E. & J. Gallo Winery v. Encana Corp., No. 05-17352.

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtIkuta
Citation503 F.3d 1027
PartiesE. & J. GALLO WINERY, Plaintiff-Appellee, v. ENCANA CORPORATION, formerly known as Pancanadian Energy Corporation; WD Energy Services Inc., formerly known as EnCana Energy Services, Defendants-Appellants.
Docket NumberNo. 05-17352.
Decision Date19 September 2007
503 F.3d 1027
E. & J. GALLO WINERY, Plaintiff-Appellee,
v.
ENCANA CORPORATION, formerly known as Pancanadian Energy Corporation; WD Energy Services Inc., formerly known as EnCana Energy Services, Defendants-Appellants.
No. 05-17352.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted February 13, 2007.
Filed September 19, 2007.

[503 F.3d 1030]

Richard P. Levy, David A. Battaglia, James P. Fogelman, Julian W. Poon and J. Christopher Jennings, Gibson, Dunn & Crutcher, LLP, Los Angeles, CA, for defendant-appellant EnCana Corporation formerly known as PanCanadian Energy Corporation; WD Energy Services, Inc., formerly known as EnCana Energy Services.

Joseph W. Cotchett, Frank M. Pitre, Steven N. Williams, and Barbara L. Lyons, Cotchett, Pitre, Simon & McCarthy, Burlingame, CA; D. Greg Durbin and Timothy J. Buchanan, McCormick, Barstow, Sheppard, Wayte & Carruth, LLP, Fresno, CA; G. Kip Edwards, Kings Beach, CA, for plaintiff-appellee E. & J. Gallo Winery.

Appeal from the United States District Court for the Eastern District of California; Anthony W. Ishii, District Judge, Presiding. D.C. No. CV-03-05412-AWI.

Before: B. FLETCHER, RICHARD R. CLIFTON, and SANDRA S. IKUTA, Circuit Judges.

IKUTA, Circuit Judge:


E. & J. Gallo Winery ("Gallo") alleged that EnCana Corp., a natural gas supplier, and WD Energy Services, Inc., a wholly-owned marketing subsidiary of EnCana Corp. (collectively "EnCana"), along with multiple unnamed coconspirators, inflated the price Gallo paid for natural gas through their violations of state and federal antitrust laws. EnCana sought summary judgment on the ground that the filed rate doctrine and federal preemption bar Gallo's claims as a matter of law. The district court denied EnCana's summary judgment motion. We have jurisdiction over this interlocutory appeal pursuant to 28 U.S.C. § 1292(b), and we now affirm the district court.

I
GALLO'S CLAIMS AND PROCEDURAL HISTORY

Gallo is a wine producer and distributor headquartered in California that purchased natural gas for use in its wineries and glass plant. During the period between June 1, 2000, and December 31, 2001, Gallo purchased its gas at the California border market known as PG & E Citygate from EnCana, an energy trader.1

503 F.3d 1031

During this period, the purchase and sale contract between Gallo and EnCana did not specify how the parties would calculate the price of the natural gas. However, both parties concede that, as a matter of practice, the purchase price was pegged to indices published in two trade publications, Natural Gas Intelligence ("NGI") and Gas Daily.

Beginning in the summer of 2000, both natural gas and electricity prices at the California border markets were subject to widespread manipulation by energy traders that dramatically raised the price of natural gas. See FINAL REPORT ON PRICE MANIPULATION IN WESTERN MARKETS ("FINAL REPORT"), FEDERAL ENERGY REGULATORY COMMISSION (2003). One of the key elements of the market misconduct was the manipulation of prices reported to private indices published by natural gas trade publications. These indices, including NGI and Gas Daily, reported the sales price for wholesale transactions at market rates. As explained by the district court:

The indices published in the NGI or the Gas Daily Index are closely linked to rates, but are not rates themselves. The published index represents a compilation of submitted and verified information gathered from voluntary submissions of trading activity and is published as a price representing trading activity at each location.

E. & J. Gallo Winery v. EnCana Corp., No. CV-F-03-5412 # AWI-LJO, 2005 WL 2435900 at *19 (E.D.Cal. Sept.30, 2005) (memorandum order and opinion denying defendant's motion for summary judgement).

Buyers and sellers relied on these indices to determine the market price for natural gas transactions. See FINAL REPORT, at III-17. However, there was neither a formal process for reporting pricing data to the publishers of the indices, nor any oversight by the Federal Energy Regulatory Commission ("FERC"), which has jurisdiction over certain natural gas wholesale transactions. See E. & J. Gallo Winery, 2005 WL 2435900, at *19. The process by which the prices in natural gas transactions were reported to the publishers of indices was left largely to the traders themselves. After investigating the operation of the indices, FERC explained that:

[M]ost of the largest natural gas marketing companies in the country had no formal process for reporting trade data to the publishers of the price indices; the process was left to the trading desks and the traders themselves. Traders from all companies describe a typical trading day as hectic, pressure packed, and frenetic. One of their many tasks was to report trading data to the Trade Press; this was viewed as bothersome but necessary. Often it was a job given to the newest employee. Many companies report passing around a form or using a spreadsheet on a shared drive. The last person who filled out the form or spreadsheet may have been required to total the numbers and send them to the Trade Press. There was nothing to stop a trader from changing the numbers someone else had entered. In other cases, traders took an oral "survey" to get a sense of where the market was trading. Sometimes they represented it to the Trade Press as an actual survey, but in other cases they made up trades to average out to a number that was consistent with this "survey."

FINAL REPORT, at III-29. Thus, despite their wide use as reference points in pricing

503 F.3d 1032

natural gas sales and derivatives, including most of the transactions subject to FERC's jurisdictional authority, the information used to calculate the indices was reported in a less than meticulous manner. Not only were the indices ripe for manipulation, but also FERC's investigation confirmed that such abuse actually occurred. Market participants had provided false reports of natural gas prices and trade volumes, and had engaged in other misconduct. Id. at ES-1-ES-6.

As a purchaser in the wholesale market, Gallo alleges it was affected by the wide-spread price manipulation identified by FERC in such markets. Specifically, Gallo claims that EnCana and its competitors engaged in a number of illegal practices designed to manipulate the indices, including agreeing to set the "basis"2 price of natural gas at an inflated rate, misreporting natural gas prices paid to the indices, and engaging in "wash trades."3 Because Gallo paid EnCana for natural gas at rates pegged to the indices, Gallo claims it was injured by the illegal practices that artificially inflated the indices. Gallo seeks to recover as damages the amount it was overcharged due to the allegedly illegal conduct. Gallo states it can establish its damages by determining a hypothetical fair index price and then subtracting that price from the actual price Gallo paid for natural gas.

On April 9, 2003, Gallo filed a six-count complaint against EnCana, consisting of federal and state antitrust actions and state law damage claims arising under various statutes: the Sherman Act, 15 U.S.C. § 1, California's Cartwright Act, CAL. BUS. & PROF. CODE §§ 16720 et seq., California's Unfair Competition Law, CAL. BUS. & PROF. CODE §§ 17200 et seq., California's Uniform Fraudulent Transfer Act, CAL. CIV. CODE §§ 3439 et seq., and under a theory of unjust enrichment. Gallo sought treble damages, disgorgement or restitution, and injunctive relief, as well as a constructive trust for fraudulently transferred assets.

On February 11, 2004, EnCana moved to dismiss the complaint on the grounds that, among other things, the filed rate doctrine barred all of Gallo's federal claims and that federal preemption barred Gallo's state law claims. The district court denied the motion because it determined that Gallo-given its status as a retail purchaser for consumption-might be able to prove its damages in a way that would not impinge on FERC's authority over wholesale rates. After Gallo filed an amended complaint, EnCana filed a second motion to dismiss, which was also denied. Then, on July 25, 2005, EnCana moved for summary judgment, contending that Gallo's damage claims are barred because they require a court to determine a hypothetical fair rate in the wholesale natural gas market, a determination barred by the filed rate doctrine and associated principles of federal preemption. The district court denied this motion, holding that Gallo could prove its damages without requiring the court "to examine the fairness of a rate or tariff that has been filed by FERC." E. & J. Gallo Winery, 2005 WL 2435900, at *23. However, the district court certified its order for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) because the applicability of the filed rate doctrine is a controlling question of law in this case, and it stayed the mandate pending this court's decision

503 F.3d 1033

on this issue. On October 24, 2005, EnCana filed a timely petition for interlocutory review, which we granted on December 8, 2005.

II
STANDARD OF REVIEW

We review de novo the district court's denial of summary judgment. See Lee v. Gregory, 363 F.3d 931, 932 (9th Cir.2004). Summary judgment is appropriate only where the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). Therefore, this court must "determine, viewing the evidence in the light most favorable to the non-moving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law." Suzuki Motor Corp. v. Consumers Union of U.S., Inc., 330 F.3d 1110, 1131-32 (9th Cir.2003), cert. denied, 540 U.S. 983, 124 S.Ct. 468, 157 L.Ed.2d 373 (2003). We also review de...

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  • In re Hawaiian & Guamanian Cabotage Antitrust Litig..This Document Relates To: All Cases., No. 08–md–1972 TSZ.
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Western District of Washington)
    • November 30, 2010
    ...to a regulatory agency even if the rates are not actually “filed” or are not “rates” per se. E. & J. Gallo Winery v. Encana Corp., 503 F.3d 1027 (9th Cir.2007) (holding that claims involving rates within the Federal Energy Regulatory Commission's jurisdiction were barred by the filed rate d......
  • In re Transpacific Passenger Air Transportation Antitrust Litig., No. C 07–05634 CRB
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • September 23, 2014
    ...as a matter of law and cannot be collaterally challenged under federal antitrust law....” See E. & J. Gallo Winery v. EnCana Corp., 503 F.3d 1027, 1035 (2007). As explained below, the Court finds that Congress gave the Department of Transportation (“DOT”) authority over all of the rates and......
  • Carlin v. Dairyamerica, Inc., No. 10–16448.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 11, 2013
    ...Milk Are Generally Subject to the Filed Rate Doctrine.A. The Filed Rate Doctrine As we observed in E. & J. Gallo Winery v. Encana Corp., 503 F.3d 1027, 1033 (9th Cir.2007): “The [filed rate] doctrine is a judicial creation that arises from decisions interpreting federal statutes that give f......
  • Carlin v. Dairyamerica, Inc., No. 10–16448.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 7, 2012
    ...Milk Are Generally Subject to the Filed Rate Doctrine.A. The Filed Rate Doctrine As we observed in E. & J. Gallo Winery v. Encana Corp., 503 F.3d 1027, 1033 (9th Cir.2007): “The [filed rate] doctrine is a judicial creation that arises from decisions interpreting federal statutes that give f......
  • Request a trial to view additional results
60 cases
  • In re Hawaiian & Guamanian Cabotage Antitrust Litig..This Document Relates To: All Cases., No. 08–md–1972 TSZ.
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Western District of Washington)
    • November 30, 2010
    ...to a regulatory agency even if the rates are not actually “filed” or are not “rates” per se. E. & J. Gallo Winery v. Encana Corp., 503 F.3d 1027 (9th Cir.2007) (holding that claims involving rates within the Federal Energy Regulatory Commission's jurisdiction were barred by the filed rate d......
  • In re Transpacific Passenger Air Transportation Antitrust Litig., No. C 07–05634 CRB
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • September 23, 2014
    ...as a matter of law and cannot be collaterally challenged under federal antitrust law....” See E. & J. Gallo Winery v. EnCana Corp., 503 F.3d 1027, 1035 (2007). As explained below, the Court finds that Congress gave the Department of Transportation (“DOT”) authority over all of the rates and......
  • Carlin v. Dairyamerica, Inc., No. 10–16448.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • January 11, 2013
    ...Milk Are Generally Subject to the Filed Rate Doctrine.A. The Filed Rate Doctrine As we observed in E. & J. Gallo Winery v. Encana Corp., 503 F.3d 1027, 1033 (9th Cir.2007): “The [filed rate] doctrine is a judicial creation that arises from decisions interpreting federal statutes that give f......
  • Carlin v. Dairyamerica, Inc., No. 10–16448.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 7, 2012
    ...Milk Are Generally Subject to the Filed Rate Doctrine.A. The Filed Rate Doctrine As we observed in E. & J. Gallo Winery v. Encana Corp., 503 F.3d 1027, 1033 (9th Cir.2007): “The [filed rate] doctrine is a judicial creation that arises from decisions interpreting federal statutes that give f......
  • Request a trial to view additional results

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