target’s board where the bidder and the board conspire in or agree to the fiduciary breach.214

For these reasons, in Mindbody, we explained that, when evaluating the nature of the

relationship between the secondary and primary actors, the secondary actor’s status

as a third-party bidder affords it “some protection in its negotiations with potential

target companies and the directors and officers of those companies.”215

We also emphasized in Mindbody that whether a defendant’s participation in

another’s breach of duty is culpable hinges in large part on whether the defendant

substantially assisted in the commission of the breach.216 In the present context, the

“substantial assistance” requirement, derived from § 876 of the Restatement

(Second) of Torts, encompasses encouragement of or significant aid in the sell-side

fiduciary’s breach;217 it requires something more than the passive observation of the

seller’s eagerness to strike a deal or its negotiators’ want of bargaining acumen.

214 Malpiede, 780 A.2d at 1097 (citing Gilbert, 490 A.2d at 1058) (“[A]lthough an offeror may attempt to obtain the lowest possible price for stock through arm’s-length negotiations with the target’s board, it may not knowingly participate in the target board’s breach of fiduciary duty by extracting terms which require the opposite party to prefer its interests at the expense of its shareholders.”) (cleaned up). 215 Mindbody, 332 A.3d at 402. 216 Id. at 395–96. 217 See Restatement (Second) of Torts § 876 cmt. d (Am. Law. Inst. 1979) (Oct. 2024 update); Morgan v. Cash, 2010 WL 2803746, at *8 (Del. Ch. July 16, 2010) (referring to “the longstanding rule that arm’s-length bargaining is privileged and does not, absent actual collusion and facilitation of finding wrongdoing, constitute aiding and abetting” and listing two examples of conduct that might warrant the imposition of aiding-and-abetting liability: “buying off the board in a side deal, or by actively exploiting conflicts in the board to the detriment of the target’s stockholders”).

73 This means that an aider and abettor’s participation in a primary actor’s breach

of fiduciary duty must be of an active nature. It must include something more than

taking advantage of the other side’s weakness and negotiating aggressively for the

lowest possible price. Put another way, a bidder who has not colluded or conspired

with its negotiating counterpart, who does not create the condition giving rise to a

conflict of interest, who does not encourage his counterpart to disregard his fiduciary

duties or substantially assist him in committing the breach, does not aid and abet the

breach. The bidder may have, under such circumstances as we have seen here,

stretched the bounds of hard bargaining so ungraciously as to unsettle the polite

observer. But a bidder’s aggressive bargaining tactics, however disquieting, do not

constitute aiding and abetting unless the bidder has substantially assisted, that is,

“knowingly participated” in the breach.

According to the Court of Chancery, TransCanada’s culpable participation

was three-fold; it consisted of: (1) Poirier’s exploitation of Smith’s inexperience in

negotiating the sale of a public company; (2) TransCanada’s violation of its $26.00

offer; and (3) a purported threat of a harmful disclosure if Columbia did not accept

TransCanada’s updated $25.50/share offer.

74 The Court of Chancery found that TransCanada, acting through Poirier

exploited Smith, described by the court as a “neophyte dealmaker”218 who was out

of his depth throughout the negotiations. The court found that

Poirier skillfully cultivated Smith by trading on their past professional friendship. Then, Poirier manipulated Smith by creating the impression that the two of them were the Svengalis behind the scenes, working together as partners to pull everyone’s strings, script their bosses’ conversations, and generally make the deal happen. Co-opted by Poirier, Smith spoke freely, giving Poirier the information he needed to take advantage of the situation.219

Although the court considered Poirier’s interaction with Smith in its analysis

of whether TransCanada exploited the sell-side breaches, it concluded Poirier’s

handling of Smith did not amount to culpable participation. We agree. It cannot be

the case that taking advantage of a personal relationship and superior negotiating

skills and experience to secure the best reasonably available price will expose a party

to aiding-and-abetting liability.220

We turn next to the Court of Chancery’s finding that TransCanada’s violation

of the Standstill was evidence of its culpable participation in the sellers’ breaches.

The court found that the Standstill breaches were “persistent and opportunistic . . .

218 Liability Decision, 299 A.3d at 405. 219 Id. 220 See Morgan, 2010 WL 2803746, at *8.

75 over an extended period, culminating in the exploitative $25.50 Offer.”221 Of course,

neither their persistence nor any edge they might have given TransCanada

transforms these purported breaches into knowing participation in the sell-side

breaches of fiduciary duty. We acknowledge here that, if TransCanada’s conduct

constituted breaches of the Standstill, it most certainly “participated” in those

breaches. But for that participation to have been culpable—and here, once again,

“knowledge of wrongdoing and substantial assistance of it”222 are difficult to

separate—TransCanada must have known not only that it was breaching the

Standstill, but that Columbia’s negotiators were, by allowing it, breaching their

fiduciary duties. The record suggests that something more like the opposite is true.

Both Columbia’s in-house and outside counsel believed that the Standstill

permitted informal communications and only required a written invitation before

TransCanada could present a formal offer.223 This understanding was shared with

TransCanada in advance of the January 7 meeting between Smith and Poirier.224

And it was TransCanada that later proactively approached Columbia to ensure that

the further actions it was taking did not—at least in Columbia’s view—contravene

the Standstill. Columbia’s response, through its general counsel, was that an

221 Liability Decision, 299 A.3d at 480. 222 Restatement (Third) of Torts § 28 cmt. d (Am. Law Inst. 2020) (Oct. 2024 update). 223 App. to Opening Br. at A841. 224 Id. at A237. The parties stipulated that “[o]n January 4, 2016, counsel for Columbia and counsel for TransCanada discussed the CPG/TransCanada NDA and agreed that the parties could exchange confidential information.” Id.

76 informal “offer to purchase our securities in this context would not violate or be in

contravention with the terms of the NDA, including the standstill provision.”225

Whether this understanding represented an accurate reading of the Standstill

is beside the point. What is relevant is whether TransCanada knew that it was

breaking the Standstill and also knew that it was thereby substantially assisting the

Columbia negotiators in the breach of their fiduciary duties. In our view, in light of

the parties’ mutual understanding, we cannot reach such a conclusion.

Even if we account for the Court of Chancery’s findings regarding Poirier’s

exploitation of Smith’s ineptitude and TransCanada’s alleged Standstill breaches,

those findings by the court’s own admission would not suffice to support a finding

that TransCanada aided and abetted the sell-side breaches of fiduciary duty. It was

“by reneging on the $26 Deal, making the $25.50 Offer, and backing it up with a

coercive threat that violated the NDA”226 that TransCanada crossed the line.

TransCanada contests the Court of Chancery’s factual finding that a deal at

$26 per share existed. And it contends that, even if there was a deal, Poirier’s

statement that TransCanada would publicly disclose the end of negotiations if

Columbia did not accept the $25.50 offer was not a “threat.” Our review of the

225 Id. at A841. 226 Liability Decision, 299 A.3d at 480.

77 record, despite the deference we afford to the Court of Chancery’s findings of fact,

leads us to conclude that there was no deal at $26 on which TransCanada could have

reneged and that the court’s finding to the contrary does not find support in the

record.227

After receiving the $26 offer, Columbia’s board of directors did not vote to

accept it at its March 10 meeting. The minutes from that meeting reveal that this

was because there was not yet a firm deal that the Columbia board could vote to

accept. Nor did Smith possess authority to accept an offer on Columbia’s behalf.

The minutes describe TransCanada’s overture only as an “indicative offer[,]”228 a

term indicating that the board viewed the offer as non-binding. The minutes then

describe a presentation by Smith, in which he explained that TransCanada had yet

to “present [its] revised [financing] plan to the credit rating agencies” to confirm that

TransCanada would maintain its current credit rating following an acquisition of

Columbia.229 Skaggs then “explained that TransCanada’s offer was non-binding,

being subject to changes in market conditions and TransCanada receiving feedback

from the credit rating agencies and TransCanada’s underwriters.”230 This statement

227 See Bäcker v. Palisades Growth Cap. II, L.P., 246 A.3d 81, 94–95 (Del. 2021) (quoting Biolase, Inc. v. Oracle P’rs, 97 A.3d 1029, 1035 (Del. 2014)) (“Factual findings are not clearly erroneous ‘if they are sufficiently supported by the record and are the product of an orderly and logical deductive process.’”). 228 App. to Opening Br. at A810. 229 Id. 230 Id.

78 mirrored the three conditions—whether rating agencies viewed the transaction

favorably, whether TransCanada’s stock price remained above $49 CAD, and

whether TransCanada’s underwriters would support a bought deal—that Poirier had

given Smith when he presented the $26-per-share offer. The minutes state that “[t]he

Board recognized that TransCanada’s offer was only a non-binding indication of

interest, and there could be no certainty that it would result in a firm offer.”231 And

at the end of the meeting, “the Board concluded that TransCanada’s indicative offer

was a basis for moving forward with discussions, and authorized management to

continue working towards a potential transaction.”232

The Court of Chancery put little weight on descriptions of the Columbia

board’s understanding that there was no deal at $26 per share contained in the

minutes of the March 10 meeting because the minutes “were prepared

retrospectively after the outcome of the sale process was known.”233 Under our

deferential standard of review of factual findings, we credit the court’s skepticism

of the minutes. But contemporaneous evidence supports a finding that the minutes

as prepared—at least with respect to the content of the March 10 meeting—were

accurate. An email sent by Skaggs “about an hour” after Poirier presented the $26-

per-share offer to Smith described it as an “indicative bid” and proposed that the

231 Id. at A811 (emphasis added). 232 Id. (emphasis added). 233 Liability Decision, 299 A.3d at 449.

79 board meet on March 10.234 That email also noted that Columbia still needed to

“develop a better sense of the offer and . . . confer with our legal/financial

advisors.”235 After Skaggs and Girling spoke on March 10, Skaggs circulated a

second email to the Columbia board that contained an outline for discussion that

closely matches the description of the March 10 meeting contained in the minutes.

The email describes the $26-per-share transaction as an “Indicative/Provisional

Proposition.”236 In a section titled “Primary Deal Risks[,]” the email also outlines

the same three considerations—TransCanada’s stock price, support for a bought deal

on TransCanada’s equity offering, and TransCanada’s credit rating—that were

discussed at the meeting.237 The email then outlined a number of “To-Do’s” in

advance of a deal and contemplated that the board would not “vet the deal” and

review fairness opinions until March 21 and 22.238 On the same day, TransCanada

also sought an extended period of exclusivity, signaling that it did not believe that a

deal had been reached, and its stock fell below $49 CAD per share, one of the

contingencies noted during Poirier’s call with Smith.

The “three strands of circumstantial evidence”239 relied on by the Court of

Chancery cannot overcome the weight of this evidence and support a finding that

234 App. to Opening Br. at A873. 235 Id. 236 Id. at A871. 237 Id. 238 Id. at A871–72. 239 Liability Decision, 299 A.3d at 437.

80 the $26-per-share offer was anything more than indicative and non-binding. First,

the memo provided to the fairness opinion committee that, in the court’s view,

illustrated Wells Fargo’s understanding that the parties had reached a firm deal at

$26 states “the [TransCanada] board . . . approved the submission of a verbal offer

at $26 per share” and “the [Columbia] board accepted this preliminary offer on the

morning of March 10, 2016.”240 That statement is incorrect. It is an uncontested

fact that the Columbia board never voted to accept the $26 offer.

Second, the court based its finding on text messages between two

TransCanada executives on the day Poirier communicated the $26 offer to Smith.

In particular, it relied on a text message describing the transaction as a “done

deal.”241 Yet the other text messages in this chain strongly suggest that the parties

were yet to reach a firm deal. One reads “[Poirier] just spoke to [Smith] and they

are thinking about 10% equity. They just might do it.”242 The phrases “thinking

about” and “just might do it” are evidence that TransCanada did not believe that

Columbia, through Smith, had accepted the $26 offer. And the beginning of the

message quoted in part by the Court of Chancery in its opinion reads “I just talked

to [Poirier] and he is confident that they will do it. The[y] have called a Board

240 Id. (quoting JTX 1120 at 1; App. to Opening Br. at A889) (internal quotation marks omitted). 241 Id. (quoting JTX 1779; App. to Opening Br. at A855). 242 App. to Opening Br. at A855 (emphasis added).

81 meeting for tomorrow morning.”243 Again, this evidence suggests that TransCanada

did not believe that Columbia had accepted the $26 offer.

Finally, the court relied on the fact that Columbia’s management did not waive

the other bidders’ standstills on March 9 when TransCanada’s exclusivity expired as

instructed by the Columbia board. But when the Columbia board again provided

express direction to waive those standstills on March 11—before Poirier presented

the $25.50 offer to Kettering on March 14—Columbia management promptly did

so. This supports a finding that Columbia’s management did not believe there was

yet a deal, and, in any case, the failure to waive the other bidders’ standstills on

March 9 is not sufficient to counterbalance the overwhelming evidence in the record

that no deal existed at $26 per share.

Nor are we persuaded that TransCanada’s subsequent $25.50 offer was

accompanied by a coercive threat. To be sure, as the plaintiffs point out,

TransCanada had received an opinion letter from its outside counsel stating that a

threat of disclosure “would not be a viable strategy” because such a disclosure would

be prohibited by the Standstill.244 But it is also the case that TransCanada was under

an obligation to disclose the offer under Toronto Stock Exchange rules were

243 Id. (emphasis added). 244 App. to Answering Br. at B15. We note that this opinion letter addressed TransCanada’s question to outside counsel whether it could gain leverage by disclosing the $26-per-share offer that it made during the November sale process to gain leverage in future negotiations, not the $26- per-share offer that TransCanada made in March.

82 negotiations to fail—a disclosure that the Standstill would have permitted. That

TransCanada successfully bluffed Columbia through Poirier’s untruthful statement

to Kettering that the $25.50 offer was its “best and final offer” and thus its rejection

would trigger disclosure does not make TransCanada’s statement a threat that could

subject it to aiding-and-abetting liability. 245 It is merely another example of hard

bargaining protected by our “long-standing rule that arm’s-length bargaining is

privileged” and our recognition that under Delaware law, “both the bidder’s board

and the target’s board have a duty to seek the best deal terms for their own

corporations.”246

Because the record does not support a finding that there was a $26-per-share

deal on which TransCanada could have reneged and followed with a coercive

offer—a finding the court believed, and that we agree, was necessary for

TransCanada’s conduct to “topple across the line of culpability”247—we conclude

that TransCanada’s conduct did not constitute the substantial assistance required for

aiding and abetting liability to attach.

245 TransCanada contests the Court of Chancery’s factual finding that Poirier’s statement that the $25.50 offer was “best and final” was false. Certainly, some evidence supports a finding to the contrary, but the record adequately supports the court’s conclusion such that we see no reason to disturb it. See Bäcker, 246 A.3d at 94–95 (holding that where there are two permissible views of the evidence, we afford deference to the trial court’s findings). 246 Morgan, 2010 WL 2803746, at *8. 247 Liability Decision, 299 A.3d at 407.

83 V

TransCanada next contends that the Court of Chancery erred in finding it

liable for aiding-and-abetting breaches of the Columbia fiduciaries’ duty of

disclosure. As with the claims previously discussed, liability for aiding and abetting

a disclosure breach will attach only when the defendant knowingly participated in

the breach.

It is axiomatic that Columbia’s fiduciaries were required to “disclose fully and

fairly all material facts within their control”248 bearing on their request that Columbia

stockholders approve the acquisition by TransCanada. Directors of a Delaware

corporation breach their fiduciary duty of disclosure when an “alleged omission or

misrepresentation is material.”249 The Court of Chancery found that several

misrepresentations and omissions in the Proxy fit this bill;250 for clarity, we place

them into five categories.

First, the court noted that the Proxy failed to disclose that both Skaggs and

Smith were planning to retire in 2016.

Second, the court found that the Proxy omitted or mispresented a series of

interactions between TransCanada and Columbia management that were

248 See Dohmen, 234 A.3d at 1168. 249 Id. 250 See Liability Decision, 299 A.3d at 448–49, 485–87.

84 “sufficiently extensive [so as] to alter the total mix of information.”251 In particular,

the court found that the Proxy either did not mention or provided inadequate or

misleading descriptions of:

• The November 25 meeting during which Smith told Poirier that Columbia would “probably” continue the sales process “in a few months.”252 • The December 2 call between Skaggs and Girling, as well as another call that day between Fornell and Smith, after which Fornell provided Poirier with a proposed engagement letter for Wells Fargo to act as a financial adviser to TransCanada in its potential acquisition of Columbia. • The December 8 meeting between Fornell, Skaggs, and Smith at the energy conference. • The December 17 call between Poirier and Smith, during which Poirier indicated that TransCanada would be willing to pay $28 per share. • The January 4 call between Poirier and Smith. The Proxy stated that the purpose of the call was to request a meeting, which the court found to be misleading because the January 7 meeting had been scheduled since mid- December. • The January 7 meeting during which Poirier again indicated that TransCanada could be willing to pay $28 per share, and Smith told Poirier that TransCanada would be unlikely to face competition. • The February 9 meeting between Smith, Skaggs, and Fornell during which they discussed the potential acquisition. The Proxy only disclosed that

251 Id. at 486. 252 Id.

85 discussions had taken place from February 8 through February 12, which the court considered to be too “vague.”253

In the court’s view, the Proxy’s omissions and mischaracterizations of these

interactions “painted a misleading picture of the nature and extent of the contacts

between TransCanada and the Columbia management team.”254

Third, the court found that the Proxy failed to disclose that TransCanada had

repeatedly violated the Standstill. Specifically, the court noted that the Proxy failed

to disclose that, from November 2015 to March 2016, “TransCanada’s contacts with

Columbia breached the Standstill, that Columbia management chose not to enforce

the Standstill, and that Columbia management did not bring those breaches to the

attention of the Board so that the Board could determine how to proceed.” 255 The

court held that omitting this information materially altered the total mix of

information because it prevented stockholders “from understanding how receptive

Columbia management was to TransCanada’s approaches.”256

Fourth, the court found that the Proxy failed to disclose that the other bidders

were bound by standstills. The court noted that, although the Proxy had disclosed

that Columbia executed NDAs with three other bidders257 in November 2015, it did

253 Id. at 487. 254 Id. 255 Id. 256 Id. 257 Those bidders were Dominion, NextEra, and Berkshire.

86 not explicitly mention the “don’t-ask-don’t-waive” feature of the standstills. Rather,

the Proxy disclosed that “none of [the other potential acquirors] would be subject to

standstill obligations that would prohibit them from making an unsolicited proposal

to the Board” after Columbia had announced the merger.258 The court also found

that the Proxy misleadingly disclosed that “[u]nlike TransCanada, none of [the other

potential acquirors] sought to re-engage in discussions with [Columbia] after

discussions were terminated in November 2015.”259 According to the court, “[t]he

failure to disclose the true nature of the other bidders’ standstill obligations was

materially false and misleading.”260

Finally, the court found that the Proxy mischaracterized the $26 proposal. The

Proxy described it as “an indicative offer.”261 In the court’s view, this was a “partial

and misleading description of the $26 Offer” because “Columbia’s officers accepted

the $26 Offer, resulting in the $26 Deal.”262 In the court’s view, even though

TransCanada’s offer came with three conditions, that still made it “a real offer.”263

Having concluded that the disclosures in the Proxy were inadequate, the court

turned to the question whether TransCanada had aided-and-abetted these breaches,

again with an emphasis on the requirement that an aider-and-abettor “knowingly

258 Liability Decision, 299 A.3d at 448. 259 Id. 260 Id. 261 App. to Opening Br. at A1041. 262 Liability Decision, 299 A.3d at 487. 263 Id.

87 participate” in the breach. In concluding that TransCanada had knowingly

participated in the disclosure breaches, the court relied on the Court of Chancery’s

decision in Mindbody for the proposition that “an acquirer knowingly participates in

a disclosure violation when the acquiror has the opportunity to review a proxy

statement, has an obligation to identify material misstatements or omissions in the

proxy statement, and fails to identify those misstatements or omissions.”264 And

TransCanada had agreed in the Merger Agreement to provide all material

information necessary to be included in the Proxy, and to “promptly notify” all other

parties should it discover that the Proxy required amendment to ensure that it did not

“contain an untrue statement of a material fact or omit to state any material fact

required to be stated therein or necessary in order to make the statements therein . . .

not misleading.”265 The court found that TransCanada’s failure to identify known

or suspected deficiencies in the Proxy despite this contractual obligation was

knowing participation sufficient to support its conclusion that TransCanada was

liable as an aider-and-abettor.

TransCanada does not contest the Court of Chancery’s conclusion that, as a

result of the omissions and partial disclosures described above, Smith, Skaggs, and

264 Id. at 487–88 (citing In re Mindbody, Inc., 2023 WL 2518149, at *43–44 (Del. Ch. Mar. 15, 2023), rev’d in part, 332 A.3d 349 (Del. 2024)). 265 App. to Opening Br. at A947–48.

88 the Columbia board breached their fiduciary duty of disclosure. It instead takes aim

once more at the court’s conclusion that TransCanada “knowingly participated” in

those breaches. Accordingly, our analysis is again focused only on the third element

of our aiding and abetting framework; that is, whether TransCanada “knowingly

participated”266 in the Columbia management and board’s breaches of the duty of

disclosure.

As noted earlier, the Court of Chancery reached its conclusion here without

the guidance of our opinion in Mindbody.267 In Mindbody, we addressed the

circumstances under which a buyer’s breach of a contractual duty to correct a seller’s

proxy materials might give rise to aiding-and-abetting liability. We held that where

a buyer fails to act in the face of an affirmative contractual obligation, such

“contractual provision [does] not transform [the buyer’s] inaction into a ‘knowing

participation’” in the Seller’s disclosure breach.268 The contractual provision at issue

in Mindbody, like Section 5.01 of the Merger Agreement here, created an affirmative

obligation on the part of the buyer to notify the seller of any material misstatements

in the proxy statement. Our analysis of a claim that a buyer aided-and-abetted

disclosure breaches by a seller, however, is not a question of whether the buyer

266 Malpiede, 780 A.2d at 1098. 267 The Court of Chancery’s decision in Mindbody was issued in March 2023. The Liability Decision was issued in June 2023. We issued our opinion in Mindbody in December 2024. 268 Mindbody, 332 A.3d at 390.

89 breached its contractual obligation alone. Instead, we evaluate whether the buyer’s

conduct constitutes “substantial assistance” in the seller’s disclosure breaches.269

“Substantial assistance” in this context extends beyond “passive awareness of a

fiduciary’s disclosure breach that would come from simply reviewing draft Proxy

Materials.”270 In Mindbody, we declined to find the buyer liable for aiding and

abetting the seller’s disclosure breaches where the buyer took no affirmative action

to assist the seller’s breach—even though the buyer had undertaken an affirmative

contractual obligation to notify the seller of factual deficiencies in a proxy statement.

An application of the facts of this case to the factors discussed in Mindbody and

above dictates the same outcome.

As mentioned above, the Mindbody factors encompass both the “knowledge”

and “culpable participation” necessary for aiding-and-abetting liability to attach.

And as also mentioned above, an aider-and-abettor’s knowledge of the fiduciary

breach in question and of the wrongfulness of its own conduct, must be actual

knowledge. Again, we review these factors in turn. Like in Mindbody, all four

factors are relevant to the disclosure claim.

269 Id. 270 Id.

90 i

The first factor, as we said earlier, concerns “the nature of the tortious act, as

well as its severity, the clarity of the violation, the extent of the consequences, and

the secondary actors’ knowledge of these aspects.”271 This, we have held, is an

analysis of “whether [the buyer] acted ‘with the knowledge that the conduct

advocated or assisted constitutes [a disclosure] breach.”272 As was the case in

Mindbody, each disclosure breach found by the Court of Chancery is “not of equal

weight[,]”273 but the record shows that at least some of the disclosure breaches were

of a severity and clarity that weigh in favor of a finding of liability.

TransCanada had actual knowledge of some deficiencies in the Proxy. For

one, the court found that TransCanada had actual knowledge of the content of each

of the meetings between each counterparty’s senior management. Upon review of

the Proxy by TransCanada’s management and outside counsel, TransCanada gained

actual knowledge that the Proxy’s characterization of these meetings was either

misleading, inadequate, or non-existent. It is true, as TransCanada points out, the

Proxy did not need to provide a “a ‘play-by-play’ recitation”274 of the sale process.

But the descriptions of certain meetings, especially those in December 2015 and

271 Id. at 395–96. 272 Id. at 396 (quoting Malpiede, 780 A.2d at 1097). 273 Id. 274 David P. Simonetti Rollover IRA v. Margolis, 2008 WL 5048692, at *12 (Del. Ch. June 27, 2008).

91 January 2016, presented a warped image of the sale process that elided numerous

interactions, in particular between Smith and Poirier, that showed that TransCanada

had long been Columbia management’s preferred acquiror. Specifically, there was

no mention in the Proxy of any contact between Smith and Poirier in December

2015, and the description of the January 4, 2016 call was misleadingly written in

order to account for these omissions.275 TransCanada had also been informed by

Smith at the January 7 meeting, but the Proxy did not disclose, that TransCanada

was unlikely to face competition. These omissions were material, readily apparent

to TransCanada upon review of the Proxy, and support a finding of knowledge.

The court also found that TransCanada knew that the reasons disclosed in the

Proxy for TransCanada’s decision to renege on the $26-per-share offer given by

Poirier were largely pretextual, and that, had Columbia countered, TransCanada

could have maintained a deal above $25.50 per share. This breach would have been

less clear to TransCanada. Though TransCanada had actual knowledge that the

reasons for reneging on the $26 offer given to Columbia were part of a bluff, it was

under no obligation to urge Columbia’s management and board to “self-

flagellat[e].”276 In other words, TransCanada had no reason to know that it should

275 See Liability Decision, 299 A.3d at 486. 276 Loudon v. Archer-Daniels-Midland Co., 700 A.2d 135, 143 (Del. 1997).

92 be disclosed to Columbia stockholders that TransCanada had successfully bluffed

Columbia in the final phase of negotiations.

For other omissions and deficiencies, the Court of Chancery found that

TransCanada lacked actual knowledge that such disclosures were necessary. For

example, TransCanada “did not actually know of Skaggs and Smith’s plans” to retire

in 2016.277 Further, TransCanada only had “constructive knowledge of the Proxy

Statement’s failure to disclose that other bidders from the November 2015 process

were bound by don’t-ask-don’t-waive standstills.”278 Because TransCanada lacked

the required actual knowledge of these breaches, they provide no support for a

finding of aiding-and abetting liability.

On this record we are also hard pressed to find that Columbia’s failure to

disclose breaches of the Standstill in the Proxy would have been, from

TransCanada’s vantage point, a clear breach of the duty of disclosure by Columbia’s

fiduciaries. On more than one occasion, TransCanada’s counsel had sought

confirmation from Columbia that the discussions taking place between each party’s

executives would not contravene the Standstill. Columbia, after consulting with

outside counsel, confirmed to TransCanada that it did not believe any such breach

would occur. Moreover, because TransCanada had little insight into the decision-

277 Liability Decision, 299 A.3d at 488. 278 Id.

93 making of the Columbia board, it could not know whether the board had waived the

Standstill in the interest of securing a deal. Whether the advice provided by

Columbia’s outside counsel, and subsequently forwarded to TransCanada, was

correct is again beside the point. Our concern is whether the Proxy’s failure to

disclose that TransCanada’s advances might have breached the Standstill was a

breach of the duty of disclosure that would have been clear to TransCanada. Viewed

in the light of the advice given to TransCanada through Columbia’s counsel that its

conduct was permissible, the Proxy’s failure to disclose the Standstill breaches

would not have appeared to TransCanada as a clear breach of the duty of disclosure.

In short, at least some of the breaches of the duty of disclosure by Columbia’s

management and board were known to TransCanada such that this factor weighs in

favor of a finding of liability.

The next factor Mindbody instructs us to consider is whether TransCanada

culpably participated in the disclosure breaches. Specifically, we evaluate “the

amount, kind, and duration of assistance given” by TransCanada, “including how

directly involved [TransCanada] was in the primary actor’s conduct.”279 We see no

meaningful difference between the facts of this case and those in Mindbody and

conclude that this factor weighs against a finding of liability.

279 Mindbody, 332 A.3d at 396.

94 The Court of Chancery found that “TransCanada had reviewed the Proxy [] in

detail.”280 Poirier testified at trial that “[t]here was an exchange of drafts between

both companies to verify [the Proxy’s] completeness and accuracy.”281 Poirier read

the Proxy and provided comments on both the preliminary and definitive versions,

and Girling, Johnston, Fornell, and TransCanada’s outside counsel also reviewed it.

Yet TransCanada did not correct any material misstatements and omissions in the

Proxy. This, in the court’s opinion, was because “Girling viewed the Proxy [] as

Columbia’s document and told his team not to worry about it.”282 According to the

court, TransCanada’s failure to notify Columbia about the Proxy’s material

misstatements and omissions, in light of its affirmative obligation to do so in Section

5.01(b) of the Merger Agreement, constituted culpable participation in the disclosure

breach sufficient to trigger aiding-and-abetting liability.

We explained in Mindbody that “a failure to act, without some kind of active

role, [does not] constitute[] ‘substantial assistance’ for aiding and abetting a

fiduciary breach.”283 We also emphasized that the buyer in Mindbody did not create

an “informational vacuum” that would “proximately cause [the seller’s] disclosure

breach.”284 In the absence of affirmative conduct and because the seller “knew

280 Id. at 488. 281 Id. 282 Id. 283 Id. at 401. 284 Id.

95 everything that [the buyer] knew[,]”285 we concluded that this factor weighted

against a finding of aiding-and-abetting liability.

The same is true here. The record shows that, although TransCanada, through

its management and outside counsel, offered comments on the Proxy, it did not

propose any of the statements that the Court of Chancery found to be misleading.

Nor did it suggest omitting material information from the Proxy. The record further

shows that Columbia knew everything that TransCanada knew, with one exception.

Both knew what occurred during the meetings that were not mentioned in the Proxy.

Columbia also knew of the standstill agreements signed by every potential acquiror

and TransCanada’s approaches before the Columbia board provided written consent

under the terms of TransCanada’s Standstill. The plaintiffs point out that Columbia

was not aware of the true reasons for TransCanada’s decision to withdraw the $26-

per-share offer, but as discussed above, we are unconvinced that the parties believed

that there was a deal at $26 that would make such a correction necessary.

The plaintiffs contend that this case is distinguishable from Mindbody.

According to the plaintiffs, Section 5.01 of the Merger Agreement here imposed a

more demanding disclosure requirement than in Mindbody. The merger agreement

in Mindbody, the plaintiffs claim, only required the buyer to provide information

that the seller reasonably requested for inclusion in the proxy. Here, the plaintiffs

285 Id.

96 insist that the Proxy “imposed an independent obligation on TransCanada to provide

all information required so that the Proxy would not be materially omissive or

misleading.”286 In the plaintiffs’ view, TransCanada’s “conscious decision to

withhold material information from the Proxy” is evidence of TransCanada’s

participation in facilitating the underlying fiduciary breaches.287

We disagree. We can discern no meaningful difference between the Merger

Agreement here and the merger agreement at issue in Mindbody. Both agreements

required the seller to provide the buyer with a “reasonable opportunity” to review

and comment on the draft proxy statements, and both required that the buyer

“promptly notify” the seller if it “discovered” “any information” required to ensure

that the proxy does not contain any untrue or misleading statements.288

On this record, this factor weighs against a finding of liability.

The third factor from Mindbody concerns “the nature of the relationship”

between Columbia and TransCanada.289 Our analysis of this factor does not differ

from our approach to it in our earlier review of the sale-process claim. And for the

same reasons, we conclude that this factor weighs against liability.290

286 Pls.’ Suppl. Br. at 25 (emphasis omitted). 287 Id. at 26. 288 Compare App. to Opening Br. at A948 (Merger Agreement § 5.01(b)), with Mindbody, 332 A.3d at 398 (quoting merger agreement). 289 Mindbody, 332 A.3d at 396. 290 See p.72–73, supra.

97 iv

The final factor for our consideration is TransCanada’s state of mind. As we

explained in Mindbody, our review here concerns the second scienter requirement—

that the aider and abettor have actual knowledge that its own conduct was legally

improper.

As was the case in Mindbody, the Court of Chancery did not find as a factual

matter that TransCanada “knew that its failure to abide by its contractual duty to

notify [Columbia] of potential material omissions in the Proxy Materials was

wrongful and that its failure to act could subject it to [aiding-and-abetting]

liability.”291 In Mindbody, we found that this factor weighed against the imposition

of liability even though two members of the buyer’s deal team had acted in concert

to conceal details of the sale process by altering internal memoranda to remove

descriptions of nearly four months of preliminary meetings with the target

company’s CEO.292 We held that “the knowledge that matters for the second prong

of scienter is knowledge that the aider and abettor’s own conduct wrongfully assisted

the primary violator in his disclosure breach.”293

The Court of Chancery did not find that TransCanada had knowledge that, by

declining to abide by its contractual duty to correct the Proxy, it was wrongfully

291 Mindbody, 332 A.3d at 406. 292 Id. at 404–06. 293 Id. at 406.

98 contributing to a breach of duty by Columbia’s fiduciaries. The record would not

support such a finding. Indeed, the plaintiffs’ supplemental briefing addressing this

factor merely states what we have already concluded above—that TransCanada had

actual knowledge, with respect to certain disclosures in the Proxy, that Columbia’s

fiduciaries had breached their duty of disclosure—and adds that “TransCanada

recklessly chose not to correct the Proxy” despite this knowledge.294 Plaintiffs do

not cite, nor could we find, facts in the record showing that TransCanada knew that

a failure to correct the Proxy was wrongful, not as a breach of contract, but as

conduct that affirmatively aided breaches of Skaggs’s, Smith’s and the Columbia

board’s fiduciary duties. This factor weighs against the imposition of aiding-and-

abetting liability.

Considering these factors in a holistic fashion as Mindbody requires, we

conclude that the record does not contain sufficient support for a determination that

TransCanada “knowingly participated” in any of the disclosure breaches found by

the Court of Chancery. Lacking this crucial element, the plaintiffs’ claim that

TransCanada is partially liable for these breaches as an aider and abettor fails.

294 Pls.’ Suppl. Br. at 26.

99 VI

For the reasons set forth above, we reverse the Court of Chancery’s

judgment.295

295 Because we reverse the Court of Chancery’s liability determinations, we need not address TransCanada’s challenges to the court’s damages rulings.