Steve Otillar Quoted on Texas Partnership Law Case by Law360

Law360, for its article “As Dust Settles In ETP Case, $319M Verdict Makes Its Mark,” quoted Akin Gump energy partner Steve Otillar on Energy Transfer Partners LP v. Enterprise Products Partners LP and this Texas partnership law case’s impact on energy companies’ contracts and business practices.

According to the article, Energy Transfer Partners LP (ETP) is asking for a judgment totaling $1 billion from its former pipeline project partner Enterprise Products Partners LP for its breach of a partnership agreement with ETP. For its part, Enterprise is pursuing a take-nothing judgment. The suit has galvanized the industry. Otillar said, “This is the shot across the bow. Parties are aware of the issue, and we’re dealing with it regardless of how the judgment comes out. Where they are is fear factor enough.”

In counseling companies on how to avoid finding themselves in a similar position, Otillar said that he has advised clients to consider using jury trial waivers and choice-of-law provisions in order to increase the difficulty of forming an unintended partnership by choosing a state other than Texas to govern potential future disputes. He added, “The legal departments might draft a beautiful document—and the document put together in the Enterprise case was well thought out—but it’s the conduct after the document is signed where you really have to be careful and that really leaves legal’s hands.”

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Otillar was also quoted in a July 19 Houston Chronicle article, “Pipeline verdict rattles energy world's deal makers,” which noted that the agreement contained customary boilerplate language that indicated the partnership was non-binding, leading many, according to Otillar, to assume “there wasn't a binding agreement.” He added, “I think it's always good to take a step back and look at how carefully you craft the contract. The original meaning of the word boilerplate is an extra piece of steel between you and the boiler of a steam engine. Now, some people don't pay as much attention to it.”