On the eve of a five-week trial scheduled to begin in February 2020, our client Charif Souki, the creator of the modern LNG business model, obtained a full dismissal with prejudice of all claims asserted against him by the company he founded and led for many years, Cheniere Energy, Inc. This case showcases how we use aggressive, creative strategies—often in compressed timeframes—to achieve industry-changing results for our clients.
The origins of this complicated factual and procedural case trace back several years. In 2015, Cheniere and Parallax Enterprises, a company led by British Gas executive Martin Houston, entered into a joint development agreement for two new LNG facilities in Louisiana. Shortly thereafter, activist investor Carl Icahn took up a sizable investment position in Cheniere and placed two representatives on the Cheniere board, who then convinced the Board to scrap the Parallax project. Litigation quickly followed, with Parallax alleging that Cheniere was wrongfully backing out of an agreement to pay Parallax $400 million for the two new LNG facilities. Cheniere responded with a $46 million claim against Parallax for an alleged loan that it said had not been repaid. Cheniere also sued Tellurian and several insider individuals who Cheniere said had fraudulently transferred the Parallax business opportunity to Tellurian.
Our client Mr. Souki was not sued until nearly two years after the case had commenced, and only a few weeks before he was scheduled to be deposed. Cheniere alleged that Souki had breached his fiduciary duties by committing Cheniere to the Parallax project and by competing with Cheniere while still a member of its board. Cheniere sought more than $250 million in damages from Souki.
With trial just a few months away, we responded with a strategy to change the dynamics of the case and force a favorable resolution. We filed and won a key motion to designate the Cheniere board members as responsible parties, arguing successfully that the jury could find that any harm to Cheniere had been caused by its board members’ rash decision to abandon the Parallax projects without full analysis and due diligence. We also persuaded the judge to exclude Cheniere’s legal experts (a former Delaware judge and a Harvard Law professor) who intended to testify on fiduciary duty law while preserving Mr. Souki’s right to call an industry expert on corporate governance and customary board practices. Working with our co-counsel, we also won summary judgment on a key aspect of the tortious interference claim asserted by Cheniere. Shortly after these rulings and facing the prospect of going to trial without experts to defend the conduct of its board members, Cheniere agreed to dismiss its claims against Souki and his new company, Tellurian, Inc., with prejudice.