Avangrid’s Unaffiliated Committee Directors Win Affirmance of Dismissal of Shareholder Action

Paul, Weiss won the unanimous affirmance in New York state court of the dismissal of a putative class action brought on behalf of the minority shareholders of Avangrid, Inc., against the directors of Avangrid’s unaffiliated committee and other defendants, challenging Avangrid’s $2.6 billion take-private transaction with its majority shareholder, Iberdrola, S.A.

The plaintiffs brought suit in the New York Supreme Court alleging that Iberdrola, a Spanish multinational electric utility company, opportunistically acquired Avangrid’s outstanding shares at an unfairly low price, and that the transaction was tainted because, among other things, the unaffiliated committee lacked independence from Iberdrola.

Representing the three unaffiliated committee directors, Paul, Weiss argued that the transaction satisfied all six procedural safeguards required to obtain business judgment deference. In December 2025, Supreme Court Justice Andrew Borrok granted the defendants’ motion to dismiss in full, adopting all of our arguments.

The plaintiffs appealed to the Appellate Division, First Department, which unanimously affirmed following oral argument. The court held that the plaintiffs failed to plead facts supporting their contention that the defendants did not satisfy the procedural safeguards governing controller transactions. The court likewise rejected each of the plaintiffs’ renewed challenges to the independence of the unaffiliated committee directors.

Among other things, the court found “unavailing” the plaintiffs’ argument that one of the unaffiliated committee directors lacked independence because her board and committee compensation constituted the bulk of her income. The court further held that allegations that the former New York Lieutenant Governor Robert Duffy, another of the unaffiliated directors, had publicly praised Ignacio Galán, the chairman of both the Avangrid and Iberdrola boards, and described him as a friend were “insufficient to call his independence into question.” The court similarly concluded that allegations concerning the purported personal relationship of former Maine Governor John Baldacci, the third and final unaffiliated director, with Galán were “also insufficient” to undermine his independence.

The Paul, Weiss team includes litigation partners Andrew Gordon and Lina Dagnew.