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. e du/thir dc ir c uit_1998/252Filed October 27, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NO. 97-5470

CROSSROADS COGENERATION CORPORATION

Appellant

v.

ORANGE & ROCKLAND UTILITIES, INC.

On Appeal From the United States District Court For the District of New Jersey (D.C. Civil Action No. 96-cv-05287)

Argued April 23, 1998

BEFORE: STAPLETON and NYGAARD, Circuit Judges, and SCHWARTZ,* District Judge

(Opinion Filed October 27, 1998)

William Harla (Argued) DeCotiis, FitzPatrick & Gluck

500 Frank W. Burr Boulevard Glenpointe Centre West Teaneck, NJ 07666 Attorney for Appellant

___________________________________________________ ______________

* Hon. Murray M. Schwartz, Senior United States Dis trict Judge for the District of Delaware, sitting by designation.Glen R. Stuart (Argued)

Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103 Attorneys for Appellee

OPINION OF THE COURT

STAPLETON, Circuit Judge:

This appeal is from the dismissal of all counts of a complaint filed by Crossroads Cogeneration Corporat ion ("Crossroads") against Orange and Rockland Utilitie s, Inc. ("O&R"). The district court dismissed Crossroads' b reach of contract claim and related claims on the ground tha t they were barred by issue and claim preclusion, and dism issed

Crossroads' antitrust claims for failure to state a claim upon which relief could be granted. We will reverse in part and affirm in part.

I.

Crossroads, a Delaware company, is an independent producer of electric power that owns and operates a cogeneration facility in Mahwah, New Jersey, its pr incipal place of business. O&R is a New York corporation th at operates as a public utility in four counties in Ne w York, New Jersey, and Pennsylvania. In each county in whi ch O&R operates, it is virtually the sole retail provi der of electric power to residential, commercial, and indu strial customers. Most of the energy O&R provides to custo mers is purchased from relatively small, independent gen erators of energy, such as Crossroads. This dispute arises from a power purchase agreement governing the sale to O&R of electricity generated by Crossroads. Before examini ng the dispute in any detail, however, it is first necessa ry to review the regulatory context of the agreement.

A.

Under the Federal Power Act, 16 U.S.C. S 791a et se q., the Federal Energy Regulatory Commission ("FERC") i s

2responsible for regulating "public utilities" that offer electric

power in interstate commerce. In the midst of a nat ional energy crisis in 1978, Congress modified the Federa l Power Act by enacting the Public Utility Regulatory Polic ies Act ("PURPA"), 16 U.S.C. S 823a et seq. Congress' overa ll strategy was to "control power generation costs and ensure long-term economic growth by reducing the nation's reliance on oil and gas and increasing the use of m ore abundant, domestically produced fuels." Freehold Cogeneration Associates, L.P. v. Board of Regulator y Comm'rs of New Jersey, 44 F.3d 1178, 1182 (3d Cir. 1995). One chosen means to this broad end was to encourage the development of cogeneration facilities, which produ ce both electric and thermal energy from a single fuel sour ce.

Developing a market for cogeneration facilities req uired overcoming both the reluctance of traditional elect ric utilities to purchase power from independent provid ers and the financial burden of state and federal regulatio n on nontraditional facilities. See FERC v. Mississippi, 456 U.S. 742, 750-51 (1982). To address the first barrier, P URPA creates incentives by requiring FERC to prescribe " such rules as it determines necessary to encourage cogen eration and small power production," including rules to"req uire electric utilities to offer to . . . purchase elect ric energy from [cogeneration] facilities." 16 U.S.C. S 824a-3(a). At the same time, to address the burden of regulation, PURPA re quires FERC to prescribe rules to exempt small production facilities from many provisions of the Federal Powe r Act and "from State laws and regulations respecting the rat es, or respecting the financial or organizational regulati on, of electric utilities." 16 U.S.C. S 824a-3(e).

Acting pursuant to its authority under PURPA, FERC has promulgated regulations governing transactions betw een cogeneration facilities and electric utilities, inc luding provisions requiring electric utilities to purchase energy from qualifying facilities ("QFs") at a rate up to the utility's full avoided cost.1 In addition, FERC has also prom ulgated regulations exempting QFs from state regulatory

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1. In order to qualify as a QF, a cogeneration faci lity must meet requirements established by FERC. See 18 C.F.R. S 2 92.101 et seq.

3requirements. Those regulations provide, in relevan t part,

that:

Any qualifying facility shall be exempted . . . from State law or regulation respecting:

(i) The rates of electric utilities; and

(ii) The financial and organizational regula tion of

electric utilities.

18 C.F.R. S 292.602(c)(1).

Despite the existence of FERC regulations governing QFs and the exemption of QFs from certain federal and s tate regulations applicable to traditional electric util ities, state regulatory authorities are required to implement FE RC rules. See 16 U.S.C. S 824a-3(f). Thus state agenci es are actively involved in the formation and performance of contracts between traditional utilities and QFs; in particular, state authorities must review and appro ve power purchase agreements before they take effect.

B.

In October 1987, O&R entered into a contract with a QF for the purchase of electric energy for a period of twenty years. In 1990, Crossroads purchased the QF 's faci lity and it assigned the agreement to Crossroads.2 Pursuant to FERC regulations, the agreement required approval b y the New York Public Service Commission ("NYPSC"), the s tate agency responsible for regulating electric utilitie s. After several changes were made at the NYPSC's request, t he required approval was granted in December of 1988. The agreement provided that Crossroads' predecessor wou ld supply energy to O&R from a cogeneration facility t hat "initially will be designed to generate nominally 3 .3 MW of capacity and to generate approximately 26,300 MWH o f electric energy annually." App. at 65. The facility was initially constructed with three combustion engines , each of which had a generating capacity of approximately 1. 1 MW. However, the agreement anticipated that the plant m ight

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2. It is undisputed that Crossroads is a "qualifyin g facility."

4eventually grow in size, and the parties accordingl y agreed

upon the disposition of any capacity in excess of 3 .3 MW:

[Crossroads] shall deliver and sell to [O&R] and [O&R] shall accept and purchase from [Crossroads], subject to the terms and conditions of this agreemen t, all the capacity produced by the Plant, up to a maxi mum of 4 MW, and all energy associated with such capa city, net of that capacity and energy used from time t o time to operate the Plant. No change in the amount o f capacity committed hereunder shall be permitted witho ut the written consent of [O&R] and [Crossroads]. [Crossroads] shall have the right to sell to third parties or make alternate dispositions of all the ca pacity produced by the Plant in excess of 4 MW and all energy associated with such excess capacity; provid ed, however, that [O&R] shall have a right offir st refusal to purchase such excess capacity and energy for the price

set forth herein.

App. at 70.

Thus, despite the 3.3 MW initial capacity, the agre ement (1) requires O&R to purchase at the contract price all energy produced up to 4 MW; (2) reserves to O&R a r ight of first refusal in allocating any energy in excess of 4 MW; and (3) provides that Crossroads may sell on the open m arket any energy above 4 MW that O&R refuses.

This dispute arose in May 1996, when Crossroads constructed and began operating a new gas turbine a t the facility, capable of generating 5 MW of power. O&R refused to pay the contract price for energy generated by t he new turbine, while Crossroads claimed that O&R was obli gated under the agreement to purchase all energy generate d by the original or new equipment up to a capacity of 4 MW. O&R filed a petition with the NYPSC asking for a declaratory ruling that it was not obligated to"pur chase energy produced by the [new] Turbine at the prices set forth in the Agreement." App. at 63. Though acknowledging that the terms of the agreement required it to purchase "all the capacity produced by the Plant up to a maximum of 4 MW," App. at 57, O&R argued that it would nonetheless be unfair to require it to purchase energy from the new turbi ne.

5O&R's petition contended that the rates set forth i n the

agreement are substantially higher than the market would bear today, a result of policies in the 1980s that provided subsidies to cogeneration facilities. Since the pla nt's capacity was 3.3 before addition of the new turbine , O&R had not been paying for the full 4 MW of energy pri or to addition of the new turbine. With the new turbine, Crossroads would easily fulfill the 4 MW that O&R w as obliged to purchase under the agreement. Because O& R is locked into what it perceives is above-market rates , it charged that Crossroads was "seek[ing] to circumven t the terms and spirit of the Agreement by supplementing the availability of the Original Generators with the ou tput from the Turbine." App. at 61. O&R estimated that it wou ld be required to pay an additional $4.2 million to Cross roads for the additional energy over the life of the contract

, concluding that "[r]equiring [its] ratepayers to su bsidize Crossroads [was] simply inappropriate." App. at 61.

Crossroads opposed O&R's petition before the NYPSC. Citing a decision of this Circuit, Freehold Cogener ation Associates v. Board of Regulatory Comm'rs of New Je rsey, 44 F.3d 1178 (3d Cir. 1995), Crossroads argued that once a state utility commission approves the terms of a power purchase agreement, "any action . . . to reconsider its approval" is preempted by PURPA. 44 F.3d at 1194. Crossroads also cited NYPSC precedent suggesting th at the agency usually refused to get involved in contract disputes between utilities and their suppliers. Finally, Cro ssroads contended that the issue was more complex than O&R' s petition made it out to be, and requested an opport unity to supplement the record should the Commission decide to exercise jurisdiction.

The NYPSC granted O&R's petition. The Commission determined that it had authority to review the peti tion because of its power to "interpret [its] power purc hase contract approvals." App. at 172. The NYPSC found t hat O&R's petition could be read as a request for it to explain and interpret whether the earlier approval of the c ontract included the additional capacity created by the new turbine. The Commission concluded that "[u]nder the approval . . . Crossroads may not supplement electr icity

6produced by its [original] engine capacity with ele ctricity

produced from its new turbine capacity." App. at 17 3. Thus, the Commission ordered that electricity gener ated by the new turbine could not be priced at the contract rate.

Crossroads then filed this action, seeking recovery for

breach of contract and antitrust violations.3 O&R m oved to

dismiss Crossroads' claims under Fed. R. Civ. P. 12 (b)(6) for

failure to state a claim. Crossroads cross-moved fo r summary judgment on all claims. The district court granted

O&R's motion and denied Crossroads' motion. The dis trict court determined that: (1) the contract claims4 all are "premised on [Crossroads'] contention that[O&R] bre ached its obligations under the terms of the Agreement by refusing to pay the contract price for energy gener ated by the new gas turbine," Op. at 15; (2) Crossroads is barred by principles of issue and claim preclusion from litig ating the issue of whether the agreement requires purchase of energy from the new turbine because that issue was litigat ed and determined before the NYPSC; (3) Crossroads' argume nt that the NYPSC did not have jurisdiction to constru e the contract is also barred by operation of the "jurisd ictional finality" rule of issue preclusion; and (4) Crossro ads failed to sufficiently allege antitrust violations. After dismissing all Crossroads' claims, the district court then denied its crossmotion for summary judgment as moot. This appeal fo llowed.5

II.

We will reverse the judgment of the district court with respect to Crossroads' contract claims.

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3. Crossroads has preserved its right to appeal the NYPSC's determination by filing an appeal in the appropriat e New York state court. The parties have by stipulation stayed that proceeding pending

the outcome of this case.

4. The claims involved are Crossroads' First, Secon d, Third, and Fourth causes of action, for breach of contract, breach of the covenant of good faith and fair dealing, anticipatory repudiation, a nd declaratory judgment.

5. The district court had jurisdiction pursuant to 28 U.S.C. SS 1332 & 1337. We have jurisdiction from the district court' sfinal order pursuant

to 28 U.S.C. S 1291.

7A.

Issue preclusion, also known as collateral estoppel , bars relitigation of issues adjudicated in a prior actio n. Federal courts are required to give preclusive effect to st ate court judgments by virtue of the Full Faith and Credit Ac t, which provides that "Acts, records and judicial proceedin gs . . . shall have the same full faith and credit in every [federal] court . . . as they have by law or usage in the cou rts of such State . . . from where they are taken." 28 U.S .C. S 1738; see Swineford v. Snyder County, 15 F.3d 125 8, 1266 (3d Cir. 1994). By its terms, S 1738 applies o nly to state court decisions, and the Supreme Court has determined that the statute does not apply to administrative agency decisions that have not beenf irst reviewed by a state court. See University of Tennes see v. Elliott, 478 U.S. 788, 794 (1986). However, the Cou rt has "frequently fashioned federal common-law rules of preclusion in the absence of a governing statute." Id. Thus,

we must determine whether an unreviewed decision of the NYPSC should be given preclusive effect.

Though the Supreme Court has not yet addressed the preclusive effect of decisions of state agencies re sponsible for utility regulation, we are guided by several ge nerally applicable criteria. The Court has determined that, unless a federal statute specifically indicates that state agency decisions should not be considered conclusive, as i n the context of Title VII, Elliott, 478 U.S. at 795-96, and the Age Discrimination Act, Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 110-11 (1991), factualfindi ngs of state agencies should be given the same preclusive effect they would be accorded in the courts of that state. See Elliott, 478 U.S. at 797; Edmundson v. Borough of K ennett Square, 4 F.3d 186, 192 (3d Cir. 1993). In addition

, applying preclusive effect to legal conclusions mad e by state agencies "is favored as a matter of general p olicy, [though] its suitability may vary according to the specific context of the rights at stake, the power of the ag ency, and the relative adequacy of agency procedures." Astori a, 501

U.S. at 109-10.

In this case, we determine that the factual finding s and legal conclusions of the NYPSC should be given prec lusive

8effect to the extent afforded under New York law. U nlike

Astoria or Elliott, we find no provision of PURPA t hat seeks to limit common law rules of preclusion from applyi ng to state agency decisions relating to utility regulati on. Though PURPA does limit the authority of state agencies in some respects, e.g., by exempting cogeneration facilitie s from some regulation, PURPA still provides a substantial role to state agencies in regulating energy contracts betwe en utilities and cogenerators. Indeed, state agencies are specifically required by federal law to implement F ERC regulations. Given the substantial role given state utility agencies by Congress in enacting PURPA, we conclude Congress did not intend to prevent application of c ommon law rules of preclusion. Thus, we will give preclus ive effect

to the NYPSC decision to the same extent as would t he New York courts. Accord Long Island Lighting Co. v. IMO Industries, Inc., 6 F.3d 876, 885 (2d Cir. 1993) (d ecision of NYPSC given preclusive effect).

Crossroads also contends that, in particular, the N YPSC's determination that it had jurisdiction over O&R's p etition should not be given preclusive effect in this actio n. Though recognizing that, generally speaking, a tribunal's determination of its own jurisdiction is accorded t he same status for issue preclusion purposes as the merits of a dispute, see Durfee v. Duke, 375 U.S. 106, 114 (196 3), Crossroads contends an exception to the rule applie s in a case like this where a federal statute, PURPA, pree mpts the state agency from acting altogether. This more limi ted argument of Crossroads presents, in our judgment, a close question. We conclude that we need not resolve it, however, in light of our determination in subsection C below that the

NYPSC decided an issue distinct from that to be dec ided in this case, and our determination in subsection D be low that Crossroads' contract claims are not barred by claim preclusion. Accordingly, we assume, without decidin g, that the Commission had the jurisdiction it purported to exercise with respect to O&R's petition.

B.

Under New York law, an issue adjudicated in a prior proceeding will have preclusive effect where (1) th e "issue in

9the present proceeding [is] identical to that neces sarily

decided in a prior proceeding" and (2) "in the prio r proceeding the party against whom preclusion is sou ght was accorded a full and fair opportunity to contest the issue." Allied Chemical v. Niagara Mohawk Power Cor p., 528 N.E.2d 153, 155 (N.Y. 1988).6 The district cour t, after examining the NYPSC decision, determined that these requirements were met and concluded that Crossroads ' claims were precluded by the prior determination. S ee Op. at 19. On appeal, Crossroads challenges the determi nation that they were provided a "full and fair" opportuni ty to litigate before the NYPSC. See Appellant's Br. at 2 6, 33-35.

Under New York law:

A determination whether the first action or proceeding genuinely provided a full and fair opportuni ty requires consideration of "the `realities of the [pri or] litigation', including the context and other circumstance s which . . . may have had the practical effect of d iscouraging or deterring a party from fully litigating t he determination which is now asserted against him". (People v. Plevy, 52 N.Y.2d 58, 65, 436 N.Y. S.2d 224, 417 N.E.2d 518.) Among the specific factors to be

considered are the nature of the forum and t he importance of the claim in the prior litigat ion, the incentive and initiative to litigate and the actual extent of litigation, the competence and expertise of counsel, the availability of new evidence, the differ ences in the applicable law and the foreseeability of fut ure litigation. (Gilberg v. Barbieri, 53 N.Y.2d 285, 292, 44 1 N.Y.S.2d 49, 423 N.E.2d 807; Schwartz v. Public Admin istrator, 24 N.Y.2d 65, 72, 298 N.Y.S.2d 955, 246 N.E. 2d 725.)

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6. In addition, when applying issue preclusion to a n administrative agency, New York courts are required to ascertain t hat the agency proceeding was "quasi-judicial" in nature; i.e., wh ether (1) the agency has the power to act adjudicatively, (2) the agency follows adequate factfinding procedures, (3) the issue was fully aired, and (4) the parties expect to be bound by the decision. See Allied, 528 N.E.2d at 155. In Allied, New York's highest court determined that, j udged by these criteria, a decision of the NYPSC was "quasi-judici al." The district court in this case agreed, and Crossroads provides no per suasive reason on appeal to conclude differently.

10Ryan v. New York Telephone Co., 467 N.E.2d 487, 491 (N.Y.

1984). These requirements are intended to make cert ain that the first tribunal carefully considered the is sues litigated, and that the party against whom preclusi on is sought had a chance to offer vigorous argument for its position. In this case, two issues of "full and fai r" opportunity arise from the litigation before the NY PSC: (1) whether Crossroads was given a "full and fair" chan ce to argue the issue of the NYPSC's jurisdiction to addr ess O&R's petition; and (2) whether Crossroads was give n a "full and fair" opportunity to litigate the merits of the petition.

The issue of whether Crossroads had a "full and fai r" opportunity to argue, before the NYPSC, the issue o f the NYPSC's own jurisdiction is straightforward. The pa rties both submitted briefs before the NYPSC outlining th eir view of the jurisdictional issue, including Crossroads' contentions that PURPA, FERC regulations, and the NYPSC's own practice prohibited jurisdiction over t he interpretation of the contract. Crossroads' brief b efore the NYPSC mirrors the arguments made before us on appea l. The NYPSC opinion deciding the issue carefully cons idered each of Crossroads' arguments and reflects a consid ered analysis of its jurisdictional predicate. Reading t he parties' submissions before the NYPSC, and the resulting dec ision, we believe, leads to the conclusion that Crossroads had a full and fair opportunity to litigate the issue of the agency's jurisdiction.

The more debatable issue is whether Crossroads had a full and fair opportunity to litigate the merits of O&R's petition. In addition to determining that it had ju risdiction over O&R's petition, the NYPSC also proceeded to gr ant the petition, holding that "[u]nder [its] approval of t he contract for the Crossroads site, [Crossroads] may not expan d the generation production entitled to the contract pric ing. . . . As a result, the expanded production made possible by Crossroads' new turbine is beyond the terms and conditions approved for this contract." App. at 173

.

In this appeal, Crossroads briefly argues that the NYPSC's consideration of the merits of O&R's petiti on did not offer Crossroads a "full and fair" opportunity to contest

11the issue. Crossroads contends that it did not seek relief

from the NYPSC or participate voluntarily in the ag ency's proceedings, that it solely contested the jurisdict ional issue, and that it requested, and was denied, an opportuni ty to supplement the record before the NYPSC. Despite the se arguments, we believe that Crossroads had a full an d fair opportunity to litigate the merits of O&R's petitio n for declaratory relief before the NYPSC.

Crossroads' argument that it did not seek relief be fore the NYPSC and did not voluntarily participate before th e agency is not legally relevant to whether it had a full an d fair opportunity to litigate the merits issue. Moreover, contrary to its assertion in its brief, Crossroads' submissi on before the NYPSC did argue the merits of the petition. Cro ssroads contended that the agreement could not be read to s uggest that the original set of three 1.1 MW generators wa s the only capacity assumed by the parties, pointing to l anguage in the agreement and exhibits demonstrating the int ent of the parties at the time the contract was signed. Th at these arguments were not accepted by the NYPSC does not m ean that Crossroads had an inadequate opportunity to pr esent

them.

Crossroads also argues that the NYPSC did not heed its request to file additional materials before it rend ered its decision on the merits of the petition. In its subm ission to the agency, Crossroads requested that "[s]hould the

Commission determine that it will entertain O&R's r equest for a declaratory ruling, CROSSROADS respectively reserves its right to make a further submission tha t more fully describes the matters in dispute . . . ." App . at 120. However, the fact that Crossroads asked for a secon d opportunity to argue the issue does not establish t hat it did not have a "full and fair" first opportunity. Moreo ver, Crossroads has not pointed to any additional materi als or arguments that it would have made before the NYPSC. Since Crossroads has not suggested that it would ha ve made any additional arguments before the NYPSC, it is

difficult to conclude that it did not have a full a nd fair opportunity to litigate on this ground.

More importantly, looking only to Crossroads' oppor tunity to litigate before the NYPSC is not the legally rel evant

12perspective. The issue of a "full and fair" opportu nity to

litigate includes the possibility of a chain of app ellate review. See, e.g., Kremer v. Chemical Construction Corp., 456 U.S. 461, 484 (1982); Reubens v. New York City Dep't of Juvenile Justice, 930 F. Supp. 887, 892 (S.D.N.Y . 1996). Crossroads has an opportunity to appeal the NYPSC's decision through the state court system, and Crossr oads will presumably have an opportunity in those procee dings to raise its claims regarding the merits of O&R's p etition, as well as its contention that the NYPSC improperly de nied its application to supplement the record. In short, in determining whether a litigant has been given a"ful l and fair" opportunity to litigate a claim, we must take into account the possibility of appellate review. Since such review is available in this case, and there is no a llegation that it would be inadequate to consider Crossroads' arguments,7 Crossroads has been given a full and fa ir opportunity for preclusion purposes.

C.

In addition to the requirement of an opportunity to argue the merits, issue preclusion applies only when the issue in the present proceeding is "identical" to that decid ed in the prior proceeding. Allied, 528 N.E.2d at 155. Thus, application of claim preclusion is appropriate here only if it can be said that the issue decided by the NYPSC is the same issue that Crossroads, by filing its contract claims,

has asked the district court to decide. Resolution of this issue requires that we examine with some care the l aw applicable to those claims and the specific grounds upon which the NYPSC rested its decision on the jurisdic tional

and merits issues.

As we noted above, under PURPA and the regulations

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7. At oral argument Crossroads suggested that a res trictive standard of review in the New York state courts might limit its ability to litigate

its position. However, these comments were not raised b efore oral argument. Moreover, we find no reason to believe th at the standard of review applied by an appellate court would impair t he ability of Crossroads to meaningfully make the arguments it ha s advanced before

us.

13adopted by the FERC, qualifying facilities like Cro ssroads

are exempt from state utility-type regulation, incl uding regulation of "rates of electric utilities." 18 C.F .R. S 292.602(c)(1). We have interpreted these regulati ons to prevent state regulatory commissions from modifying the terms of a power purchase agreement between a utili ty and cogeneration facility after it has been approved by the state. In other words, while PURPA allows the appropriate state regulatory agency to approve a power purchasing agreement, once such an agreement is approved, the state agency is not permitted to modify the terms of the agreement. To do so would be to engage in the utili ty-type regulation from which PURPA exempts QFs.

This principle was recently articulated in Freehold Cogeneration Associates, L.P. v. Board of Regulator y Comm'rs of New Jersey, 44 F.3d 1178 (3d Cir. 1995).

Freehold involved facts similar to those before us. A utility and cogenerator reached a twenty-year power purchas e agreement at certain specified rates. The agreement was approved by the New Jersey regulatory board respons ible for reviewing such agreements. After a year had pas sed under the contract, the utility, in response to low er costs for obtaining electrical power, notified the state board that it wished to modify the pricing structure of the ag reement. The cogenerator rejected suggestions to renegotiate or agree to a buy-out offer to end the contract. The regulat ory board then directed the cogenerator to renegotiate the ra tes under the agreement or agree to a buy-out. The cogenerato rfiled a complaint in the district court, seeking a declar atory judgment exempting it from the board's attempts to modify the agreement. The district court denied relief. On appeal, after determining jurisdiction, ripeness, and other challenges, we proceeded to discuss whether PURPA preempted the state regulatory board's order requir ing renegotiation of the agreement.

Noting that "PURPA and the implementing regulations establish an extensive federal system to encourage and regulate the sale of electrical energy by QFs," we determined that FERC, and not state regulatory agen cies, were responsible for establishing the parameters go verning power purchase agreements between utilities and qua lifying

14facilities. 44 F.3d at 1191. Though FERC did allow state

agencies to approve such agreements, the implementa tion authority of state agencies end once an agreement i s approved. After approval has been granted, "attempt [s] to either modify the [agreement] or revoke [state agen cy] approval is `utility-type' regulation -- exactly th e type of regulation from which [a qualifying facility] is im mune under [PURPA]." Id. at 1192. Thus, unless the quali fying authority waives its PURPA rights in the agreement, the federal law prevents the state from "reconsideratio n of its prior approval." Id.

Not surprisingly, Crossroads cited our Freehold dec ision to the NYPSC in support of its contention that the Commission lacked jurisdiction to interpret the pow er purchase agreement. In response, the NYPSC expressl y recognized the "contract non-interference policy" i nherent in PURPA and acknowledged that it lacked jurisdicti on to interpret the agreement. It carefully drew a distin ction, however, between interpreting the agreement between the parties and interpreting its approval of that agree ment, holding that it possessed jurisdiction to do the la tter:

As was recently reaffirmed, it is within ou r authority to interpret our power purchase contract app rovals, and that jurisdiction has been upheld by the courts. The precedents involving interpretation of p ast policies and approvals, and not the contract non-inte rference policy that Crossroads cites, control here. As a result, the approval of the original contract for th e Crossroads site may be explained and interpreted, and O &R's petition may be construed as requesting that relief. That approval was limited to a project consi sting of three reciprocating engines, sized at a net capacity of 3.3 MW, with an estimated annual electrical output of 26,300 MWh. Under the approval, therefore, Crossroads may not supplement electricity pr oduced by its reciprocating engine capacity with el ectricity produced from its new turbine capacity.

App. at 172-73 (footnotes omitted) (emphasis suppli ed).

The opinion of the NYPSC is devoid of any reference to the text of the agreement. In reaching its conclusi on that its

15"approval was limited to a project consisting of th ree

reciprocating engines, sized at a net capacity of 3 .3 MW," the Commission cites solely to a memorandum from it s staff that describes the then existing cogeneration plant as "consist[ing] of three dual fuel engine-generator s ets." App. at 137, 173. Consistent with its ruling on jurisdic tion, the Commission's holding was carefully circumscribed to reflect only an interpretation of its approval:

Accordingly, we find and declare that the p etition of Orange and Rockland Utilities, Inc. is grant ed in part, to the extent that the December 2, 1988 appr oval of

Contract No. E-139 between O&R and Onsite (Crossroads' predecessor) is construed as li miting the contract pricing to electric production from the three reciprocating engine facility that was insta lled in 1987, and does not extend to production from the g as-fired

turbine that was installed in 1996.

App. at 174. The referenced "December 2, 1988 appro val" is a Commission letter to the parties informing them t hat it had "accepted the contract and supplement" thereto "contingent upon . . . the contract being amended" in two detailed respects not relevant here. Neither side m aintains before us that the required amendments were not mad e.

It is thus apparent that the NYPSC, because of the limitations it perceived on its own jurisdiction, d eliberately excluded from its deliberation any interpretation o f the contract it approved on December 2, 1988. As a resu lt, we conclude that it did not decide the issue presented by the

contract claim in this case.

As we understand the federal law applicable here, although a PURPA-governed agreement is unenforceabl e prior to approval by the relevant state agency, the rights of the parties, once their agreement receives such app roval, are to be determined by applying normal principles of contract interpretation to their agreement. Thus, t he district court in this case is being asked to deter mine from the approved agreement of the parties their intenti on with respect to O&R duty to purchase new capacity. This is an issue that the NYPSC expressly declined to address.

16We do not suggest that a court asked to enforce a s tate

approved PURPA governed agreement will never have occasion to consider the terms of the agency's appr oval. In some cases, those terms may be highly relevant in determining the parties' understanding of their res pective rights and duties under the contract. Nothing in th e approval granted here is helpful in that respect, h owever. Moreover, when those terms have relevance, they are relevant only in the context of the understanding o f the parties as reflected in an objective reading of the agreement and its approval. An inquiry into the issues focuse d on by

the Commission and its staff as reflected in its in ternal

records is not relevant.

Accordingly, we conclude that the issue decided by the NYPSC does not have preclusive effect with respect to the issues presented by Crossroads' contract claims.

D.

In addition to issue preclusion, the district court also

determined that Crossroads' contract claims were ba rred by claim preclusion. Operation of claim preclusion, or res judicata, enforces the principle that a final judgm ent of a claim on the merits between the same parties resolv es both that claim and all others arising out of the same transaction. See Ryan v. New York Telephone Co., 46 7 N.E.2d 487, 489-90 (N.Y. 1984). Applying this doctr ine, the

district court concluded that Crossroads' contract claims "were already litigated between these parties befor e the NYPSC, which reached a final determination of those claims on the merits." Op. at 18. We disagree.

New York courts have adopted a "transactional" appr oach to res judicata, meaning that "once a claim is brou ght to a final conclusion, all other claims arising out of t he same transaction or series of transactions are barred, e ven if based upon different theories or if seeking a diffe rent remedy." O'Brien v. City of Syracuse, 429 N.E.2d 11 58, 1159 (N.Y. 1981); see also Schuylkill Fuel Corp. v. B. & C. Nieberg Realty Corp., 165 N.E. 456, 457 (N.Y. 1929) (Cardozo, C.J.) ("A judgment in one action is concl usive in a later one, not only as to any matters actually li tigated

17therein, but also as to any that might have been so litigated

. . . ."). This principle has been applied by New Y ork courts

in cases where a defense or counterclaim used in on e action is asserted in a later action. See, e.g. , B oard of Managers of Windridge Condominiums One v. Horn, 651 N.Y.S.2d 326 (N.Y. App. Div. 1996); Lippman v. Lipp man, 612 N.Y.S.2d 532 (N.Y. App. Div. 1994). Thus, if O& R had brought its declaratory judgment action in a New Yo rk court of general jurisdiction, rather than the NYPS C, asking for a declaration that it had no duty to buy additi onal power under the agreement, Crossroads would have to come forward with any and all grounds it might have to assert that this duty exists. If so, then under tra ditional claim preclusion principles Crossroads would be bou nd by an adverse declaratory judgment whether or not the court expressly ruled on the meaning of the contract.

Nevertheless, we predict that New York courts would not apply claim preclusion in the circumstances now bef ore us. Crossroads was taken involuntarily before the NYPSC , and it asserted a jurisdictional argument there. The Commission, as we have read its opinion above, acce pted that defense to the extent that O&R was asking for a contract interpretation. It went out of its way to hold that it was without jurisdiction to grant such relief bu t that it did have jurisdiction to interpret its approval. Ac cordingly,

we think this is a situation of the kind described in the Restatement (Second) of Judgments:

S 26. Exceptions to the General Rule Concern ing Splitting

(1) When any of the following circumstances exists, the general rule of S 24 does not apply to extin guish the claim, and part or all of the claim subsists as a possible basis for a second action by the pl aintiff against the defendant: . . .

(c) The plaintiff was unable to rely on a c ert ain theory of the case or to seek a certain reme dy or form

of relief in the first action because of the limitations on the subject matter jurisdiction of the court s or restrictions on their authority to entertain multiple theories or demands for multiple remedies or forms of

18relief in a single action, and the plaintiff desires in the

second action to rely on that theory or to s eek that remedy or form of relief . . . .

New York courts, applying this provision, have crea ted an exception to claim preclusion in situations where t he first tribunal lacks jurisdiction to offer the relief sou ght in the second proceeding. Compare Handy v. Westbury Teache rs Ass'n, 104 A.D.2d 923, 925-26 (N.Y. App. Div. 1984) (state agency that "declined to adjudicate [plaintiffs] co ntentions on these issues . . . holding that it lacked . . . jurisdiction leaves plaintiffs free to raise those same contenti ons in [later] action") with Pauk v. Board of Trustees of the City Univ. of N.Y., 111 A.D.2d 17, 21 (N.Y. App. Div. 19 85) (res judicata applies where grounds for recovery "was en tirely available to plaintiff as a basis for relief " in t he prior proceeding). Because the contract claims were unava ilable to Crossroads before the NYPSC, we hold that claim preclusion was improperly applied in this case.

E.

In reaching the conclusion that the district court is free

to decide Crossroads' contract claims on their meri ts, we are mindful of the fact that the NYPSC's opinion ul timately declared that O&R owes no duty to purchase at the contract rate energy generated by Crossroads in exc ess of 3.3 MW but less than 4 MW. This can be, and in most circumstances would properly be, viewed as a declar ation on the same issue presented to the district court b y Crossroads' contract claims. Had the Commission reg arded itself as having jurisdiction to consider the terms of the contract, the district court would clearly be barre d from proceeding on the contract claims by both issue and claim preclusion. But the Commission's opinion makes it indisputably clear that it drew a careful distincti on between interpreting the intent of the parties as reflected in their approved agreement and interpreting the intent of t he Commission and then concluded that it had no jurisd iction

to do the former. Given that Crossroads' contract c laims rest solely on the intent of the parties as reflect ed in the contract, we can remain faithful to the principles underlying S 26 of the Restatement and the New York cases

19embracing it only by looking beneath the Commission 's

ultimate conclusion to its foundation., i.e., its

determination that in 1988 it had considered and subjectively approved only the sale of energy from the existing facilities at the contract price. Because the Commission considered itself without jurisdiction t o consider the argument that Crossroads was making, Crossroads remains entitled to its day in the distr ict court.

III.

In its fifth cause of action, Crossroads accuses O& R of monopolization and attempted monopolization, in vio lation of S 2 of the Sherman Act, 15 U.S.C. S 2, and price discrimination, in violation of S 2 of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. S 13. Crossroads alleges that O&R's refusal to purchase e nergy from Crossroads pursuant to the agreement has helpe d unfairly solidify O&R's monopoly position in its se rvice area. In addition, Crossroads alleges that O&R has impeded its attempts to sell its excess energy to customers in O&R's service area by offering those customers lower pric es. The

district court dismissed Crossroads cause of action on both theories for failure to state a claim. On appeal, C rossroads contends that its complaint is sufficient to surviv e dismissal. We agree with this aspect of the distric t court's

decision.

The district court correctly determined that Crossr oads'

Sherman Act claims should be dismissed. Section 2 o f the Sherman Act provides that "[e]very person who shall monopolize, or attempt to monopolize . . . any part of the trade or commerce among the several States . . . sh all be deemed guilty of a felony . . . ." 15 U.S.C.S 2. To state a claim for monopolization, a plaintiff must allege " (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historical accident." Schuylkill Energy Resources v

. Pennsylvania Power & Light Co., 113 F.3d 405, 412-1 3 (3d Cir.) (quotations omitted), cert. denied, 118 S. Ct . 435 (1997). To state a claim for attempted monopolizati on, a

20plaintiff must allege "(1) that the defendant has e ngaged in

predatory or anticompetitive conduct with (2) a spe cific intent to monopolize and (3) a dangerous probabilit y of achieving monopoly power." Schuylkill, 113 F.3d at 413.

The district court determined that Crossroads had f ailed to allege a relevant market or sufficient monopoly power to

state a claim under the Sherman Act. The court held that:

[P]laintiff fails, as a matter of law, to su fficiently allege monopoly power. Plaintiff merely states that defendant is the sole provider of electricity to certa in customers in

the counties it services. . . . Plaintiff fa ils to allege such necessary facts as defendant's market share in the markets in which plaintiff is a competitor o r that barriers that exist which prevent plaintiff 's entry into such markets. These deficiencies in the Comp laint mandate dismissal of plaintiff 's Sherman Ac t claims. See Barr Lab, Inc. v. Abbott Lab, 978 F.2d 9 8, 112-13 (3d Cir. 1992).

Op. at 9. We agree with the district court's reason ing.

Alleging market share alone is not sufficient to st ate a claim under the Sherman Act. Monopolization or thre atened monopolization requires something more, which may include "the strength of competition, probable deve lopment of the industry, the barriers to entry, the nature of the anticompetitive conduct, and the elasticity of consumer demand." Barr Labs, 978 F.2d at 112. Crossroads has not alleged any of these factors. Nor is it likely that it could

have done so. Crossroads admits that it acts as a competitor to O&R in selling its excess capacity in O&R's service area, and it provides no reason why it is p revented from doing so in the future. The complaint simply f ails to allege anything to suggest monopolization by O&R cognizable by the Sherman Act.

The district court also did not err in dismissing Crossroads' price discrimination claim under the Ro binsonPatman Act. Crossroads alleges that O&R approached its excess capacity customer and offered to sell it ele ctricity at a lower price than that offered by Crossroads, that the reduced price was not offered to all customers, and that

such action constitutes a violation of the Robinson -Patman

21Act. The Robinson-Patman Act, which amended the Cla yton

Act, prohibits price discrimination "where the effe ct of such discrimination may be substantially to lessen compe tition or tend to create a monopoly." 15 U.S.C. S 13(a). I n order to state a claim under the Robinson-Patman Act, a plai ntiff must allege facts to demonstrate that (1) the defen dant made at least two contemporary sales of the same commodity at different prices to different purchase rs; and (2) the effect of such discrimination was to injure competition. See Brooke Group Ltd. v. Brown & Willi amson Tobacco Corp., 509 U.S. 209, 219-27 (1993).

The district court dismissed Crossroads' claim beca use it failed to allege that O&R made any sales of energy at different prices. The complaint merely alleges that O&R has "offered" to sell electricity at a rate lower than that charged by Crossroads. Crossroads does not deny this infirm ity, but contends that since O&R is virtually the sole provi der of electricity in its service area that there is "dang er" that O&R will abuse its market power in competing with small er suppliers like Crossroads. See Appellant's Br. at 4 7. This position is not supported by any citation to author ity and suggests that Crossroads' claim is based on at a sp eculative threat of future competitive injury, which would no t be ripe for determination in any event. Merely offering low er prices to a customer does not state at a price discriminat ion claim.8

Even if the offer of lower prices were sufficient t o survive dismissal, Crossroads has failed to sufficiently pl ead the second element of a price discrimination claim: inj ury to competition. Crossroads has made no allegation of predatory conduct in any offers to customers that O &R has made, nor has it alleged any other competitive effe ct of

O&R's offer. The mere fact of O&R's market share do es not mean that approaching Crossroads' customer is an antitrust violation, so something additional must b e alleged in order to survive dismissal. See Barr Labs, 978 F .2d at 106-07. Crossroads has not alleged any anticompetit ive

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8. As the district court noted, at least two other circuits have required dismissal when two sales are not alleged. See Terry 's Floor Fashions, Inc. v. Burlington Indus., 763 F.2d 604, 615 (4th Cir. 1 985); Fusco v. Xerox Corp., 676 F.2d 332, 337 (8th Cir. 1982).

22effect, such as below-market prices, or any other i ndicia of

anticompetitive behavior. Crossroads' monopolizatio n and price discrimination claims simply come up short.

IV.

The judgment of the district court will be reversed , and the matter will be remanded for further proceedings consistent with this opinion.9

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

___________________________________________________ ______________

9. As we noted above, the district court denied Cro ssroads' cross-motion for summary judgment as moot. In light of our decis ion, the motion is no longer moot, but we decline to reach its merits sin ce it has not been briefed before us nor first addressed by the distri ct court.

23