Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-87-02123/USCOURTS-ca10-87-02123-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

COLORADO INTERSTATE GAS ) 

COMPANY, ) 

) 

Plaintiff/Counterclaim- ) 

Defendant/Appellee, ) 

) 

v. ) 

) 

) 

NATURAL GAS PIPELINE COMPANY ) 

OF AMERICA; NGPL-TRAILBLAZER, ) Nos. 

INC., ) 

) 

Defendants/Counter- ) 

claimants/Appellants, ) 

) 

v. ) 

) 

WYOMING INTERSTATE COMPANY, ) 

LTD.; THE COASTAL CORPORATION, ) 

) 

Counterclaim-Defendants/ ) 

Appellees. ) 

) 

------------------------------- ) 

) 

MIDCON VENTURES, INC., ) 

) 

Counterclaimant. ) 

) 

------------------------------- ) 

) 

FEDERAL ENERGY REGULATORY ) 

COMMISSION, ) 

) 

Amicus Cur.iae. ) 

FILED 

u~,iced Stste!i Cou,c of Ap~1lls 

Tenth C!rt'llit 

SEP l 11989 

ROBERT L, HOECKER 

Clerk 

87-2109 

87-2123 

Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 1 
Appeal from the United States District Court 

For the District of Wyoming 

D.C. No. C84-0139-B 

Michael L. Beatty of Colorado Interstate Gas Company, Colorado 

Springs, Colorado, (Rebecca H. Noecker of Colorado Interstate Gas 

Company, Colorado Springs, Colorado; William F. Baxter of Shearman 

& Sterling, Stanford, California; William C. McClearn, James E. 

Hartley, Joseph w. Halpern, Elizabeth A. Phelan, and Timothy M. 

Rastello of Holland & Hart, Denver, Colorado; J. Kent Rutledge of 

Lathrop & Uchner, P.C., Cheyenne, Wyoming, with him on the briefs) 

for Plaintiff/Counterclaim Defendants/Appellees. 

Phillip Areeda, Cambridge, Massachusetts, (William H. Brown of 

Brown & Drew, Casper, Wyoming; Paul J. Hickey of Rooney, Bagley, 

Hickey, Evans & Statkus, Cheyenne, Wyoming; Gerald M. Stern and 

Charles E. Foster, Los Angeles, California; Joseph M. Wells and 

Paul E. Goldstein, Lombard, Illinois; John T. Cusack and Michael 

P. Padden of Gardner, Carton & Douglas, Chicago, Illinois; J. 

Curtis Moffatt and Paul Korman of Gardner, Carton & Douglas, 

Washington, D.C.; Harvey I. Saferstein and Steven A. Marenberg of 

Irell & Manella, Los Angeles, California; and Louis Nizer and Paul 

Martinson of Phillips, Nizer, Benjamin, Krim & Ballon, New York, 

Ne~ York, with .him on the brief) for Defendants/Counterclaimants/ 

Appellants. 

Catherine C. Cook, General Counsel; Jerome M. Feit, Solicitor; and 

Joshua z. Rokach, Attorney, of the Federal Energy Regulatory 

Commission, Washington, D.C., for Amicus Curiae. 

Before MOORE, ANDERSON, and BALDOCK, Circuit Judges. 

MOORE, Circuit Judge. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 2 
This is an appeal from an order of the district court 

refusing to grant judgment notwithstanding the verdict or a new 

trial for the defendants, Natural Gas Pipeline Company of America 

(Natural) and NGPL-Trailblazer. The jury awarded the plaintiff, 

Colorado Interstate Gas Company (CIG), $724,033,361 in damages 

based on CIG's claim that Natural attempted to monopolize the 

market for long distance transportation of Wyoming gas, breached 

its contract with CIG, and tortiously interfered with CIG's 

contractual relations. While the district court reduced the jury 

award to $412,237,972, Natural argues that the district court 

failed to rectify the underlying legal errors on which the 

judgment was based. 

Natural deploys a two-pronged attack against each of CIG's 

claims. First, it asserts that the award of damages for conduct 

approved by the Federal Energy Regulatory Commission (FERC) 

impermissibly interferes with FERC'S authority to regulate gas 

sales and transportation markets. Second~ Natural argues, in the 

alternative, that the substantive law of contracts, torts, and 

antitrust, requires the reversal of the jury's verdict on each 

claim. We hold that in light of FERC's orders concerning the 

basic issues underlying the breach of contract dispute, deference 

to FERC authority requires that we reverse the breach of contract 

verdict. We further hold that CIG failed to establish there was a 

dangerous probability that Natural would monopolize the long 

distance transportation 

antitrust verdict. The 

market. 

claim for 

Therefore, we reverse the 

tortious interference with 

contractual relations neither interferes with FERC's authority nor 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 3 
is substantively flawed; thus, the jury's verdict on that claim 

will stand. 

I. Introduction 

CIG and Natural are owners of pipelines which transport 

natural gas. For many years, Natural has purchased gas from CIG 

and transported that gas to markets in the Midwest and East. In 

July 1982, CIG and Natural entered into a new contract (the 

Service Agreement or Agreement) which obliged CIG to deliver and 

Natural to purchase specified quantities of natural gas. CIG sold 

two types of gas to Natural. Field gas was sold at a lower rate 

(F-1 rate) than gas which was delivered from CIG's main 

transmission line (H-1 rate). The contract set forth how much gas· 

Natural was required to purchase, both on a annual and on a daily 

basis. Like previous service agreements between Natural and CIG, 

the 1982 Service Agreement also contained a minimum bill provision 

which allowed CIG to bill Natural at a predetermined rate for gas 

which Natural reserved but did not purchase. 

Because CIG's Service Agreement with Natural involved the 

interstate sale of natural gas, the rates and terms specified in 

the Agreement required approval by FERC. When, in 1982, CIG 

sought FERC approval, Natural intervened to protest both the rate 

increase and its contractual obligation to pay CIG for gas it did 

not purchase. In response to Natural's intervention, FERC 

modified the terms of the Service Agreement to reduce the price 

Natural was required to pay for unpurchased gas. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 4 
In July 1983, Natural sharply reduced its gas purchases from 

CIG. Natural paid CIG what Natural determined to be the FERC 

modified rate for unpurchased gas. Natural's decrease in 

purchases forced CIG to stop purchasing gas from some of its 

suppliers. One of those suppliers, Champlin Petroleum, supplied 

gas to CIG from the Whitney Canyon gas fields in southern Wyoming. 

Although Natural claimed that it quit purchasing gas from CIG 

because it had an oversupply of gas, the evidence made this claim 

problematical. As soon as CIG ceased purchasing Whitney Canyon 

gas, Natural made arrangements to purchase that gas directly from 

Champlin. Indeed, CIG presented evidence that Natural purchased 

gas from many sources to replace lost volumes from CIG. This 

substitute gas was often more expensive than CIG's gas. On 

occasion, Natural resumed purchases of gas from CIG when CIG was 

attempting to sell gas to new customers. Natural's decision to 

stop purchasing gas and the losses CIG experienced as a result of 

that decision form the basis of this litigation. 

II. CIG's Common Law Claims 

A. Breach of Contract 

The district court instructed the jury that it could find 

Natural breached the Service Agreement only if Natural failed to 

purchase gas and refused to pay CIG the rate that FERC decided was 

appropriate for volumes not purchased. Neither party disputes 

that Natural refused to purchase gas. The parties dispute the 

rate FERC determined to be appropriate for gas not taken. Natural 

argues that the district court should have directed a verdict on 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 5 
the breach of contract claim in its favor because it paid CIG the 

FERC determined rate for gas not purchased. We agree. 

In order to apprehend the parties' arguments on this issue, 

it is necessary to examine the long history of the dispute over 

Natural's minimum purchase obligation before FERC. 1 For many 

years the service agreements between CIG and Natural contained two 

provisions which, together, defined Natural's minimum purchase 

obligation. 2 Section 2 of the Service Agreement, the "minimum 

daily take provision," required Natural to accept each day 90% of 

its General Daily Entitlement. 3 Section 4 of the· Service 

1 The difficulty that CIG and Natural faced with the minimum 

purchase obligation was not unique. Minimum purchase obligations 

in gas contracts became a problem for the industry in the early 

1980's, as a nationwide gas surplus forced many purchasers to 

curtail their takes. The huge liability incurred by purchasers 

forced FERC to take action on two procedural levels. First, FERC 

considered purchasers' objections to minimum purchase requirements 

on a case by case basis and modified service agreement provisions 

where necessary. Second, because minimum purchase obligations 

were widespread in the natural gas industry, FERC issued general 

orders that modified certain provisions in all gas contracts. 

Thus, the conflict between CIG and Natural was just a small part 

of a significant problem which required FERC's continued 

attention. 

2 For purposes of this opinion we are using the term "minimum 

purchase· obligation" to refer to contract terms which seek to 

insure that gas buyers purchase a minimum volume of gas. These 

provisions are sometimes called "take or pay," "minimum bill," or 

"minimum take" provisions. Although the precise details or 

mechanisms of these provisions might differ, they have similar 

effects. 

3 Section 2 of the Service Agreement entitled "POINTS OF 

DELIVERY, MAXIMUM DAILY VOLUME OBLIGATIONS, AND PRESSURES" 

includes Natural's daily purchase obligation. It states: 

Variations in daily takes may be made at Buyer's 

election at H-1 delivery points to meet its varying load 

conditions, however, Buyer shall not request total daily 

volumes on any day hereunder less than 90 percent of the 

General Daily Entitlement. · 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 6 
Agreement, the "mini~um annual bill," required Natural to purchase 

each year 90% of its Total Annual Entitlement, or pay CIG a 

predetermined rate for gas not purchased. 4 

Natural first objected to the minimum·purchase obligation in 

the Service Agreement when CIG sought approval of the rates and 

terms of the Agreement from_FERC in 1982. The reasonableness of 

the minimum purchase obligation was considered in administrative 

proceedings before an administrative law judge in 1983. The judge 

found the "minimum bill provisions" to be unreasonable and ordered 

CIG to modify the Service Agreement so that CIG could collect from 

Natural only the fixed costs5 associated with the sale of gas. 

This decision was appealed to FERC, which, in response, modified 

the precise mechanism by which CIG could· collect money for 

unpurchased gas but left unchanged the basic ruling that CIG could 

collect only fixed costs for unpurchased gas. 6 

4 Section 4 entitled ''MINIMUM BILL" states, in relevant part: 

The m1n1mum bill shall be •.. determined by 

multiplying the Total Annual Entitlement by a factor of 

90 percent, such volume hereinafter referred to as 

''Minimum Volume." ••. In the event the Buyer's actual 

purchases for the fiscal year are less than the Minimum 

Volume, then any deficiency shall be billed at the unit 

fixed cost component under Rate Schedule F-1 ..•• 

(Emphasis added.) 

5 Fixed costs are costs which CIG must incur regardless of the 

volume of gas it sells. The fixed cost component of the commodity 

charge also includes a sum representing profits on CIG's 

operations. The major nonfixed (variable) cost, which CIG was 

forced to eliminate from the rate it could charge Natural, was the 

cost of gas. 

6 On the same day, FERC issued Order No. 380 which required gas 

sellers to modify their minimum bill provisions to collect only 

fixed costs foi unpurchased gas. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 7 
In respo~se to FERC's ruling, CIG submitted to FERC a 

modification of its Service Agreement by which it sought to 

collect F-1 fixed costs for F-1 gas which Natural did not purchase 

and H-1 fixed costs for unpurchased H-1 gas. Since the fixed cost 

component of gas rates included profits on the sale of gas, CIG's 

submitted rate would have insured full profits on unsold gas. 

However, FERC did not approve this rate for unpurchased gas. 7 It 

ruled that CIG could collect only F-1 fixed costs for whichever 

type of gas Natural did not purchase. CIG appealed FERC's order 

to this court asserting that it should collect full profits on 

unsold gas. We rejected this appeal. Colorado Interstate Gas Co. 

v. FERC, 791 F.2d 803 (10th Cir. 1986), cert. denied, 479 U.S. 

1043 (1987). 

CIG now argues that these extensive proceedings only 

considered one aspect of the minimum purchase obligation, namely, 

the minimum annual bill provision (Section 4) of the Service 

Agreement. It insists FERC simply overlooked the minimum daily 

take requirement (Section 2) in the individual proceedings. CIG 

asserts that the minimum daily take requirement was later modified 

by FERC's Order No. 380-C which ruled that minimum take provisions 

were meant to be governed by Order No. 380. 

Although FERC's general orders treated minimum bill 

provisions identically with minimum take provisions, CIG argues 

that because FERC Order No. 380-C states sellers may collect fixed 

7 FERC explained that allowing 

costs for the more expensive 

incentive to sell H-1 gas instead 

undelivered gas. 

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CIG to collect only F-1 fixed 

H-1 gas would give CIG a strong 

of merely collecting fees for 

Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 8 
costs, 8 CIG may collect F-1 fixed costs for unsold F-1 gas and H-1 

fixed costs for unsold H-1 gas. If we were to accept CIG's argument, CIG could collect a higher rate for each year that Natural 

failed to purchase gas by adding up its compensation for Natural's 

daily failure to take gas than it could by using the individually 

tailored FERC 'formula for determining CIG's compensation for 

Natural's annual failure to purchase gas. Aside from the 

irrationality of this result, we think it ignores the fact that 

FERC has plainly examined both the minimum annual bill and the 

· minimum daily take requirements in the Service Agreement since the 

original ALJ decision. 

As noted earlier, the ALJ stated that he found the minimum 

bill provisions to be unjust and unreasonable. CIG apparently 

assumes this reference to the minimum bill provisions meant that 

th~ ALJ only con~idered the minimum annual bill (Section 4) of the 

contract. Yet, the rest of the opinion makes clear that the ALJ 

considered both Sections 2 and 4 of the Service Agreement. For 

instance, in describing the Service Agreement the ALJ stated, 

"CIG's mode of billing to Natural under the F-1 and H-1 Rate 

Schedules is explained for the situation when the minimum bill 

provisions operate because Natural failed to take 90 percent of 

its daily or annual volumetric entitlements." Colorado Interstate 

Gas Co., 25 F.E.R.C. flfl 63,012, 65,015 (Oct. 18, 1983) (emphasis 

added). The ALJ clearly understood that the Service Agreement 

8 Since Order No. 380-C was a general order, it did not specify 

the precise value of the fixed cost CIG, or any other sellers, 

could collect for unsold gas. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 9 
provided a single rate of compensation for failure to purchase gas 

on a daily or annual basis and that he was modifying that rate. 

This conclusion is confirmed by subsequent FERC orders. In 

its order of June 1985, FERC surveyed the entire history of CIG's 

proceedings before the agency on the minimum purchase issue. FERC 

stated the ALJ found "both the minimum annual volume and the 

minimum daily take requirement in CIG's Service Agreement" to be 

unreasonable. 

(June 19, 1985). 

Colorado Interstate Gas Co., 31 F.E.R.C. fl 61,325 

FERC further noted that the individualized 

proceedings required CIG to modify both the minimum annual bill 

and the minimum daily take provisions to eliminate variable costs. 

Id. The only formula for the elimination of variable costs 

approved in the individualized proceedings required CIG to charge 

F-1 fixed costs for failure to purchase either F-1 or H-1 gas. 

The inescapable conclusion is that FERC regarded this as the sole 

remedy for failure to purchase gas under either contractual 

provision. 

Finally, FERC's amicus brief explains its current 

interpretation of the FERC proceedings on the minimum purchase 

issue. The amicus brief states: 

[T]he district court erred in holding that the 

Commission did not deal with the minimum purchase 

obligation and that therefore CIG may litigate that 

issue in this case ••• the Commission treated the 

minimum bill as the remedy for Natural's failure to live 

up to its minimum purchase obligation ••• therefore, 

the district court erred in its perception that the 

minimum bill and take provisions were separate and 

discrete matters establishing distinct remedies. 

In light of the deference we owe to FERC's interpretations of its 

own orders, Colorado Interstate Gas, 791 F.2d at 810; Distrigas of 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 10 
Massachusetts Corp. v. Boston Gas Co., 693 F.2d 1113, 1119 (1st 

Cir. 1982), and the plain meaning of the orders themselves, there 

is simply no room for CIG's assertion that FERC's individualized 

proceedings left the minimum daily take provision (Section 2) of 

the Service Agreement unaffected. 

B. Breach of Duty of Good Faith and Fair Dealing 

Natural argues the jury's verdict on bad faith breach of 

contract must be reversed because FERC's modification of the rate 

Natural was required to pay CIG for unpurchased gas gave Natural 

the unqualified right to stop purchasing gas, provided it paid CIG 

the FERC established price for unpurchased gas. Natural insists 

that by awarding·CIG damages for bad faith failure to purchase gas 

that were greater than FERC's established rate .for failure to 

purchase, the d~strict court allowed state common law to impinge 

upon FERC's regulatory authority. CIG asserts that Natural's bad 

faith alters the character of Natural's conduct so that the FERC 

rate for unpurchased gas does not apply. While we are unwilling to 

embrace Natural's claim that FERC's orders shield it from all 

liability for failure to purchase gas, we do agree that Natural is 

free from liability for failure to purchase gas based upon the 

implied duty of good faith and fair dealing in the Service 

Agreement. 

The Supreme Court is wary of attempts by parties, 

dissatisfied with determinations of federal agencies, to neutralize 

the effect of those determinations through common-law actions for 

damages. Chicago & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 11 
U.S. 311, 324 (1981); Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 

571, 577 n.6 (1981). These cases are bottomed on the principle 

that the Supremacy Clause requires state regulation not thwart 

federal policy. Kale Brick & Tile, 450 U.S. at 326. Common-law 

claims that seek to litigate matters already decided by a federal 

agency are therefore preempted. 

For instance, in Kale Brick & Tile, 450 U.S. at 311, a 

shipper of goods by rail, sought to assert a state, common-law tort 

action for damages caused by a regulated rail carrier's decision to 

eliminate service on a rail line. The Supreme Court unanimously 

held that because the Interstate Commerce Commission had, in 

approving the cessation of service in administrative proceedings, 

ruled on all the issues underlying the shippers state-court suit, 

the common-law action was preempted. The Court stated: "It is 

difficult to escape the conclusion that the instant litigation 

represents little more than an attempt by a disappointed shipper to 

gain from the Iowa courts the relief it was denied by the 

commission." Id. at 324. 

Through its common-law claim of breach of the contractual 

duty of good faith and fair dealing, CIG obtained an award of 

damages that allowed it to collect H-1 fixed costs for unpurchased 

H-1 gas. FERC and this court have repeatedly denied CIG's request 

to modify the minimum purchase obligation of the Service Agreement 

to allow it to collect this rate for failure 

Colorado Interstate Gas, 791 F.2d at 808-09. 

to purchase gas. 

By allowing CIG to 

press this claim, the district court gave CIG a second chance to 

which it was not entitled. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 12 
Nevertheless, CIG argues that this case is distinguishable 

from Kale Brick&. Tile9 and is not a collateral attack upon FERC's 

decision because FERC denied CIG H-1 fixed costs for unpurchased 

H-1 gas only if Natural decided not to purchase gas in good faith. 

CIG contends, once Natural decided to "shut in'' CIG's gas in order 

to harm CIG, FERC's remedy for failure to purchase gas, a remedy 

which did not allow collection of H-1 fixed costs, was no longer 

intended by FERC to apply. Essentially, CIG is asking us to imply 

a good faith limitation upon the scope of FERC's remedy for failure 

to purchase gas. 

While we find CIG's argument forceful, we cannot ignore the 

Supreme Court's vigorous effort to insure agency action is not 

blunted by state regulation. See, e.g., Nantahala Power and Light 

Co. v. Thornburg, 476 U.S. 953 (1986) (state regulated rate for 

retail sale of gas did not give enough weight to FERC determined 

rate for wholesale gas sales); Kalo Brick & Tile, 450 U.S. at 326. 

We think that limiting the scope of the FERC developed remedy for 

failure to purchase gas in the manner suggested by CIG would permit 

circumvention of FERC authority through state contract law. In 

order for FERC's remedy to be effective, it must have room to 

breathe. As the Supreme Court has stated, "Respondents' theory of 

the case would give inordinate importance to the role of contracts 

9 The Court in Kalo Brick & Tile emphasized that the 

"commission has actually addressed the matters [the customer] 

wishes to raise in state court.'' 450 U.S. at 327. The Court 

reserved the question of whether "a state court suit is barred 

when the commission is empowered to rule on the underlying 

issues." Id. In this case, FERC was not explicitly confronted 

with the question of whether Natural's motive for not purchasing 

gas would be relevant to the rate CIG could collect for that gas. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 13 
between buyers and sellers in the federal scheme for regulating the 

sale of natural gas." Arkansas Louisiana Gas, 453 U.S. at 582. We 

think this statement applies with equal force to this case. 

Further, the limited evidence we have suggests FERC intended 

the collection of F-1 fixed costs to be the exclusive contract 

remedy for failure to purchase gas. FERC's amicus brief notes the 

jury awarded damages for antitrust, tort, and breach of contract 

claims. Nevertheless, FERC only sought to have the damages for 

breach of contract reversed. FERC did not distinguish between the 

breach of contract damages awarded for bad faith failure to 

purchase gas and those awarded for failure to purchase gas under 

Section 2 of the Service Agreement. 10 

This interpretation of FERC's intent mirrors FERC's 

interpretation of the scope of its actions in a closely analogous 

context. During the gas shortage of the early 1970's, FERC 

permitted sellers of gas to curtail their contractually agreed upon 

10 The district court did not ask the jury to award damages 

separately for breach of Section 2 of the Service Agreement and 

breach of the contractual obligation of good faith and fair 

dealing. This is troubling because we cannot determine what 

damages, if any, the jury intended to award for each breach. 

Further, the jury incorrectly found that Natural breached its 

obligation to purchase gas under Section 2 of the Service 

Agreement. Having found that Natural deliberately breached the 

Service Agreement by deciding not to purchase gas, it is difficult 

to see how the jury could objectively consider the question of 

whether Natural acted in good faith. 

Thus, even if we were to find that the bad faith claim was 

not preempted, we would have to order a new trial. First, the 

jury would have to evaluate CIG's bad faith claim in light of the 

fact that Natural did not breach Section 2 of the Service 

Agreement. Second, even if the jury still found that Natural 

breached its contractual obligation of good faith and fair 

dealing, it would have to determine the appropriate damages for 

this breach. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 14 
deliveries of gas, if the curtailment was carried out in accordance 

with plans on file with FERC. See, e.g., United Gas Pipe Line 

Co. v. FERC, 824 F.2d 417, 421 (5th Cir. 1987). Buyers who did not 

receive gas they contracted for sued sellers based upon breach of 

contract and various tort theories. Id.; see also CF Industries v. 

Transcontinental Gas Pipe Line, 614 F.2d 33 (4th Cir. 1980). In 

response, sellers sought to have FERC modify their service 

agreements to exculpate them from liability for failure to deliver 

gas to buyers curtailed under curtailment plans. FERC declined to 

deny the purchasers all remedies for the sellers' failure to 

deliver gas stating: 

Claims that are essentially "breach of contract" in 

nature and arise because of curtailments initiated and 

conducted in accordance with effective curtailment - tariffs are preempted by federal law, which nullifies 

them. But claims that require a finding of negligence 

to permit recovery remain unaffected. 

Transcontinental Gas Pipe Line, 35 F.E.R.C. flfl 61,043, 61,080 

(April 7, 1986} (emphasis added). 11 

We believe FERC intended to draw the same line for failure to 

take gas as it drew for failure to purchase. Actions based upon 

tort were not meant to be preempted by FERC's modification of the 

contract, while actions based upon breach of contract were. Any 

11 Significantly, one seller challenged FERC's decision alleging 

that if buyers were permitted to sue based upon a seller's 

negligent or willful misconduct, some state courts might conclude 

that actions for ''breach of a good faith duty" were not preempted. 

United Gas Pipe Line, 824 F.2d at 428. The Fifth Circuit rejected 

the suggestion that state courts could interpret FERC orders which 

allowed actions based upon negligence to permit actions for 

"breach of a good faith duty." Thus, at least one other court has 

interpreted FERC orders prohibiting suits based upon breach of 

contract to also forbid suits based upon breach of the contractual 

obligation of good faith and fair dealing. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 15 
other distinction would impermissibly undermine the effectiveness 

of FERC orders. Thus, the jury's verdict for bad faith breach of 

contract must be reversed. 

C. Tortious Interference with Contract 

The gravamen of CIG's tortious interference with contract 

claim is that Natural intentionally stopped taking gas from CIG in 

order to force CIG to relinquish its contractual right to purchase 

Whitney Canyon gas from Champlin Petroleum. CIG alleged Natural 

was motivated by a desire to acquire the rights to purchase 

Whitney Canyon gas. After CIG gave up its rights to the Whitney 

Canyon reserves, Natural did, in fact, acquire the gas. 

Natural argues that the jury's verdict, awardin9 damages for 

tortious conduct, must be reversed because CIG's claim is 

preempted by FERC's modification of the minimum purchase 

provisions. Natural also asserts that because the Service 

Agreement allowed it to stop purchasing gas, it may not be held 

liable for tortious interference based on that conduct. We 

disagree. 

FERC's modification of the contract remedy for failure to 

purchase gas does not limit CIG's right to seek damages for 

tortious interference with contract. As noted above, in an 

analogous situation, FERC decided that although it eliminated a 

gas seller's contractual liability for failure to sell gas to 

curtailed customers, buyers who did not receive contractually 

agreed upon volumes of gas could maintain suits based upon a 

seller's negligent or willful misconduct. United Gas Pipe Line, 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 16 
824 F.2d at 430. By not contesting tortious interference damages, 

FERC apparently made the same distinction in this case. Although 

Kale Brick & Tile requires preemption of tort actions which 

conflict with agency orders, 450 U.S. at 326-27, we decline to 

find preemption where FERC currently perceives no conflict. 

More difficult to evaluate is Natural's assertion that its 

contractual right to choose between purchasing gas or paying CIG 

for gas not purchased immunized it from a tortious interference 

claim based upon failure to purchase. There is some support for 

the proposition that conduct which is otherwise lawful ought not 

form the basis of a tortious interference claim simply because the 

alleged tort-feasor is motivated by a desire to interfere with the 

plaintiff's contractual relations. See Circe v. Spanish Gardens 

Food Mfg. Co., 643 F. Supp. 51, 56 (W.D. Mo. 1985); Perlman, 

Interference with Contract and Other Economic Expectancies: A 

Clash of Tort and Contract Doctrine, 49 u. Chi. L. Rev. 61, 128 

(1982). Advocates of this position are reluctant to impose 

limitations on conduct which is otherwise permitted in an economy 

based upon vigorous competition. Perlman, supra at 78. 

While we are sympathetic to this view and recognize that the 

law of tortious interference is evolving, see Restatement (Second) 

of Torts, ch. 37, introductory note at 5 (1977), we believe that 

the better position is that taken by the Restatement and followed 

by many courts. This line of authority holds that motive can be a 

determinative factor in converting otherwise lawful behavior into 

"improper" conduct for which the defendant will be liable. 

Restatement (Second) of Torts § 767 comment d (1977); Alyeska 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 17 
Pipeline Serv. Co. v. Aurora Air Serv., Inc., 604 P.2d 1090, 1093 

(Alaska 1979); see also Perlman, Interference with Contract, 49 

u. Chi. L. Rev. 61, 78 (1982). · Indeed, Professor Prosser has 

described/ the contours of the tort stating that "no specific 

conduct is prohibited ••• and liability turns on the purpose for 

which the defendant acts." w. Prosser, Law of Torts S 129, at 979 

(5th ed. 1984). 

Natural's interest in being free to adjust its purchases of 

gas is not so strong that it cannot be limited by a requirement 

not to exercise its discretion for the purpose of interfering with 

CIG's contractual relationships. Alyeska Pipeline, 604 P.2d at 

1093 (right to terminate contract at will did not prevent 

liability for tortious interference based upon termination of that 

contract). The tortious interference verdict will stand. 12 

III. CIG's Antitrust Claim 

CIG claims that in addition to being a violation of the 

Service Agreement and a means of stealing CIG's customers, 

Natural's decision to stop purchasing gas was also the cornerstone 

of an attempt by Natural to monopolize the market for the long 

12 Natural also asserts the award of $8,000,839 in 

restitutionary damages was inappropriate. It argues that 

restitutionary damages are unavailable for tortious interference 

claims under Section 766A of the Restatement. While it cites one 

case to this effectu Marcus, Stowell & Beye Gov't Secs., Inc. v. 

Jefferson Inv. Corp., 797 F.2d 227, 231-32 (5th Cir. 1986), the 

weight of authority holds that restitutionary damages are 

available for tortious interference with contract. See 

Zippertubing Co. v. Teleflex, Inc., 757 F.2d 1401, 1411-12 (3d 

cir. 1985); Federal Sugar Ref. Co. v. United States Sugar 

Equalization Bd., 268 F. 575, 582 (D.C. N.Y. 1920); National 

Merchandising Corp. v. Leyden, 370 Mass. 425, 348 N.E. 2d 771, 

775-76 (1976); D. Dobbs, Remedies S 6, at 465 (1973). 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 18 
distance transportation of natural gas. 13 Since an attempt to 

monopolize typically involves an attempt by a firm which does not 

possess monopolistic control over a market to become a monopolist 

in that market, CIG's claim is unusual because it does not allege 

that Natural was attempting to gain control of the transportation 

market for itself. Rather, CIG alleges Natural stopped purchasing 

gas in order to give CIG's chief competitor, the Trailblazer 

System14 , a monopoly in the long distance gas transportation 

market. 

13 Natural also asserted an antitrust counterclaim against CIG. 

Natural alleged that CIG monopolized or attempted to monopolize 

the purchase of Wyoming natural gas by intervening and threatening 

to intervene in FERC proceedings in which CIG's competitors 

proposed building new pipelines leading out of Wyoming. The 

district court ruled that the Noerr-Pennington doctrine barred 

evidence of CIG's activities before FERC. 

The Noerr-Pennington doctrine requires that attempts to 

influence the government, including attempts to influence 

administrative agencies, be exempt from attack under the Sherman 

Act. California Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 

508, 511-12 (1972); Bright v. Moss Ambulance Serv., Inc., 824 F.2d 

819 (10th Cir. 1987). We agree with the district court that 

nothing in CIG's activities before FERC so corrupts the judicial 

or administrative process that those activities amount to a sham 

and therefore are exempt from. the Noerr-Pennington doctrine. 

Hydro-Tech Corp. v. Sundstrand Corp., 673 F.2d 1171, 1176-77 & n.7 

(10th Cir. 1982). 

14 It is important to distinguish between NGPL-Trailblazer, one 

of the defendants, and the Trailblazer System. The Trailblazer 

System is a series of three separately owned and operated 

pipelines joined end-to-end which stretches from Wyoming to 

Nebraska. When built in 1982, the Trailblazer System greatly 

expanded the capacity of producers to move their gas from Wyoming 

to eastern markets. The westernmost segment of the Trailblazer 

System, Overthrust, is owned by CIG and Natural, as well as four 

other companies. The middle segment, WIC, is owned by CIG alone. 

The easternmost and longest segment of the system, Trailblazer, is 

owned jointly by NGPL-Trailblazer and two other companies. The 

Trailblazer System, the alleged beneficiary of Natural's predatory 

conduct, is not even a party to this case. 

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Natural asserts that a party may not be held liable for attempting to give monopoly power to another party which it does not 

control. This is especially true,- it asserts, when the intended 

beneficiary of the monopolist is not a single entity but three 

separately operated entities owned in significant part by the 

alleged victim of the monopolistic scheme. 

Nevertheless, Section 2 of the Sherman Act does not 

explicitly state that a party can only monopolize for itself. We 

need not decide this thorny issue because even if we assume that 

it is possible to create a monopoly for the benefit of a third 

party, CIG did not establish each of the elements of an attempted 

monopolization claim. 15 

CIG alleges that Natural attempted to monopolize the market 

by preventing CIG from offering gas transportation services to 

customers who might choose between CIG and the Trailblazer System. 

Because CIG was required to maintain capacity in its pipeline for 

the volume of gas Natural chose to reserve under the Service 

Agreement, CIG was not able to replace lost income from Natural's 

reduced purchases by off~ring "firm" 16 transportation services to 

15 The difficulty with punishing a firm for attempting to create 

a monopoly for a third party which does not act as a single 

entity, is that the threat to competition after the monopoly is 

achieved is obscure. In a more typical case in which a firm is 

attempting, through unfair means, to gain control of a market for 

itself, one can be quite certain the firm will not hesitate to 

exercise its newly acquired monopoly power. In this case, the 

alleged monopolist's (Natural's) conduct says little about its 

intended beneficiary's (the Trailblazer System's) proclivity or 

ability to monopolize. Section 2 of the Sherman Act does not 

punish the mere possession of monopoly power. Standard Oil Co. of 

New Jersey v. United States, 221 U.S. 1, 62 (1911). 

16 Gas can be sold on either a firm or interruptible basis. 

(Continued to next page.) 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 20 
new customers. In the summer of 1984, after Natural had stopped 

taking gas from CIG, CIG offered Natural the opportunity to reduce 

the capacity it reserved on the CIG system. Instead of reducing 

its reservation, Natural chose to increase it. Thus, Natural 

continued to tie up CIG's capacity, while refusing to purchase 

gas. 

Further, CIG attempted to offer interruptible service to new 

customers to utilize the capacity left vacant by Natural's 

decreased purchases. Soon after CIG began to service the new 

customers, Natural resumed purchases of gas, forcing CIG to 

interrupt its service to the new customers. Because the 

Trailblazer System could offer inexpensive, uninterrupted service, 

CIG's new customers switched to the Trailblazer System. 

While Natural's alleged manipulation of its gas purchases in 

an effort to disrupt CIG's ability to service new customers may be 

reprehensible conduct, the antitrust laws cannot be invoked to 

punish all forms of unseemly business activity. If a party does 

not have monopolistic control over a market, its unfair business 

conduct implicates the attempt provision of the antitrust laws 

only if that conduct threatens to create a monopoly. Indiana 

Grocery, Inc. v. Super Valu Stores, Inc., 864 F.2d 1409, 1413 (7th 

Cir. 1989); cf. Continental T.V., Inc. v. GTE Sylvania, Inc., 433 

U.S. 36, 54 (1977) ("an antitrust policy divorced from market 

(Continued from previous page.) 

Firm sales guarantee the purchaser that he will receive the 

volumes of gas he reserves, while interruptible sales only 

guarantee deliveries if customers with higher priority do not 

demand the gas.· Since CIG had a firm obligation to sell gas to 

Natural, CIG could only offer to sell interruptible service to new 

customers. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 21 
considerations would lack any objective benchmarks"). The 

defendant need face the added sanction of antitrust triple damages 

only if the plaintiff can establish each element of an antitrust 

offense. 

In this circuit, four elements must be proven to establish an 

attempt to monopolize under Section 2 of the Sherman Act: (1) 

relevant market (including geographic market and relevant product 

market) in which the alleged attempt occurred; (2) dangerous 

probability of success in monopolizing the relevant market; (3) 

specific intent to monopolize; and (4) conduct in furtherance of 

such an attempt. Shoppin' Bag of Pueblo, Inc. v. Dillon 

Companies, 783 F.2d 159, 161 (10th Cir. 1986). In addition, any 

private plaintiff seeking treble damages under Section 4 of the 

Clayton Act must show antitrust injury. Brunswick Corp. v. Pueblo 

Bowl-O-Mat, Inc., 429 U.S. 477, 488, cert. denied, 429 U.S. 1090 

(1977). While Natural argues that CIG has failed to establish 

each element of the attempted monopolization claim, CIG's failure 

to show a dangerous probability of successful monopolization 

reveals the fundamental difficulty in CIG's claim. 17 

17 Several commentators have noted approvingly that the 

dangerous probability of success element of the attempt to 

monopolize offense prevents courts from expanding the Sherman Act 

into a broad unfair competition statute. For instance, Handler & 

Steuer state: 

[T]here is ample reason for excluding single-firm 

behavior from the serious penalties of the antitrust 

laws when no dangerous probability of monopolization 

exists. When one firm monopolizes an economically 

significant market or threatens such a monopoly, 

competition is immediately and seriously jeopardized. 

It was largely to combat this peril that section 2 of 

the Sherman Act was passed, fortified with the 

(Continued to next page.) 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 22 
In order to satisfy the dangerous probability of success 

element of an attempt claim, the plaintiff must show that there 

was a dangerous probability the defendant would achieve monopoly 

status as the result of the predatory conduct alleged by the 

plaintiff. Shoppin' Bag, 783 F.2d at 162; Lektro-Vend Corp. ·v. 

Vendo Co., 660 F.2d 255, 271 (7th Cir. 1981), cert. denied, 455 

U.S. 921 (1982). The likelihood of successful monopolization is 

typically evaluated by examining the defendant's share of the 

relevant market. Shoppin' Bag, 783 F.2d at 161. Reformulated in 

terms of market share, the plaintiff must show that there was a 

dangerous ~robability that the defendant's conduct would propel it 

from a non-monopolistic share of the market to a share that would 

be. large enough to constitute a monopoly for purposes of the 

monopolization offense. 18 The higher the firm's initial market 

(Continued from previous page.) 

formidable deterrent of treble damages and criminal 

penalties. Short of this situation, however, single 

firm behavior does not present so significant a threat 

to competition as to warrant such harsh consequences. 

Handler & Steuer, Attempts to Monopolize and No Fault 

Monopolization, 129 u. Pa. L. Rev. 125, 175 (1980) (footnote 

omitted); see also 3 P. Areeda & D. Turner, Antitrust Law ,1 833 

(1978) (hereinafter Areeda & Turner); cf. Cooper, Attempts and 

Monopolization: A Mildly Expansionaryl\nswer to the Prophylactic 

Riddle of Section Two, 72 Mich. L. Rev. 373, 454-55 (1974) 

(warning against expansion of the attempt provision into an unfair 

competition statute); but see Blecher, Attempt to Monopolize Under 

Section 2 of the Sherman Act: "Dangerous Probability'' of 

Monopolization Within the "Relevant Market," 38 Geo. Wash. L. Rev. 

215, 222 (1969); Note, Attempt to Monopolize Under the Sherman 

Act: Defendant's Market Power as a Requisite to a Prima Facie 

Case, 73 Colum. L. Rev. 1451, 1459-61 (1973). 

18 While the Supreme Court has refused to specify a m1n1mum 

market share necessary to indicate a defendant has monopoly power, 

lower courts generally require a minimum market share of between 

70% and 80%. 2 E. Kintner, Federal Antitrust Law§ 12.6 (1980); 

Areeda & Turner, , 803. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 23 
share, the greater the likelihood that it will eventually gain 

monopolistic control over the market. Id. at 162. 

CIG asserts the fact that the Trailblazer System's market 

share rose from 41% to 53% is sufficient evidence to support the 

jury's finding that there was a dangerous probability that the 

Trailblazer System would attain a monopoly. If this were a 

typical attempted monopolization case in which the defendant was 

attempting to acquire a monopoly for itself through the use of 

economic coercion, we would have little difficulty in affirming 

the jury's finding of dangerous probability. First, a market 

share at the commencement of the defendant's predatory conduct of 

41% would show that the defendant would not have to acquire much 

additional market share in order to attain monopoly control over 

the market. 

More importantly, however,· a 41% market· share typically 

indicates that a firm has substantial economic power in the 

market, and, therefore, has the tools at its disposal to elevate 

its market share to monopolistic levels. In other words, a high 

market share indicates that the defendant has the economic 

capacity to monopolize the market. Id. However, proximity to 

monopolistic status is not enough; the defendant must also have 

the ability to propel itself to monopolistic control over the 

market. Indiana Grocery, Inc., v. Super Valu Stores, Inc., 864 

F.2d 1409 (7th Cir. 1989) (50% market share insufficient to show 

dangerous probability of successful monopolization); Richter 

Concrete Corp~ v. Hilltop Concrete Corp., 691 F.2d 818, 827 (6th 

Cir. 1982) ("the real test is whether [the defendant] possessed 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 24 
sufficient market power to achieve its aims"); United States v. 

Empire Gas Corp., 537 F.2d 296, 305 (8th Cir. 1976), cert. denied, 

429 U.S. 1122 (1977) (50% market share insufficient to show 

dangerous probability of successful monopolization). While the 

Trailblazer System's substantial market share demonstrates its 

proximity to monopoly status, it does not indicate Natural's 

capacity to raise the Trailblazer System's market share to a 

monopolistic level. 

CIG did not attempt to offer evidence of Natural's share of 

the transportation market. One might initially imagine that 

evidence of a firm's market share would be required in order to 

assess that firm's ability to obtain or confer market power, but 

this is not necessarily true. In this case, Natural's capacity to 

create a monopoly for the Trailblazer System cannot be measured by 

Natural's market share because Natural did not use economic 

coercion in its attempt to monopolize. Rather, Natural took 

advantage of its contractual right to stop.purchasing gas from CIG 

to magnify the Trailblazer System's position in the market. 19 In 

evaluating the probability of successful monopolization "we must 

consider the firm's capacity to commit the offense, the scope of 

its objective, and the character of its conduct." Kearney & 

Trecker Corp. v. Giddings & Lewis, Inc., 452 F.2d 579, 598 (7th 

Cir. 1971), cert. denied, 405 _U.S. 1066 (1972). In this case each 

19 The record does not clearly disclose how much of the 

Trailblazer System's market share gain reflected increased 

transportation volumes because CIG was unavailable as a 

competitor, and how much the market share gain simply resulted 

from the Trailblazer System's constant sales level in comparison 

with CIG's sales losses. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 25 
of these factors is strictly determined and ultimately limited by 

the Service Agreement between Natural and CIG. 

Natural's predatory conduct consisted of exercising its 

contract rights with CIG to prevent CIG from offering 

transportation services to long distance customers. Because 

Natural reserved a certain amount of space in CIG's pipeline, CIG 

could not offer that space to others. By continuing to reserve 

large amounts of gas and taking gas when CIG threatened to sell 

Natural's reserved capacity, Natural insured that CIG could not 

offer Natural's reserved capacity to the market. Yet, Natural's 

ability to exclude CIG was strictly limited by Natural's ability 

to insure its reserved capacity went empty. By exercising all its 

rights under the Service Agreement to tie up the entire capacity 

it had reserved, Natural was still only able to raise the 

Trailblazer System's market share to 54%. 

Thus, from the beginning, Natural's decision to quit 

purchasing gas presented no danger_that Natural could do anything 

more than shift 13% of the market to the Trailblazer System. The 

necessarily limited scope of Natural's objective leaves no room 

for speculation about the probability that the Trailblazer System 

would gain a monopoly. There was simply no reasonable chance, let 

alone a dangerous probability, that Natural, through the exercise 

of its contractual rights, could imbue_ the Trailblazer System with 

sufficient market share to be a monopolist. 20 

20 We agree with the proposition that it is no defense to an 

attempted monopolization charge that the defendant's attempt to 

monopolize proved to be unsuccessful. United States v. American 

Airlines, Inc., 743 F.2d 1114, 1119 (5th Cir. 1984). Simply 

(Continued to next page.) 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 26 
Further, market share statistics sometimes overestimate a 

firm's market power. See, e.g., Ball Memorial Hosp., Inc. v. 

Mutual Hosp. Ins., Inc., 784 F.2d 1325, 1335 (7th Cir. 1986); 

Landes & Posner, Market Power in Antitrust Cases, 94 Harv. L. Rev. 

937, 950 (1981). In this case, if ~e look beyond market share 

statistics, we are further convinced that Natural's conduct did 

not threaten to give the Trailblazer System the degree of market 

power that would constitute a monopoly for purposes of the 

monopolization offense. One measure of the degree of market power 

is the persistence of a firm's ability to profitably charge 

(Continued from previous page.) 

because a plan fails to succeed does not mean there was no 

probability that it could have succeeded. A flipped coin which 

lands head~ still had a 50% chance of landing tails before it was 

flipped. The capacity of the defendant to monopolize must be 

evaluated at the commencement of the predatory scheme. 

We also note our holding in this case does not require that 

in every instance where a party intends to eliminate a competitor 

through unfair means, the elimination of the competitor must give 

the predator a monopolistic market share. For instance, when a 

party with a substantial market share eliminates a smaller 

competitor_ through economic coercion, increased market power will 

give it even greater coercive power to eliminate other 

competitors. There is no reason to wait until the predator 

attacks a competitor that would put it just over the brink of 

monopolization before it can be stopped. See Note, Attempt to 

Monopolize Under The Sherman Act: Defendants Market Power as a 

Requisite to a Prima Facie Case, 73 Colum. L. Rev. 1451, 1462-63 

(1973). 

In this case, Natural sought to take advantage o~ a unique 

opportunity its contract afforded to temporarily harm a competitor 

of an entity in which it had an economic stake. Unlike the 

ordinary situation in which a firm's market share is crucial to 

the firm's ability to engage. in predatory conduct and every 

predatory act makes future predation easier, Natural's ability to 

engage in predatory conduct would not be enhanced by conferring 

market share upon the Trailblazer System. 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 27 
monopoly prices. 21 If the evidence demonstrates that a firm's 

ability to charge monopoly prices will necessarily be temporary, 

the firm will not possess the degree of market power required for 

the monopolization offense. 22 3 P. Areeda & D. Turner, Antitrust 

21 Although most courts do not explicitly discuss the 

persistence of a firm's ability to charge supracompetitive prices 

as a measure of a firm's market power, courts indirectly consider 

the potential longevity of supracompetitive pricing whenever they 

use market share to evaluate the degree of market power. Market 

share statistics are a useful measure of market power, in large 

part, because they indicate the relative durability of 

supracompetitive pricing capacity. The greater a firm's market 

share, the longer it will be able to charge monopoly prices 

because it will take longer for its small competitors to increase 

their output enough to discipline prices. See H. Hovencamp, 

Economics and Federal Antitrust Law§ 3.1, at 587T985). 

The durability of a firm's ability to charge supracompetitive 

prices also underlies another factor used to evaluate the degree 

of market power. Barriers to entry are often used by courts to 

determine whether an alleged monopolist has sufficient market 

power for purposes of the monopolization offense. 2 E. Kintneri 

Federal Antitrust Law§ 12.9 (1980). Barriers to entry are market 

char·acter1st1.cs which make it difficult or time-consuming for new 

firms to enter a market. For instance, if market entry requires 

the construction of large manufacturing plants, Cargill, Inc. v. 

Monfort of Colorado, Inc., 479 U.S. 104, 119 (1986), or obtaining 

governmental approval to enter the market, United States v. Marine 

Bancorporation, Inc., 418 U.S. 602, 628-29 (1974), the market is 

said to have high barriers t6 entry. Often courts refuse to find 

a sufficient degree of market power for the monopolization offense 

when they determine that a market has low barriers to entry. See, 

~, Ball Memorial Hosp., 784 F.2d at 1335. While a firm may 

have the capacity to charge supracompetitive prices in a market 

with low barriers to entry, that capacity is likely to be 

temporary. 

22 Some courts and commentators label the degree of market power 

necessary for the monopolization offense as "monopoly power." See 

L. Sullivan, Antitrust§ 22, at 75 (1977) ("Monopoly power can be 

distinguished from a lesser· amount of market power only in 

degree."); Dimmitt Agri Indus., Inc. v. CPC Int'l, Inc., 679 F.2d 

516, 529 (5th Cir. 1982), cert. denied, 460 U.S. 1082 (1983). One 

commentator has suggested that 1n the future courts might more 

precisely define monopoly power by "focus[ing] on the permanence 

of market power, with mere market power suggesting that 

supranormal profits will. be quickly eroded by new entry, and 

monopoly power suggesting significantly greater insulation from 

(Continued to next page.) 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 28 
Law, at 11 807; Williamsburg Wax Museum, Inc. v. Historic Figures, 

Inc., 810 F.2d 243, 252 (D.C. Cir. 1987); Dimmitt Agri Indus., 

Inc. v. CPC Int'l, Inc., 679 F.2d 516, 530 (5th Cir. 1982), cert. 

denied, 460 U.S. 1082 (1983); Metro Mobile CTS, Inc. v. Newvector 

Communications, Inc., 661 F. Supp. 1504, 1523-24 (1987); cf: 

Copperweld v. Independence Tube Corp., 467 U.S. 752, 767-68 (1984) 

(antitrust laws are only meant to condemn conduct with long-run 

anticompetitive effects). 23 

In this case, the Trailblazer System's ability to charge 

supracompetitive prices could last only as long as Natural had the 

contractual right to tie up CIG's pipeline capacity. This right 

was strictly limited by the duration of the Service Agreement. 24 

(Continued from previous page.) 

the long-run forces of entry." G. Hay, Single Firm Conduct, 57 

Anti trust L. J •" 75, 81 . ( 1988) ( emphasis added). While we do not 

adopt this commentator's nomenclature, we do agree with his assertion that market power must be persistent to make a firm a 

monopolist for purposes of the antitrust laws. 

23 A suggestion that unidentified market forces will eventually 

correct supracompetitive pricing will not suffice to show that 

market power will be temporary. Only when an alleged monopolist 

faces substantial competition from a known competitor who will 

enter the market in a definite period of time, ought courts to 

decline to find sufficient market power to satisfy the requirement 

for the monopolization offense. Williamsburg Wpx Museum, 810 F.2d 

at 252 (defendant did not have monopoly in the wax figure market 

because a known competitor could, within a year, begin to deliver 

wax figures); Metro Mobile CTS, 661 F. Supp. at 1523-24 (defendant 

did not possess monopoly power for purposes of the monopolization 

or attempted monopolization offense even though it controlled 100% 

of the market because a known competitor had both the plans and 

capacity to enter the market within three years). Cf. Landes & 

Posner, Market Power in Antitrust Cases, 94 Harv. L~ev. 937, 

950, n.28 (1981) (difficulty in identifying potential competitors 

forces courts to assume that a firm's ability to charge monopoly 

prices will be persistent). 

24 The Service Agreement 

Trailblazer System would 

was to expire in 1989. Thus, the 

be free from competition for a longer 

(Continued to next page.) 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 29 
Once Natural's control over CIG's capacity ended, the market would 

return to the status quo25 since the Trailblazer System would be 

helpless to compete against the unused and inexpensive capacity of 

CIG's system. 

This analysis, which requires a plaintiff to show that an 

attempted monopoiist's conduct 26 threatened to create substantial 

and persistent changes in the marketplace, may allow some unfair 

(Continued from previous page.) 

period of time than the defendants in either Williamsburg Wax 

Museum (1 year) or Metro Mobile CTS (3 years). Yet, the actual 

number of years that the Trailblazer System would be free from 

competition from CIG is not the deciding factor in this case. 

Rather the certainty that the market will return to the status quo 

at a predetermined date and the fact that the Trailblazer System 

has no power to prevent the erosion of its market share, convince 

us that the market implications of Natural's conduct are not the 

subject of the antitrust laws. 

25 There is no suggestion in the record that Natural was in 

danger of driving CIG completely out of the transportation business before the expiration of the Service Agreement. Indeed, 

considering CIG's financial resources and record profitability 

during Natural's tie~up, it is unlikely that Natural could have 

completely excluded CIG. By attacking CIG, Natural could not 

alter the competitive structure of the industry which is based on 

a permanent superstructure. See Cargill v. Monfort, 479 U.S. at 

119, n.15. 

26 One treatise has stressed that courts ought to take a longrun view when evaluating allegedly anticompetitive conduct. In 

attempting to distinguish between conduct that should be addressed 

by the antitrust laws and conduct which should be regulated by 

tort law, Professors Areeda and Turner state: 

[M]ost important, is our doubt that the torts and other 

activities considered in this Paragraph would very often 

seriously impair the competitive opportunities of rivals 

in any significant or permanent way. We must beware of 

the inclination to condemn a monopolist on the basis of 

antisocial behavior that could possibly give him an 

improper advantage in the market. • • • The antitrust 

court musto thereforeu insist on ••• significant and 

more-than-temporary harmful effects on competition. 

Areeda & Turner, ,1 737b ( emphasis added). 

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Appellate Case: 87-2123 Document: 01019899399 Date Filed: 09/11/1989 Page: 30 
and potentially harmful methods of competition to go unpunished by 

the antitrust laws. But the Supreme Court, in a now oft quoted 

phrase, has stated "the antitrust laws ••• were enacted for 'the 

protection of competition not competitors."' Brunswick Corp. v. 

Pueblo Bowl-0-Mat, Inc., 429 U.S. 477, 488 (quoting Brown Shoe 

Co. v. United States, 370 U.S. 294, 320 (1962)), cert. denied, 429 

U.S. 1090 (1977). The Court has long recognized that the Sherman 

Act "does not purport to afford remedies for all torts committed 

by or against persons engaged in interstate commerce." Hunt v. 

Crumboch, 325 U.S. 821, 826 (1945). We believe the triple damage 

sanction of the Clayton Act is too harsh a remedy for unfair 

methods of competition that only threaten to have a transitory 

impact on the marketplace. Since there was no dangerous 

probability that Natural would bestow upon the Trailblazer System 

the degree of market power, either in terms of market share or 

persistence, necessary for the monopolization offense, the jury's 

antitrust verdict must be reversed. 

IV. Conclusion 

In conclusion, we hold that because FERC has already 

determined the appropriate contractual rate for failure to 

purchase gas, and Natural has paid CIG that rate, the verdicts for 

breach of contract and bad faith breach of contract awarding a 

different rate are reversed. The antitrust verdict is reversed 

because CIG failed to present sufficient evidence for a jury to 

find a dangerous probability of successful monopolization. The 

verdict for tortious interference with contract is affirmed. 

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