Arandell Corporation v. Xcel Energy Inc.

Filing 292

ORDER granting Motion to Certify Class under Rule 23 (162 in case 3:09-cv-00240-jdp, (275) in case 3:07-cv-00076-jdp) and setting a settlement approval hearing for 6/29/2023 at 1:00 by Zoom. Motion for Final Approval of Settlement Agreement due 6/8/2023. Motion for Attorney Fees due 6/8/2023. Response due 6/15/2023. Signed by District Judge James D. Peterson on 3/7/2023. Associated Cases: 3:07-cv-00076-jdp, 3:09-cv-00240-jdp (lam)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

ARANDELL CORPORATION, et al.,
Plaintiffs,

OPINION AND ORDER

v.
07-cv-076-jdp

XCEL ENERGY INC., et al.,
Defendants.
NEWPAGE WISCONSIN SYSTEM INC.,
Plaintiff,

09-cv-240-jdp

v.
CMS ENERGY RESOURCE MANAGEMENT
COMPANY, et al.,
Defendants.
In these consolidated cases, certain commercial and industrial consumers of natural gas
in Wisconsin claim that defendants conspired to increase natural gas prices between 2000 and
2002. These cases were formerly centralized with several other actions in the District of Nevada
as part of a multi-district ligation (MDL). After spending more than a decade in MDL, these
cases were remanded to this court in 2019 for additional pre-trial decisions and trial.
On October 21, 2022, plaintiffs in both of the Wisconsin cases reached a settlement
with defendants The Williams Companies, Inc., Williams Merchant Services Company LLC
(f/k/a Williams Merchant Services Company, Inc.), and WPX Energy Marketing, LLC (f/k/a
Williams Power Company, Inc.). Dkt. 276-1 (Williams settlement agreement).1 Pending before

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Docket citations are to case number 07-cv-076-jdp.

the court is plaintiffs’ unopposed motion to certify a class under Federal Rule of Civil Procedure
23 for the purpose of settlement, preliminarily approve the settlement agreement, appoint class
representatives and class counsel, and approve a class notice.2 Dkt. 275. The court will grant
the motion, direct plaintiffs to send notice to the class members, set deadlines related to final
approval, and set a date for a fairness hearing.

ANALYSIS
Plaintiffs contend that the Williams defendants participated in an unlawful conspiracy
to manipulate natural gas price indices in violation of Wisconsin state antitrust laws. They
have alleged that defendants’ price manipulation began around January 1, 2000 and continued
in many respects until at least October 31, 2002, resulting in class members paying excessive
prices for natural gas. Plaintiffs assert that the manipulation was carried out through
agreements to falsely report prices to trade publications that generated price indexes and
conduct wash trades and churning activities. They also allege that the manipulative conduct
was

facilitated

through

oral

communications,

face-to-face

meetings,

electronic

communications, trading platforms, and other means.
A. Class certification
Although the parties have settled, the court must still certify that the proposed class
satisfies the three requirements for class certification under Rule 23: (1) the class must be
clearly defined with objective criteria, Mullins v. Direct Digital, LLC, 795 F.3d 654, 657 (7th
Cir. 2015); (2) the class must satisfy the threshold requirements of numerosity, commonality,

This court and the MDL court have approved three similar settlements in these cases with
other defendant groups. See Dkt. 276, ¶ 21; Dkt. 276-2 at 2.

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typicality, and adequacy of representation under Rule 23(a); and (3) the class must meet the
requirements of at least one of the types of class actions listed in Rule 23(b).
1. Class definition
The parties propose the following class definition for purposes of settlement:
All industrial and commercial purchasers of natural gas for their
own use or consumption during the period from January 1, 2000
until October 31, 2002, and which gas was used or consumed by
them in Wisconsin. Excluded from the Class are (a) entities that
purchased natural gas for resale (to the extent of such purchase
for resale); (b) entities that purchased natural gas for generation
of electricity for the purpose of sale (to the extent of such
purchase for generation); (c) entities that purchased natural gas
from entities that sold natural gas at rates approved by the
Wisconsin Public Service Commission (to the extent of such
purchases at such approved rates); (d) defendants and their
predecessors, affiliates and subsidiaries; and (e) the federal
government and its agencies.
Dkt. 276-1 at 3.
The class definition is not vague, based on subjective criteria, or defined in terms of
success on the merits. See Mullins, 795 F.3d at 660-61. It identifies a particular group of
companies (industrial and commercial purchasers of natural gas with clearly defined exclusions)
harmed in a particular way (paid more for natural gas than they would have absent the alleged
conspiracy) during a specific period in a particular area. So the parties have satisfied the first
requirement for class certification.
2. Rule 23(a) requirements
Rule 23(a)(1) requires a proposed class that is so numerous that joinder is impracticable.
The court of appeals has deemed classes of 40 members to be sufficient. See Swanson v. Am.
Consumer Indus., Inc., 415 F.2d 1326, 1333 n.9 (7th Cir. 1969). See also 1 Newberg and
Rubenstein on Class Actions, § 3:12 (6th ed. 2022) (“[A] a class of 40 or more members raises

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a presumption of impracticability of joinder based on numbers alone.”). Plaintiffs state that
the United States Energy Information Agency (EIA) reported thousands of commercial and
industrial purchasers of natural gas in Wisconsin between 2000 and 2002, so numerosity is
easily met. Dkt. 276, ¶ 19.
Commonality requires that the action involve “questions of law or fact common to the
class.” Rule 23(a)(2). A proposed class meets this requirement if “determining the truth or
falsity of [a] common contention will resolve an issue that is central to the validity of each
claim.” Chi. Teachers Union, Local No. 1. v. Bd. of Educ., 797 F.3d 426, 434 (7th Cir. 2015). The
common question of whether the Williams defendants participated in a nationwide price
manipulation conspiracy that resulted in increased prices for natural gas across Wisconsin can
be answered by evidence that applies to all plaintiffs. Therefore, the commonality requirement
is met.
Typicality requires the class representatives’ claims to be typical of the claims of the
proposed class. Plaintiffs suffered the same baseline harm that all members of the proposed
class suffered from the alleged price fixing, even if class members purchased natural gas at
different prices and in different ways. See Kleen Prods. LLC v. Int’l Paper Co., 831 F.3d 919, 92829 (7th Cir. 2016) (“Even for transactions where prices were negotiated individually or a longer
term contract existed, the district court found, reasonably, that the ‘starting point for those
negotiations would be higher if the market price for the product was artificially inflated.’”).
Plaintiffs have satisfied this requirement.
Adequacy of representation has two components: (1) whether the class representatives’
interests are aligned with the class’s interests; and (2) whether class counsel can capably litigate
the case. Gomez v. St. Vincent Health, Inc., 649 F.3d 583, 592 (7th Cir. 2011). The court sees

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no apparent conflicts between the named plaintiffs’ interests and those of the rest of the class.
Therefore, Arandell Corporation, Briggs & Stratton Corporation, Carthage College, Ladish Co.,
Inc. (n/k/a ATI Ladish LLC), Merrick’s, Inc., Verso Minnesota Wisconsin LLC (f/k/a NewPage
Wisconsin System Inc., n/k/a Billerud Wisconsin LLC), and Sargento Foods, Inc., are
appointed as class representatives.
Plaintiffs’ counsel, which includes five law firms in the Midwest, have litigated these
and related cases for Wisconsin class members for 17 years, securing settlements totaling
approximately $77 million for the Wisconsin class. See dkt. 163, ¶¶ 27, 32-33. Nothing in the
litigation up to this point calls counsel’s capabilities into question to prevent their appointment
under Rule 23(g). In fact, the Kohner Mann & Kailas, S.C. and Polsinelli PC firms have already
been appointed by the MDL Court in the seven prior class settlements involving Wisconsin.
So the court will grant plaintiffs’ request that the law firms of Kohner Mann & Kailas, S.C.,
Perkins Coie LLP, and Polsinelli PC be appointed counsel for the settlement class.
3. Rule 23(b)(3) requirements
In addition to satisfying Rule 23(a)’s four prerequisites, these actions must satisfy one
of the Rule 23(b) provisions. Plaintiffs rely on Rule 23(b)(3), which requires that the action’s
common questions of law or fact predominate over questions that affect only individual
members, and that the controversy would best be resolved through a class action. To determine
whether common questions predominate, the court considers (1) the class members’ interests
in individually controlling their own claims; (2) the nature and extent of any other litigation
about the controversy; (3) the desirability of concentrating the litigation here; and (4) any
management challenges that the case may present. Rule 23(b)(3).

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First, although individual class members have an interest in controlling their own
claims, they also have an interest in efficiently resolving their claims, which a class action and
the proposed settlement provide. Second, there is no indication that any class members are
pursuing other litigation related to the claims at issue in this case. Third, consolidating the
common issues and resolving them in one case is efficient. Fourth, the case presents no
management difficulties because the parties have settled. See Amchem Prods., Inc. v. Windsor,
521 U.S. 591, 620 (1997) (court need not inquire into management difficulties when
considering class certification for purposes of settlement). So the predominance requirement is
satisfied.
Superiority is also satisfied. As found in the previous three settlements in these cases,
individual litigation of each class member’s claims would be expensive and time-consuming,
and the cost of litigation would likely exceed any recovery. Resolving those claims through a
class action will save time and expense for both the parties and the court.
The proposed class satisfies all of Rule 23’s requirements, so the court will certify the
proposed class for settlement purposes. Next the court must determine whether to preliminarily
approve the proposed settlement.
B. Preliminary approval
The settlement, Dkt. 276-1, provides for a fund of $12 million from which expenses,
attorneys’ fees, and service awards will be deducted. Specifically, plaintiffs’ counsel seeks to
recover costs and expenses they have incurred from February 1, 2020 through September 30,
2022, not to exceed $143,000. See dkts. 276, ¶ 35; 277, ¶ 16, and 278, ¶ 12. In addition,
plaintiffs will seek up to $100,000 in administration fees from the settlement fund for AB
Data, Ltd., which plaintiffs’ counsel has selected to serve as the claims administrator pending

6

the court’s approval. See dkt. 276, ¶ 25. No more than $50,000 in administrative fees will be
incurred in the notice, exclusion, and objection process before final approval. Id. Plaintiffs’
counsel will seek attorneys’ fees not to exceed 35% of the settlement fund that remains after
costs and expenses (approximately $4.1 million). The same 35% net fee recovery was approved
in six prior Wisconsin class settlements. Settlement class counsel also may request a service
award for each of the class representatives in an amount that the court deems appropriate.
The remaining settlement fund will be allocated to class members based on the volume
of natural gas that each participating class member purchased in proportion to the total
purchased by all participating class members. The resulting percentages will be multiplied
against the net settlement fund for the Wisconsin class (total settlement minus all expenses,
attorneys’ fees, and service awards) to determine each participating class members’ payment.
Class members will receive a net distribution of almost $8 million.3
The court has reviewed the terms of the proposed settlement and concludes that they
are “within the range of possible approval” under Rule 23(e)(2). Armstrong v. Bd. of Sch. Dirs. of
City of Milwaukee, 616 F.2d 305, 314 (7th Cir. 1980), overruled on other grounds by Felzen v.
Andreas, 134 F.3d 873 (7th Cir. 1998). So the court will grant the motion for preliminary
approval of the settlement and appoint AB Data, Ltd. as the settlement administrator.
C. Class notice
Plaintiffs have identified the identity of potential class members from customer
information produced by defendants, documents and information produced by local natural
gas distribution companies, and nitrogen oxide emissions reports filed with the EPA and EIA,

Wisconsin class members participating in previous settlements have recovered more than $39
million to date. Dkt. 275 at 9.
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which identify entities that burn natural gas. All potential plaintiffs and defendants are wellestablished business entities and organizations, generally with their own corporate attorneys.
As with the previous class settlements, plaintiffs propose that a long form notice, Dkt.
276-3, be sent by U.S. mail or electronic mail to each class member. A short form notice, Dkt.
276-4, will then be published in major newspapers of general circulation in Wisconsin. Both
notices, along with the settlement agreement, will be posted on a website accessible to potential
class members.
The court has reviewed the proposed long and short form notices and finds that they
comply with the requirements of Rule 23. The notices plainly state the nature of the action,
definition of the class, issues, option for members to appear through an attorney, option to be
excluded from the class, and binding effect of judgment on participating class members.
D. Deadlines and final fairness hearing
The court will hold a final fairness hearing via video conference on June 29, 2023, at
1:00 p.m. The parties may have until April 7, 2023, to disseminate notice to the class, giving
the class members until June 5, 2023 to request exclusion from the settlement class and until
May 30, 2023, to object to the settlement and/or file a notice of intention to appear at the
fairness hearing.
The parties have until June 8, 2023, to file a motion for final approval addressing the
factors in Rule 23(e)(2) and until June 5, 2023 to provide one another with PDF copies of all
objections received. Plaintiffs have until June 8, 2023, to file a motion for attorney fees;
defendants may have until June 15, 2023, to respond.

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Plaintiffs have until June 13, 2023, to provide defendants with the list of entities that
timely requested exclusion from the settlement class. Counsel for the parties may file and serve
written responses to any objection no later than five days before the fairness hearing.
In accordance with the terms of the settlement agreement: (1) the Williams defendants
shall deliver into the escrow account the initial installment of its payment towards the
settlement fund within fourteen 14 days of the entry of this order; and (2) a maximum of
$50,000 from this payment may be used to cover the costs of distributing the class notices and
administering the settlement fund up to the date that the settlement agreement becomes final.
Entered March 7, 2023.
BY THE COURT:
/s/
_____________________________________
JAMES D. PETERSON
District Judge

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