City of Vernon v. Southern California Edison Co.

Decision Date07 February 1992
Docket NumberNo. 90-56281,90-56281
Citation955 F.2d 1361
Parties1992-1 Trade Cases P 69,717 CITY OF VERNON, Plaintiff-Appellant, v. SOUTHERN CALIFORNIA EDISON COMPANY, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Shirley M. Hufstedler, Hufstedler, Kaus & Ettinger, Joseph J. O'Malley, Paul, Hastings, Janofsky, & Walker, Los Angeles, Cal., David C. Hjelmfelt, Channing D. Strother, Jr., Goldberg, Fieldman & Letham, P.C., Washington, D.C., for plaintiff-appellant.

Paul G. Bower, Arthur L. Sherwood, Richard D. Hall, Daniel G. Swanson, and Suzanne S. La Pierre, Gibson, Dunn & Crutcher, Los Angeles, Cal.; and David N. Barry III, Stephen E. Pickett, and Janet K. Lohmann, Southern California Edison Company, Rosemead, Cal., for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before SCHROEDER, LEAVY and FERNANDEZ, Circuit Judges.

FERNANDEZ, Circuit Judge:

The City of Vernon ("Vernon") brought this action against Southern California Edison Company ("Edison") and alleged that Edison had engaged in anticompetitive conduct by denying Vernon access to power transmission lines, by filing discriminatory rate schedules, and by engaging in a group boycott that prevented Vernon from obtaining bulk power from other suppliers. Vernon sought damages and injunctive relief on each of its claims. The district court granted summary judgment in favor of Edison. Vernon appeals. We affirm in part and reverse in part.

BACKGROUND

Edison is an investor-owned fully integrated public utility, which generates, transmits, and distributes electric power within its service area, an area which includes much of Central and Southern California. Vernon is located in Edison's service area, but it has its own electric distribution system, and is the sole provider of retail electric service within its own boundaries. Vernon is bounded by Edison territory and by the City of Los Angeles, which also has its own service territory operated by the Los Angeles Department of Water and Power.

Although Vernon distributes power at retail within its boundaries, it generates a very small portion of its own electricity. Thus, it obtains most of its power in bulk elsewhere and receives it over Edison's transmission lines. That wholesale power is purchased from Edison or from other electrical utilities. It is Edison's responsibility to see to it that Vernon receives all of the power that it needs. Edison also purchases power from and sells it to other utilities.

Vernon and Edison have a long history of disputes over rates, access to Edison's transmission facilities, and the integration of non-Edison power sources into Edison's operating system for the benefit of Vernon. 1 Most of Edison's conduct with respect to Vernon is regulated by the Federal Energy Regulatory Commission (FERC), including the wholesale rates Edison charges, the terms of integration agreements Vernon's denial of access claims (sometimes called foreclosure claims) are based upon Edison's refusal to provide relative size share 3 access to its transmission lines, particularly the Pacific Intertie 4 and lines from the desert Southwest. Vernon also claims entitlement to what the district court characterized as "unlimited" access to Edison's 220 kV network. 5

and transmission rights on Edison's high voltage lines. 2

Vernon claims that Edison has refused to enter into reasonable agreements to integrate Vernon's firm purchases from other sources. These claims involve a generic Integrated Operations Agreement (IOA) and Special Condition 12 (SC-12). The IOA which Edison submitted to Vernon provided that outside power resources could be integrated into Edison's service system on such terms and at such time as Edison deemed appropriate. The FERC determined that parts of the IOA, including the absence of a reasonable notice provision, were unreasonable. Southern Cal. Edison Co., 41 F.E.R.C. p 61,188 at 61,493-94 (1987) and Southern Cal. Edison Co., 52 F.E.R.C. p 61,299 at 62,202-03 (1990), vacated in part, 55 F.E.R.C. p 61,258 (1991). SC-12 was entered into as a partial settlement of Vernon's claims that Edison was unreasonably denying integration and access. SC-12 permits Vernon to import and obtain capacity credit for outside resources without integration pursuant to an IOA.

Vernon also asserts that Edison acted anticompetitively in interrupting or refusing transmission from Nevada Power Company (Nevada Power) to Vernon. It also claims that Edison and Nevada Power engaged in a group boycott designed to keep Vernon from purchasing power from Nevada Power. Vernon and Edison entered into a contract for interruptible transmission service under which Vernon could purchase power from outside suppliers on a non-firm basis. That power would then be transmitted over Edison lines. The contract provided for interruption by Edison at any time and for any reason.

The parties brought several motions for summary judgment, including those which ultimately resulted in judgment for Edison on all claims. The district court granted summary judgment on the foreclosure claims on several grounds. As to Vernon's claim that it was entitled to relative size share access, the district court determined that Edison had established a legitimate business reason for its refusal to provide the requested access, which Vernon had failed to refute. Summary judgment on the integration claims was granted on the ground that Edison had shown a legitimate business justification for not providing for integration on eighteen months' notice. The court granted summary judgment on the SC-12 claims because Edison had no obligation to offer SC-12 and its failure to offer it sooner was not an antitrust violation. The court granted summary judgment on the interruptible transmission service claims because Vernon had not quantified damages. The court viewed that claim as arising from a contractual dispute, and found no material issue of fact regarding The district court also granted Edison's motion for summary judgment on its claims that Edison had discriminated against Vernon in its rates 6 and on the claim that Edison and Nevada Power engaged in a group boycott against Vernon. The court concluded that summary judgment was appropriate because Vernon had presented no evidence of damages and Vernon had failed to introduce evidence sufficient to sustain a finding of concerted action. Eventually, the court determined that judgment was appropriate on all of Vernon's claims, including a claim that Edison had conspired with others to deny access to the Pacific Intertie. Vernon asked the district court to compel Edison to bring a motion for summary judgment on the latter claim, but the district court declined to require the filing of a separate motion.

whether Edison's reasons for interrupting were legitimate.

After entry of judgment, Vernon filed a timely motion for reconsideration. The district court declined to reconsider its decision. 7 Vernon filed a timely notice of appeal.

JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction under 15 U.S.C. §§ 15 and 26. We have jurisdiction under 28 U.S.C. § 1291.

We review a grant of summary judgment de novo. Image Technical Serv., Inc. v. Eastman Kodak Co., 903 F.2d 612, 614 (9th Cir.1990), cert. granted, --- U.S. ----, 111 S.Ct. 2823, 115 L.Ed.2d 994 (1991). We must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Id.

Summary judgment is appropriate if the nonmoving party bears the ultimate burden of proof at trial as to an element essential to its case, and fails to make a showing sufficient to establish a genuine dispute of fact with respect to the existence of that element. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

DISCUSSION

To establish a violation of Section 2 of the Sherman Act, 15 U.S.C. § 2 (§ 2), Vernon would have to show (1) that Edison possessed monopoly power in the relevant market; (2) that it willfully acquired or maintained that power; and (3) that Vernon suffered a causal antitrust injury. Oahu Gas Serv., Inc. v. Pacific Resources, Inc., 838 F.2d 360, 363 (9th Cir.), cert. denied, 488 U.S. 870, 109 S.Ct. 180, 102 L.Ed.2d 149 (1988). An attempt to monopolize is also actionable under § 2. Attempted monopolization has three elements: "specific intent to monopolize, predatory or anticompetitive conduct, and a dangerous probability of success." Drinkwine v. Federated Publications, Inc., 780 F.2d 735, 740 (9th Cir.1985), cert. denied, 475 U.S. 1087, 106 S.Ct. 1471, 89 L.Ed.2d 727 (1986). Vernon would also be required to show causal antitrust injury in an attempted monopoly case. California Computer Products, Inc. v. IBM Corp., 613 F.2d 727, 736 (9th Cir.1979).

To establish a violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 (§ 1), Vernon would have to prove "three elements: (1) an agreement or conspiracy among two or more persons or distinct business entities; (2) by which the persons or entities intend to harm or restrain competition; and (3) which actually restrains competition." Morgan, Strand, Wheeler & Biggs v. Radiology, Ltd., 924 F.2d 1484, 1488 (9th Cir.1991) (citation and quotations omitted).

A. Essential Facility Claims.

Vernon's foreclosure claims are based on its assertion that the EHV transmission lines, such as the Pacific Intertie and the Southwest lines, as well as the 220 kV grid, are essential facilities to which Edison has improperly refused Vernon access. In our opinion in the companion to this case, City of Anaheim v. Southern California Edison Co., 955 F.2d 1373, (9th Cir.1991), filed on the same date as this opinion, we have outlined the nature of the essential facility doctrine and the elements necessary to prove...

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