Nugget Hydroelectric, L.P. v. Pacific Gas and Elec. Co.

Decision Date07 December 1992
Docket NumberNos. 91-15785,91-16306,s. 91-15785
Citation981 F.2d 429
Parties1992-2 Trade Cases P 70,068, 24 Fed.R.Serv.3d 485, Util. L. Rep. P 13,914, RICO Bus.Disp.Guide 8160 NUGGET HYDROELECTRIC, L.P., Plaintiff-Appellant, v. PACIFIC GAS AND ELECTRIC COMPANY, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Steven N. Yermish and Richard L. Caplan, Caplan & Luber, Paoli, PA, for plaintiff-appellant.

Terry J. Houlihan, Raymond C. Marshall, Patrick C. Cooper and Christopher Van Gundy, McCutchen, Doyle, Brown & Enersen, and Douglas A. Oglesby and Randall J. Litteneker, Pacific Gas and Elec. Co., San Francisco, CA, for defendant-appellee.

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

Before: WALLACE, Chief Judge, GOODWIN and POOLE, Circuit Judges.

WALLACE, Chief Judge:

Nugget Hydroelectric, L.P. (Nugget) appeals from the district court's judgment in favor of Pacific Gas & Electric Company (PG & E) based upon dismissal of its claim under section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2, and the district court's denial of leave to amend its claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68. Nugget also challenges the district court's order denying Nugget leave to amend its state law claims and dismissing them. Nugget further contends that the district court improperly refused to reconsider the magistrate judge's denial of a discovery request and imposition of sanctions under Federal Rule of Civil Procedure 11. The district court had jurisdiction pursuant to 28 U.S.C. § 1331. We have jurisdiction over this timely appeal pursuant to 28 U.S.C. § 1291. We affirm in part, and vacate in part and remand.

I

PG & E is a California public utility that buys, sells, and distributes electricity under the regulation of the California Public Utility Commission (Commission). In 1984, PG & E entered into three power purchase agreements with Nugget's predecessor-in-interest, Enviro Hydro (Hydro), which planned to be a private power supplier. PG & E agreed to purchase energy at a certain price over a 30 year period from three Hydro projects, which were to be built in eastern California on federal land. The power purchase agreements provided that they would terminate if the projects failed to commence delivery of energy by November 5, 1989, five years after their execution. The agreements also provided that the delivery deadline could be extended in the event of a force majeure occurrence.

Nugget acquired Hydro's interest in the power purchase agreements in 1988, about one year before the deadline. At that time, Hydro had neither begun construction of any of the three projects nor secured the necessary permits from various government agencies. Nugget first sought from PG & E a force majeure extension of the power delivery deadline, pointing to permitting delays. Force majeure "refers to uncontrollable or unforeseeable circumstances or actions which would relieve one party in a contract from certain obligations." Commission Guidelines Re Power Purchase Contracts Between Electric Utilities and Qualifying Facilities (Guidelines), 29 C.P.U.C.2d 415, 431 (1988). PG & E initially denied Nugget's force majeure claim, but later offered a deferral if Nugget would agree to certain price concessions and waive all potential force majeure claims. Nugget rejected PG & E's offer, and tried to meet the deadline. Nugget and PG & E discussed various interconnection plans: the means by which the energy produced by Nugget's power projects would be delivered to PG & E. In August, PG & E represented to Nugget that one of these plans was preferable and that it would cost Nugget an estimated $260,000-$270,000. In October, PG & E notified Nugget that it had approved in principle the interconnection plan and was prepared to produce a final estimate of cost. Nugget authorized PG & E to proceed.

In February 1989, PG & E sent Nugget its final analysis of the interconnection plan, which deviated substantially from PG & E's earlier representations. Among other things, it estimated that the plan would cost Nugget $825,520 and would not be ready to begin delivering power until six weeks after the deadline. In addition, PG & E advised Nugget that it might be required to reimburse PG & E for unknown "take or pay" energy costs pursuant to a contract between the Placer County Water Authority and PG & E, but PG & E refused to disclose to Nugget the contract's provisions. PG & E also advised Nugget that operation of the plan was contingent upon the consent of a third party landowner, who, according to PG & E, refused to agree. However, two days later Nugget approached the landowner and secured the requisite consent with ease.

These events proved disquieting to Nugget's lender, Credit Suisse, and in April 1989, it declared a default of the loan agreements and withdrew its financial support of Nugget's projects. Seven months later, Nugget filed for bankruptcy protection.

II

The district court dismissed Nugget's antitrust claim under Federal Rule of Civil Procedure 12(b)(6) because it determined that PG & E was immune from antitrust liability under the state action doctrine. Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943) (Parker ). We review Nugget's dismissal de novo. See Grason Elec. Co. v. Sacramento Mun. Util. Dist., 770 F.2d 833, 835 (9th Cir.1985), cert. denied, 474 U.S. 1103, 106 S.Ct. 886, 88 L.Ed.2d 921 (1986).

A.

Nugget first argues that the state action doctrine has been preempted as to utilities by the Public Utility Regulatory Policies Act of 1978 (Act), Pub.L. No. 95-617, 92 Stat. 3117 (codified as amended in scattered sections of 15, 16, 30, 42, and 43 U.S.C.). The specific section of the Act on which Nugget relies provides that "[n]othing in this Act or in any amendment made by this Act affects ... the applicability of the antitrust laws to any electric utility or gas utility (as defined in section 3202 of Title 15)." 16 U.S.C. § 2603(1). Nugget contends that the phrase "antitrust laws" refers only to statutory law and does not encompass the common law state action doctrine.

The Act's definition of "antitrust laws" "includes the Sherman Antitrust Act, the Clayton Act, the Federal Trade Commission Act, the Wilson Tariff Act, and the Act of June 19, 1936, chapter 592." 16 U.S.C. § 2602(1) (citations omitted). The definition's use of the word "includes" suggests that the phrase "antitrust laws" may encompass more than just these statutes. See Highway & City Freight Drivers v. Gordon Transps., Inc., 576 F.2d 1285, 1289 (8th Cir.), cert. denied, 439 U.S. 1002, 99 S.Ct. 612, 58 L.Ed.2d 678 (1978); American Fed'n of Television & Radio Artists v. NLRB, 462 F.2d 887, 889-90 (D.C.Cir.1972); United States v. Gertz, 249 F.2d 662, 666 (9th Cir.1957). In interpreting another statute, the Supreme Court has held that the term "laws" encompasses both statutes and court decisions. See Illinois v. City of Milwaukee, 406 U.S. 91, 99-100, 92 S.Ct. 1385, 1390-91, 31 L.Ed.2d 712 (1972). We conclude that the phrase "antitrust laws" embraces not only the text of the Sherman Antitrust Act and the other listed statutes, but also the courts' interpretations of them. The state action doctrine is an interpretation of the Sherman Antitrust Act, see Parker, 317 U.S. at 350-51, 63 S.Ct. at 313-14, of which Congress was aware, see Director, Office of Workers' Compensation Programs v. Perini North River Assocs., 459 U.S. 297, 319-20, 103 S.Ct. 634, 648-49, 74 L.Ed.2d 465 (1983), when it chose the phrase "antitrust laws." The plain meaning of section 2603(1) thus establishes that the Act is to have no effect on the applicability of the state action doctrine to gas and electric utilities like PG & E.

Nugget argues that the legislative history reveals that Congress clearly intended that, with respect to gas and electric utilities, the Act would preempt the state action doctrine. However, because the meaning of section 2603(1) is clear and fails to compel an absurd result, we are discouraged from examining its legislative history. See United Air Lines v. McMann, 434 U.S. 192, 199, 98 S.Ct. 444, 448, 54 L.Ed.2d 402 (1977) ("legislative history ... is irrelevant to an unambiguous statute"); Public Citizen v. United States Dep't of Justice, 491 U.S. 440, 473, 109 S.Ct. 2558, 2576, 105 L.Ed.2d 377 (1989) (Kennedy, J., concurring) ("Where it is clear that the unambiguous language of a statute embraces certain conduct, and it would not be patently absurd to apply the statute to such conduct, it does not foster a democratic exegesis for this Court to rummage through unauthoritative materials to consult the spirit of the legislation in order to discover an alternative interpretation of the statute with which the Court is more comfortable."); Green v. Bock Laundry Mach. Co., 490 U.S. 504, 508-09, 109 S.Ct. 1981, 1983-84, 104 L.Ed.2d 557 (1989); In re Kelly, 841 F.2d 908, 912 (9th Cir.1988). We will look no further than the face of the statute.

B.

Nugget argues in the alternative that even if the state action doctrine were available to gas and electric utilities, the doctrine does not protect PG & E's conduct because it fails to satisfy the doctrine's requirements as described in California Retail Liquor Dealers Ass'n v. Midcal Aluminum, 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980) (Midcal ). Private party conduct is immune from antitrust liability only if the party claiming immunity shows that its conduct satisfies two requirements. First, it must be "clearly articulated and affirmatively expressed as state policy." Id. at 105, 100 S.Ct. at 943 (internal quotation marks omitted). This may be satisfied if the conduct is a "foreseeable result" of the state's policy. Town of Hallie v. City of Eau Claire, 471 U.S. 34, 38-39, 42, 105 S.Ct. 1713, 1716-17, 1718, 85 L.Ed.2d 24 (1985). Second, the conduct must be "actively...

To continue reading

Request your trial
187 cases
  • Washington v. Sherman, Case No.: 15cv2448 MMA (BGS))
    • United States
    • U.S. District Court — Southern District of California
    • 30 Septiembre 2019
  • Madlaing v. JPMorgan Chase Bank, N.A.
    • United States
    • U.S. District Court — Eastern District of California
    • 31 Mayo 2013
    ...facts tending to show that he or she was injured by the use or investment of racketeering income." Nugget Hydroelectric, L.P. v. Pacific Gas and Elec. Co., 981 F.2d 429, 437 (9th Cir. 1992), cert. denied, 508 U.S. 908, 113 S.Ct. 2336 (1993). The RICO claim is vitiated by the absence of suff......
  • Allen v. U.S. Bank, Nat'l Ass'n
    • United States
    • U.S. District Court — Eastern District of California
    • 10 Octubre 2013
    ...facts tending to show that he or she was injured by the use or investment of racketeering income." Nugget Hydroelectric, L.P. v. Pacific Gas and Elec. Co., 981 F.2d 429, 437 (9th Cir. 1992), cert. denied, 508 U.S. 908, 113 S.Ct. 2336 (1993). A purported RICO claim is vitiated by the absence......
  • Pharmacare v. Caremark
    • United States
    • Supreme Court of Hawai'i
    • 12 Diciembre 1996
    ...facts tending to show that he or she was injured by the use or investment of racketeering income." Nugget Hydroelectric v. Pacific Gas and Electric, 981 F.2d 429, 437 (9th Cir.1992). In an effort to abide by this standard, the Plaintiff in Nugget "alleg[ed] that PG & E received racketeering......
  • Request a trial to view additional results
8 books & journal articles
  • General Application of the Doctrine
    • United States
    • ABA Antitrust Library State Action Practice Manual. Third Edition
    • 9 Diciembre 2017
    ...examination for mathematical accuracy . . . .”) (citations omitted). 128. Id. 129. See Nugget Hydroelec., L.P. v. Pac. Gas & Elec. Co., 981 F.2d 429, 435 (9th Cir. 1992). 130. Id. 131. See, e.g. , Hoover v. Ronwin, 466 U.S. 558, 568 (1984). The analytical approach of Hoover suggests that de......
  • Pleadings and Procedural Issues
    • United States
    • ABA Antitrust Library State Action Practice Manual. Third Edition
    • 9 Diciembre 2017
    ...v. Sw. Bell Tel. Corp., 988 F.2d 601, 606 (5th Cir. 1993) (examining agency decisions); Nugget Hydroelec., L.P. v. Pac. Gas & Elec. Co., 981 F.2d 429, 435 (9th Cir. 1992) (same). 131. N. Star Steel Co. v. MidAmerican Energy Holdings Co., 184 F.3d 732, 739 (8th Cir. 1999). 132. N.C. State Bd......
  • Table of Cases
    • United States
    • ABA Antitrust Library State Action Practice Manual. Third Edition
    • 9 Diciembre 2017
    ...90, 124, 125, 129, 132, 141, 142, 143, 144, 155, 164, 168, 169, 171, 172, 192, 195, 196 Nugget Hydroelec., L.P. v. Pac. Gas & Elec. Co., 981 F.2d 429 (9th Cir. 1992), 74, 172, 193 Nursing Registry v. E. N.C. Reg’l Emergency Med. Servs. Consortium, 959 F. Supp. 298 (E.D.N.C. 1997), 152, 158 ......
  • Discovery and Expert Testimony
    • United States
    • ABA Antitrust Library State Action Practice Manual. Third Edition
    • 9 Diciembre 2017
    ...1987). 21. See, e.g. , Tri-State Rubbish v. Waste Mgmt., 998 F.2d 1073 (1st Cir. 1993); Nugget Hydroelec., L.P. v. Pac. Gas & Elec. Co., 981 F.2d 429 (9th Cir. 1992). 22. See, e.g. , Columbia Steel Casting Co. v. Portland Gen. Elec. Co., 111 F.3d 1427 (9th Cir. 1997); TEC Cogeneration v. Fl......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT