Consol. Gas Co. of Fla. v. City Gas Co. of Fla.
| Decision Date | 24 July 1987 |
| Docket Number | No. 83-1010-CIV.,83-1010-CIV. |
| Citation | 665 F. Supp. 1493 |
| Parties | CONSOLIDATED GAS COMPANY OF FLORIDA, INC., Plaintiff, v. CITY GAS COMPANY OF FLORIDA, INC., Defendant. |
| Court | U.S. District Court — Southern District of Florida |
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William J. Dunaj, Philip A. Allen, III, Eric D. Isicoff, Miami, Fla., for plaintiff Mershon Sawyer, et al.
Gary S. Brooks, Miami, Fla., for defendant Fine, Jacobson, et al.
The central issue presented by this case is whether a monopolist involved in the distribution and sale of natural gas, a business regulated by the Florida Public Service Commission, is completely immunized from the sweep of the federal antitrust laws. On the facts of this case, where we can find no clearly articulated state policy or codification conferring any such immunity, we hold that the conduct of Defendant City Gas of Florida, Inc. ("City Gas"), as to the creation of a territorial agreement not to compete in south Florida with its only real competitor in this state, violates the Sherman Act. We also hold that the Defendant's refusal to deal with the Plaintiff, Consolidated Gas Company of Florida, Inc. ("Consolidated"), a tiny potential competitor in south Dade County, as to the transportation or sale of natural gas violates the Sherman Act, inter alia, under the essential facilities doctrine. The particular regulatory scheme adopted in Florida does not extend so far as to clothe with absolute immunity the Defendant's demonstrably anticompetitive conduct.
For the reasons which we detail at great length below, it is hereby
ORDERED AND ADJUDGED as follows:
1. Defendant City Gas has violated § 2 of the Sherman Act, 15 U.S.C. § 2.
2. Plaintiff Consolidated shall recover $1,587,065.15 from Defendant City Gas as compensatory damages, to be trebled pursuant to 15 U.S.C. § 15, for a total recovery of $4,761,195.45 in antitrust damages from City Gas.
3. Consolidated's request for injunctive relief, pursuant to 15 U.S.C. § 26, is granted. City Gas shall sell or transport natural gas to Consolidated at a reasonable price to be determined, upon Consolidated's request, by the Florida Public Service Commission.
4. Consolidated's claims for costs and attorneys' fees shall be determined upon subsequent motion.
5. Consolidated shall submit a proposed order of final judgment in this cause to this Court within ten (10) days of the date of this Order.
Plaintiff has brought suit against Defendant alleging that Defendant violated § 2 of the Sherman Act by monopolizing and attempting to monopolize the natural gas market in south Florida. Plaintiff has sued under 15 U.S.C. §§ 2, 15 and 26 (the Sherman Anti-Trust Act (§ 2) and the Clayton Anti-Trust Act (§§ 15, 26)), seeking injunctive relief, damages and treble damages, costs and attorneys' fees.
Plaintiff has charged Defendant with possessing and illegally exercising monopoly power, and with having wrongfully deprived Plaintiff of access to natural gas while Defendant allegedly took away all of Plaintiff's commercial customers and some of its residential customers, thereby destroying Plaintiff's ability to compete. Plaintiff specifically alleges, among other things, that Defendant acquired and maintained monopoly power from an unlawful territorial agreement not to compete with Peoples Gas System, Inc. ("Peoples"), the only other major natural gas distributor in south Dade; from a grant to Defendant by the Federal Energy Regulatory Commission ("FERC") of the right to purchase natural gas in sufficient bulk to serve many more customers than it serves; and from the fact that Defendant allegedly occupied a "bottleneck" position and was in exclusive possession of essential facilities regarding the transportation and sale of natural gas in portions of Dade County.
The Defendant has filed an Amended Counterclaim alleging in three counts that Plaintiff violated § 1 of the Sherman Act (15 U.S.C. § 1) by engaging in contracts, combinations and conspiracies having as their purpose and effect the restraint of trade with respect to the purchase and resale of gas products; that Plaintiff violated § 2 of the Sherman Act (15 U.S.C. § 2) in that it unlawfully possessed and exercised monopoly power in the Bel Air/Point Royale subdivision, thereby substantially prohibiting or foreclosing Defendant from selling its product therein; and finally that Plaintiff violated § 3 of the Clayton Act (15 U.S.C. § 14) by virtue of an illegal exclusivity agreement between Plaintiff and the subdivision developers and a restrictive covenant running with the land, providing that no liquified or natural gas would be sold within the subdivision unless sold and supplied by Plaintiff.
At the core of Defendant's prayer for relief is the assertion that Plaintiff violated the antitrust laws by these arrangements, improperly binding subdivision customers to purchase gas to be used for power, heating or cooking exclusively from Plaintiff. Defendant contends that as a direct and proximate result of these arrangements, it has been "precluded," "foreclosed," or "delayed" from selling natural gas in the subdivision. Like Plaintiff, Defendant seeks declaratory and injunctive relief, damages and treble damages, costs and attorneys' fees.
This protracted and complex cause came on for trial before the Court, and accordingly, we make the following Findings of Fact and Conclusions of Law.
Consolidated is a retail distributor of liquid petroleum gas ("LP gas") to approximately 2,000 residential and 10 commercial consumers located in the south Dade County subdivision known as the Bel Air/Point Royale Subdivision. Consolidated's gas is shipped by rail or truck to storage tanks owned by Consolidated, and then is transported from the storage tanks to the ultimate consumer by a series of underground pipes located in easements. Consolidated has been in the LP business since before its current President, Mr. Arnold Rosen, purchased the company in the early 1960's.
Defendant City Gas began business in 1949 as an LP gas company. Tr. 2-113. It served district subdivisions throughout Florida and currently serves over 23 such communities. City Gas' principal competitor has been Peoples, which also operated numerous LP gas subdivisions throughout Florida. In 1960, natural gas, which can only be transported by pipeline, became available for resale in southern Florida and both City Gas and Peoples applied for and received allocations to purchase and resell natural gas in Florida from the Federal Energy Regulatory Commission or its predecessor agency. City Gas soon became a major distributor of natural gas in Florida. Currently it purchases natural gas from Florida Gas Transmission ("FGT"), the sole wholesale pipeline supplier of natural gas for resale in Florida. City Gas serves approximately 100,000 residential, commercial and industrial customers. City Gas' pipes and area of service totally surround Consolidated's system. Despite its dominance in the natural gas field, City Gas continued to operate LP subdivision systems until May 1984 through its wholly owned subsidiary, Dade Gas Co. Tr. 3-104.
The LP gas business is unregulated; no governmental franchise or approval is required to purchase and resell LP gas. Moreover, LP gas is not subject to rate regulation by the Florida Public Service Commission ("FPSC"), although its resale...
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