Centerpoint Energy v. Miller County Circuit

Decision Date07 June 2007
Docket NumberNo. 06-1294.,06-1294.
PartiesCENTERPOINT ENERGY, INC., Centerpoint Energy Resources Corp. (f/ k/a Reliant Energy Resources Corp.), Entex Gas Marketing Company, Centerpoint Energy Field Services, Inc., and Centerpoint Energy Pipeline Services, Inc., Petitioners, v. MILLER COUNTY CIRCUIT COURT, SECOND DIVISION, the Honorable Jim Hudson, Circuit Judge, Presiding; Weldon Johnson; and Angela Sullivan Engledowl, Respondents.
CourtArkansas Supreme Court

Baker Botts, LLP, by: B. Daryl Bristow, Mark R. Robeck, Amy Douthitt Maddux, and Jason M. Ryan; Jackson Walker, LLP, by: Richard E. Griffin, Houston, TX; Friday, Eldredge & Clark, LLP, by: James M. Simpson, Robert S. Shafer, and Martin A. Kasten, Little Rock; and Atchley, Russell, Waldrop & Hlavinka, LLP, by: J. Dennis Chambers, Texarkana, TX, for petitioners.

Patton, Roberts, McWilliams & Capshaw, by: Phillip N. Cockrell, Richard A. Adams, and Shivali Sharma; Keil & Goodson, by: John C. Goodson and Matt Keil; Nix, Patterson & Roach, LLP, by: C. Cary Patterson and Michael B. Angelovich, Texarkana, TX; James M. Pratt, Jr., P.A., by: James M. Pratt, Jr., Camden; and Eggleston & Briscoe, by: Wade Vandiver and Bill Eggleston, Houston, TX, for respondents.

Mary W. Cochran, General Counsel, and Randolph Hightower, Commission Counsel, Arkansas Public Service Commission, Little Rock, for Arkansas Public Service Commission as amicus curiae.

Greg Abbott, Attorney General of Texas, Kent C. Sullivan, First Ass't Attorney General, Edward D. Burbach, Dep. Attorney General for Litigation, Karen Kornell, Ass't Attorney General, Chief, Natural Resources Division, Daniel C. Wiseman, Ass't Attorney General, Natural Resources Division, Austin, TX, for Public Utility Commission of Texas, as amicus curiae.

Mitchell, Williams, Selig, Gates & Woodyard, PLLC, by: Derrick W. Smith, Little Rock; Eve Kahao Gonzalez, General Counsel, Louisiana Public Service Commission, Baton Rouge, LA, for Louisiana Public Service Commission as amicus curiae.

ROBERT L. BROWN, Justice.

Petitioners Centerpoint Energy, Inc. (hereinafter "Centerpoint"); Centerpoint Energy Resources Corp. (f/k/a Reliant EnergyResources Corp.) (hereinafter "CERC"); Entex Gas Marketing Company (hereinafter "EGMC"); Centerpoint Energy Field Services, Inc.; and Centerpoint Energy Pipeline Services, Inc. (hereinafter referred to collectively as "Centerpoint petitioners"), have petitioned this court for a writ of prohibition to prohibit the Miller County Circuit Court from exercising subject-matter jurisdiction over a class-action complaint styled Weldon Johnson, et al. v. Centerpoint Energy, Inc., et al., Miller County Circuit Court No. 04-327-2.1 We grant the writ of prohibition in part, as explained below.

The underlying facts are these. On October 8, 2004, Weldon Johnson, a resident of Miller County, Arkansas, and Guy W. Sparks, a resident of Bowie County, Texas, filed a class-action complaint in the Miller County Circuit Court against the petitioners, as well as several other named defendants,2 wherein they asserted claims for fraud, unjust enrichment, and civil conspiracy concerning the cost of natural gas delivered to the purported class representatives and to other customers similarly situated in Arkansas and Texas. The complaint alleges that Centerpoint transports and sells natural gas to customers through divisions of its wholly owned subsidiary, CERC, a regulated gas utility company that conducts natural gas distribution and pipeline operations. CERC, through "individuals" within Centerpoint's "Gas Supply Group," purchases natural gas from various suppliers, which are also named defendants in the complaint. The "individuals" in Centerpoint's "Gas Supply Group" also purchase natural gas for EGMC, a Centerpoint affiliate, wholly owned subsidiary, and unregulated utility company that provides natural gas to major commercial and industrial consumers. Thus, the complaint alleges that the same "individuals" purchasing natural gas for CERC, as a regulated entity, are also purchasing natural gas for Centerpoint's unregulated entity, EGMC.

The complaint asserts that Centerpoint and its affiliates are involved in a fraudulent "high-low" selling scheme for natural gas that creates huge profits for the company at the expense of residential customers. The plaintiffs allege that suppliers sell natural gas to the regulated utility divisions of Centerpoint for resale to residential and commercial consumers in the states of Arkansas, Texas, Oklahoma, Louisiana, and Mississippi at prices far above market prices. The cost of the natural gas is then passed on to the customers through a purchased-gas-adjustment clause.3 Because of these high-priced purchases by the regulated subsidiaries, the gas suppliers are then able to sell natural gas to unregulated subsidiaries at below market prices, and those subsidiaries, in turn, sell the natural gas to major commercial and industrial consumers. Industrial natural gas prices are not government regulated, and the complaint alleges that because Centerpoint buys this natural gas at such low prices, it obtains a competitive advantage in the industrial natural gas market. The complaint asserts causes of action against the defendants for fraud, unjust enrichment, and civil conspiracy and seeks relief on behalf of residential and commercial customers in the form of actual money damages sustained as a result of the alleged fraud, as well as exemplary and punitive damages and reasonable and necessary attorneys' fees.4

On June 30, 2005, Centerpoint and others moved to dismiss the complaint and urged that the class-action complaint involved rates charged to those customers, who are the ratepayers, and that exclusive jurisdiction of these claims lay with the state regulatory agencies, not with the circuit court. The Arkansas Public Service Commission (APSC) and the Texas Railroad Commission (TRRC) both filed amicus curiae briefs with the circuit court in support of the motion to dismiss.

The plaintiffs next filed an amended complaint,5 asserted the same basic allegations, and substituted Angela Sullivan Engledowl as named class representative from Bowie County, Texas, replacing Guy W. Sparks. The amended complaint alleges that subject-matter jurisdiction is proper in the circuit court, because the plaintiffs are not really complaining about the rates they are being charged but rather about the fraudulent efforts by the defendants to misrepresent the actual cost of natural gas. The amended complaint further alleges that state regulatory agencies do not have the authority to adjudicate private causes of action or tort claims, and that because many of the defendants are unregulated, the various regulatory agencies do not have jurisdiction to adjudicate the claims against these defendants. The relief sought by the plaintiffs remains the same.

After a hearing on the defendants' motion to dismiss, the circuit court entered an order denying the motion. In its order, the circuit court ruled that state regulatory agencies did not have the authority to regulate the actual cost of natural gas, which was the subject matter of this lawsuit. It further ruled that the APSC did not have the authority to adjudicate claims of common law fraud, to provide a remedy to class members that reside outside the State of Arkansas, or to adjudicate claims involving unregulated defendants. The circuit court also ruled that the filed-rate doctrine did not deny it subject-matter jurisdiction, because the plaintiffs were not requesting a change in their natural gas rates.

The Centerpoint petitioners have now filed a petition for writ of prohibition with this court and are contending that the state regulatory agencies, including the APSC, have exclusive jurisdiction over the claims asserted by the plaintiffs on behalf of the proposed class and that the circuit court is wholly without jurisdiction. They urge that the plaintiffs' core contention is that they paid too much for their natural gas service and that this is precisely a matter over which the APSC has sole and exclusive jurisdiction. They insist that the plaintiffs' complaint deals with the rates they were charged and asserts that the circuit court erred in ruling that the APSC has no authority over complaints regarding the cost of natural gas. They further claim that the circuit court apparently confused the issue of whether the APSC actually fixes the proper cost of natural gas with whether it has the authority to examine the costs charged and to disallow improper costs.

The Centerpoint petitioners further claim that the APSC has sole and exclusive jurisdiction by statute to adjudicate disputes between customers and utility companies over public rights. They assert that the right to a reasonable natural gas rate is a public right and that the plaintiffs here have no private cause of action sufficient to vest jurisdiction in the circuit court. They also maintain that the circuit court erred in ruling that the APSC lacks jurisdiction and further erred in ruling that the APSC has no authority to grant proper relief to the plaintiffs. The Centerpoint petitioners emphasize that the APSC may give refunds, billing credits, or any other appropriate relief to customers. With regards to attorneys' fees, they argue that although the APSC may not have the authority to award them, attorneys' fees are generally not recoverable in any event under Arkansas law, absent a specific statutory authorization. Furthermore, they assert that the plaintiffs did not seek disgorgement of profits by the gas suppliers in their complaint and that the APSC does have the ability to make the plaintiffs and purported class members whole.

The APSC has filed an amicus curiae brief with this court supporting the grant of the writ of prohibition. It claims in that brief that it has sole and exclusive jurisdiction over the rates charged for public utilities in Arkansas, and it...

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9 cases
  • Coll v. First Am. Title Ins. Co.
    • United States
    • U.S. Court of Appeals — Tenth Circuit
    • April 26, 2011
    ...does not create a right to a reasonable rate that exists independently of agency action”); Centerpoint Energy, Inc. v. Miller Cnty. Circuit Ct., 370 Ark. 190, 258 S.W.3d 336, 342–43 (2007) (noting Arkansas law has adopted Eighth Circuit's reasoning in H.J. Inc. “that the underlying alleged ......
  • Desoto Gathering Co. v. Ramsey
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    • Arkansas Supreme Court
    • January 28, 2016
    ...court did not have jurisdiction over the proceedings below because we had previously held in Centerpoint Energy, Inc. v. Miller County Circuit Court , 370 Ark. 190, 258 S.W.3d 336 (2007), that the Arkansas Public Service Commission had sole and exclusive jurisdiction, rather than the circui......
  • Arkansas Dept. Health Human Serv. V. Smith
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    • Arkansas Supreme Court
    • September 13, 2007
    ... ...         Miller & Schrader, P.A., by: Rebecca Winburn, Little Rock, AR, for ... court for a writ of prohibition instructing the Circuit Court of Pulaski County that it is without jurisdiction to ... See Centerpoint Energy Resources Corp. v. Circuit Court of Miller County, ... ...
  • Centerpoint Energy v. Miller Cty Cir. Court
    • United States
    • Arkansas Supreme Court
    • February 14, 2008
    ... ... MILLER COUNTY CIRCUIT COURT, The Honorable James Scott Hudson, Jr., Weldon Johnson, and Angela Sullivan Engledowl, Respondents ... No. 07-924 ... Supreme ... ...
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1 books & journal articles
  • Arkansas. Practice Text
    • United States
    • ABA Antitrust Library State Antitrust Practice and Statutes (FIFTH). Volume I
    • December 9, 2014
    ...202. The PSC has the sole and exclusive jurisdiction and authority to determine rates. Centerpoint Energy v. Miller County Circuit Court, 258 S.W.3d 336, 345 (Ark. 2007); Cullum , 907 S.W.2d at 743 (citing ARK. CODE ANN. § 23-4-201(a)(1)). “[T]his jurisdiction extends over rate matters and ......

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