Duke Energy Carolinas, LLC v. NTE Carolinas II, LLC
| Decision Date | 24 June 2022 |
| Docket Number | CIVIL ACTION NO. 3:19-CV-00515-KDB-DSC |
| Citation | 608 F.Supp.3d 298 |
| Parties | DUKE ENERGY CAROLINAS, LLC, Plaintiff/Counter-Defendant, v. NTE CAROLINAS II, LLC, et al., Defendants/Counterclaimants, v. Duke Energy Progress, LLC, and Duke Energy Corporation, Counter-Defendants. |
| Court | U.S. District Court — Western District of North Carolina |
ORDER ON MOTION FOR SUMMARY JUDGMENT
This is an action involving antitrust, unfair competition and breach of contract claims among competitors in the market to sell wholesale electricity, none of whom is entitled as a matter of law to succeed in their competitive efforts. Indeed, it has long been emphasized that the antitrust and unfair competition laws at issue stand not as a means to choose market winners and losers, but rather only as guardrails to protect the fairness of the process. Here, it appears to the Court that the NTE Defendants / Counterclaimants want to use these laws not as the shield they are intended to be but as a sword to ensure their own success where the market hasn't fully rewarded their labor.
NTE repeatedly assails the Duke Plaintiff and Counterdefendants as nefarious companies, but it is not for the Court to determine if Duke should receive a corporate citizenship award. Even accepting that Duke has aggressively sought to maintain its leading market position to NTE's detriment, the sole question before the Court is whether it has done so unlawfully. For the reasons described below, the Court finds Duke has not engaged in unlawful anticompetitive conduct and is entitled to summary judgment with respect to NTE's counterclaims under the Sherman Act and North Carolina's unfair competition law.
However, with respect to the parties’ competing claims for breach of contract under the parties’ Large Generator Interconnection Agreement ("LGIA"), the Court finds that neither party is entitled to summary judgment, and it will be up to the jury to decide if the LGIA has been breached, unless the parties’ settle their dispute prior to trial.1
Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."
Variety Stores, Inc. v. Wal-Mart Stores, Inc. , 888 F.3d 651, 659 (4th Cir. 2018) (quoting Fed. R. Civ. P. 56(a) ); see United States, f/u/b Modern Mosaic, LTD v. Turner Construction Co., et al. , 946 F.3d 201, 206 (4th Cir. 2019). A factual dispute is considered genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "A fact is material if it might affect the outcome of the suit under the governing law." Vannoy v. Federal Reserve Bank of Richmond , 827 F.3d 296, 300 (4th Cir. 2016) (quoting Libertarian Party of Va. v. Judd , 718 F.3d 308, 313 (4th Cir. 2013) ).
The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact through citations to the pleadings, depositions, answers to interrogatories, admissions, or affidavits in the record. See Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Bouchat v. Baltimore Ravens Football Club, Inc. , 346 F.3d 514, 522 (4th Cir. 2003). "The burden on the moving party may be discharged by ‘showing’ ... an absence of evidence to support the nonmoving party's case." Celotex , 477 U.S. at 325, 106 S.Ct. 2548. Once this initial burden is met, the burden shifts to the nonmoving party. The nonmoving party "must set forth specific facts showing that there is a genuine issue for trial," Id. at 322 n.3, 106 S.Ct. 2548. The nonmoving party may not rely upon mere allegations or denials of allegations in his pleadings to defeat a motion for summary judgment. Id. at 324, 106 S.Ct. 2548.
In determining if summary judgment is appropriate, "courts must view the evidence in the light most favorable to the nonmoving party and refrain from weigh[ing] the evidence or mak[ing] credibility determinations." Variety Stores , 888 F.3d at 659 (internal quotation marks omitted) (quoting Lee v. Town of Seaboard , 863 F.3d 323, 327 (4th Cir. 2017) ); see Modern Mosaic at 205-06. "Summary judgment cannot be granted merely because the court believes that the movant will prevail if the action is tried on the merits." Jacobs v. N.C. Admin. Office of the Courts , 780 F.3d 562, 568-69 (4th Cir. 2015) ().
However, "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial." Ricci v. DeStefano , 557 U.S. 557, 586, 129 S.Ct. 2658, 174 L.Ed.2d 490 (2009) (internal citations omitted). Anderson , 477 U.S. at 248, 106 S.Ct. 2505. Also, the mere argued existence of a factual dispute does not defeat an otherwise properly supported motion. Id. If the evidence is merely colorable, or is not significantly probative, summary judgment is appropriate. Id. at 249-50, 106 S.Ct. 2505.
In the end, the question posed by a summary judgment motion is whether the evidence as applied to the governing legal rules "is so one-sided that one party must prevail as a matter of law." Id. at 252, 106 S.Ct. 2505.
The parties have filed a voluminous record in this matter reflecting the expansive scope of their discovery efforts. The Court cannot (and need not) recite all of the facts that the parties contend are applicable to the pending motion. Rather, the Court will attempt to "summarize" the relevant facts below with additional facts discussed as necessary in its legal analysis.
Counterclaim Defendant Duke Energy Corporation, a large energy holding company, provides electricity and natural gas to millions of customers in several states, including North and South Carolina. It is the parent company of Plaintiff Duke Energy Carolinas, LLC and Counterclaim Defendant Duke Energy Progress, LLC, which provide energy products and services in the Carolinas. The principal place of business of all these "Duke" entities (which will collectively be referred to as "Duke" unless more specificity is required) is Charlotte, North Carolina.
Duke sells electric power directly to residential and commercial "retail" customers and to "wholesale" customers – primarily municipalities – which operate their own distribution lines. Unlike in its retail business, where it is a public utility monopoly regulated by a state public utilities commission,2 in its wholesale business Duke competes against companies which independently produce and/or sell wholesale power. The market for wholesale power is regulated by the Federal Energy Regulatory Commission (FERC), which has exclusive authority over " ‘the transmission of electric energy in interstate commerce’ and ‘the sale of electric energy at wholesale in interstate commerce.’ " New York v. FERC , 535 U.S. 1, 6-7, 122 S.Ct. 1012, 152 L.Ed.2d 47 (2002) (quoting 16 U.S.C. § 824(b) ).
Duke operates approximately 70 power plants in the Carolinas region. As of 2014, Duke served the "vast majority of available customers" and "approximately 90% of the available load [in] NC and SC." See Doc. No. 214-35 at DUKE_0088890–91. Similarly, NTE's expert Dr. John Morris testified that Duke's share in the relevant market has exceeded 90% since 2012. See Doc. No. 214-4 at ¶ 71. Duke does not challenge the extent of its market share (although it does argue that market share has limited relevance in this market as discussed below). Also, FERC has recognized since at least 2008 that Duke has "market power" for purposes of determining how Duke must price the wholesale power it sells (i.e., "cost based" pricing). See Doc. No. 214-11 at 128:16–129:3; 137:6–23; Doc. No. 214-18 at 99:22–100:16.
Defendants and Counterclaimants NTE Carolinas II, LLC, NTE Carolinas II Holdings, LLC, NTE Energy, LLC, NTE Southeast Electric Co., LLC, NTE Energy Services Co., LLC, and Castillo Investment Holdings II, LLC (together, "NTE") are collectively an independent power producer ("IPP") that develops and operates power generation facilities that sell wholesale power to municipalities and electric cooperatives. NTE has its principal place of business in St. Augustine, Florida. While NTE builds power plants, it does not also build transmission networks to connect its plants to the interstate transmission grid. Therefore, to deliver the power it sells, NTE needs to connect to utilities like Duke that own transmission networks. By regulation, FERC requires that Duke allow NTE to connect to Duke's network, and FERC sets the terms of the interconnection by requiring that Duke and IPPs enter into a FERC approved standard contract, the pro forma LGIA.
In 2014, NTE began developing the Kings Mountain Energy Center ("Kings Mountain"), a combined-cycle natural gas plant. See Doc. No. 214-14 at 339:4–13. Duke and NTE entered into a standard LGIA to interconnect Kings Mountain with Duke's transmission network. The project was successful. Nine former Duke customers agreed to buy power from the Kings Mountain plant, and it began operations in April 2018. There is no claim in this action related to Kings Mountain; however, NTE alleges that because of NTE's success at Kings Mountain, Duke became worried about its ability to retain its wholesale customers and began to target NTE as a competitor. Duke's internal documents contain vivid rhetoric regarding its intent to compete against NTE, including that Duke planned to go...
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