Paladin Associates, Inc. v. Montana Power Co., No. CV-95-067-BU.
| Decision Date | 04 May 2000 |
| Docket Number | No. CV-95-067-BU. |
| Parties | PALADIN ASSOCIATES, INC., a Montana corporation, and Marie G. Owens, doing business as Paladin Associates, a Montana Sole Proprietorship, Plaintiffs, v. MONTANA POWER COMPANY, a Montana corporation, North American Resources Company, a Montana corporation, Northridge Petroleum Marketing, Inc., a Canadian corporation, and TransCanada Gas Services Limited, a Canadian corporation, f/k/a Northridge Gas Marketing Inc., a Canadian corporation, Defendants. |
| Court | U.S. District Court — District of Montana |
Frank C. Crowley, Michael J. Uda, Doney, Crowley, & Bloomquist, PC, Helena, Richard L. Fanyo, Dufford & Brown, PC, Thomas P. McMahon, Powers Phillips, PC, Denver, CO, for Paladin Associates, Inc., Marie G. Owens.
Robert T. O'Leary, Montana Power Company—Legal Department, Butte, Nicholas A. Verwolf, Steven F. Greenwald, Alan S. Middleton, Cassandra L. Kinkead, Davis, Wright & Tremaine, Bellevue, WA, Todd L. Lundy, Baker & Hostetler, Denver, CO, David J. Ivey, Baker & Hostetler, Houston, TX, Timothy R. Beyer, Brownstein Hyatt Farber, Denver, CO, Arthur G. Matteucci, Matteucci, Falcon, Squires & Lester, Great Falls, Munir R. Meghjee, Baker & Hostetler, Denver, CO, William A. Squires, Attorney at Law, Helena, Peter J. Korneffel, Jr., Brownstein Hyatt
Farber, Denver, CO, for Montana Power Company, North American Resources Company, Northridge Petroleum Marketing, Inc., TransCanada Gas Services Limited.
The plaintiffs, Paladin Associates, Inc. ("PAI") and Marie G. Owens ("Owens"), instituted the present action alleging the defendants, Montana Power Company ("MPC"), North American Resources Company ("NARCO"), Northridge Petroleum Marketing, Inc. ("Northridge Petroleum") and TransCanada Gas Services Limited ("TransCanada") engaged in certain anti-competitive activities with respect to the intrastate transportation and sale of natural gas in Montana, and the interstate transportation of natural gas through Montana for sale to customers located south of Montana. Invoking the original jurisdiction of this court under 28 U.S.C. § 1337, plaintiffs advance five claims for relief under Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2. Plaintiffs also advance five claims for relief predicated upon state common law, urging the court to assert supplemental jurisdiction over these claims. Plaintiffs seek compensatory damages, punitive damages, treble damages and injunctive relief based upon the referenced claims.
Presently before the court are the following motions: (1) defendants' motions for summary judgment; (2) defendants' motions urging the court to exclude the expert testimony of Robert Franz, C. Leslie Webber, Jack Harpole and David Huettner; (3) defendants MPC and NARCO's motion to strike portions of the affidavits of Richard Swinney and Marie Owens; (4) defendants' motions for costs and attorney's fees incurred with respect to the supplemental depositions of Robert Franz and C. Leslie Webber; and (5) defendants Northridge Petroleum and TransCanada's joint motion for costs and attorney's fees incurred in responding to plaintiffs' counter-motion to strike and limit certain defense experts. Having reviewed the record herein, together with the parties' briefs in support of their respective positions, the court is prepared to rule.
Defendant MPC is a public utility that operates, among other things, a natural gas gathering, transmission, storage, and distribution system in Montana ("MPC's system"). MPC's system extends generally from the Montana-Canada border on the north to the Wyoming border on the south.
Plaintiff PAI is a Montana corporation that, at times pertinent to this action, marketed natural gas within Montana to industrial customers connected to MPC's system, and outside of Montana to customers downstream of MPC's system. PAI obtained its natural gas supplies primarily from Canadian gas suppliers and gas producers located in Montana. PAI entered into contracts with MPC for the transportation of natural gas through MPC's system. PAI is owned by its president and sole shareholder, plaintiff Owens, and operated by Owens and her husband, Richard Swinney ("Swinney").
Plaintiff Paladin Associates ("PA") is a natural gas consulting business operated as a sole proprietorship by Owens.
Defendant NARCO is a natural gas marketer and wholly-owned subsidiary of Entech, Inc. ("Entech"), which in turn is a wholly-owned subsidiary of MPC. NARCO markets natural gas in Montana and elsewhere.
Defendant Northridge Petroleum is a Canadian corporation. Northridge Petroleum marketed natural gas in Montana until July of 1992, when it sold all of its assets to Northridge Gas Marketing, Inc. ("Northridge Gas"), a Canadian corporation. In July of 1995, Northridge Gas changed its name to TransCanada Gas Services Limited. Defendant TransCanada is a Canadian corporation that engages in natural gas marketing activities in Montana and elsewhere. For purposes of this Memorandum and Order, Northridge Petroleum, Northridge Gas, and TransCanada shall be referred to individually and collectively as "Northridge."
Gas enters MPC's system from a number of sources. Gas produced and gathered in Montana is connected directly to MPC's system or delivered to MPC's system via the Northern Natural Gas pipeline located in northcentral Montana.
Gas produced in Canada is delivered directly into MPC's system via a pipeline operated by the NOVA Corporation of Alberta, Canada ("NOVA"). The NOVA pipeline connects with MPC's pipeline at an interconnect located at Carway, Alberta, referred to as the "NOVA Interconnect," and at an interconnect located at Aden, Alberta.1
MPC transports and distributes natural gas intrastate to "on-system" customers,2 and transports natural gas interstate across Montana for delivery to "off-system"3 markets located south of Montana. The gas transported interstate across MPC's pipeline is delivered into two pipelines that interconnect with MPC's system near Montana's southern border. The Williston Basin Interstate ("WBI") pipeline connects to MPC's system at the WBI Interconnect at Warren, Montana. The WBI pipeline transports gas for distribution in eastern Montana, North Dakota and South Dakota. The Colorado Interstate Gas Company ("CIG") pipeline connects to MPC's system at the CIG interconnect at Grizzly, Montana. The CIG pipeline extends in a southeasterly direction to Texas and the Oklahoma Panhandle, and connects with other pipelines that serve markets in California.
MPC's operation of its gas transmission and storage facilities is regulated by both the Montana Public Service Commission ("MPSC") and the Federal Energy Regulatory Commission ("FERC"). Title 69, Chapter 3 of the Montana Code Annotated empowers the MPSC to regulate MPC's natural gas rates and operations in Montana. The Natural Gas Act, 15 U.S.C. §§ 717 et seq., grants to the FERC comprehensive regulatory authority over MPC's interstate transportation of natural gas.
Prior to 1991, natural gas customers in the United States were generally required to purchase natural gas from a local distribution company on a "bundled" basis. The single "bundled" price paid by customers encompassed all the costs for delivering the gas to the customer, including payments made by the local distribution company to upstream pipelines, producers, and processing plants, and expenses incurred by the local distribution company in operating its own transportation, distribution and storage facilities.
In 1991, the FERC ordered pipelines regulated by the FERC to offer natural gas services on an "unbundled" basis. Accordingly, pipelines were required to separately offer, at individual prices transportation, storage and other natural gas services which they previously had offered on a bundled, single-price basis. Additionally, the FERC required pipelines to separate the merchant function of selling gas from the common carrier function of transporting gas. These changes at the federal level led states to follow suit with respect to the intrastate transportation and sale of natural gas regulated by state agencies.
The "unbundling" arrangements had significant impacts on natural gas customers and marketers. After natural gas service was unbundled, large natural gas customers could purchase natural gas as a commodity from an unregulated seller at market price, and then contract with a pipeline and/or local distribution company for firm or interruptible transportation of that gas to the customer's location at a regulated rate.4 Similarly, natural gas marketers could acquire natural gas at sources remote from the customers location, arrange for transportation and accompanying services relating to the delivery of the natural gas, and then sell a "rebundled" package of services to the natural gas customer.
On November 1, 1991, MPC began providing unbundled intrastate transportation service and unbundled interstate transportation service. The intrastate transportation service approved by the MPSC established two classes of on-system customers —"core" customers and "non-core" customers. Generally, core customers consisted of residential and small business customers. Core customers were not eligible for unbundled transportation service and had to continue to purchase gas on a fully-bundled basis. Non-core customers were customers, primarily industrial, whose annual consumption of gas exceeded 60 million cubic feet ("60,000 Mcf"). Non-core customers were eligible to begin receiving unbundled transportation service from MPC beginning on November 1, 1991.5
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