Dismissal of all claims against ExxonMobil secured in New York Court of Appeals

On May 16, 2024, Davis Polk obtained a victory for its clients, Exxon Mobil Corporation and ExxonMobil Canada Holdings ULC, in a breach of contract action brought in New York State Supreme Court.

The plaintiffs were former shareholders of InterOil Corporation, a Canadian oil and gas company that was acquired by ExxonMobil in 2017. Plaintiffs sued ExxonMobil four years after the transaction closed, alleging that it breached its contractual obligations by failing to pay the full amount of post-closing contingent consideration due to them under a Contingent Resource Payment agreement that was executed in connection with the acquisition. 

In April 2022, Davis Polk moved to dismiss the complaint, arguing, among other things, that plaintiffs lacked standing to pursue their claims because the agreement barred individual shareholders or small ad hoc groups (like plaintiffs) from instituting any action to enforce the agreement. Rather, Davis Polk argued that the agreement vested that authority exclusively in a shareholder representative or a group of shareholders holding at least 25% of the rights granted in the agreement, and the plaintiffs failed to meet that standard. The Supreme Court agreed and dismissed the complaint.

The plaintiffs appealed to the Appellate Division, First Department, which affirmed the dismissal in a 3-2 decision in March 2023. The plaintiffs then appealed to the Court of Appeals, which unanimously affirmed the dismissal of the complaint. The court agreed with Davis Polk’s argument that the contract unambiguously barred the plaintiffs from commencing any action on their own behalf to enforce third-party beneficiary rights under the agreement.  

The Davis Polk team includes partner Andrew Ditchfield (who argued both appeals), counsel Lindsay Schare and associate Sean Stefanik. Members of the Davis Polk team are based in the New York and Washington DC offices.