California ex rel. Lockyer v. Mirant Corp, C-02-1787-VRW.

Decision Date25 March 2003
Docket NumberNo. C-02-3042-VRW.,No. C-02-3318-VRW.,No. C-02-2400-VRW.,No. C-02-1788-VRW.,No. C-02-2061-VRW.,No. C-02-1854-VRW.,No. C-02-3040-VRW.,No. C-02-207-VRW.,No. C-02-3041-VRW.,No. C-02-1787-VRW.,No. C-02-3311-VRW.,No. C-02-1914-VRW.,No. C-02-3036-VRW.,No. C-02-1791-VRW.,No. C-02-3127-VRW.,C-02-1787-VRW.,C-02-1788-VRW.,C-02-1791-VRW.,C-02-1854-VRW.,C-02-1914-VRW.,C-02-2061-VRW.,C-02-207-VRW.,C-02-2400-VRW.,C-02-3036-VRW.,C-02-3040-VRW.,C-02-3041-VRW.,C-02-3042-VRW.,C-02-3127-VRW.,C-02-3311-VRW.,C-02-3318-VRW.
Citation266 F.Supp.2d 1046
PartiesPeople of the State of CALIFORNIA, ex rel Bill Lockyer, Attorney General, et al, Plaintiffs, v. MIRANT CORPORATION, et al, Defendants. People of the State Of California, ex rel Bill Lockyer, Attorney General, et al, Plaintiffs, v. Reliant Energy, Inc., et al, Defendants. People of the State Of California, ex rel Bill Lockyer, Attorney General, Plaintiff, v. Reliant Energy, Inc., et al, Defendants. People of the State of California, ex rel Bill Lockyer, Attorney General, Plaintiff, v. Dynegy, Inc, et al, Defendants. People Of The State Of California, ex rel Bill Lockyer, Attorney General, Plaintiffs, v. Mirant Corporation, et al, Defendants. People of the State Of California, ex rel Bill Lockyer, Attorney General, Plaintiffs, v. Coral Power, LLC, Defendant. People Of The State Of California, ex rel Bill Lockyer, Attorney General, Plaintiffs, v. Puget Sound Energy, Inc, Defendant. People of the State Of California, ex rel Bill Lockyer, Attorney General, Plaintiffs, v. Transalta Energy Marketing (California), Inc, et al, Defendants. People of the State Of California, ex rel Bill Lockyer, Attorney General, Plaintiffs, v. Tucson Electric Power Company, Defendant. People of the State of California, ex rel Bill Lockyer, Attorney General, Plaintiffs, v. Idaho Power Company, Defendant. People of the State of California, ex rel Bill Lockyer, Attorney General, Plaintiffs, v. Merrill Lynch Capital Services, Inc, et al, Defendants. People of the State Of California, ex rel Bill Lockyer, Attorney General, Plaintiffs, v. BP Energy Company, Defendant. People of the State of California, ex rel Bill Lockyer, Attorney General, Plaintiffs, v. Portland General Electric Company, Defendant.
CourtU.S. District Court — Northern District of California

Harvey I. Saferstein, Nada I. Shamonki, Mintz Levin Cohn Ferris Glovsky & Popeo, Santa Monica, CA, Pamela Merchant, San Francisco, CA, for Plaintiffs.

John A. Sturgeon, Robert P. Pongetti, White & Case LLP, Los Angeles, CA, Robert B. Pringle, Thelen Reid & Priest LLP, San Francisco, CA, for Defendant.

Harvey Y. Morris, Public Utilities Commission of CA, San Francisco, CA, for Loretta Lynch.

ORDER.

WALKER, District Judge.

Motions to dismiss and to remand in the above-captioned cases are currently pending before the undersigned. In these related cases, the Attorney General of California (AG) alleges violation of California's unfair business practices law, Cal B & P Code § 17200, by a number of wholesale electricity suppliers. Two of the actions also allege federal antitrust claims under § 7 of the Clayton Act, 15 USC § 18. Plaintiffs Department of Water Resources and the State of California join these two federal antitrust actions. For ease of e position, the court refers to all plaintiffs as "the AG."

The remaining fifteen actions assert only state law claims under § 17200. Defendants in these cases removed the actions to federal court. On August 6, 2002, the court denied the A.G's motions to remand in five of these actions (Case Nos 02-1791, 02-1854, 02-1914-VRW, 02-2061-VRW, 02-2207-VRW). Eight additional cases alleging identical causes of action under § 17200 were removed to this court and related to the other pending cases but not in time for motions to remand to be noticed and heard on July 31, 2002, with the aforementioned cases (Case Nos 02-2400-VRW, 02-3036-VRW, 02-3040-VRW, 02-3041-VRW, 02-3042-VRW, 02-3127-VRW, 02-3311-VRW, 02-3318-VRW). Defendants in all these actions, except for BP Energy (Case No 02-3311-VRW), move to dismiss or, alternatively, to stay these proceedings pending further action by the Federal Energy Regulatory Commission (FERC).

I

Because the factual background of these cases is discussed in the court's August 6, 2002, order, the court will not repeat those facts here, except to note that the related cases were classified into three categories:

(1) Antitrust eases (2 cases). People v. Mirant, 02-1787-VRW, and People v. Reliant, 02-1788-VRW, allege violation of § 7 of the Clayton Act, 15 USC § 18, and a corollary state law claim under California's unfair business practices statute, Cal B & P § 17200.

(2) Failed to File/Overcharge cases (10 cases). People v. Reliant, 02-2061-VRW, People v. Mirant, 02-2207-VRW, People v. Coral, 02-2400-VRW, People v. Puget Sound, 02-3036-VRW, People v. Transalta, 02-3040-VRW, People v. Tucson Electric, 02-3041-VRW, People v. Idaho Power, 02-3042-VRW, People v. Merrill Lynch Capital, 02-3127-VRW, People v. BP Energy, 02-3311-VRW, and People v. Portland General, 02-3318-VRW, allege two separate violations of California's unfair business practices law, Cal B & P § 17200. First, the AG alleges that these companies failed to file rate schedules as required by the Federal Power Act (FPA), 16 USC § 824 et seq. Second, the AG alleges that the companies charged unjust and unreasonable rates, as determined by FERC, which has plenary regulatory authority over wholesale electricity sales.

(3) Ancillary services cases (3 cases). People v. Reliant, 02-1791-VRW, People v. Dynegy, 02-1854-VRW, People v. Mirant, 02-1914-VRW, assert one cause of action under Cal B & P § 17200, alleging that defendants engaged in various unfair business practices with respect to the ancillary services they contracted to provide the ISO, whose operations are governed by a tariff on file with and approved by FERC.

The court's August 6, 2002, order addressed the AG's motions to remand, which were filed in all the removed cases. As a matter of prudent case management, the court declined to rule on the motions to dismiss at that time to allow other nearly identical cases in the process of being removed and related to achieve procedural parity with the earlier cases. Defendants in these cases were to file motions to dismiss, if they had not done so already, so that the matter could be heard on September 26, 2002.

This order addresses the (1) motions to remand currently pending in eight of the cases that were not related in time to be heard with the other remand motions on July 31, 2002, and (2) the motions to dismiss currently pending in all of the cases.

II

As a preliminary matter, the court considers its jurisdiction to proceed as to defendant NRG Energy, Inc (NRG) in People v. Dynegy, Inc, Case No 02-1854-VRW, one of the ancillary services cases. On December 13, 2002, NRG notified the court that bankruptcy proceedings were commenced against it in United States Bankruptcy Court, District of Minnesota. See Notice of Bankruptcy Filing (02-1854: Doc #50). NRG contends that, as a result of the bankruptcy proceeding, these proceedings against it are automatically stayed, pursuant to 11 USC § 362(a)(1). Id.

The AG, in opposition, contends that the action with respect to NRG Energy, Inc is not automatically stayed because the case falls within the scope of 11 USC § 362(b)(4), which exempts actions or proceedings "by a governmental unit * * * to enforce such governmental unit's * * * police and regulatory power." See PI Opp (Doc # 51). The court agrees. In In re First Alliance Mortgage Co., 263 B.R. 99, 108-09 (9th Cir.BAP 2001), the Bankruptcy Appellate Panel of the Ninth Circuit held that an action seeking civil penalties, commenced by a state under its consumer protection laws, fell within the narrow scope of § 362(b)(4)'s exceptions to an automatic stay. In particular, the Bankruptcy Appellate Panel found that a suit seeking civil penalties for fraudulent business practices was not pursued "solely to advance a pecuniary interest of the governmental unit." Id at 107. Instead, the suit was meant to "effectuate public policy" as opposed to "adjudicate private rights" which might otherwise be at issue in bankruptcy proceedings. Id at 108. Because the suit fell within the scope of § 362(b)(4)'s exception, "which is to prevent the bankruptcy court from becoming a haven for wrongdoers," id at 109 (citing In re Berg, 230 F.3d 1165, 1167 (9th Cir. 2000)), the Bankruptcy Appellate Panel reversed the bankruptcy court's stay of proceedings.

Similarly, in the instant case, the AG seeks to enforce its unfair competition laws on behalf of the public by way of civil penalties. The AG does not seek restitution or other private forms of relief that might create a conflict between bankruptcy and other proceedings that would necessitate a stay. First Alliance Mortgage Company, 263 B.R. at 108-09. Hence, the court finds that the bankruptcy proceedings against NRG in Minnesota district court do not stay these proceedings against NRG.

III

Motions to remand are currently pending in eight cases, all of which are failure to file/overcharge cases, as described above. These motions are substantively identical to the motions to remand considered and denied by the court in its August 6, 2002, order. The parties raise no new material arguments in these more recent motions. The court therefore relies on the reasoning and analysis contained in its August 6, 2002, order and DENIES the AG's motions to remand in these cases (02-2400: Doc #13; 02-3036: Doc #16; 02-3040: Doc #26; 02-3041: Docs ## 16,34; 02-3042: Doc # 25; 02-3127: Docs ## 15,16; 02-3311: Docs ##12,14; 02-3318: Docs ## 9,21).

The court now turns to the motions to dismiss. By written order dated September 3, 2002, pursuant to the procedure described by the Ninth Circuit in Chuman v. Wright, 960 F.2d 104 (9th Cir.1992), the court certified that the AG's pending appeal of the court's denial of remand cases was "frivolous". 9/3/02 Order (e g, 02-1791: Doc # 78). Consequently, notwithstanding the AG's pending appeals of the court's denial of remand, the court in these...

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