In Re: Western States Wholesale Natural Gas Antitrust Litigation (MDL 1566)

Filing 1960

ORDER Granting CMS Energy Corporation, CMS Energy Resources Management Co., and Cantera Gas Company's Motion to Dismiss filed as document #10-6 in 2:09-cv-1103-PMP-PAL. Signed by Judge Philip M. Pro on 11/10/10. (Copies have been distributed pursuant to the NEF - EDS)

In Re: Western States Wholesale Natural Gas Antitrust Litigation (MDL 1566)

Doc. 1960

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 P re se n tly before the Court is Defendants' Motion to Dismiss (Doc. #10-6 in 2:09C V -0 1 1 0 3 -P M P -P A L ), filed in this Court on June 19, 2009. Plaintiffs filed an Opposition (D o c . #1675) on June 29, 2009. Defendants filed a Reply (Doc. #1695) on July 13, 2009. I. BACKGROUND T h is case is one of many in consolidated Multidistrict Litigation arising out of the e n e rg y crisis of 2000-2001. Plaintiffs originally filed this action in the Eastern District of M ic h ig a n on March 25, 2009. (Compl. [Doc. #10-2 in 2:09-CV-01103-PMP-PAL].) The J u d ic ia l Panel on Multidistrict Litigation ("MDL") entered a Transfer Order pursuant to 28 U .S .C . § 1407 centralizing the foregoing action in this Court for coordinated or c o n s o lid a te d pretrial proceedings. /// /// UNITED STATES DISTRICT COURT D IS T R IC T OF NEVADA *** IN RE: WESTERN STATES ) W H O L E S A L E NATURAL GAS ) A N T IT R U S T LITIGATION ) ___________________________________ ) ) A R A N D E L L CORP., et al., ) ) Plaintiffs, ) ) v. ) ) C M S ENERGY CORPORATION, et al., ) ) Defendants. ) ) M D L 1566 2 :0 3 -C V -0 1 4 3 1 -P M P -P A L B A S E FILE

2 :0 9 -C V -0 1 1 0 3 -P M P -P A L

O R D E R RE: DEFENDANTS' MOTION T O DISMISS (Doc. #10-6 in 2:09-CV0 1 1 0 3 -P M P -P A L )

Dockets.Justia.com

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P la in tif f s Arandell Corporation, Merrick's Inc., Sargento Foods Inc., Ladish Co., In c ., Carthage College, and Briggs & Stratton Corporation are Wisconsin corporations or p riv a te educational institutions. (Id. at 2-3.) According to the Complaint, Defendants CMS E n e rg y Corporation ("CMS"), CMS Energy Resource Management Company ("MST"), and C a n te ra Gas Company ("Cantera") are Michigan corporations. (Id. at 4.) In this litigation, P la in tif f s allege Defendants conspired among themselves and with others to engage in antic o m p e titiv e activities with the intent to manipulate and artificially increase the price of n a tu ra l gas for consumers. (Id. at 9-50.) Specifically, Plaintiff alleges Defendants c o n s p ire d to manipulate the natural gas market by knowingly delivering false reports c o n c e rn in g trade information to trade indices and engaging in wash trades, in violation of W is c o n s in Statutes chapter 133. (Id.) The Complaint asserts two causes of action. Count one arises under Wisconsin S ta tu te s § 133.14, which voids contracts to which an antitrust conspirator is a party and a llo w s recovery of payments made pursuant to such a contract. (Id. at 59-60.) Count two s e e k s trebled actual damages under Wisconsin Statutes § 133.18 for Defendants' alleged a n titru s t violations. (Id. at 60-61.) T h e Complaint largely mirrors a similar Complaint filed in another MDL case, A ra n d e ll Corp. v. Xcel Energy Inc., 2:09-CV-01019-PMP-PAL ("Arandell I"), which was f ile d in Wisconsin. This Court previously dismissed CMS, MST, and Cantera as D e f e n d a n ts in Arandell I for lack of personal jurisdiction in Wisconsin.1 Plaintiffs th e re a f te r filed this action in Michigan against the dismissed Defendants. /// ///

The Court since has reinstated Defendant MST as a defendant in Arandell I. (Order (Doc. 2

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#1946).)

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D e f e n d a n ts move to dismiss, arguing that under Michigan choice-of-law rules, M ic h ig a n 's four-year limitations period for antitrust actions2 would apply. Defendants a rg u e Plaintiffs' claims are untimely because Plaintiffs knew or should have known of their c la im s in 2002, when several natural gas companies admitted they provided false price in f o rm a tio n to index publishers. Defendants further argue the alleged misconduct was the s u b je c t of widely reported government investigations and reports in 2002 and 2003. Defendants note that beginning in 2002, other plaintiffs began filing suit alleging the same m isc o n d u c t Plaintiffs allege in this action. Defendants contend that even under Wisconsin's lo n g e r limitations period, Plaintiffs' claims are untimely. Further, Defendants argue that P la in tif f s cannot argue fraudulent concealment because Plaintiffs knew of their claims no la te r than when they filed Arandell I, and Plaintiffs did not file the present suit within two ye a rs of that date. P la in tif f s respond that Wisconsin's six-year limitations period for antitrust c la im s3 applies. Plaintiffs also contend that even if Michigan's limitations period applies, P la in tif f s are entitled to tolling of the period because they did not discover their claims until M a rc h 26, 2002, when a report was issued by the Federal Energy Regulatory Commission (" F E R C " ), and because Michigan has statutory tolling rules which apply to Plaintiffs' C o m p la in t. I I . LEGAL STANDARD In considering a motion to dismiss, "all well-pleaded allegations of material fact a re taken as true and construed in a light most favorable to the non-moving party." Wyler S u m m it P'ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998) (citation o m itte d ). However, the Court does not necessarily assume the truth of legal conclusions

Mich. Comp. Laws § 445.781(2). Wis. Stat. § 133.18(2). 3

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m e re ly because they are cast in the form of factual allegations in the plaintiff's complaint. See Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994). There is a s tro n g presumption against dismissing an action for failure to state a claim. Ileto v. Glock In c ., 349 F.3d 1191, 1200 (9th Cir. 2003). The issue is not whether a plaintiff ultimately w ill prevail but whether the plaintiff is entitled to offer evidence to support its claims. Mohamed v. Jeppesen Dataplan, Inc., 614 F.3d 1070, 1100 (9th Cir. 2010). A plaintiff m u s t make sufficient factual allegations to establish a plausible entitlement to relief. Bell A tl. Corp. v Twombly, --- U.S. ----, 127 S. Ct. 1955, 1965 (2007). Such allegations must a m o u n t to "more than labels and conclusions, [or] a formulaic recitation of the elements of a cause of action." Id. at 1964-65. "A claim may be dismissed under Rule 12(b)(6) on the g ro u n d that it is barred by the applicable statute of limitations only when the running of the s ta tu te is apparent on the face of the complaint." Von Saher v. Norton Simon Museum of A rt at Pasadena, 592 F.3d 954, 969 (9th Cir. 2010) (quotation omitted). I I I . DISCUSSION T h is Court sitting in diversity applies the "forum state's choice of law rules to d e te rm in e the controlling substantive law." Fields v. Legacy Health Sys., 413 F.3d 943, 9 5 0 (9th Cir. 2005) (quotation omitted). Generally, Michigan applies its own law "unless a ra tio n a l reason to do otherwise exists." Frydrych v. Wentland, 652 N.W.2d 483, 485 (Mich. C t. App. 2002). To determine whether a rational reason exists to apply another state's law, th e Court first determines whether any foreign state has an interest in having its law applied. Id. "If no state has an interest, the presumption that Michigan law will apply is not o v e rc o m e ." Id. However, if a foreign state does have an interest in having its law applied, th e Court then determines "whether Michigan's interests mandate that Michigan law be a p p lie d , despite any foreign state interest." Id. at 485-86. W h ile these are Michigan's general choice-of-law rules, Michigan statutorily has a d o p te d a choice-of-law rule for statutes of limitations in certain situations. Parish v. B. F. 4

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G o o d ric h Co., 235 N.W.2d 570, 572 (Mich. 1975) (referring to borrowing statutes, in c lu d in g Michigan's, as enacted "to resolve the possible conflicts of laws that may arise w h e n a plaintiff's claim accrues outside of the forum"); Smith v. Elliard, 312 N.W.2d 161, 1 6 4 (Mich. Ct. App. 1981).4 Consequently, in the statute of limitations context, Michigan lo o k s to its "borrowing" statute instead of its normal choice-of-law rules. Bechtol v. M a ye s , 499 N.W.2d 439, 440-41 (Mich. Ct. App. 1993); Erickson v. Am. Motors Corp., 6 8 3 F. Supp. 644, 646 (E.D. Mich. 1987). Michigan's borrowing statute provides: A n action based upon a cause of action accruing without this state shall n o t be commenced after the expiration of the statute of limitations of e ith e r this state or the place without this state where the cause of action a c c ru e d , except that where the cause of action accrued in favor of a re s id e n t of this state the statute of limitations of this state shall apply. Mich. Comp. Laws § 600.5861. Under this statute, a "cause of action accruing in another s ta te or jurisdiction commenced in Michigan by a nonresident of this state is barred upon e x p ira tio n of either the applicable Michigan limitation period or the applicable limitation p e rio d of the other state or jurisdiction." Hover v. Chrysler Corp., 530 N.W.2d 96, 98 (M ic h . Ct. App. 1994); Bechtol, 499 N.W.2d at 440. This rule applies even where the cause o f action at issue is a statutorily-created claim with a built-in statute of limitations. See L a m b e rt v. Calhoun, 229 N.W.2d 332, 336 (Mich. 1975). To determine whether the plaintiff's claim is barred under either applicable lim ita tio n s period, the Court must determine where and when the action accrued. Scherer v. H e lls tro m , 716 N.W.2d 307, 310 (Mich. Ct. App. 2006); CMACO Auto. Sys., Inc. v. W a n x ia n g Am. Corp., 589 F.3d 235, 243 (6th Cir. 2009) (applying Michigan law).

The Michigan Court of Appeals once stated that § 600.5861 "is a statute of limitations rather than a choice-of-law statute." Pryber v. Marriott Corp., 296 N.W.2d 597, 600 (Mich. Ct. App. 1980). However, the Michigan Supreme Court has referred to it as a choice-of-law provision. Parish, 235 N.W.2d at 572. 5

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M ic h ig a n generally holds that a cause of action accrues at the place of injury. CMACO A u to . Sys., Inc., 589 F.3d at 246. A cause of action accrues "without" the state of Michigan if the action "accrued without any essential facts giving rise to the cause of action occurring in Michigan." Scherer, 716 N.W.2d at 310. With respect to when a claim accrues, M ic h ig a n statutorily provides that a claim accrues at the time provided in certain statutory s e c tio n s ,5 "and in cases not covered by these sections the claim accrues at the time the w ro n g upon which the claim is based was done regardless of the time when damage re s u lts ." Mich. Compl. Laws § 600.5827. Plaintiffs are non-residents and therefore the borrowing statute applies to their c la im s if the claims accrued "without" Michigan. Under Michigan accrual rules, Plaintiffs' c la im s accrued at the place of injury, Wisconsin, where Plaintiffs are residents and where th e y purchased the natural gas at allegedly manipulated prices. Plaintiffs do not dispute th e ir claims accrued in Wisconsin. (Pls.' Opp'n to Defs.' Mot. for J. on the Pleadings (Doc. # 1 6 7 5 ) at 15.) Accordingly, the Michigan borrowing statute applies.6 As a result, Plaintiffs m u s t have brought their claims within four years of accrual under Michigan's closest a n a lo g o u s antitrust provision.7 Mich. Compl. Laws § 445.781(2).

Sections 600.5829 (right to make entry on and the claim to recover land); 600.5831 (to recover the balance due upon a mutual and open account current); 600.5833 (breach of warranty of quality or fitness); 600.5834 (claim by common carriers to recover for charges arising out of interstate transportation); 600.5835 (actions on life insurance contracts); 600.5836 (claims on installment contract); 600.5837 (claims for alimony payments); 600.5838 (malpractice claims); and 600.5839 (medical malpractice claims). The Court therefore expresses no opinion on what law controls the substantive claims in Plaintiffs' Complaint, as Michigan's borrowing statute is directed only at the statute of limitations. Michigan antitrust law is different from Wisconsin antitrust law. Wisconsin law provides for a full consideration remedy, while Michigan does not. Mich. Compl. Laws § 445.778(2); Wis. Stat. § 133.14. Further, Michigan requires a higher showing for treble damages than does Wisconsin. Mich. Compl. Laws § 445.778(2); Wis. Stat. § 133.18(1)(a). However, the cause of action at issue is an antitrust price fixing conspiracy. Michigan's antitrust statute, while not an exact parallel in terms of 6
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B y the Complaint's allegations, Defendants engaged in the price manipulation c o n s p ira c y from January 1, 2000 through October 31, 2002. Plaintiffs' claim thus accrued n o later than October 31, 2002. Because Plaintiffs did not file the present action until M a rc h 25, 2009, well beyond four years since their claims accrued, the claims are barred u n le s s some tolling provision applies. U n d e r Michigan's borrowing statute, Michigan's tolling rules apply when the M ic h ig a n statute of limitations applies. Hover, 530 N.W.2d at 98. Michigan used to re c o g n iz e the discovery rule for tolling limitations periods in certain cases. See, e.g., L a rs o n v. Johns-Manville Sales Corp., 399 N.W.2d 1, 5 (Mich. 1986) (collecting cases). However, in 2007, the Michigan Supreme Court held that because the legislature had e n a c te d a comprehensive legislative scheme designating specific limitations periods and s p e c if ic exceptions thereto, the statutory scheme superseded the common law. Trentadue v. B u c k le r Lawn Sprinkler, 738 N.W.2d 664, 671 (Mich. 2007). Consequently, the discovery ru le does not apply unless an applicable statutory section so provides.8 Id. M ic h ig a n has enacted some tolling provisions beyond the discovery rule. For e x a m p le , a statute of limitations is tolled "[a]t the time the complaint is filed, if a copy of th e summons and complaint are served on the defendant within the time set forth in the s u p re m e court rules." Mich. Comp. Laws § 600.5856(a). This rule applies even where the c o u rt lacked subject matter jurisdiction or personal jurisdiction over the defendant, so long a s the defendant timely was served with the summons and complaint. See Hoekstra v. available remedies, is the most analogous cause of action under Michigan law. The Court therefore will apply the limitations period in § 445.778(2), rather than the limitations period for "other personal actions" as Plaintiffs argue. The Michigan Supreme Court has granted leave to appeal in a separate case, Colaianni v. Stuart Frankel Dev. Corp., Inc., inviting the parties to address whether Trentadue was decided correctly. 777 N.W.2d 410 (Mich. 2010). However, the Court must apply Michigan law as it exists, and not predict possible changes in that law. Hemmings v. Tidyman's Inc., 285 F.3d 1174, 1203 (9th Cir. 2002). 7
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B o s e , 655 N.W.2d 298, 300 (Mich. Ct. App. 2002); Ralph Shrader, Inc. v. Ecclestone C h e m . Co., 177 N.W.2d 241, 241-43 (Mich. Ct. App. 1970). Here, however, Plaintiffs did not file the action in Wisconsin until after the M ic h ig a n statute of limitations already had expired. As discussed previously, Plaintiffs' c la im accrued under Michigan law in October 2002. Plaintiffs thus had four years from that d a te to file a timely action. Plaintiffs filed the action in Wisconsin December 2006, two m o n th s too late to take advantage of the Michigan tolling provision. Plaintiffs do not id e n tif y any other tolling provisions under Michigan law that applies to their claims. B e c a u s e Plaintiffs' claims are untimely under Michigan's statute of limitations, P la in tif f s ' claims are barred. The Court therefore will grant Defendants' motion to dismiss. III. CONCLUSION IT IS THEREFORE ORDERED that Defendants' Motion to Dismiss (Doc. #10-6 in 2:09-CV-01103-PMP-PAL) is hereby GRANTED.

D A T E D : November 10, 2010

_______________________________ PHILIP M. PRO United States District Judge

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