W. States Wholesale Natural Gas Antitrust Litig. Reorganized Fli, Inc. v. Williams Cos.
| Decision Date | 30 March 2017 |
| Docket Number | MDL No. 1566,2:06-cv-01351-RCJ-PAL,2:05-cv-01331-RCJ-PAL,2:03-cv-01431-RCJ-PAL,2:09-cv-00915-RCJ-PAL,2:07-cv-01019-RCJ-PAL,2:06-cv-00282-RCJ-PAL,2:07-cv-00987-RCJ-PAL,2:06-cv-00267-RCJ-PAL,2:06-cv-00233-RCJ-PAL |
| Parties | In re WESTERN STATES WHOLESALE NATURAL GAS ANTITRUST LITIGATION REORGANIZED FLI, INC. et al., Plaintiffs, v. WILLIAMS COMPANIES. et al., Defendants. LEARJET, INC. et al., Plaintiffs, v. ONEOK, INC. et al., Defendants. SINCLAIR OIL CORP., Plaintiff, v. E PRIME INC. et al., Defendants. SINCLAIR OIL CORP., Plaintiff, v. ONEOK ENERGY SERVICES CO., L.P., Defendant. BRECKENRIDGE BREWERY OF COLORADO, LLC et al., Plaintiffs, v. ONEOK INC. et al., Defendants. HEARTLAND REGIONAL MEDICAL CENTER et al., Plaintiffs, v. ONEOK, INC. et al., Defendants. ARANDELL CORP. et al., Plaintiffs, v. XCEL ENERGY INC. et al., Defendants. NEWPAGE WISCONSIN SYSTEM INC., Plaintiff, v. CMS ENERGY RESOURCE MANAGEMENT CO. et al., Defendants. |
| Court | U.S. District Court — District of Nevada |
These consolidated cases arise out of the energy crisis of 2000-2002. Plaintiffs (retail buyers of natural gas) allege that Defendants (natural gas traders) manipulated the price of natural gas by reporting false information to price indices published by trade publications and by engaging in "wash sales." Four motions for class certification, six motions for summary judgment, fourteen motions to strike expert opinions or briefs, a motion to amend complaints, a motion to reconsider an order of the magistrate judge, a motion to seal, and a motion for suggestion of remand of five of the eight remaining actions (the class actions) to their respective transferor courts are pending before the Court.
In 2003, the Judicial Panel on Multidistrict Litigation ("JPML") transferred seven class action cases from various districts in California to this District under 28 U.S.C. § 1407 asMultidistrict Litigation ("MDL") Case No. 1566, assigning Judge Pro to preside. Since then, the JPML has transferred in several more actions from various districts throughout the United States. Between 2003 and 2015, Judge Pro ruled on many motions to remand, to dismiss, and for summary judgment. He also approved several class settlements. Several parties settled on their own. One or more of the cases have been to the Court of Appeals twice and to the Supreme Court once. In 2007, the Court of Appeals reversed several dismissals under the filed rate doctrine and remanded for further proceedings. In 2013, the Court of Appeals reversed several summary judgment orders, ruling that the Natural Gas Act did not preempt state law anti-trust claims and that certain Wisconsin- and Missouri-based Defendants should not have been dismissed for lack of personal jurisdiction. The Supreme Court granted certiorari as to preemption under the Natural Gas Act and affirmed. The case was soon thereafter reassigned to this Court when Judge Pro retired. The Court has issued several orders on motions to dismiss and for summary judgment. Eight of the eighteen consolidated cases remain open, the others having been variously settled, dismissed, or remanded to state courts.
The motions are based primarily upon the opposing sides' arguments (which are in turn based on opinions by their own experts) that the other side's experts have used unreliable methods, have made poor assumptions, etc. The main problem with these kinds of arguments is that the Court requires expert assistance to understand the issues in the first instance. An opposing expert's opinion may be helpful in understanding the issues, as well. Some degree of debate and uncertainty as to the issues may exist, and the Court must determine class certification (and juries must eventually determine liability) based on the relevant legal standards having considered the expert evidence provided by all proffered witnesses who have moreexpertise in some relevant area than a layman and whose testimony will be helpful to the Court in understanding the issues. Finally, the Court notes that it does not require and will not consider any expert's opinion on the law itself.
Defendants in the definition of "churning" for regulatory or industry purposes may or may not overlap completely or partially with Dwyer's and Harris's understandings of the term. But so long as they have reliably applied reliable principles and methods to determine that Defendants' activity—whatever it was and whether it falls within anyone's definition of "churning"— had the effect of artificially inflating natural gas prices or some other effect that could reasonably support a verdict in Plaintiffs' favor under the antitrust laws at issue, their testimony is not objectionable under Rule 702 based on unreliability. Defendants argue that Dwyer and Harris did not sufficiently establish causal relationships between trades and price increases or even separate legitimate, non-manipulative rapid trades from manipulative rapid trades. But Defendants are able to argue (and counter with other experts) as to the depth of their analysis and as to their alleged prior inconsistent statements as to definitions they have used during the litigation. Dwyer and Harris may testify as to the pace of trading and their opinions as to the effect it had on prices. Defendants can argue as to whether Plaintiffs have any evidence of individual or concerted intent to manipulate prices.
Plaintiffs in the Class Actions ask the Court to strike the expert opinions of Dr. Michelle Burtis. The Court denies the motion. Dr. Burtis's alleged antagonism towards class actions may be relevant to impeachment for bias, but it does not disqualify her as an expert. Plaintiffs' objection to Dr. Burtis is mainly over her disagreement with their own expert, Dr. Harris, as to whether individual trades should be examined for legitimacy versus conspiracy before concluding a conspiracy. The Court does not need either side's experts to address that issue. The Court will not strike Dr. Burtis's testimony but will not rely on any of her legal conclusions just as it will not rely on legal conclusions made by any expert. The Court will consider her expert testimony where it is helpful to class certification.
Plaintiffs in the Class Actions ask the Court to strike the expert opinions of Michael De Laval. Plaintiffs mainly attack De Laval's lack of academic credentials in the field of economics and argue that his experience trading in the wholesale energy market is not relevant. The Court disagrees. The experience of an actual natural gas trader may be very valuable to understanding the impact of Defendants' actions on price fluctuations. In some respects, it may even be more valuable than the opinions of economics experts who have never actually traded natural gas. An actual trader who witnesses trades and price fluctuations as they happen may have a perspective that cannot be replicated by a cold, after-the-fact mathematical analysis. That is not to say that his testimony will be more important or helpful than that of any particular economist's, but it is certainly relevant and helpful enough for him to give expert testimony in this case. The Court finds that his testimony, along with the testimony of experts in other areas, will aid in understanding the issues and evidence.
Plaintiffs in the Class Actions ask the Court to strike the expert opinions of Dr. Christopher L. Cavanagh. They argue that he has wrongly impugned the methods of one of their own experts, Dr. Dwyer. They also argue that his methods are unreliable because he makes incorrect assumptions about the natural gas market. The Court will not exclude his testimony for these reasons. As noted, the Court will consider his testimony and Dr. Dwyer's, as well as their criticisms of one another's methods, in determining the relevant legal issues.
Plaintiffs in the Class Actions ask the Court to strike the expert opinions of Dr. Randall Heeb, Ph. D. They argue that his testimony is based on a misunderstanding of Plaintiffs' theory of collusion and is based on unreliable methods. Plaintiffs argue that Dr. Heeb concludes there was no illegal collusion because the evidence does not show that Defendants acted identically at all times with respect to price reporting, but Plaintiffs note that a conspiracy can exist even though not all members of the conspiracy participate in it in the exact same way at the exact same time and that some members of the conspiracy may in fact be at cross purposes at various times based on their individual interests. The Court agrees with Plaintiffs' statement of the law, but it will not strike Dr. Heeb's testimony altogether simply because his conclusions imply his belief in an incorrect legal standard. As with other experts who have a flawed understanding of the law or, more accurately, who have exceeded the limits of their expertise by opining on the law at all (which probably includes most of the experts in this case), Dr. Heeb offers some amount of valuable expertise to the Court, and the Court will not strike his testimony.
///
///
Plaintiffs in the Class Actions ask the Court to strike the expert opinions of Dr. Hendrik Bessembinder, Ph. D. They argue that his opinions contradict opinions he offered in 2007 as a witness for the CFTC. The Court notes that this is legitimate evidence of bias for impeachment purposes but is not a basis to strike his...
To continue reading
Request your trial