Enterprise Products Partners L.P. (NYSE:EPD) announced that it intends to oppose any judgment based on yesterday’s verdict by a Dallas jury which ruled against the company in a lawsuit filed by Energy Transfer Partners over a proposed pipeline project that was cancelled in August 2011 due to a lack of customer support. In April 2011 both Enterprise and Energy Transfer signed a non-binding letter of intent disclaiming any partnership or joint venture absent executed definitive documents and board approvals of the two companies. Definitive agreements were never executed and board approval was never obtained for the potential pipeline project.
While Enterprise firmly believes, and argued during its defense, that no agreement was ever executed forming a legal joint venture or partnership between the parties, the jury found that the actions of the two companies, nevertheless, constituted a legal partnership. As a result, the jury found that Energy Transfer was wrongfully excluded from a subsequent pipeline project that was to transport crude oil from Oklahoma to the Gulf Coast, and awarded Energy Transfer $319 million in actual damages. A judgment has not yet been entered in this case.
Enterprise does not believe that the verdict is supported by the evidence or the law and will promptly seek to reverse those findings. Furthermore, Enterprise management believes that the decision sets a dangerous precedent that jeopardizes current and future business relationships in the state of Texas. Businesses, large and small, need certainty, particularly when they are exploring potential projects. They need the ability to negotiate their relationships and put the terms in writing. If the legal system will not honor the terms of those agreements, the resulting uncertainty will be bad for everyone because nobody will know what their rights are until they get a judge and a jury to tell them, perhaps years after the fact.