In re El Paso Pipeline Partners, L.P. Derivative Litigation

El Paso MLP's corporate sponsor, El Paso Corporation (Parent), which wholly owned El Paso MLP's General Partner (defendant), proposed selling El Paso MLP interests in two liquid natural gas companies (Southern LNG and Elba Express) whose revenue depended on Service Agreements that counterparties Shell and British Gas could abandon if unprofitable. Because this created a conflict of interest, El Paso MLP's limited partnership agreement required approval by a majority of a Conflicts Committee acting in good faith; the Committee reviewed substantial information over five meetings and approved the transactions, but was never told that Parent had, around the same time it was touting these assets' value, separately declined its own option to buy other LNG assets at a more favorable rate. Limited partners (plaintiffs) sued, arguing the Committee acted in bad faith, and the defendants moved for summary judgment.