Southern Union says Southwest’s claims thrown out

David Strow

Monday, Jan. 7, 2002 | 11:09 a.m.

David Strow

Southern Union Co. of Austin, Texas, a one-time suitor for Southwest Gas Corp. of Las Vegas, said today a federal judge has thrown out all charges made by the Las Vegas natural gas utility against Southern Union.

Southern Union and Southwest have been in litigation in Phoenix federal court for nearly two years over Southwest's failed efforts to find a merger partner in 1998 and 1999. Southern Union made an unsolicited bid for Southwest that topped a $1.8 billion offer made by ONEOK Inc. of Tulsa, Okla. Southwest rejected the Southern Union offer, but Southern Union later sued, claiming the two companies had wrongfully conspired to derail the Southern Union bid.

The allegations led ONEOK to withdraw its offer for Southwest. Southwest sued ONEOK and Southern Union, and ONEOK sued Southern Union and Southwest. All of these claims were consolidated in Phoenix federal court, and are set to go to trial in May.

Southern Union said Judge Roslyn Silver dismissed Southwest's and ONEOK's claims against Southern Union on Friday. Southern Union said Silver allowed ONEOK's and Southwest's fraud charges against one another to continue to trial.

Southern Union said it is the only company that can now receive punitive damages in the case. It is still pursuing claims for interference with a potential business relationship against ONEOK and fraud and breach of contract against Southwest.

"We are in the process of reviewing that order now, to see what the impact is on us," Southwest spokesman Roger Buehrer said this morning. "At this point, we just don't know."

ONEOK spokesman Weldon Watson said the company was "gratified" that Silver's decision limited Southern Union's claims for out-of-pocket expenses, which ONEOK estimates at less than $7 million. Southern Union's claims once included all potential lost profits from a potential Southwest-Southern Union merger.

"We've seen this go from over $1 billion to less than $7 million," Watson said.