1

Dynegy has also filed several fraudulent transfer counts alleging that Draiman caused

Multiut to transfer over $21 million to himself, his family, and related business entities and that

most of this money came from the sale of gas delivered by Dynegy. But the present summary

judgement motion does not address these counts.

-1-

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

DYNEGY MARKETING AND TRADE, a )

Colorado Partnership )

)

 Plaintiff, )

) 

)

) No. 02 C 7446

v. )

) Judge John A. Nordberg

MULTIUT CORPORATION, an Illinois )

Corporation, et al., )

)

 Defendants. )

MEMORANDUM OPINION AND ORDER

This is a dispute over payments for natural gas. Dynegy Marketing and Trade

(“Dynegy”) alleges that Multiut Corporation (“Multiut”) failed to pay for natural gas delivered in

2000, 2001, and 2002. Count I is a claim for breach of the parties 1994 sales agreement and

seeks $15,348,244.72 plus interest from Multiut. Count II seeks the same amount from Multiut

and also from defendant Nachshon Draiman, the sole owner of Multiut, under a guaranty

agreement. Dynegy now moves for summary judgment on these two counts.1

 It also moves for

summary judgment on Multiut’s six counterclaims. These counterclaims, as well as several

related affirmative defenses, allege generally that Dynegy’s invoices were inflated because they
-2-

either failed to give Multiut price breaks allegedly agreed to in oral agreements or because they

were based on an index price that Dynegy had manipulated by reporting false trades. 

FACTS

Multiut is an Illinois corporation with its principal place of business in Skokie, Illinois. 

Nachshon Draiman is the CEO and controlling shareholder. Dynegy is a Colorado general

partnership with its principal place of business in Houston, Texas. Dynegy was formerly known

as Natural Gas Clearinghouse or NGC.

In October 1995, Dynegy (then called NGC) and Multiut entered into the Natural Gas

Sales Agreement. However, the agreement was dated January 1, 1994, and we will refer to it as

the “1994 Agreement.” The parties entered into a similar agreement in 1988. 

The 1994 agreement set forth the general terms and procedures that would govern the

parties’ relationship. The agreement anticipated that Multiut would periodically nominate (i.e.

make a request for) certain amounts of natural gas, expressed in the industry as a “therm.” Under

the agreement, Multiut was obligated to pay for all quantities nominated and tendered for

delivery.

The 1994 agreement was a general agreement in the sense that it did not set forth a single

price or quantity to govern the specific nomination requests made throughout the parties’

relationship. Instead, the parties contemplated that they would agree to price and quantity terms

as well as delivery dates in individual agreements during the course of their relationship. The

1994 Agreement included a form, Exhibit B, on which these agreements would be memorialized.

In nominating gas under the 1994 agreement, Multiut was acting as a middle man. It

would purchase and secure gas as a whole from Dynegy and would then allocate it to individual
2

D Ex. and M Ex. refer respectively to Dynegy’s and Multiut’s exhibits. DF refers to

Dynegy’s statement of material facts, and MF refers to Multiut’s statement of additional facts.

-3-

customers pursuant to agreements negotiated by Multiut with no input from Dynegy. In fact,

Dynegy was not aware of the identity of these customers. Multiut used different pricing methods

for different customers. The options included shared savings, an index plus price, a fixed

contract price, or a cost plus price. (Draiman Aff. ¶ 13.) “Index plus” meant that the customer

would pay the published index price plus an agreed-upon additional fixed charge. The “cost

plus” option meant that Multiut’s customers paid the same amount for the natural gas that

Multiut paid to Dynegy plus an agreed-upon additional fixed charge. As Draiman explained in

his deposition, the pricing was a “dynamic procedure which involved a number of people with

various different pricing methods and purchasing methods.” (D Ex. 2 at 31-32.)2

This lawsuit focuses on the period from 2001 to 2004. During that time Multiut

nominated various amounts of natural gas, at prices agreed to by the parties at the time of

nomination, and Dynegy delivered those amounts. In some cases, the specific agreements as to

price and delivery were set forth on the form known as Exhibit B. In all cases, Dynegy also sent

out a monthly invoice showing the total gas nominated and delivered to Multiut for the month. 

It is undisputed that, within weeks of receiving these invoices, Joan Shultz at Multiut

reviewed them to “make sure they were accurate.” Schultz was Multiut’s managing Director of

Operations from 2001 to 2004 and was responsible for nominating the gas and managing the

department. After Shultz verified the invoices, she sent them to Lenore Kamien, Multiut’s

bookkeeper, who would book the payment. Kamien was “a perfectionist” and knew the exact

amounts owed to Dynegy. (DF 15.) Draiman also confirmed that the invoices initialed by
-4-

Schultz were accurate with respect to the volume of gas nominated and delivered and the prices

agreed to by Multiut as set forth on the invoices. (DF 23.) 

At some point, Multiut fell behind on its payments. A meeting was held on March 7,

2001, to determine Multiut’s outstanding balance. (DF 18.) Mark Ludwig and Ginger Wright

attended on behalf of Dynegy, and Draiman and Kamien represented Multiut. (DF 18, 69.) At

the meeting, Wright and Kamien reviewed Dynegy’s internal accounting records, Dynegy’s

invoices, and Multiut’s internal accounting records and correspondence. Kamien agreed that, as

of December 2000, Multiut owed Dynegy at least $1,620,178. (DF 19, 71.)

Turning to present dispute, Dynegy explains that it hired an expert to calculate the

amounts Multiut currently owes under the 1994 agreement. Dynegy’s expert began his

calculation with the $1,620,178 figure from above and (i) added in the amount of unpaid

invoices, using only invoices that had been initialed by Schultz or her predecessor at Multiut,

and (ii) subtracted the total payments made by Multiut since 2001, a figure based on cancelled

checks produced by Multiut and Dynegy’s accounting records. (DF 21, 25.) Multiut did not

depose Dynegy’s expert, nor submit a report of its own expert to challenge the calcuations of

these amounts. In sum, Dynegy’s expert concluded that Multiut owes $13,693,943.18 in

principal and $1,654,301.54 in interest as of October 1, 2004. 

DISCUSSION

Based on the documents submitted by the parties, we find that no dispute exists that

Multiut nominated and Dynegy then delivered the natural gas in the amounts and prices set forth

on the invoices and other supporting documents, all as summarized by Dynegy’s expert. As

Multiut agrees, no dispute exists about the arithmetic. The unpaid invoices and interest add up
3

The parties agree that, if Multiut is liable under the breach of contract claim in Count I,

then both Multiut and Draiman are also liable under the guaranty claim in Count II.

4

Because the parties evaluate these claims under Illinois law, we will do the same. 

-5-

to $15,348,244.72, plus interest accruing from October 1, 2004. There is likewise no dispute

that the parties agreed at the time to the particular prices set forth on those invoices.3

 

In its counterclaims and related affirmative defenses, Multiut argues for the first time that

the various amounts and prices it agreed to years before were inflated. It claims that it was

unaware of this fact because it believed it could “trust” Dynegy. (Resp. at 3.) Multiut also

asserts two counterclaims specifically relating to Nicor Energy, a subsidiary Dynegy formed that

competed with Multiut. One counterclaim alleges that Dynegy employees learned confidential

information from Multiut when the parties had discussions in 1998 about the possibility of

Dynegy buying Multiut. The other is a Robinson-Patman Act claim alleging that Dynegy sold

gas to Nicor on more favorable terms. Finally, looming over all the counterclaims is a broad

allegation that Dynegy’s invoices should be reduced to reflect its alleged participation in

manipulating the price of the natural gas indexes that were used, in some cases, to set the prices

for sales to Multiut. 

I. Breach of Contract Counterclaims.

Four of the six counterclaims allege that the parties entered into binding oral

agreements.4

 To be enforceable, oral agreements must at least include an offer and acceptance,

consideration, and definite and certain terms. Association Benefit Services, Inc. v. Caremark Rx,

Inc., 493 F.3d 841, 849-850 (7th Cir. 2007) (“No contract exists under Illinois law, and, indeed,

under principles of general law, if the agreement lacks definite and certain terms; nor is a
-6-

contract formed by an offer that itself lacks definite and certain material terms and does not

require such terms to be supplied by acceptance.”). The requirement that the contract contain

“definite and certain terms” means that, even if the parties intended to enter into an agreement,

no contract exists if the court cannot figure out what are the essential terms. Id. at 850.

Although we address each counterclaim individually below, we note that they generally

suffer from two primary problems. First, Multiut relies almost exclusively on its own unilateral

“understanding” of vague conversations that took place many years ago, understandings that 

were never put in writing and that were never explicitly acknowledged by Dynegy. Second, for

all but one of these counterclaims, Multiut has provided no evidence -- either documents or an

expert witness -- to establish damages.

A. Agreement To Lock In Prices – Counterclaim I.

Multiut’s first counterclaim alleges that the parties orally agreed to “lock in” prices for

certain Multiut’s customers that were buying from Multiut on a fixed-price basis. The

agreement was allegedly entered into orally at a meeting on September 17, 2001. 

Dynegy admits that the parties discussed this issue but argues that they never reached any

agreement. Dynegy secondly argues that, even if they did, such an agreement would be barred

by statute of frauds. Finally, Dynegy argues that Multiut has not presented evidence of damages. 

Based on the first and third arguments, we find in Dynegy’s favor on this counterclaim.

To support its allegation that the parties entered into this alleged agreement, Multiut

relies on three facts from its statement of material facts:

Fact 66: On or about September 17, 2001, Multiut supplied Dynegy with a list of

contracts with end users for which Multiut had agreed to provide gas at fixed

prices. 
-7-

Fact 68: During the meeting with Multiut, Mark Ludwig and Pete Pavluk

informed Draiman that they would work on locking in a price for gas below the

fixed price at which Multiut agreed to supply gas for the duration of Multiut’s

fixed price contracts. Draiman testified that Pete Pavluk informed him along the

lines that “he would get it done” or “it would be done.” 

Fact 69: Multiut relied on this understanding and did not seek out other suppliers

for these fixed customers. By the time that Dynegy subsequently decided that it

would not supply the gas at those fixed prices the market price for gas had risen to

a point where [] Multiut paid more for gas than it received from its fixed price

customers.

The evidentiary support for these three facts is the September 17th letter and Draiman’s

recollection of what was said at the meeting.

This evidence, even taken in a light favorable to Dynegy, fails to show that the parties

intended to enter into a binding contract or show what the terms of such an agreement were. 

Draiman’s testimony, as set forth in Fact 68, is that he was told that Dynegy would “work on”

locking in prices. This statement is far too equivocal by itself to establish a meeting of minds, as

it is ambiguous about whether Dynegy was merely considering the issue or alternatively making

a vague but non-binding aspirational statement or, as Multiut alleges, was intending to enter into

a binding contract. The rest of Draiman’s testimony is similarly vague about exactly what was

said in this conversation. When asked whether either Pavluk or Ludwig ever “explicitly” stated

that Dynegy would agree to lock in prices, Draiman conceded that they never made any explicit

statement. (M Ex. Q at 303.) Instead, Draiman fell back on his claim that it was his

“understanding” that the parties had reached an agreement. But a party’s subjective belief is not

enough. Ocean Atlantic Dev. Corp. v. Aurora Christian Schools, Inc., 322 F.3d 983, 995 (7th

Cir. 2002).
5

Even if the parties intended to enter into an agreement, the terms of the agreement are

not clear. For example, how long would the agreement last? Draiman states in his affidavit (¶

18) that it would have been for a “particular time period,” but so far as we can tell, he never

stated what that period would be. 

-8-

The second piece of evidence, the September 17th letter, is also inconclusive and raises

more questions than it answers. To begin with, the timing of the letter is unclear. The

September 17th letter states in the first sentence that it was being sent “following” the meeting. 

(M Ex. DD.) In other words, contrary to the impression created by the order of the three facts

quoted above, the September 17th letter was not presented before the meeting as a type of offer,

but was sent after the meeting. Yet, the letter does not acknowledge that the parties had just

reached an agreement. The letter merely provides a list of Multiut’s fixed-price customers for

Dynegy’s “review,” a word suggesting that the parties were only at a preliminary discussion

stage. This interpretation is underscored by the fact that, a few months after receiving the

September 17th letter, Dynegy told Draiman that it would not agree to lock in prices. (Draiman

Aff. ¶ 25.) Draiman claims that Dynegy’s rejection was “contrary to what [Draiman] had earlier

understood,” but his unsubstantiated belief is not a basis for concluding that the parties had

entered into a binding agreement, especially when all of the available evidence suggests that the

parties were only involved, at most, in negotiations.5

We also find that summary judgment is warranted for the separate and independent

reason that Multiut has not provided any evidence of damages. The parties agree that Multiut

must come forward with at least some evidence on summary judgment to show that it would be

able to prove damages with a “reasonable degree of certainty” without relying on “conjecture or

speculation.” See generally Dunkin’ Donuts Inc. v. N.A.S.T., Inc., 428 F.Supp.2d 761, 767 (N.D.
-9-

Ill. Dec. 28, 2005) (summarizing cases) (“a non-movant’s failure to produce sufficient evidence

of the damages element of its claim calls for the entry of summary judgement against that

party”). As Judge Shadur concluded in Dunkin’ Donuts, a vague answer with no coherent

explanation “totally flunks the Rule 56(e) requirement of admissible evidence.” Id. at 770

(emphasis in original.)

Here, Multiut has not provided a way to calculate damages. During discovery, Multiut

failed to comply with Rule 26's requirement that it provide a computation of damages. See D.

Reply at 14-19 (summarizing discovery history). Multiut also has not provided an expert opinion

on the damages related to its first counterclaim nor to any of the other counterclaims except the

sixth one. Instead, Multiut relies solely on an affidavit of Draiman that was submitted after

discovery closed. Dynegy argues that this affidavit should not be considered because Multiut

failed to make timely disclosures during discovery. We agree. Multiut has not provided any

explanation for its failure to make earlier disclosures, and to allow it to make late disclosures

now, after a lengthy discovery process, would prejudice Dynegy. In sum, Multiut has not met its

burden with regard to damages on this counterclaim. 

B. Oral Agreement To Sell at Lowest Prices – Counterclaim VI.

The sixth counterclaim also involves an alleged oral agreement. The substance of the

agreement, according to Multiut, is the following promise: 

Multiut would be charged (i) a price either equal to or 1/2 cent per therm higher

than the index price, or (ii) the lowest price contemporaneously being charged by

Dynegy to any of Multiut’s competitors.
6

As Multiut artfully puts it in its brief (at p. 13), the parties entered into a “series of

understandings” that in turn transformed into an “evolving” agreement.

-10-

(Resp. at 36.) The latter provision is referred to by the parties as a “most favored nation”

provision. Again, it is undisputed that there is no written document of any kind evidencing this

agreement. 

Dynegy makes similar arguments against this claim, asserting that it is barred by the

statute of frauds; that no evidence proves that an agreement was reached; and that any agreement

would have been superseded by the subsequent specific agreements on price. As explained

below, we agree with these arguments.

The details of this alleged agreement are hazy. It is hard to reconstruct when it was

made. The alleged agreement appears to be a hybrid of two oral agreements made many years

apart.6

 The second half of the agreement -- the most favored nation (“MFN”) provision -- is an

“understanding” that supposedly existed since “the inception of [the parties’] relationship.” (MF

54.) This would mean that the understanding came about sometime around 1988. Multiut

provides no information about what day or month the parties agreed to this provision, where they

were, who was present, or what was said. The first half of the agreement -- tying the price to a

certain amount above the index -- was allegedly entered into “in the mid-1990s.” (Resp. at 13;

MF 56.) Again, few details are provided. Multiut cannot narrow the date the agreement was

made down to even a specific year. Further uncertainty exists over how the two separate

agreements are supposed to work together as they each set forth a different pricing structure,

raising a question about which one takes precedence over the over in the event of a conflict.
-11-

Unlike the September 17th alleged agreements, these two oral agreements are broad and

cover all nominations. As such, it would be reasonable to expect that the parties would have

included them in their written agreements given that they purported to set forth the general terms

applicable to all nominations. The MFN provision allegedly was created before the 1988 and

1994 written agreements were signed. Yet neither agreement includes the provision. The 1994

agreement is based on the assumption that all prices would be negotiated on an individual, caseby-case basis for each nomination, an assumption at odds with the existence of the MFN

provision. Draiman now claims that Dynegy’s agreement to the MFN provision was a “critical”

pre-condition for Multiut entering into the 1988 written agreement. See Draiman Aff ¶ 16. If so,

then surely he would have insisted that this critical provision be included in that agreement. The

only reasonable explanation for why it was not is that Dynegy never agreed to it. This conclusion

is also supported by Shkop’s testimony. He said that Dynegy did not agree to include the MFN

provision in the written agreements because of problems with other suppliers and with its parent

company. (M Ex. L at 20.) For all the above reasons, the evidence fails to provide any basis for

believing that Dynegy intended to enter into a binding agreement as alleged by Multiut.

C. Implied Agreement To Waive Interest Payments -- Counterclaim III.

The third counterclaim relates to the payment of interest for a certain period. 

Specifically, Dynegy failed to charge for interest in the invoices between March 1999 and

December 2000 because, Dynegy explains, of an oversight that occurred with a change in

employees. Multiut argues that the failure to send out invoices for this period constituted an

implied agreement (or waiver) not to collect these interest payments. (MF 80.) In response,
7

The reconciliation provision in the 1994 agreement provided that the parties would have

up to 24 months to rectify any mistakes in the billing process. See Ex. DD, Article V-A(2) The

existence of this provision would make it even more unreasonable to rely solely on an unverified

belief that charges were being waived.

-12-

Dynegy argues first that the mere failure to send out an invoice is not an agreement to forego

collection of these amounts and secondly that Multiut has failed to provide evidence of damages.

We agree with Dynegy’s first argument. Regardless of which legal theory it is relying on,

Multiut acknowledges that it must show that it relied to its detriment on the implicit agreement

or waiver. Yet, as Dynegy has demonstrated (see DF 66), the decisionmakers at Multiut had no

knowledge of any agreement by Dynegy to waive charges. Most notably, Draiman was not

involved in the making of any such agreement and did not know anyone who was. Although

Lenore Kamien did notice that Dynegy had omitted the charges on some invoices, she only

testified that she “assumed” that no interest was due. (MF 81.) And there is no evidence that

she communicated with Draiman on this point.7

As for damages, although Multiut has not presented any evidence of damages, its failure

with regard to this counterclaim is not fatal because the amount of interest charges has already

been established by Dynegy first. Therefore, there would be no need for Multiut to provide

proof of these amounts.

D. Agreement To Exclude Uncollectible Accounts -- Counterclaim IV.

In its fourth counterclaim, Multiut alleges that the parties intended in their 1994

agreement that Multiut would not have to pay for uncollectible accounts from end users because

Multiut was merely acting as an agent. In other words, Dynegy bore the risk of uncollectible

accounts. In response, Dynegy acknowledges that the 1994 agreement includes two general
-13-

provisions stating that Multiut was acting as an agent to the end user principals, but Dynegy

argues that this language was included merely to help Multiut avoid sales tax obligations that it

thought were due if it took title to the gas before selling it to its customers. (DF 2.) The parties

agree that question of interpreting the meaning of the 1994 agreement is a legal question. 

As both sides concede, the 1994 agreement contains no provision explicitly addressing

the specific question of which party is responsible for uncollectible accounts of end users.

Multiut relies on general language in the first paragraph of the 1994 agreement stating that

Multiut is acting as an agent of the ultimate consumers of the natural gas and that Multiut is

performing according to instructions from the end-user principals. (MF 34-35.) Dynegy in turn

relies on several provisions in the body agreement. 

We start with the general language relied upon by Multiut and do so by quoting the entire

first paragraph of the agreement from which that language is taken:

The purpose of this document is to set forth the understanding and Agreement

between [Dynegy] and [Multiut], acting in its role as the duly authorized agent

and representative of ultimate consumers and users of the natural gas delivered to

Multiut under this Agreement. Seller and Multiut acknowledge that Multiut is

acting as an authorized agent and is performing under this Agreement in

accordance with the instructions of its principals. Except as specifically provided

in this Agreement, Multiut and its principals, as ultimate consumers and users of

the gas, are referred to collectively as “Buyer.” Seller agrees to sell and deliver

gas to Buyer pursuant to the following terms and conditions[.] 

While this paragraph does contain two statements that Multiut is acting as an agent to certain end

users, this language is general and not connected to any operative provision in the main part of

the agreement.

Significantly, this first paragraph defines the term “buyer” as being both Multiut and the

end users. This collective definition by itself contradicts Multiut’s argument that it was not a
8

The term “Buyer” is used throughout the agreement in a way that would only make

sense if Multiut were considered a buyer. The agreement states, for example, that the Buyer shall

have a right to make daily nominations of gas. This could only refer to Multiut as no evidence

suggest that end users nominated gas or interacted with Dynegy in any way.

9

Multiut’s interpretation would create an awkward incentive system and also one difficult

to enforce. How would a court be able to determine if Multiut was in breach of its duty

to“collect” payments? 

-14-

buyer.8 Furthermore, when this definition of buyer is applied to paragraph 5, which states that

the “Buyer shall be obligated to pay for all quantities nominated,” it can only be interpreted to

mean that Multiut, as a buyer, must pay for “all” the gas nominated. The agreement contains no

other language that excludes uncollectible accounts from this broad provision.

This conclusion is reinforced by other language in the agreement. The agreement states

that Multiut is “responsible for collecting payment from its principals.” (Ex. DD; Article VA(2).) Reading this provision in a straightforward way, we find that it creates a strong

presumption that Multiut is “responsible for” uncollectible accounts. Put differently, if the

parties had a contrary understanding, you would expect that they would have mentioned that

here to make clear that Multiut was only required to try to collect payments and was not

responsible if its effort failed.9

 This presumption is also reasonable because the agreement

elsewhere specifically states that Dynegy is responsible for certain things. For example, Article

IV-A states that Dynegy must pay “all royalties, taxes and other sums due on production[.]” (Ex.

DD, Article IV-A.)

There is no contextual evidence to the contrary. Multiut argues in its response brief (at

p.25) that the “circumstances surrounding the negotiation and performance” of the parties’

agreement created an “understanding” that Multiut would not be responsible for non-paying
10In his deposition, Draiman stated that it was his understanding that the parties would

“share” the burden of uncollectible accounts. (MF ¶ 49.) This statement is in conflict with

Multiut’s current position that Dynegy would be solely responsible and it also raises a question

of exactly how they would share the burden.

-15-

customers. But it has no evidence that Dynegy agreed to this understanding.10 Draiman testified

that no one from Dynegy ever said that Multiut would not be responsible if customers did not

pay. (DF 76.)

As for Dynegy’s alternative argument that Multiut did not produce evidence of its

damages, Multiut states that the uncollectible accounts were $2,761,735.45. (MF 129.) This

amount comes from Draiman’s affidavit (¶ 29). However, as noted above, Multiut failed to

disclose this information in discovery and may not rely on it now.

II. Counterclaims Relating to Nicor.

A. Breach of Confidentiality Agreement -- Counterclaim II.

In 1997, Dynegy expressed an interest in purchasing Multiut, and the parties entered into

a confidentiality agreement to allow Dynegy to investigate the possibility. (1st Am CC ¶¶ 16-

22.) As part of this process, several Dynegy employees were given confidential and proprietary

information, including customer lists, copies of contracts with customers, etc. Dynegy, after

receiving and studying the Multiut information, ultimately purchased Nicor and Illinova, two

competitors of Multiut. Multiut alleges that the Dynegy employees “inevitably disclosed”

confidential information to Nicor and Illinova and that, as a result, those companies were able to

win customers from Multiut.

Dynegy raises a number of arguments in response, arguing that no evidence exists that

the employees received confidential information and arguing that the “inevitable disclosure”
-16-

doctrine only applies if an employee of Multiut was hired by Dynegy. Dynegy also argues that

Multiut has no evidence of damages.

We find that summary judgment is warranted on the latter ground. Although Multiut

alleges that it lost “profits and other damages” of more than $5 million from the alleged breach

of the confidentiality agreement, Multiut has provided no evidence to quantify damages. 

Multiut’s expert stated in his deposition that he did not do any work to calculate damages

relating to this counterclaim. (DF 65.) We have already found that Draiman’s affidavit may not

be considered. And Draiman admitted that he does not know the number of customers that

allegedly left Multiut for Nicor while also admitting that the loss of business was attributable to,

among other things, his brother’s involvement, service issues, customer relationship issues, and

the size of the customer. See DF 92-93.

B. Alleged Violation of Robinson-Patman Act – Counterclaim V.

Asserting a claim under the Robinson-Patman Act, 15 U.S.C. § 13(a), Multiut alleges that

Dynegy sold gas at lower prices to competitors of Multiut, one of which was Nicor. Dynegy

moves for summary judgment on three grounds: (i) Multiut cannot show that the gas sold to

Nicor and Multiut was of “like grade and quality”; (ii) Multiut failed to provide a computation of

its alleged injury; and (iii) Multiut failed to show that it had standing to assert an RPA claim. 

As to the first argument, Dynegy argues that what was being sold was not merely the

natural commodity of natural gas but also inextricably included related services that varied

between Multiut and Nicor, making them different cases. Multiut responds that this argument is

really an affirmative defense of cost justification and that this is a fact question. Because we are
-17-

not convinced by the authorities submitted by Dynegy on this argument, we find that summary

judgment is not warranted on this ground.

We are also not persuaded by the third argument that Multiut is precluded from asserting

an RPA claim because it was only an agent. As noted above, Dynegy has already argued that

Multiut was not merely an agent but was operating more as a buyer in its own right. We have

agreed with that argument based on our interpretation of the language of the contract. As

Dynegy itself has argued in its reply brief, “Multiut is one or the other, not both.” (Reply at 35.)

However, as to the second argument, we agree that Multiut has failed to show evidence

of injury. As described in Dynegy’s opening brief, the Supreme Court has held that a private

plaintif seeking damages must not only meet the essential elements of a § 2(a) claim but also

must show that it suffered injury. See Mem. at 31 (citing J. Truett Payne Co. v. Chrysler Motors

Corp., 451 U.S. 557, 562 (1981) (“proof of a violation does not mean that a disfavored purchaser

has been actually ‘injured’ within the mean of § 4"). Dynegy points out that Multiut has

provided no evidence of injury. In its one-paragraph response, Multiut only makes a conclusory

assertion that it lost sales and profits. See Resp. at 49. But it has no evidence. First, Multiut

specifically told its expert not to do any work on, or provide any opinions with respect to, the

Robinson-Patman Act claim. Second, as noted above, although Draiman claims in an affidavit

that his company lost customers to Nicor, he did not know of a single customer who had left

Multiut for Nicor, and he also admitted that Multiut lost customers because of unrelated issues. 

(DF 92-94.)
-18-

III. Index Manipulation Evidence.

Multiut spends much time in its response arguing that Dynegy manipulated the index

prices. See Resp. at 16-24. This allegation is based largely on an investigation conducted by the

Federal Energy Regulatory Commission (“FERC”) in 2002 and 2003. FERC concluded in a

lengthy report that a number of major energy companies reported false price and volume

information to industry publications, such as Gas Daily and Inside FERC, that compiled price

indexes. (M Ex. A.) Fifteen Dynegy traders were involved in some way, including one who was

later convicted for activity relating to price manipulation. As a result of its conduct, Dynegy

entered into a settlement with FERC valued at approximately $282 million. (MF 14.) Multiut

argues that Dynegy’s involvement either precludes recovery altogether or that it requires that the

total amount be reduced by “invoices tainted by that manipulation.” (Resp. at 16.)

The legal theory underlying this allegation is not clear. At one point, Multiut suggests

that Dynegy must show as part of its prima facie breach of contract case that the invoices were

not tainted by manipulation. See Resp. at 21. But we cannot find any legal support for the

assertion that Dynegy must disprove fraud as part of its initial case. Multiut also argues that the

price manipulation allegation relates to its first affirmative defense. (Resp. at 22.) This defense,

entitled “Material Breach,” alleges that Dynegy “overcharged for gas . . . by failing to properly

apply the index price [and] by failing to charge Multiut . . . the lowest price contemporaneously

being charged . . . to Multiut’s competitors.” (Docket # 81, ¶ 10.) This affirmative defense is

thus a restatement of the sixth counterclaim. Yet, as explained above, we have already granted

summary judgment on that counterclaim, finding that the parties did not have any general
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agreement to base prices on index prices. We are therefore unclear at the outset as to how the

price manipulations allegations fit into any viable legal theory. 

In its reply brief Dynegy offers five specific reasons why the manipulation allegations

should not be considered: (1) they are barred by res judicata based on Judge Pro’s dismissal of

similar claims in the multi-district litigation in Nevada; (2) Magistrate Judge Mason already

determined that evidence concerning price manipulation is not admissible or even likely to lead

to admissible evidence; (3) the alleged manipulation only concerned California and western

markets, but not price manipulation of the Chicago city-gate indexes that were used as the

indexes by these parties; (4) the doctrine of unclean hands is not an affirmative defense to

Dynegy’s monetary claims; and (5) Multiut did not plead (and therefore waived) these

affirmative defenses. As explained below, we find that summary judgment should be granted on

the first and third arguments.

Before addressing these two arguments, we begin with a general observation. The

manipulation allegations are vast. They cover a wide and complex group of participants and a

broad and factually intense subject area. The FERC report is over 400 pages and was completed

after a year-long investigation. It discusses the activities of many wholesalers, including Aquila,

AEP, El Paso Merchant Energy, Williams, Reliant, Duke, Mirant, Coral, CMS, and Sempra

Energy Trading. (M Ex. A at ES-7-8.) It focuses on both the electricity and natural gas markets

and concludes that they were “inextricably linked.” (M Ex. A at ES-1.) Multiut’s theory is that

all these companies together defrauded the entire marketplace. (Resp. at 21.) In short, if these

allegations are added to this case, they would turn a relatively straightforward breach of contract

case involving two parties into a sprawling nationwide fraud case implicating numerous parties.
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As for Dynegy’s argument that these claims are barred by res judicata, we agree with the

reasons and authorities offered by Dynegy. See Reply at 4-7. As summarized therein, Judge Pro

ruled that Multiut’s claims for fraud, violations of the Illinois Deceptive Business Practices Act,

and violations of the Sherman Act, all of which were based on the same facts as the manipulation

allegation here, should be dismissed under the filed rate. See Reply, Ex. 6 – In Re Western

States Wholesale Natural Gas Antitrust Litig, MDL 1566, Order dated May 15, 2006. In

granting Dynegy’s motion to dismiss, Judge Pro held that the “nature of the damages sought

would require this Court to determine the just and reasonable price of natural gas absent the

alleged misconduct which forms the basis of Plaintiff’s Complaint, and therefore would be a

violation of the filed rate doctrine.” (Order at 12.) As Dynegy has demonstrated, there is an

identity of the parties; an identity of the causes of actions as the manipulation allegations here

are the same as in the Nevada case; and there is a final judgment on the merits. Multiut’s

complaint in the Nevada action contains the same allegations asserted here. See Dynegy Reply

Ex. 5. If Multiut were allowed to litigate its manipulation claims here, it would defeat the

purposes of res judicata. 

We also agree with Dynegy’s argument that the FERC report relates to the manipulation

of the California and western market indexes. Index prices existed for 11 distinct geographic

areas of the United States and Canada and also for 100 separate delivery points within those

geographic areas. See Dynegy Reply at 9. The sales at issue here related only to the “Chicago

City Gate” index prices. And, as Dynegy has argued in its reply brief, none of the investigations

described in the FERC report and other exhibits submitted by Multiut address a single instance

of a false price or volume report by a Dynegy employee with respect to Chicago city gate price
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indexes. Accordingly, we find that the alleged manipulation is too remote to be connected to a

specific sale between these two parties. 

This argument points to a larger problem with the manipulation allegations. The causal

chain that Multiut seeks to prove is too attenuated and diffuse. Although not dispositive by itself,

Magistrate Judge Mason’s observation in discovery is nonetheless apt: “[t]he relevance of [the

price manipulation evidence] is premised on the implausible assertion that Dynegy, one of the

many participants in the natural gas market, could independently influence the index price.”

(12/02/03 Order.) As this observation suggests, Dynegy was only one of many players in this

market and could not control the entire market by itself. Moreover, it is not clear how damages

would apply in that Multiut’s theory is that the fraud was perpetrated on the entire marketplace

so that the price charged by all suppliers presumably would have been equally affected by the

alleged manipulation. And it is also not clear in Multiut’s response brief whether the higher

charges were simply passed through to end users. As Draiman stated in his affidavit, some

customers were charged on either a “cost plus” or an “index plus” method in which the end user

paid the index price plus an additional charge to Multiut. These questions, and many others, are

not explained clearly in Multiut’s response brief. In sum, for all the above reasons, the price

manipulation allegations, even if true, do not preclude summary judgment on either Dynegy’s

claims or Multiut’s counterclaims.
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CONCLUSION

For the reasons set forth above, defendant’s motion for summary judgment is granted,

and judgment is granted to plaintiff, and against defendants Multiut and Draiman, on Counts I

and II of plaintiff’s amended complaint, in the amount of $15,348,244.72 plus interest accruing

from October 1, 2004. Judgment is granted for plaintiff and against defendants on Counts I

through VI of defendants’ counterclaims.

ENTER:

____________________________________

JOHN A. NORDBERG

Senior United States District Court Judge

DATED: June 11, 2008