1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

10-27-1998

Crossroads v. Orange & Rockland

Precedential or Non-Precedential:

Docket 97-5470

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Recommended Citation

"Crossroads v. Orange & Rockland" (1998). 1998 Decisions. Paper 252.

http://digitalcommons.law.villanova.edu/thirdcircuit_1998/252
Filed 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 District 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 Corporation 

("Crossroads") against Orange and Rockland Utilities, Inc. 

("O&R"). The district court dismissed Crossroads' breach of 

contract claim and related claims on the ground that they 

were barred by issue and claim preclusion, and dismissed 

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 principal 

place of business. O&R is a New York corporation that 

operates as a public utility in four counties in New York, 

New Jersey, and Pennsylvania. In each county in which 

O&R operates, it is virtually the sole retail provider of 

electric power to residential, commercial, and industrial 

customers. Most of the energy O&R provides to customers 

is purchased from relatively small, independent generators 

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 examining the 

dispute in any detail, however, it is first necessary to review 

the regulatory context of the agreement. 

A. 

Under the Federal Power Act, 16 U.S.C. S 791a et seq., 

the Federal Energy Regulatory Commission ("FERC") is 

 2 
responsible for regulating "public utilities" that offer electric 

power in interstate commerce. In the midst of a national 

energy crisis in 1978, Congress modified the Federal Power 

Act by enacting the Public Utility Regulatory Policies Act 

("PURPA"), 16 U.S.C. S 823a et seq. Congress' overall 

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 more 

abundant, domestically produced fuels." Freehold 

Cogeneration Associates, L.P. v. Board of Regulatory 

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 produce both 

electric and thermal energy from a single fuel source. 

Developing a market for cogeneration facilities required 

overcoming both the reluctance of traditional electric 

utilities to purchase power from independent providers and 

the financial burden of state and federal regulation on 

nontraditional facilities. See FERC v. Mississippi, 456 U.S. 

742, 750-51 (1982). To address the first barrier, PURPA 

creates incentives by requiring FERC to prescribe "such 

rules as it determines necessary to encourage cogeneration 

and small power production," including rules to"require 

electric utilities to offer to . . . purchase electric energy from 

[cogeneration] facilities." 16 U.S.C. S 824a-3(a). At the same 

time, to address the burden of regulation, PURPA requires 

FERC to prescribe rules to exempt small production 

facilities from many provisions of the Federal Power Act and 

"from State laws and regulations respecting the rates, or 

respecting the financial or organizational regulation, of 

electric utilities." 16 U.S.C. S 824a-3(e). 

Acting pursuant to its authority under PURPA, FERC has 

promulgated regulations governing transactions between 

cogeneration facilities and electric utilities, including 

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 promulgated 

regulations exempting QFs from state regulatory 

_________________________________________________________________ 

1. In order to qualify as a QF, a cogeneration facility must meet 

requirements established by FERC. See 18 C.F.R. S 292.101 et seq. 

 3 
requirements. Those regulations provide, in relevant 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 regulation 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 state 

regulations applicable to traditional electric utilities, state 

regulatory authorities are required to implement FERC 

rules. See 16 U.S.C. S 824a-3(f). Thus state agencies are 

actively involved in the formation and performance of 

contracts between traditional utilities and QFs; in

particular, state authorities must review and approve 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 facility and 

it assigned the agreement to Crossroads.2 Pursuant to 

FERC regulations, the agreement required approval by the 

New York Public Service Commission ("NYPSC"), the state 

agency responsible for regulating electric utilities. After 

several changes were made at the NYPSC's request, the 

required approval was granted in December of 1988. The 

agreement provided that Crossroads' predecessor would 

supply energy to O&R from a cogeneration facility that 

"initially will be designed to generate nominally 3.3 MW of 

capacity and to generate approximately 26,300 MWH of 

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 might 

_________________________________________________________________ 

2. It is undisputed that Crossroads is a "qualifying facility." 

 4 
eventually grow in size, and the parties accordingly 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 agreement, all the 

 capacity produced by the Plant, up to a maximum of 4 

 MW, and all energy associated with such capacity, net 

 of that capacity and energy used from time to time to 

 operate the Plant. No change in the amount of capacity 

 committed hereunder shall be permitted without 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 capacity 

 produced by the Plant in excess of 4 MW and all energy 

 associated with such excess capacity; provided, 

 however, that [O&R] shall have a right offirst 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 agreement 

(1) requires O&R to purchase at the contract price all 

energy produced up to 4 MW; (2) reserves to O&R a right of 

first refusal in allocating any energy in excess of 4 MW; and 

(3) provides that Crossroads may sell on the open market 

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 at the 

facility, capable of generating 5 MW of power. O&R refused 

to pay the contract price for energy generated by the new 

turbine, while Crossroads claimed that O&R was obligated 

under the agreement to purchase all energy generated 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"purchase 

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 turbine. 

 5 
O&R's petition contended that the rates set forth in 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 plant's 

capacity was 3.3 before addition of the new turbine, O&R 

had not been paying for the full 4 MW of energy prior to 

addition of the new turbine. With the new turbine, 

Crossroads would easily fulfill the 4 MW that O&R was 

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 circumvent the 

terms and spirit of the Agreement by supplementing the 

availability of the Original Generators with the output from 

the Turbine." App. at 61. O&R estimated that it would be 

required to pay an additional $4.2 million to Crossroads for 

the additional energy over the life of the contract, 

concluding that "[r]equiring [its] ratepayers to subsidize 

Crossroads [was] simply inappropriate." App. at 61.

Crossroads opposed O&R's petition before the NYPSC.

Citing a decision of this Circuit, Freehold Cogeneration 

Associates v. Board of Regulatory Comm'rs of New Jersey, 

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 that the 

agency usually refused to get involved in contract disputes 

between utilities and their suppliers. Finally, Crossroads 

contended that the issue was more complex than O&R's 

petition made it out to be, and requested an opportunity 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 petition 

because of its power to "interpret [its] power purchase 

contract approvals." App. at 172. The NYPSC found that 

O&R's petition could be read as a request for it to explain 

and interpret whether the earlier approval of the contract 

included the additional capacity created by the new

turbine. The Commission concluded that "[u]nder the

approval . . . Crossroads may not supplement electricity 

 6 
produced by its [original] engine capacity with electricity 

produced from its new turbine capacity." App. at 173. 

Thus, the Commission ordered that electricity generated 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 moved to 

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

failure to state a claim. Crossroads cross-moved for 

summary judgment on all claims. The district court granted 

O&R's motion and denied Crossroads' motion. The district 

court determined that: (1) the contract claims4 all are 

"premised on [Crossroads'] contention that[O&R] breached 

its obligations under the terms of the Agreement by

refusing to pay the contract price for energy generated by 

the new gas turbine," Op. at 15; (2) Crossroads is barred by 

principles of issue and claim preclusion from litigating the 

issue of whether the agreement requires purchase of energy 

from the new turbine because that issue was litigated and 

determined before the NYPSC; (3) Crossroads' argument 

that the NYPSC did not have jurisdiction to construe the 

contract is also barred by operation of the "jurisdictional 

finality" rule of issue preclusion; and (4) Crossroads 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 followed.5 

II. 

We will reverse the judgment of the district court with 

respect to Crossroads' contract claims. 

_________________________________________________________________ 

3. Crossroads has preserved its right to appeal the NYPSC's 

determination by filing an appeal in the appropriate 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, Second, Third, and Fourth 

causes of action, for breach of contract, breach of the covenant of good 

faith and fair dealing, anticipatory repudiation, and 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. 

 7 
A. 

Issue preclusion, also known as collateral estoppel, bars 

relitigation of issues adjudicated in a prior action. Federal 

courts are required to give preclusive effect to state court 

judgments by virtue of the Full Faith and Credit Act, which 

provides that "Acts, records and judicial proceedings . . . 

shall have the same full faith and credit in every [federal] 

court . . . as they have by law or usage in the courts of 

such State . . . from where they are taken." 28 U.S.C. 

S 1738; see Swineford v. Snyder County, 15 F.3d 1258, 

1266 (3d Cir. 1994). By its terms, S 1738 applies only to 

state court decisions, and the Supreme Court has 

determined that the statute does not apply to 

administrative agency decisions that have not beenfirst 

reviewed by a state court. See University of Tennessee v. 

Elliott, 478 U.S. 788, 794 (1986). However, the Court 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 responsible 

for utility regulation, we are guided by several generally 

applicable criteria. The Court has determined that, unless 

a federal statute specifically indicates that state agency 

decisions should not be considered conclusive, as in 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), factualfindings 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 Kennett 

Square, 4 F.3d 186, 192 (3d Cir. 1993). In addition, 

applying preclusive effect to legal conclusions made by 

state agencies "is favored as a matter of general policy, 

[though] its suitability may vary according to the specific 

context of the rights at stake, the power of the agency, and 

the relative adequacy of agency procedures." Astoria, 501 

U.S. at 109-10. 

In this case, we determine that the factual findings and 

legal conclusions of the NYPSC should be given preclusive 

 8 
effect to the extent afforded under New York law. Unlike 

Astoria or Elliott, we find no provision of PURPA that seeks 

to limit common law rules of preclusion from applying to 

state agency decisions relating to utility regulation. Though 

PURPA does limit the authority of state agencies in some 

respects, e.g., by exempting cogeneration facilities from 

some regulation, PURPA still provides a substantial role to 

state agencies in regulating energy contracts between 

utilities and cogenerators. Indeed, state agencies are 

specifically required by federal law to implement FERC 

regulations. Given the substantial role given state utility 

agencies by Congress in enacting PURPA, we conclude

Congress did not intend to prevent application of common 

law rules of preclusion. Thus, we will give preclusive effect 

to the NYPSC decision to the same extent as would the New 

York courts. Accord Long Island Lighting Co. v. IMO

Industries, Inc., 6 F.3d 876, 885 (2d Cir. 1993) (decision of 

NYPSC given preclusive effect). 

Crossroads also contends that, in particular, the NYPSC's 

determination that it had jurisdiction over O&R's petition 

should not be given preclusive effect in this action. Though 

recognizing that, generally speaking, a tribunal's 

determination of its own jurisdiction is accorded the same 

status for issue preclusion purposes as the merits of a 

dispute, see Durfee v. Duke, 375 U.S. 106, 114 (1963), 

Crossroads contends an exception to the rule applies in a 

case like this where a federal statute, PURPA, preempts the 

state agency from acting altogether. This more limited 

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 decided in 

this case, and our determination in subsection D below 

that Crossroads' contract claims are not barred by claim 

preclusion. Accordingly, we assume, without deciding, 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) the "issue in 

 9 
the present proceeding [is] identical to that necessarily 

decided in a prior proceeding" and (2) "in the prior 

proceeding the party against whom preclusion is sought 

was accorded a full and fair opportunity to contest the 

issue." Allied Chemical v. Niagara Mohawk Power Corp., 

528 N.E.2d 153, 155 (N.Y. 1988).6 The district court, after 

examining the NYPSC decision, determined that these

requirements were met and concluded that Crossroads' 

claims were precluded by the prior determination. See Op. 

at 19. On appeal, Crossroads challenges the determination 

that they were provided a "full and fair" opportunity to 

litigate before the NYPSC. See Appellant's Br. at 26, 33-35. 

Under New York law: 

 A determination whether the first action or proceeding 

 genuinely provided a full and fair opportunity requires 

 consideration of "the `realities of the [prior] litigation', 

 including the context and other circumstances which 

 . . . may have had the practical effect of discouraging 

 or deterring a party from fully litigating the 

 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 the 

 importance of the claim in the prior litigation, the 

 incentive and initiative to litigate and the actual extent 

 of litigation, the competence and expertise of counsel, 

 the availability of new evidence, the differences in the 

 applicable law and the foreseeability of future litigation. 

 (Gilberg v. Barbieri, 53 N.Y.2d 285, 292, 441 N.Y.S.2d 

 49, 423 N.E.2d 807; Schwartz v. Public Administrator, 

 24 N.Y.2d 65, 72, 298 N.Y.S.2d 955, 246 N.E.2d 725.) 

_________________________________________________________________ 

6. In addition, when applying issue preclusion to an administrative 

agency, New York courts are required to ascertain that the agency 

proceeding was "quasi-judicial" in nature; i.e., whether (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, judged by these 

criteria, a decision of the NYPSC was "quasi-judicial." The district court 

in this case agreed, and Crossroads provides no persuasive reason on 

appeal to conclude differently. 

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

1984). These requirements are intended to make certain 

that the first tribunal carefully considered the issues 

litigated, and that the party against whom preclusion is 

sought had a chance to offer vigorous argument for its 

position. In this case, two issues of "full and fair" 

opportunity arise from the litigation before the NYPSC: (1) 

whether Crossroads was given a "full and fair" chance to 

argue the issue of the NYPSC's jurisdiction to address 

O&R's petition; and (2) whether Crossroads was given a 

"full and fair" opportunity to litigate the merits of the 

petition. 

The issue of whether Crossroads had a "full and fair" 

opportunity to argue, before the NYPSC, the issue of the 

NYPSC's own jurisdiction is straightforward. The parties 

both submitted briefs before the NYPSC outlining their view 

of the jurisdictional issue, including Crossroads' 

contentions that PURPA, FERC regulations, and the 

NYPSC's own practice prohibited jurisdiction over the 

interpretation of the contract. Crossroads' brief before the 

NYPSC mirrors the arguments made before us on appeal. 

The NYPSC opinion deciding the issue carefully considered 

each of Crossroads' arguments and reflects a considered 

analysis of its jurisdictional predicate. Reading the parties' 

submissions before the NYPSC, and the resulting decision, 

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 jurisdiction 

over O&R's petition, the NYPSC also proceeded to grant the 

petition, holding that "[u]nder [its] approval of the contract 

for the Crossroads site, [Crossroads] may not expand the 

generation production entitled to the contract pricing. . . . 

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 petition did 

not offer Crossroads a "full and fair" opportunity to contest 

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

from the NYPSC or participate voluntarily in the agency's 

proceedings, that it solely contested the jurisdictional issue, 

and that it requested, and was denied, an opportunity to 

supplement the record before the NYPSC. Despite these 

arguments, we believe that Crossroads had a full and fair 

opportunity to litigate the merits of O&R's petition for 

declaratory relief before the NYPSC. 

Crossroads' argument that it did not seek relief before the 

NYPSC and did not voluntarily participate before the agency 

is not legally relevant to whether it had a full and fair 

opportunity to litigate the merits issue. Moreover, contrary 

to its assertion in its brief, Crossroads' submission before 

the NYPSC did argue the merits of the petition. Crossroads 

contended that the agreement could not be read to suggest 

that the original set of three 1.1 MW generators was the 

only capacity assumed by the parties, pointing to language 

in the agreement and exhibits demonstrating the intent of 

the parties at the time the contract was signed. That these 

arguments were not accepted by the NYPSC does not mean 

that Crossroads had an inadequate opportunity to present 

them. 

Crossroads also argues that the NYPSC did not heed its 

request to file additional materials before it rendered its 

decision on the merits of the petition. In its submission to 

the agency, Crossroads requested that "[s]hould the

Commission determine that it will entertain O&R's request 

for a declaratory ruling, CROSSROADS respectively 

reserves its right to make a further submission that more 

fully describes the matters in dispute . . . ." App. at 120. 

However, the fact that Crossroads asked for a second 

opportunity to argue the issue does not establish that it did 

not have a "full and fair" first opportunity. Moreover, 

Crossroads has not pointed to any additional materials or 

arguments that it would have made before the NYPSC.

Since Crossroads has not suggested that it would have 

made any additional arguments before the NYPSC, it is 

difficult to conclude that it did not have a full and fair 

opportunity to litigate on this ground. 

More importantly, looking only to Crossroads' opportunity 

to litigate before the NYPSC is not the legally relevant 

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

litigate includes the possibility of a chain of appellate 

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 Crossroads 

will presumably have an opportunity in those proceedings 

to raise its claims regarding the merits of O&R's petition, as 

well as its contention that the NYPSC improperly denied its 

application to supplement the record. In short, in 

determining whether a litigant has been given a"full 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 allegation 

that it would be inadequate to consider Crossroads' 

arguments,7 Crossroads has been given a full and fair 

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 decided 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 law 

applicable to those claims and the specific grounds upon 

which the NYPSC rested its decision on the jurisdictional 

and merits issues. 

As we noted above, under PURPA and the regulations 

_________________________________________________________________ 

7. At oral argument Crossroads suggested that a restrictive standard of 

review in the New York state courts might limit its ability to litigate 

its 

position. However, these comments were not raised before oral 

argument. Moreover, we find no reason to believe that the standard of 

review applied by an appellate court would impair the ability of 

Crossroads to meaningfully make the arguments it has advanced before 

us. 

 13 
adopted by the FERC, qualifying facilities like Crossroads 

are exempt from state utility-type regulation, including 

regulation of "rates of electric utilities." 18 C.F.R. 

S 292.602(c)(1). We have interpreted these regulations to 

prevent state regulatory commissions from modifying the 

terms of a power purchase agreement between a utility 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 utility-type 

regulation from which PURPA exempts QFs. 

This principle was recently articulated in Freehold

Cogeneration Associates, L.P. v. Board of Regulatory 

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 purchase 

agreement at certain specified rates. The agreement was 

approved by the New Jersey regulatory board responsible 

for reviewing such agreements. After a year had passed 

under the contract, the utility, in response to lower costs 

for obtaining electrical power, notified the state board that 

it wished to modify the pricing structure of the agreement. 

The cogenerator rejected suggestions to renegotiate or agree 

to a buy-out offer to end the contract. The regulatory board 

then directed the cogenerator to renegotiate the rates under 

the agreement or agree to a buy-out. The cogeneratorfiled 

a complaint in the district court, seeking a declaratory 

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 requiring 

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 agencies, 

were responsible for establishing the parameters governing 

power purchase agreements between utilities and qualifying 

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

agencies to approve such agreements, the implementation 

authority of state agencies end once an agreement is 

approved. After approval has been granted, "attempt[s] to 

either modify the [agreement] or revoke [state agency] 

approval is `utility-type' regulation -- exactly the type of 

regulation from which [a qualifying facility] is immune 

under [PURPA]." Id. at 1192. Thus, unless the qualifying 

authority waives its PURPA rights in the agreement, the 

federal law prevents the state from "reconsideration of its 

prior approval." Id. 

Not surprisingly, Crossroads cited our Freehold decision 

to the NYPSC in support of its contention that the 

Commission lacked jurisdiction to interpret the power 

purchase agreement. In response, the NYPSC expressly 

recognized the "contract non-interference policy" inherent 

in PURPA and acknowledged that it lacked jurisdiction to 

interpret the agreement. It carefully drew a distinction, 

however, between interpreting the agreement between the 

parties and interpreting its approval of that agreement, 

holding that it possessed jurisdiction to do the latter: 

 As was recently reaffirmed, it is within our authority 

 to interpret our power purchase contract approvals, 

 and that jurisdiction has been upheld by the courts. 

 The precedents involving interpretation of past policies 

 and approvals, and not the contract non-interference 

 policy that Crossroads cites, control here. As a result, 

 the approval of the original contract for the 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 consisting 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 produced 

 by its reciprocating engine capacity with electricity 

 produced from its new turbine capacity. 

App. at 172-73 (footnotes omitted) (emphasis supplied). 

The opinion of the NYPSC is devoid of any reference to 

the text of the agreement. In reaching its conclusion that its 

 15 
"approval was limited to a project consisting of three 

reciprocating engines, sized at a net capacity of 3.3 MW," 

the Commission cites solely to a memorandum from its 

staff that describes the then existing cogeneration plant as 

"consist[ing] of three dual fuel engine-generator sets." App. 

at 137, 173. Consistent with its ruling on jurisdiction, the 

Commission's holding was carefully circumscribed to reflect 

only an interpretation of its approval: 

 Accordingly, we find and declare that the petition of 

 Orange and Rockland Utilities, Inc. is granted in part, 

 to the extent that the December 2, 1988 approval of 

 Contract No. E-139 between O&R and Onsite 

 (Crossroads' predecessor) is construed as limiting the 

 contract pricing to electric production from the three 

 reciprocating engine facility that was installed in 1987, 

 and does not extend to production from the gas-fired 

 turbine that was installed in 1996. 

App. at 174. The referenced "December 2, 1988 approval" is 

a Commission letter to the parties informing them that it 

had "accepted the contract and supplement" thereto 

"contingent upon . . . the contract being amended" in two 

detailed respects not relevant here. Neither side maintains 

before us that the required amendments were not made. 

It is thus apparent that the NYPSC, because of the 

limitations it perceived on its own jurisdiction, deliberately 

excluded from its deliberation any interpretation of the 

contract it approved on December 2, 1988. As a result, 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 unenforceable 

prior to approval by the relevant state agency, the rights of 

the parties, once their agreement receives such approval, 

are to be determined by applying normal principles of 

contract interpretation to their agreement. Thus, the 

district court in this case is being asked to determine from 

the approved agreement of the parties their intention with 

respect to O&R duty to purchase new capacity. This is an 

issue that the NYPSC expressly declined to address.

 16 
We do not suggest that a court asked to enforce a state 

approved PURPA governed agreement will never have 

occasion to consider the terms of the agency's approval. In 

some cases, those terms may be highly relevant in 

determining the parties' understanding of their respective 

rights and duties under the contract. Nothing in the 

approval granted here is helpful in that respect, however. 

Moreover, when those terms have relevance, they are

relevant only in the context of the understanding of the 

parties as reflected in an objective reading of the agreement 

and its approval. An inquiry into the issues focused on by 

the Commission and its staff as reflected in its internal 

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 barred by 

claim preclusion. Operation of claim preclusion, or res 

judicata, enforces the principle that a final judgment of a 

claim on the merits between the same parties resolves both 

that claim and all others arising out of the same 

transaction. See Ryan v. New York Telephone Co., 467 

N.E.2d 487, 489-90 (N.Y. 1984). Applying this doctrine, the 

district court concluded that Crossroads' contract claims 

"were already litigated between these parties before 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" approach 

to res judicata, meaning that "once a claim is brought to a 

final conclusion, all other claims arising out of the same 

transaction or series of transactions are barred, even if 

based upon different theories or if seeking a different 

remedy." O'Brien v. City of Syracuse, 429 N.E.2d 1158, 

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 conclusive in 

a later one, not only as to any matters actually litigated 

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

. . . ."). This principle has been applied by New York courts 

in cases where a defense or counterclaim used in one 

action is asserted in a later action. See, e.g. , Board of 

Managers of Windridge Condominiums One v. Horn, 651

N.Y.S.2d 326 (N.Y. App. Div. 1996); Lippman v. Lippman, 

612 N.Y.S.2d 532 (N.Y. App. Div. 1994). Thus, if O&R had 

brought its declaratory judgment action in a New York 

court of general jurisdiction, rather than the NYPSC, asking 

for a declaration that it had no duty to buy additional 

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 traditional 

claim preclusion principles Crossroads would be bound 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 before us. 

Crossroads was taken involuntarily before the NYPSC, and 

it asserted a jurisdictional argument there. The 

Commission, as we have read its opinion above, accepted 

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 but that it 

did have jurisdiction to interpret its approval. Accordingly, 

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 extinguish the 

 claim, and part or all of the claim subsists as a 

 possible basis for a second action by the plaintiff 

 against the defendant: . . . 

 (c) The plaintiff was unable to rely on a cert ain 

 theory of the case or to seek a certain remedy or form 

 of relief in the first action because of the limitations on 

 the subject matter jurisdiction of the courts or 

 restrictions on their authority to entertain multiple 

 theories or demands for multiple remedies or forms of 

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

 second action to rely on that theory or to seek that 

 remedy or form of relief . . . . 

New York courts, applying this provision, have created an 

exception to claim preclusion in situations where the first 

tribunal lacks jurisdiction to offer the relief sought in the 

second proceeding. Compare Handy v. Westbury Teachers 

Ass'n, 104 A.D.2d 923, 925-26 (N.Y. App. Div. 1984) (state 

agency that "declined to adjudicate [plaintiffs] contentions 

on these issues . . . holding that it lacked . . . jurisdiction 

leaves plaintiffs free to raise those same contentions 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. 1985) (res 

judicata applies where grounds for recovery "was entirely 

available to plaintiff as a basis for relief " in the prior 

proceeding). Because the contract claims were unavailable 

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 merits, we 

are mindful of the fact that the NYPSC's opinion ultimately 

declared that O&R owes no duty to purchase at the 

contract rate energy generated by Crossroads in excess of 

3.3 MW but less than 4 MW. This can be, and in most

circumstances would properly be, viewed as a declaration 

on the same issue presented to the district court by 

Crossroads' contract claims. Had the Commission regarded 

itself as having jurisdiction to consider the terms of the 

contract, the district court would clearly be barred 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 distinction between 

interpreting the intent of the parties as reflected in their 

approved agreement and interpreting the intent of the 

Commission and then concluded that it had no jurisdiction 

to do the former. Given that Crossroads' contract claims 

rest solely on the intent of the parties as reflected in the 

contract, we can remain faithful to the principles 

underlying S 26 of the Restatement and the New York cases 

 19 
embracing 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 to 

consider the argument that Crossroads was making, 

Crossroads remains entitled to its day in the district court. 

III. 

In its fifth cause of action, Crossroads accuses O&R of 

monopolization and attempted monopolization, in violation 

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 energy 

from Crossroads pursuant to the agreement has helped 

unfairly solidify O&R's monopoly position in its service 

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 prices. The 

district court dismissed Crossroads cause of action on both 

theories for failure to state a claim. On appeal, Crossroads 

contends that its complaint is sufficient to survive 

dismissal. We agree with this aspect of the district court's 

decision. 

The district court correctly determined that Crossroads' 

Sherman Act claims should be dismissed. Section 2 of 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 . . . shall 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, 412-13 (3d 

Cir.) (quotations omitted), cert. denied, 118 S. Ct. 435 

(1997). To state a claim for attempted monopolization, a 

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

predatory or anticompetitive conduct with (2) a specific 

intent to monopolize and (3) a dangerous probability of 

achieving monopoly power." Schuylkill, 113 F.3d at 413. 

The district court determined that Crossroads had failed 

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 sufficiently allege 

 monopoly power. Plaintiff merely states that defendant 

 is the sole provider of electricity to certain customers in 

 the counties it services. . . . Plaintiff fails to allege such 

 necessary facts as defendant's market share in the 

 markets in which plaintiff is a competitor or that 

 barriers that exist which prevent plaintiff 's entry into 

 such markets. These deficiencies in the Complaint 

 mandate dismissal of plaintiff 's Sherman Act claims. 

 See Barr Lab, Inc. v. Abbott Lab, 978 F.2d 98, 112-13 

 (3d Cir. 1992). 

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

Alleging market share alone is not sufficient to state a 

claim under the Sherman Act. Monopolization or threatened 

monopolization requires something more, which may 

include "the strength of competition, probable development 

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 prevented 

from doing so in the future. The complaint simply fails 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 RobinsonPatman Act. Crossroads alleges that O&R approached its 

excess capacity customer and offered to sell it electricity 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 

 21 
Act. The Robinson-Patman Act, which amended the Clayton 

Act, prohibits price discrimination "where the effect of such 

discrimination may be substantially to lessen competition 

or tend to create a monopoly." 15 U.S.C. S 13(a). In order to 

state a claim under the Robinson-Patman Act, a plaintiff 

must allege facts to demonstrate that (1) the defendant 

made at least two contemporary sales of the same 

commodity at different prices to different purchasers; and 

(2) the effect of such discrimination was to injure

competition. See Brooke Group Ltd. v. Brown & Williamson 

Tobacco Corp., 509 U.S. 209, 219-27 (1993). 

The district court dismissed Crossroads' claim because 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 infirmity, but 

contends that since O&R is virtually the sole provider of 

electricity in its service area that there is "danger" that O&R 

will abuse its market power in competing with smaller 

suppliers like Crossroads. See Appellant's Br. at 47. This 

position is not supported by any citation to authority and 

suggests that Crossroads' claim is based on at a speculative 

threat of future competitive injury, which would not be ripe 

for determination in any event. Merely offering lower prices 

to a customer does not state at a price discrimination claim.8 

Even if the offer of lower prices were sufficient to survive 

dismissal, Crossroads has failed to sufficiently plead the 

second element of a price discrimination claim: injury 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 effect of 

O&R's offer. The mere fact of O&R's market share does not 

mean that approaching Crossroads' customer is an 

antitrust violation, so something additional must be alleged 

in order to survive dismissal. See Barr Labs, 978 F.2d at 

106-07. Crossroads has not alleged any anticompetitive 

_________________________________________________________________ 

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. 1985); Fusco v. Xerox 

Corp., 676 F.2d 332, 337 (8th Cir. 1982). 

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

anticompetitive behavior. Crossroads' monopolization 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 Crossroads' cross-motion 

for summary judgment as moot. In light of our decision, the motion is no 

longer moot, but we decline to reach its merits since it has not been 

briefed before us nor first addressed by the district court. 

 23