This section contains the nature of the case and procedural background.

P brought this action challenging the acquisition of Crystal Gas Storage, Inc. by El Paso Energy Partners, L.P. (the 'Partnership'). P is a limited partner in the Partnership and has sued derivatively on its behalf. Crystal Gas is owned by El Paso Energy Corp. (Energy), which also owns and controls the Partnership’s general partner, DeepTech International, Inc. Energy also holds 34.5% of the Partnership units, which are traded on the New York Stock Exchange. The Partnership purchased Crystal Gas for $170 million in newly issued Partnership preference units. P alleges that this consideration exceeded 'the value of Crystal Gas, its assets and businesses' and that the transaction is therefore substantively unfair to the Partnership. The complaint simply notes that 'for the quarter ended September 30, 1999, Crystal Gas reported a decline in revenues of $ 1.2 million and a decline for the nine months of that fiscal year of about $3.5 million.' The only procedural protection used by the Partnership to ensure the interests of unitholders other than Energy was to subject the transaction to 'Special Approval' by DeepTech's 'Conflicts and Audit Committee.' The Committee was composed of Michael B. Bracy (D), a director of DeepTech and a former employee of Energy, and H. Douglas Church (D), another director of DeepTech. P alleges that the process was 'irreparably impaired' because Bracy(D) and Church (D) owed fiduciary duties to DeepTech as DeepTech directors, and thus could not fairly evaluate a transaction in which DeepTech and the Partnership had conflicting interests. Ds, principally DeepTech and its directors, filed a motion to dismiss the complaint. Ds claim the Partnership Agreement precludes P's claims for breach of fiduciary duty in connection with the Crystal Gas acquisition. The Partnership Agreement states: 6.9 Resolution of Conflicts of Interest. (a) Unless otherwise expressly provided in this Agreement . . . whenever a potential conflict of interest exists or arises between the General Partner or any of its Affiliates, on the one hand, and the Partnership, the Operating Companies, any Partner or any Assignee, on the other hand, any resolution or course of action in respect of such conflict of interest shall be permitted and deemed approved by all Partners, and shall not constitute a breach of this Agreement, of the Operating Companies Agreements, of any agreement contemplated herein or therein, or of any duty stated or implied by law or equity, if the resolution or course of action is or, by operation of this Agreement, is deemed to be, fair and reasonable to the Partnership. The General Partner shall be authorized, but not required, in connection with its resolution of such conflict of interest, to seek Special Approval of a resolution of such conflict or course of action. Any conflict of interest and any resolution of such conflict of interest shall be conclusively deemed fair and reasonable to the Partnership if such conflict of interest or resolution is (i) approved by Special Approval, (ii) on whole, on terms no less favorable to the Partnership than those generally being provided to or available from unrelated third parties or (iii) fair to the Partnership, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to the Partnership). . . . The General Partner (including the Conflicts and Audit Committee in connection with Special Approval) shall be authorized in connection with its determination of the 'fair and reasonable' nature of any transaction or arrangement and in its resolution of any conflict of interest to consider (i) the relative interests of any party to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interest; (ii) any customary or accepted industry practices and any customary or historical dealings with a particular Person; (iii) any applicable generally accepted accounting or engineering practices or principles; and (iv) such additional factors as the General Partner or such Conflicts and Audit Committee determines in its sole discretion to be relevant, reasonable or appropriate under the circumstances. Nothing contained in this Agreement, however, is intended to nor shall it be construed to require the General Partner or such Conflicts and Audit Committee to consider the interests of any Person other than the Partnership. In the absence of bad faith by the General Partner, the resolution, action or terms so made, taken or provided by the General Partner with respect to such matter shall not constitute a breach of this Agreement or any other agreement contemplated herein or a breach of any standard of care or duty imposed herein or therein or under the Delaware Act or any other law, rule, or regulation.

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