Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_03-cv-05412/USCOURTS-caed-1_03-cv-05412-20/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 28:1331 Fed. Question

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

E. & J. GALLO WINERY, )

)

Plaintiff, )

)

v. )

)

ENCANA ENERGY SERVICES, INC., )

a Delaware corporation, formerly known )

as PANCANADIAN ENERGY )

SERVICES INC.; ENCANA )

CORPORATION, a Canadian )

corporation, formerly known as and )

successor to PANCANADIAN )

ENERGY CORPORATION, )

)

Defendants )

____________________________________)

CV F 03-5412 AWI LJO

ORDER GRANTING MOTION

FOR CERTIFICATION

ORDER DENYING REQUEST

TO SET PRETRIAL DATES

ORDER VACATING TRIAL

DATE

ORDER STAYING ACTION

[Document #688 & #690]

BACKGROUND

This is an action for damages and declaratory relief by plaintiff E. & J. Gallo Winery

(“Gallo”) against defendants EnCana Corp. (“EnCana”), a Canadian producer of natural gas,

and WD Energy Services, Inc. (“WD”) (formerly EnCana Energy Services, formerly Pan

Canadian Energy Services, Inc.), a wholly-owned marketing subsidiary of EnCana Corp.

(collectively, “Defendants”). On January 24, 2005, Gallo filed its first amended complaint

for damages, disgorgement/restitution , constructive trust, and injunctive relief (the “FAC”). 

The FAC alleges both state and federal antitrust claims. Federal question jurisdiction exists

pursuant to 28 U.S.C., section 1331. Venue is proper in this court.

Case 1:03-cv-05412-LJO -DLB Document 692 Filed 10/17/05 Page 1 of 6
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On September 30, 2005, the court denied Defendants’ motion for summary judgment

on all claims set forth in the FAC on the grounds that the federal claims are barred by the

filed rate doctrine and the state claims are preempted under federal law. On October 7,

2005, Defendants filed a motion to certify for appeal the court’s order denying summary

judgment. On October 11, 2005, Gallo filed an opposition. 

LEGAL STANDARD

Title 28 U.S.C. § 1292(b) provides that: 

When a district judge, in making in a civil action an order not otherwise

appealable under this section, shall be of the opinion that such order involves

a controlling question of law as to which there is substantial ground for

difference of opinion and that an immediate appeal from the order may

materially advance the ultimate termination of the litigation, he shall so state

in writing in such order. The Court of Appeals which would have jurisdiction

of an appeal of such action may thereupon, in its discretion, permit an appeal

to be taken from such order, if application is made to it within ten days after

the entry of the order: Provided, however, that application for an appeal

hereunder shall not stay proceedings in the district court unless the district

judge or the Court of Appeals or a judge thereof shall so order.

The court cannot be compelled to certify an order or an issue under section 1292(b), see

Green v. Occidental Petroleum Corp., 541 F.2d 1335, 1338 (9th Cir. 1976), and the court’s

refusal to certify an order under this statute is not appealable. See Oppenheimer v. Los

Angeles County Flood Control Dist., 453 F.2d 895, 895 (9th Cir. 1972). The requirements

for certification are: (1) that there is a controlling question of law; (2) that there are

substantial grounds for difference of opinion; and (3) that an immediate appeal may

materially advance the ultimate termination of the litigation. In re Cement Antitrust

Litigation, 673 F.2d 1020, 1026 (9th Cir. 1982).

DISCUSSION

I. Controlling Question of Law

In its motion for summary judgment, Defendants contended that Gallo’s state law

claims are barred because the regulatory system instituted by Congress under the Natural Gas

Act, 15 U.S.C., section 717 et seq., and the Natural Gas Policy Act (“NGPA”), 15 U.S.C.,

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sections 3301-3432, preempts state law claims that impinge upon the FERC’s exclusive

jurisdiction over all wholesale sales of natural gas in interstate commerce. Defendants

argued that Gallo’s action is preempted because Gallo, in order to establish its claims for

damages, “must engage in speculative rate-setting, or must ask this court or jury to do so, in

order to establish any damages.” Defendants also contended Gallo’s claims are barred

because the determination of damages for each of the claims pled requires the court or the

jury to “engage in speculative rate-setting,” which is prohibited by the filed rate doctrine. 

The court followed the same analysis in addressing both contentions.

Gallo, in its opposition to Defendants’ motion for certification, contends the question

Defendants seek to certify is not a controlling question of law as framed. Gallo contends

Defendants framed the question as whether the claims alleged by Gallo in the complaint

“implicate the exclusive jurisdiction of the Federal Energy Regulatory Commission.” Gallo

contends that Defendants, while framing the question in terms of whether FERC jurisdiction

is “implicated,” do not actually argue the implication of FERC jurisdiction, but rather argue

the filed rate doctrine bars any of Gallo’s claims. The court finds Gallo’s argument

somewhat confusing. 

The issue to be certified for appeal does not turn on a distinction between whether

Gallo’s claims implicate exclusive FERC jurisdiction or whether the filed rate doctrine

applies. The court, in its memorandum opinion of September 30, 2005, applied a three-step

analysis in which it first determined that the sales giving rise to Gallo’s claims were retail

sales that fall outside FERC’s statutorily-circumscribed jurisdiction. The court then went on

to determine whether Gallo’s claims where nonetheless barred because the court would be

forced to “reach back” to FERC-determined wholesale rates or tariffs in order to grant relief. 

The concern in that latter portion of the analysis is not focused on the extent of FERC

jurisdiction, it is focused on precisely what determinations the court must make to fashion

relief. If the court is required to reference a FERC-set rate or tariff in order to fashion relief,

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then the concerns raised in County of Stanislaus v. Pac. Gas & Elec. Co., 114 F.3d 858 (9th

Cir. 1997) are implicated and the filed rate doctrine may apply. The court concluded that, in

this case, the retail rates paid were pegged to indices published in the Natural Gas Index or

the Gas Daily Index. After examining those indices, the court concluded the filed rate

doctrine was not applicable because the indices do not establish FERC-set rates and do not

operated under FERC-approved tariffs.

Whether the filed rate doctrine applies to a plaintiff who challenges the fairness of a

retail rate paid for natural gas where the retail rate is not directly referent to a wholesale rate

or tariff that has been filed with FERC is a controlling question of law. Neither the Supreme

Court nor any appellate court has determined this issue on the set of facts currently before the

court. 

Gallo also argues that, even if the Ninth Circuit were to reverse this court’s

conclusion on the issue certified for appeal, the issue would still not be controlling because

the gas purchased was entirely Canadian gas and therefore outside the scope of FERC

jurisdiction. The court rejects that argument because the precise question is not whether

FERC has primary jurisdiction over the sales giving rise to Gallo’s claims. The court has

determined there is no primary FERC jurisdiction and would reach the same conclusion if the

court were to accept Gallo’s allegation that the gas purchases it made were outside FERC

jurisdiction because the gas was Canadian. The question is whether, notwithstanding the fact

the sales were retail or otherwise outside FERC’s exclusive jurisdiction, the court would be

intruding into matters exclusively under FERC jurisdiction by making determinations as to

the fairness of indices published in the NGI or Gas Daily Index. That question remains

whether the sales were retail sales of gas produced in the United States or of gas produced in

Canada.

The court concludes the question Defendants seek to certify for interlocutory appeal

presents a controlling question of law in this case.

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II. Difference of Opinion

There are substantial grounds for difference of opinion on this issue. Contrary to this

court, other courts appear to have concluded that a retail gas purchaser’s claims are subject to

dismissal on the ground of the filed rate doctrine on facts similar or identical to those

presented in this case. See Western States Wholesale Natural Gas Antitrust Litigation, 368

F.Supp.2d 1110 (D. Nev. 2005) (“Western States”); Sierra Pac. Res. v. El Paso Corp., No.

CV-S-03-0414 JCM-RJJ (D. Nev. 2004). While Gallo is correct in asserting that neither of

these cases are authoritative, the court notes that the precise issue before those courts and this

court are novel, at least within this circuit, and the lack of relevant appellate opinion is a

substantial factor in the court’s decision to certify this issue for appeal.

III. Advance the Ultimate Determination of the Issue

Finally, an immediate appeal may materially advance the ultimate termination of the

litigation. The court recognizes that considerable resources have already been spent in this

litigation. However, considerable time and resources of both the court and the parties will be

spent on the trial in this action. The trial on Gallo’s claims is complex and will require

numerous witnesses and the admission of voluminous documents. The parties estimate this

trial will take between 20 and 75 days. Even based on Gallo’s estimate, this trial will likely

last at least one month. If Gallo’s claims are barred by preemption and the filed rate

doctrine, this action will be over and there will be nothing left for trial. The most effective

use of federal judicial resources is to allow an interlocutory appeal on the issue of whether

Gallo’s claims are barred by the filed rate doctrine and preemption prior to trial.

The court also notes that the parties are not disadvantaged by the delay as much as

Gallo claims. Given the extent and complexity of the dispositive motions remaining before

this court in this case and the amount of time available to resolve those motions, the current

trial date of November 8, 2005, cannot be maintained. A substantial postponement of the

trial date would be required in any event to allow for resolution of the current dispositive

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motions as well as what the court assumes will be voluminous and extensive motions in

limine. 

The court finds an interlocutory appeal advisable on the court’s conclusion that

Defendants have failed to meet their burden to show there is no issue of material fact as to the

applicability of the filed rate doctrine to the present case, where a retail rate is challenged and

the proof of damages does not require the court to examine the fairness of a rate or tariff that

has been filed by FERC. Similarly, the court finds an interlocutory appeal advisable on the

court’s conclusion that Gallo’s state law claims are not preempted by the Natural Gas Act or

the Natural Gas Policy Act because the sales involved in this case lie outside exclusive FERC

jurisdiction and the determination of Gallo’s claims does not require the court to intrude on

exclusive FERC jurisdiction.

The court also finds that a stay of proceedings will serve the interests of optimum

allocation of judicial resources. The court will, however review the need for a continuing

stay at intervals and may, at its discretion or upon motion of the parties, lift the stay when

further events warrant.

THEREFORE, it is hereby ORDERED that:

1. Defendants’ motion to certify the order denying Defendants’ motion for summary

judgment on the filed rate doctrine and preemption is GRANTED;

2. Gallo’s request for the court to set a pretrial conference, and for the court to set other

dates in preparation for trial, is DENIED;

3. The November 8, 2005 trial date is VACATED; and

4. This action is STAYED pending resolution of an appeal in the Ninth Circuit Court of

Appeals.

IT IS SO ORDERED.

Dated: October 14, 2005 /s/ Anthony W. Ishii 

0m8i78 UNITED STATES DISTRICT JUDGE

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