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

Filing 2987

ORDERED that the Motion for Leave to File Supplemental Brief (ECF No. 2946 ) and the Motion to Reconsider (ECF No. 2962 ) are GRANTED. FURTHER ORDERED that the Motion to Reconsider (ECF No. 2959 ) is GRANTED IN PART and DENIED IN PART. Xcel Energy Inc.; Northern States Power Co.; Dynegy Illinois, Inc.; Dynegy GP, Inc.; El Paso Corp.; and Williams Merchant Services Co. are entitled to summary judgment based on release, but DMT GP, LLC is not. FURTHER ORDERED that the Motions to C ertify (ECF Nos. 2967 , 2968 ) and the Motion for Suggestion of Remand (ECF No. 2961 ) are DENIED. FURTHER ORDERED that the consolidated cases are STAYED, and the parties shall notify the Court upon the issuance of the Court of Appeals' rulings in Appeals Nos. 16-17099 and 17-16227. Signed by Judge Robert C. Jones on 11/20/2017. (Copies have been distributed pursuant to the NEF - DRM)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 _____________________________________ ) ) In re WESTERN STATES WHOLESALE ) NATURAL GAS ANTITRUST ) LITIGATION _____________________________________ ) ) ) REORGANIZED FLI, INC. et al., ) ) Plaintiffs, ) ) vs. ) ) WILLIAMS COMPANIES. et al., ) ) Defendants. _____________________________________ ) ) ) LEARJET, INC. et al., ) ) Plaintiffs, ) ) vs. ) ) ONEOK, INC. et al., ) ) Defendants. _____________________________________ ) 1 of 9 2:03-cv-01431-RCJ-PAL MDL No. 1566 ORDER 2:05-cv-01331-RCJ-PAL 2:06-cv-00233-RCJ-PAL 1 SINCLAIR OIL CORP., 2 Plaintiff, 3 vs. 4 E PRIME INC. et al., 5 6 Defendants. _____________________________________ 7 SINCLAIR OIL CORP., 8 Plaintiff, 9 vs. 10 ONEOK ENERGY SERVICES CO., L.P., 11 Defendant. _____________________________________ 12 13 BRECKENRIDGE BREWERY OF COLORADO, LLC et al., Plaintiffs, 14 15 vs. 16 ONEOK INC. et al., 17 Defendants. _____________________________________ 18 19 HEARTLAND REGIONAL MEDICAL CENTER et al., 20 Plaintiffs, 21 vs. 22 ONEOK, INC. et al., 23 Defendants. _____________________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 24 2 of 9 2:06-cv-00267-RCJ-PAL 2:06-cv-00282-RCJ-PAL 2:06-cv-01351-RCJ-PAL 2:07-cv-00987-RCJ-PAL 1 2 3 4 5 6 7 8 9 10 11 ARANDELL CORP. et al., ) ) Plaintiffs, ) ) vs. ) ) XCEL ENERGY INC. et al., ) ) Defendants. ) _____________________________________ ) ) NEWPAGE WISCONSIN SYSTEM INC., ) ) Plaintiff, ) ) vs. ) ) CMS ENERGY RESOURCE ) MANAGEMENT CO. et al., ) ) Defendants. ) _____________________________________ ) 2:07-cv-01019-RCJ-PAL 2:09-cv-00915-RCJ-PAL 12 13 These consolidated cases arise out of the energy crisis of 2000–2002. Plaintiffs (retail 14 buyers of natural gas) allege that Defendants (natural gas traders) manipulated the price of 15 natural gas by reporting false information to price indices published by trade publications and by 16 engaging in “wash sales.” Several motions are pending before the Court. 17 I. 18 PROCEDURAL HISTORY In 2003, the Judicial Panel on Multidistrict Litigation (“JPML”) transferred seven class 19 action cases from various districts in California to this District under 28 U.S.C. § 1407 as 20 Multidistrict Litigation (“MDL”) Case No. 1566, assigning Judge Pro to preside. Since then, the 21 JPML has transferred in several more actions from various districts throughout the United States. 22 Between 2003 and 2015, Judge Pro ruled on many motions to remand, to dismiss, and for 23 summary judgment. He also approved several class settlements. Several parties settled on their 24 own. One or more of the cases have been to the Court of Appeals twice and to the Supreme 3 of 9 1 Court once. In 2007, the Court of Appeals reversed several dismissals under the filed rate 2 doctrine and remanded for further proceedings. In 2013, the Court of Appeals reversed several 3 summary judgment orders, ruling that the Natural Gas Act did not preempt state law anti-trust 4 claims and that certain Wisconsin- and Missouri-based Defendants should not have been 5 dismissed for lack of personal jurisdiction. The Supreme Court granted certiorari as to 6 preemption under the Natural Gas Act and affirmed. The case was soon thereafter reassigned to 7 this Court when Judge Pro retired. The Court has issued several dispositive orders and has 8 denied class certification in applicable cases. The Court recently ruled on approximately forty 9 motions, including the final group of dispositive motions. Two motions to reconsider and 10 several other motions are pending before the Court. 11 II. MOTIONS TO RECONSIDER 12 A. Motion No. 2959 13 Defendants Xcel Energy Inc. (“Xcel”), Northern States Power Co. (“N. States”), Dynegy 14 Illinois, Inc. (“DII”), DMT GP, LLC (“DMT”), Dynegy GP, Inc. (“DGI”), El Paso Corp. (“El 15 Paso”), and Williams Merchant Services Co. (“Williams”) ask the Court to reconsider denial of 16 their motion for summary judgment in the ‘1019 and ‘915 Cases based on release and/or res 17 judicata via the settlements in a consolidated class action brought in the Southern District of New 18 York, No. 03-cv-6186 (“the NYMEX Case”). The Court granted the motion as to several 19 Defendants but denied the motion as to movants because the Court was not satisfied that 20 movants were parties to the NYMEX Case or parents, subsidiaries, successors, etc. of parties to 21 the NYMEX Case covered by the release. The Court invited the present motions to reconsider if 22 movants could provide such evidence or point out to the Court such evidence already in the 23 record. 24 4 of 9 Movants note that the Court reconsidered the release arguments of Xcel, El Paso, and 1 2 Williams after a previous round of summary judgment motions under similar circumstances. (See 3 Order 2–3, Nov. 16, 2016, ECF No. 2671 (noting that the relevant Plaintiff had affirmatively 4 alleged the corporate relationships at issue in the relevant pleading)). Movants are correct that 5 Plaintiffs in the ‘1019 and ‘915 Cases have also judicially admitted several corporate 6 relationships via their respective pleadings. (See Third Am. Compl. ¶ 25 (Williams), ¶ 45 (El 7 Paso), ¶ 67 (Xcel), ¶ 68 (N. States), ECF No. 1846, attached as Ex. 1 to Mot. Recon., ECF No. 8 2959; Am. Class Action Compl. ¶ 21 (Williams), ¶ 41 (El Paso), ¶ 68 (Xcel), ¶ 69 (N. States), 9 ECF No. 1953, attached as Ex. 2 to Mot. Recon., ECF No. 2959). The Court therefore finds that 10 Williams, El Paso, Xcel, and N. States were released. Movants also adduce the testimony of DII’s Rule 30(b)(6) deponent that DII, DMT, and 11 12 DGI were related to Dynegy Marketing & Trade, which was a “Settling Defendant” in the 13 NYMEX Case. (See Jolley Dep. 49, ECF No. 2959-7 (attesting that DII is the parent of Dynegy 14 Holdings, Inc., which in turn is the parent of DGI, a general partner in Dynegy Marketing & 15 Trade, and that Dynegy Holdings, Inc. also owns DMT)). In other words, DGI was a general 16 partner of a Settling Defendant (Dynegy Marketing & Trade), DII was DGI’s “grandparent,” and 17 DMT shared a parent with DGI. The Court must examine whether these entities are released 18 based on their relationships to Dynegy Marketing & Trade. The relevant language of the release 19 is: 20 21 22 23 24 “Released Parties” shall mean the Settling Defendants, the Settling Defendants’ predecessors, the Settling Defendants’ successors, and the present or former members, principals, officers, directors, employees, agents, assigns, attorneys, insurers, shareholders, advisors, parents, subsidiaries, affiliates, joint ventures, partnerships, and associates (as defined in SEC Rule 12b-2 . . .) of the Settling Defendants, the Settling Defendants’ predecessors, and/or the Settling Defendants’ successors, in any capacity related to the Settling Defendants and their predecessors and successors, but not in any capacity related to any of the nonsettling defendants; and each of their assigns, representatives, heirs, executors, and 5 of 9 1 2 3 administrators (and present or former members, principals, officers, directors, employees, agents, assigns, attorneys, insurers, shareholders, advisors, parents, subsidiaries, affiliates, joint ventures, partnerships, or associates of all such parents, subsidiaries, affiliates, joint ventures, partnerships, or associates in any capacity related to the Settling Defendants and their predecessors and successors, but not in any capacity related to any of the non-settling defendants). 4 (First Settlement Order 4–5 n.3, ECF No. 2300-5). 5 First, according to Jolley’s testimony, DGI was a partner of Dynegy Marketing & Trade. 6 It was therefore released as a member of a Settling Defendant. 7 Second, DII was the parent of the parent of DGI. Under the release, parents of parents of 8 Settling Defendants, as well as parents of members of Settling Defendants, were released. But 9 DII was the parent of a parent (Dynegy Holdings, Inc.) of a member (DGI) of a Settling 10 Defendant (Dynegy Marketing & Trade). There is no language in the release indicating that it is 11 infinitely recursive, i.e., that it includes parents of parents of members, etc., ad infinitum. There 12 is a single recursive clause, “and each of their assigns, representatives . . . .” DII therefore only 13 falls under the definition of “Released Parties” if “parents” under the language of the release was 14 intended to include parents of parents. The Court finds that it was. The term “corporate parent” 15 means “[a] corporation that has a controlling legal interest in another corporation.” Black’s Law 16 Dictionary 418 (10th ed. 2014). The essential characteristic of a “parent” entity is its control 17 over the other entity, not the degree to which it is separated from the controlled entity via 18 corporate formalities. 19 Third, DMT is a subsidiary of DMT Holdings, which is in turn a subsidiary of Dynegy 20 Holdings, Inc., which in turn is a parent of DGI, which in turn is a member of a Settling 21 Defendant (Dynegy Marketing & Trade). Under the release, subsidiaries of parents of Settling 22 Defendants are released. It would therefore be clear that DMT is released if DGI were itself a 23 Settling Defendant, because DMT is a (grand)subsidiary of DGI’s parent (Dynegy Holdings, 24 6 of 9 1 Inc.). But DGI is not a Settling Defendant. Rather, it is a member of a Settling Defendant 2 (Dynegy Marketing & Trade). The release cannot reasonably be read to include 3 (grand)subsidiaries of parents of members of Settling Defendants. As noted, the release is not 4 infinitely recursive. 5 B. Motion No. 2962 6 The remaining Defendants ask the Court to reconsider its March 2017 denial of summary 7 judgment in the ‘1019 Case based on its finding that that there remained a genuine issue of 8 material fact as to whether Plaintiffs Carthage College and Briggs & Stratton received sufficient 9 notice of the NYMEX settlement. The Court was unsure at the time whether Plaintiffs’ broker 10 Kaztex, who had received the notice, had a duty to notify Plaintiffs. Movants note that in its 11 recent August 2017 order addressing a similar motion, the Court ruled that the case law indicated 12 that the NYMEX court’s finding that constitutionally sufficient notice had been provided was not 13 amenable to collateral attack here. (See Order, 13, ECF No. 2957 (citing Hesse v. Sprint Corp., 14 598 F.3d 581, 588 (9th Cir. 2010) (citing Epstein v. MCA, Inc., 179 F.3d 641, 648 (9th Cir. 1999) 15 (citing Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 809 (1985))))). 16 Plaintiffs argue that in the case of movants, it previously appeared that Kaztex had only 17 received notice in its capacity as a class member itself, not as Plaintiffs’ agent, and that the 18 record has not changed in that regard. But movants correctly note in reply that the reason the 19 Court recently granted summary judgment on this issue despite any potential fact issues 20 concerning notice was because any such fact issues were precluded; under the case law, the 21 NYMEX court’s findings that notice to class members had been sufficient was simply not 22 collaterally attackable here. The factual distinction Plaintiffs ask the Court to recognize may be 23 valid, but the Court would have to ignore Hesse in order to address it. The Court is not free to do 24 so and finds that it must reconsider. 7 of 9 1 III. MOTIONS TO CERTIFY ORDER FOR INTERLOCUTORY APPEAL Several Defendants in the ‘1019, ‘915, and ‘1351 Cases ask the Court to certify its March 2 3 30, 2017 denials of summary judgment for interlocutory appeal under 28 U.S.C. § 1292(b). The 4 Court denies the motion. The immediate appeal of the denial of summary judgment would not 5 likely advance the termination of the present litigation but is more likely to delay it. These cases 6 are already over a decade old. They have been to the Court of Appeals twice and to the Supreme 7 Court once, and they have outlasted the tenure of the district judge originally assigned to hear 8 them. The Court intends to conclude the consolidated pretrial proceedings and remand to the 9 transferor courts in the most expeditious manner possible. The Court will not certify these issues 10 for interlocutory appeal based on the speculation that the Court of Appeals may choose to hear 11 those issues together with the pending appeals. At a minimum, even if the Court of Appeals 12 chose to do that, it would almost certainly extend the time to determine the pending appeals. 13 IV. 14 MOTION FOR SUGGESTION OF REMAND Plaintiffs in the class action cases (the ‘233, ‘1019, ‘987, ‘1351, and ‘915 Cases) have 15 asked the Court to issue a suggestion of remand to the JPML. See J.P.M.L. Rule 10.1(b)(i). The 16 Court solicited the motion at an August 9, 2017 fairness hearing, indicating that Plaintiffs should 17 file it after briefing was completed on Motions for Summary Judgment Nos. 2745 and 2764. The 18 parties agree that those motions are moot. Two appeals are pending concerning the Court’s 19 denial of class certification and the Court’s dismissal of claims against Defendant CenterPoint 20 Energy Services, Inc. Plaintiffs ask the Court to enter a proposed order that does not simply 21 suggest remand but rather: (1) stays the actions in this Court; (2) stays or denies without 22 prejudice (it is not clear) the pending motions to reconsider, for consideration by the transferor 23 courts after remand; (3) suggests to the JPML that the cases be remanded after the mandates 24 issue in the pending appeals; and (4) is entered into the docket but not submitted to the JPML 8 of 9 1 until the mandates issue from the Court of Appeals. (See Proposed Order, ECF No. 2961-1). The 2 Court will not enter the proposed order. If Plaintiffs themselves do not believe the class action 3 cases should be immediately remanded, the Court will not issue a suggestion of remand. 4 Plaintiffs implicitly admit that the Court should not suggest remand until the pending appeals are 5 decided. That being the case, the Court will not enter a superfluous order indicating what it may 6 do in the future. The Court agrees with Defendants that upon issuing the present order, it should 7 simply stay the cases and await the Court of Appeals’ rulings in the two pending appeals. CONCLUSION 8 9 10 IT IS HEREBY ORDERED that the Motion for Leave to File Supplemental Brief (ECF No. 2946) and the Motion to Reconsider (ECF No. 2962) are GRANTED. 11 IT IS FURTHER ORDERED that the Motion to Reconsider (ECF No. 2959) is 12 GRANTED IN PART and DENIED IN PART. Xcel Energy Inc.; Northern States Power Co.; 13 Dynegy Illinois, Inc.; Dynegy GP, Inc.; El Paso Corp.; and Williams Merchant Services Co. are 14 entitled to summary judgment based on release, but DMT GP, LLC is not. 15 16 17 IT IS FURTHER ORDERED that the Motions to Certify (ECF Nos. 2967, 2968) and the Motion for Suggestion of Remand (ECF No. 2961) are DENIED. IT IS FURTHER ORDERED that the consolidated cases are STAYED, and the parties 18 shall notify the Court upon the issuance of the Court of Appeals’ rulings in Appeals Nos. 16- 19 17099 and 17-16227. 20 21 IT IS SO ORDERED. 20th day October, 2017. Dated this 11th day ofof November, 2017. 22 23 24 _____________________________________ ROBERT C. JONES United States District Judge 9 of 9

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