FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE: WESTERN STATES

WHOLESALE NATURAL GAS

ANTITRUST LITIGATION,

LEARJET, INC.; TOPEKA UNIFIED

SCHOOL DISTRICT 501,

Plaintiffs-Appellants,

v.

ONEOK, INC.; ONEOK ENERGY

MARKETING & TRADING CO., L.P.;

THE WILLIAMS COMPANIES, INC.;

WILLIAMS MERCHANT SERVICES

COMPANY, INC.; WILLIAMS ENERGY

MARKETING & TRADING COMPANY;

AMERICAN ELECTRIC POWER

COMPANY, INC.; AEP ENERGY

SERVICES, INC.; DUKE ENERGY

CORPORATION; DUKE ENERGY

TRADING AND MARKETING, LLC;

DYNEGY MARKETING AND TRADE;

EL PASO CORPORATION; EL PASO

MERCHANT ENERGY, L.P.; CMS

ENERGY CORPORATION; CMS

MARKETING SERVICES & TRADING

COMPANY; CMS FIELD SERVICES;

RELIANT ENERGY, INC.; RELIANT

No. 11-16786

D.C. Nos.

2:03-cv-01431-

PMP-PAL

2:06-cv-00233-

PMP-PAL
2 IN RE: WESTERN STATES ANTITRUST LITIG.

ENERGY SERVICES, INC.; CORAL

ENERGY RESOURCES, L.P.; XCEL

ENERGY, INC.; EPRIME, INC.,

Defendants-Appellees.

IN RE: WESTERN STATES

WHOLESALE NATURAL GAS

ANTITRUST LITIGATION,

HEARTLAND REGIONAL MEDICAL

CENTER; PRIME TANNING CORP.;

NORTHWEST MISSOURI STATE

UNIVERSITY,

Plaintiffs-Appellants,

v.

ONEOK, INC.; ONEOK ENERGY

MARKETING & TRADING CO., L.P.;

THE WILLIAMS COMPANIES, INC.;

WILLIAMS MERCHANT SERVICES

COMPANY, INC.; WILLIAMS ENERGY

MARKETING & TRADING COMPANY;

AMERICAN ELECTRIC POWER

COMPANY, INC.; AEP ENERGY

SERVICES, INC.; DUKE ENERGY

CORPORATION; DUKE ENERGY

TRADING AND MARKETING, LLC;

DYNEGY MARKETING AND TRADE;

EL PASO CORPORATION; EL PASO

MERCHANT ENERGY, L.P.; CMS

No. 11-16798

D.C. Nos.

2:03-cv-01431-

PMP-PAL

2:07-cv-00987-

PMP-PAL
IN RE: WESTERN STATES ANTITRUST LITIG. 3

ENERGY CORPORATION; CMS

MARKETING SERVICES & TRADING

COMPANY; CMS FIELD SERVICES;

RELIANT ENERGY, INC.; RELIANT

ENERGY SERVICES, INC.; CORAL

ENERGY RESOURCES, L.P.; XCEL

ENERGY, INC.; EPRIME, INC.,

Defendants-Appellees.

IN RE: WESTERN STATES

WHOLESALE NATURAL GAS

ANTITRUST LITIGATION,

BRECKENRIDGE BREWERY OF

COLORADO, LLC; BBD ACQUISITION

CO.,

Plaintiffs-Appellants,

v.

XCEL ENERGY, INC.; EPRIME, INC.,

Defendants-Appellees.

No. 11-16799

D.C. Nos.

2:03-cv-01431-

PMP-PAL

2:06-cv-01351-

PMP-PAL
4 IN RE: WESTERN STATES ANTITRUST LITIG.

IN RE: WESTERN STATES

WHOLESALE NATURAL GAS

ANTITRUST LITIGATION,

REORGANIZED FLI, INC.,

Plaintiff-Appellant,

v.

ONEOK, INC.; ONEOK ENERGY

MARKETING & TRADING CO., L.P.;

THE WILLIAMS COMPANIES, INC.;

WILLIAMS MERCHANT SERVICES

COMPANY, INC.; WILLIAMS ENERGY

MARKETING & TRADING COMPANY;

AMERICAN ELECTRIC POWER

COMPANY, INC.; AEP ENERGY

SERVICES, INC.; DUKE ENERGY

CORPORATION; DUKE ENERGY

TRADING AND MARKETING, LLC;

DYNEGY MARKETING AND TRADE;

EL PASO CORPORATION; EL PASO

MERCHANT ENERGY, L.P.; CMS

ENERGY CORPORATION; CMS

MARKETING SERVICES & TRADING

COMPANY; CMS FIELD SERVICES;

RELIANT ENERGY, INC.; RELIANT

ENERGY SERVICES, INC.; CORAL

ENERGY RESOURCES, L.P.; XCEL

ENERGY, INC.; EPRIME, INC.,

Defendants-Appellees.

No. 11-16802

D.C. Nos.

2:03-cv-01431-

PMP-PAL

2:05-cv-01331-

PMP-PAL
IN RE: WESTERN STATES ANTITRUST LITIG. 5

IN RE: WESTERN STATES

WHOLESALE NATURAL GAS

ANTITRUST LITIGATION,

SINCLAIR OIL CORPORATION,

Plaintiff-Appellant,

v.

ONEOK ENERGY SERVICES

COMPANY, L.P.,

Defendant-Appellee.

No. 11-16818

D.C. Nos.

2:03-cv-01431-

PMP-PAL

2:06-cv-00282-

PMP-PAL

IN RE: WESTERN STATES

WHOLESALE NATURAL GAS

ANTITRUST LITIGATION,

SINCLAIR OIL CORPORATION,

Plaintiff-Appellant,

v.

EPRIME, INC.; XCEL ENERGY, INC.,

Defendants-Appellees.

No. 11-16821

D.C. Nos.

2:03-cv-01431-

PMP-PAL

2:06-cv-00267-

PMP-PAL
6 IN RE: WESTERN STATES ANTITRUST LITIG.

IN RE: WESTERN STATES

WHOLESALE NATURAL GAS

ANTITRUST LITIGATION,

ARANDELL CORPORATION;

MERRICK’S INC.; SARGENTO FOODS

INC.; LADISH CO., INC.; CARTHAGE

COLLEGE; BRIGGS & STRATTON

CORPORATION,

Plaintiffs-Appellants,

v.

XCEL ENERGY, INC.; NORTHERN

STATES POWER COMPANY; EPRIME,

INC.; AMERICAN ELECTRIC POWER

COMPANY, INC.; AEP ENERGY

SERVICES, INC.; CMS ENERGY

CORPORATION; CMS FIELD

SERVICES; CMS MARKETING

SERVICES & TRADING COMPANY;

CORAL ENERGY RESOURCES, L.P.;

DUKE ENERGY CAROLINAS, LLC;

DUKE ENERGY TRADING AND

MARKETING LLC; DYNEGY ILLINOIS

INC.; DMT G.P. L.L.C.; DYNEGY GP

INC.; EL PASO CORPORATION; EL

PASO MERCHANT ENERGY, L.P.;

ONEOK, INC.; ONEOK ENERGY

MARKETING & TRADING CO., L.P.;

RRI ENERGY, INC., FKA RELIANT

ENERGY, INC.; RRI ENERGY

No. 11-16869

D.C. Nos.

2:03-cv-01431-

PMP-PAL

2:07-cv-01019-

PMP-PAL
IN RE: WESTERN STATES ANTITRUST LITIG. 7

SERVICES, INC., FKA Reliant Energy

Services, Inc.; THE WILLIAMS

COMPANIES, INC.; WILLIAMS POWER

COMPANY, INC.; WILLIAMS ENERGY

MARKETING & TRADING COMPANY;

WILLIAMS MERCHANT SERVICES

COMPANY, INC.,

Defendants-Appellees.

IN RE: WESTERN STATES

WHOLESALE NATURAL GAS

ANTITRUST LITIGATION,

NEWPAGE WISCONSIN SYSTEM, INC.,

Plaintiff-Appellant,

v.

CMS ENERGY CORPORATION; CMS

MARKETING SERVICES & TRADING

COMPANY; CMS FIELD SERVICES;

XCEL ENERGY, INC.; NORTHERN

STATES POWER COMPANY; EPRIME,

INC.; CORAL ENERGY RESOURCES,

L.P.; DUKE ENERGY TRADING AND

MARKETING LLC; DYNEGY ILLINOIS

INC.; DMT G.P. L.L.C.; DYNEGY GP

INC.; DYNEGY MARKETING AND

TRADE; EL PASO CORPORATION; EL

PASO MERCHANT ENERGY, L.P.;

ONEOK, INC.; ONEOK ENERGY

No. 11-16876

D.C. Nos.

2:03-cv-01431-

PMP-PAL

2:09-cv-00915-

PMP-PAL
8 IN RE: WESTERN STATES ANTITRUST LITIG.

MARKETING & TRADING CO., L.P.;

RRI ENERGY SERVICES, INC., FKA

Reliant Energy Services, Inc.; THE

WILLIAMS COMPANIES, INC.;

WILLIAMS POWER COMPANY, INC.;

WILLIAMS ENERGY MARKETING &

TRADING COMPANY; WILLIAMS

MERCHANT SERVICES COMPANY,

INC.,

Defendants-Appellees.

IN RE: WESTERN STATES

WHOLESALE NATURAL GAS

ANTITRUST LITIGATION,

ARANDELL CORPORATION;

MERRICK’S INC.; SARGENTO FOODS

INC.; LADISH CO., INC.; CARTHAGE

COLLEGE; BRIGGS & STRATTON

CORPORATION,

Plaintiffs-Appellants,

v.

CMS ENERGY CORPORATION; CMS

MARKETING SERVICES & TRADING

COMPANY; CMS FIELD SERVICES,

Defendants-Appellees.

No. 11-16880

D.C. Nos.

2:03-cv-01431-

PMP-PAL

2:09-cv-01103-

PMP-PAL

OPINION
IN RE: WESTERN STATES ANTITRUST LITIG. 9

Appeal from the United States District Court

for the District of Nevada

Philip M. Pro, District Judge, Presiding

Argued and Submitted

October 19, 2012—San Francisco, California

Filed April 10, 2013

Before: Carlos T. Bea and Paul J. Watford, Circuit Judges,

and Willliam K. Sessions, District Judge.*

Opinion by Judge Bea

SUMMARY**

Energy Law

The panel reversed in part, and affirmed in part, the

district court’s orders in cases consolidated into a

multidistrict litigation proceeding, and arising out of the

energy crisis of 2000-2002.

Plaintiffs, retail buyers of natural gas, alleged that

defendants, natural gas traders, manipulated the price of

natural gas by reporting false information to price indices

* The Honorable William K. Sessions, III, District Judge for the U.S.

District Court for the District of Vermont, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
10 IN RE: WESTERN STATES ANTITRUST LITIG.

published by trade publications and engaging in wash sales.

The district court entered summary judgment against

plaintiffs in most of the cases, finding that state law antitrust

claims were preempted by the Natural Gas Act.

The panel held that the Natural Gas Act does not preempt

the plaintiffs’ state antitrust claims, and reversed the

summary judgment entered in favor of the defendants. The

panel also held that the 2003 enactment of the Federal Energy

RegulatoryCommission’s Code of Conduct did not affect the

panel’s conclusion that the Natural Gas Act does not grant

FERC jurisdiction over claims arising out of false price

reporting and other anticompetitive behavior associated with

nonjurisdictional sales. The panel further held that the

district court did not abuse its discretion in denying either of

the two motions for leave to amend complaints. The panel

reversed in part the district court’s orders dismissing the AEP

defendants from the Wisconsin Arandell and Missouri

Heartland suits, and affirmed all the other orders at issue in

these appeals.

COUNSEL

Jennifer Gille Bacon (argued), William E. Quirk, and

Gregory M. Bentz, Polsinelli Shughart PC, Kansas City,

Missouri, for Appellants Learjet, Inc., et al., Heartland

Regional Medical Center, et al., Breckenridge Brewery of

Colorado, LLC, et al., Reorganized FLI, Inc., and Sinclair Oil

Corporation.

Robert L. Gegios, Alexander T. Pendleton, and William E.

Fischer, Kohner, Mann & Kailas, S.C., Milwaukee,

Wisconsin, for Wisconsin Plaintiffs-Appellants.
IN RE: WESTERN STATES ANTITRUST LITIG. 11

Mark E. Haddad (argued), Michelle B. Goodman, and Nitin

Reddy, Sidley Austin LLP, Los Angeles, California, for

Defendants-Appellees CMS Energy Corp., CMS Energy

Resources Management Co., and Cantera Gas Company.

Michael J. Kass and Douglas R. Tribble, Pillsbury Winthrop

Shaw Pittman LLP, San Francisco, California, for

Defendants-Appellees Dynegy Marketing & Trade, Dynegy

Illinois, Inc., DMT G.P. L.L.C., and Dynegy GP Inc.

Joshua D. Lichtman, Fulbright & Jaworski L.L.P., Los

Angeles, California, and RoxannaA.Manuel,QuinnEmanuel

Urquhart & Sullivan, LLP, for Defendant-Appellee Coral

Energy Resources, L.P.

Joel B. Kleinman, Adam Proujanski, and Lisa M. Kaas,

Dickstein Shapiro LLP, Washington, D.C., for DefendantsAppellees Duke Energy Trading and Marketing, L.L.C. and

Duke Energy Carolinas, LLC.

Robert B. Wolinsky, Hogan Lovells US LLP, Washington,

D.C., and Steven J. Routh, Orrick, Herrington & Sutcliffe,

L.L.P., Washington, D.C., for Defendants-Appellees

American Electric Power Company, Inc. and AEP Energy

Services, Inc.

Brent A. Benoit and Stacy Williams, Locke Lord Bissell &

Liddell LLP, Houston, Texas, for Defendants-Appellees El

Paso Corporation, El Paso Merchant Energy, L.P., and El

Paso Marketing, L.P.
12 IN RE: WESTERN STATES ANTITRUST LITIG.

Amelia A. Fogleman, Oliver S. Howard, and Craig A.

Fitzgerald, Gable Gotwals, A Professional Corporation,

Tulsa, Oklahoma, for Defendants-Appellees ONEOK, Inc.,

ONEOK Energy Services Company L.P.

J. Gregory Copeland and Mark R. Robeck, Baker Botts LLP,

Houston, Texas, for Defendant-Appellee Reliant Energy

Services, Inc.

Graydon Dean Luthey, Jr. and Sarah Jane Gillett, Hall, Estill,

Hardwick, Gable, Golden & Nelson, P.C., Tulsa, Oklahoma,

for Defendants-Appellees The Williams Companies, Inc.,

Williams Merchant Services Company, Inc., Williams Power

Company, Inc., and Williams Energy Marketing & Trading

Company.

Michael John Miguel, K & L Gates LLP, Los Angeles,

California, for Defendants-Appellees Xcel Energy, Inc., e

prime, inc., e prime Energy Marketing, Inc., and Northern

States Power Company.

OPINION

BEA, Circuit Judge:

These cases arise out of the energy crisis of 2000–2002. 

Plaintiffs (retail buyers of natural gas) allege that Defendants

(natural gas traders) manipulated the price of natural gas by

reporting false information to price indices published by trade
IN RE: WESTERN STATES ANTITRUST LITIG. 13

publications and engaging in wash sales.1 Plaintiffs brought

various claims in state and federal court beginning in 2005,

and all cases were eventuallyconsolidated into the underlying

multidistrict litigation proceeding. In July 2011, the district

court entered summary judgment against Plaintiffs in most of

the cases,2finding that their state law antitrust claims were

preempted by the Natural Gas Act, 15 U.S.C. § 717 et seq.

(“NGA”). Plaintiffs appeal the district court’s order granting

summary judgment, as well as orders denying as untimely

Plaintiffs’ motions to amend their complaints, orders

dismissing the AEP Defendants from two cases for lack of

personal jurisdiction, and an order granting partial summary

judgment to Defendant Duke Energy Trading and Marketing,

LLC.

We have jurisdiction pursuant to 28 U.S.C. § 1291. We

reverse the district court’s order granting summary judgment

to the Defendants, reverse in part the district court’s orders

dismissing the AEP Defendants from the Wisconsin Arandell

and Missouri Heartland suits, and affirm all of the other

orders at issue in this appeal. We remand to the district court

for further proceedings consistent with this opinion.

1 Wash sales are prearranged sales in which traders execute a trade on

an electronic trading platform, and then immediately offset that trade by

executing an equal and opposite trade.

2 The district court’s judgment is final in all cases except Sinclair v. EPrime, No. 11-16821, and Sinclair v. Oneok, No. 11-16818. The

Plaintiffs’ complaints in the Sinclair cases contain federal claims that were

not preempted, but the District Court declared that there was “no just

reason for delay,” making the preemption rulings in Sinclair v. E-Prime

and Sinclair v. Oneok final and appealable pursuant to Federal Rule of

Civil Procedure 54(b).
14 IN RE: WESTERN STATES ANTITRUST LITIG.

I. Facts and Regulatory Framework

A. Energy Crisis of 2000–2002

A brief recitation of the background of this litigation, as

well as a description of the regulatory framework governing

this case, is useful to set the stage for our holding. These

cases arise out of claims that the Defendants violated antitrust

laws by manipulating the natural gas market and selling

natural gas at artificially inflated prices, leading to the energy

crisis of 2000–2002. The Federal Energy Regulatory

Commission (“FERC”) conducted a fact-finding investigation

of the energy crisis, and concluded that “[s]pot gas prices rose

to extraordinary levels, facilitating the unprecedented price

increase in the electricity market.” This market distortion

stemmed in part from efforts of energy trading companies to

manipulate price indices compiled by trade publications.

The natural gas industry relied on two trade publications,

Gas Daily and Inside FERC, which published the most

widely-used price indices. Gas Daily published a daily gas

price index, while Inside FERC published a monthly gas price

index. Gas Daily relied on telephone interviews with natural

gas market participants (traders, end users,3and producers) to

collect pricing data. Inside FERC collected pricing data

through standardized spreadsheets, which traders filled out

and emailed to Inside FERC. Buyers and sellers relied on

these indices as reference points to determine the market

price for natural gas transactions. In short, the prices for

actual transactions were pegged to price indices that were

subject to manipulation by energy traders.

 

3

 The term “end users” refers to industrial, commercial, and residential

consumers of gas, such as the Plaintiffs in this case.
IN RE: WESTERN STATES ANTITRUST LITIG. 15

After the energy crisis of 2000–2002, a number of energy

trading companies admitted that their employees provided

false pricing data to Gas Daily and Inside FERC. 

Government investigations revealed that the companies had

few, if any, internal controls in place to ensure the accuracy

of the data reported to the trade publications. A 2003 FERC

report described the process as follows:

Traders from all companies describe a typical

trading day as hectic, pressure packed, and

frenetic. One of their many tasks was to report

trading data to the Trade Press; this was

viewed as bothersome but necessary. Often it

was a job given to the newest employee.

Manycompanies report passing around a form

and using a spreadsheet on a shared drive. . . .

There was nothing to stop a trader from

changing the numbers someone else had

entered. In other cases, traders took an oral

“survey” to get a sense of where the market

was trading. Sometimes they represented it to

the Trade Press as an actual survey, but in

other cases theymade up trades to average out

to a number that was consistent with this

“survey.”

In addition to reporting false data to the price indices, traders

also manipulated the market by engaging in “wash sales,” or

prearranged sales in which traders “agreed to execute a buy

or a sell on an electronic trading platform . . . and then to

immediately reverse or offset the first trade by bilaterally

executing over the telephone an equal and opposite buy or

sell.”
16 IN RE: WESTERN STATES ANTITRUST LITIG.

B. Overview of Natural Gas Regulation

Whether Plaintiffs’ state law antitrust claims are

cognizable depends, for one thing, on whether the field of

natural gas regulation has been preempted by federal

regulation. This court’s preemption analysis is governed by

the framework of natural gas regulation, and more

importantly, the distinction between categories of sales that

fall within FERC’s jurisdiction (“jurisdictional sales”) and the

categories of sales that fall outside of FERC’s jurisdiction

(“non-jurisdictional sales”).

Individual states were originally responsible for the

regulation of the production, sale, and transportation of

natural gas. However, as the volume of gas sold and

transported along interstate pipelines increased, state

regulations became regarded by Congress as ineffective. See

Panhandle Eastern Pipe Line Co. v. Pub. Serv. Comm’n of

Ind., 332 U.S. 507, 515 (1947). In 1938, Congress enacted

the Natural Gas Act (“NGA”) in response to the demand for

federal regulation and to curb the market power of interstate

pipelines. Id. at 516; see also E. &J. Gallo Winery v. Encana

Corp., 503 F.3d 1027, 1036 (9th Cir. 2007). FERC is the

agency charged with the administration of the NGA, and its

jurisdiction is laid out in Section 1(b) of the Act as follows:

The provisions of this chapter shall apply to

the transportation of natural gas in interstate

commerce, to the sale in interstate commerce

of natural gas for resale for ultimate public

consumption for domestic, commercial,

industrial, or any other use, and to natural-gas

companies engaged in such transportation or

sale, and to the importation or exportation of
IN RE: WESTERN STATES ANTITRUST LITIG. 17

natural gas in foreign commerce and to

persons engaged in such importation or

exportation, but shall not apply to any other

transportation or sale of natural gas or to the

local distribution of natural gas or to the

facilities used for such distribution or to the

production or gathering of natural gas.

15 U.S.C. § 717(b). Put simply, the NGA applies to:

(1) transportation of natural gas in interstate commerce,

(2) natural gas sales in interstate commerce for resale (i.e.,

wholesale sales), and (3) natural gas companies

4

engaged in

such transportation or sale. The NGA does not apply to retail

sales (i.e., direct sales for consumptive use). See Panhandle

Eastern Pipe Line Co., 332 U.S. at 517 (“The line of the

statute [is] thus clear and complete. It cut[s] sharply and

cleanly between sales for resale and direct sales for

consumptive uses.”).

Since the passage of the NGA, Congress has removed

other categories of sales from the scope of FERC’s

jurisdiction as part of a general effort to reduce federal

regulation of the natural gas industry. In 1989, Congress

passed the Natural Gas Wellhead Decontrol Act of 1989, Pub.

L. No. 101-60, which removed “first sales”5from FERC’s

4 A “natural-gas company” is defined as “a person engaged in the

transportation of natural gas in interstate commerce, or the sale in

interstate commerce of such gas for resale.” 15 U.S.C. § 717a(6).

5 The statutory definition of “first sales” is quite complex, see 15 U.S.C.

3301(21), but as this court stated in Gallo, “first sales are, in essence,

merely sales of natural gas that are not preceded by a sale to an interstate

pipeline, intrastate pipeline, local distribution company, or retail customer. 

In other words, sales by pipelines, local distribution companies, and their
18 IN RE: WESTERN STATES ANTITRUST LITIG.

jurisdiction, therefore completely eliminating FERC’s

authority to set prices at the wellhead. In 1992, to give effect

to the North American Free Trade Agreement, Congress

amended the NGA to provide that all natural gas sales from

Canadian and Mexican sellers to buyers in the United States

are also first sales, and therefore not subject to FERC’s

jurisdiction. See EnergyPolicy Act of 1992, Pub. L. No. 102-

486 (codified at 15 U.S.C. § 717b(b)).

The final aspect of the natural gas regulatory scheme

relevant to this appeal is FERC’s practice of issuing “blanket

marketing certificates.”6 Following congressional efforts to

reduce federal regulation of the industry, FERC began its own

deregulation process. In 1992, FERC promulgated Order

636, which “required all interstate pipelines to ‘unbundle’7

affiliates cannot be first sales unless these entities are selling gas of their

own production.” Gallo, 503 F.3d at 1037.

6 Under blanket certificates issued pursuant to Section 7(c) of the NGA,

“a natural gas company may undertake a restricted array of routine

activities without the need to obtain a case-specific certificate for each

individual project.” See BLANKET CERTIFICATES, FEDERAL ENERGY

REGULATORY COMMISSION (last visited on March 25, 2013),

http://www.ferc.gov/industries/gas/indus-act/blank-cert.asp. A company

with a blanket certificate may “construct, modify, acquire, operate, and

abandon a limited set of natural gas facilities, and offer a limited set of

services, provided each activity complies with constraints on costs and

environmental impacts set forth in the Commission's regulations.” Id.

7

“Prior to the early 1980s, most natural gas was sold at or near the

wellhead to the intrastate or interstate pipeline in the field. . . . The

pipeline purchasers typically provided a bundled service which included

the gathering, processing, storage and transmission of the gas to market.” 

Judith M. Matlock, Federal Oil and Gas Pipeline Regulation: An

Overview, ROCKY MOUNTAIN MINERAL LAW FOUND. Paper No. 4 (Feb.

23–24, 2011).
IN RE: WESTERN STATES ANTITRUST LITIG. 19

their transportation from their own natural gas sales.” 

General Motors Corp. v. Tracy, 519 U.S. 278, 284 (1997);

Pipeline Service Obligations and Revisions to Regulations

GoverningSelf-ImplementingTransportation; and Regulation

of Natural Gas Pipelines After Partial Wellhead Decontrol,

57 Fed. Reg. 13,267 (Apr. 16, 1992). FERC also issued

blanket sale certificates to interstate pipelines that allowed

them to offer “unbundled” natural gas at market-based rates,

rather than at rates filed with FERC. See 57 Fed. Reg. at

13,270. FERC continued its own deregulation process by

issuing blanket sales certificates for all other resales of

natural gas. See Regulations Governing Blanket Marketer

Sales Certificates, 57 Fed. Reg. 57,952; 57,957–58 (Dec. 8,

1992). These blanket certificates had the effect of allowing

all natural gas companies subject to FERC’s jurisdiction to

charge market-based rates, as opposed to rates filed with and

approved by FERC.

II. Procedural History

Beginning in 2001, a series of class action lawsuits were

filed around the country and were eventually consolidated

into a multi-district litigation in the District of Nevada. Two

of the earliest cases, Texas-Ohio Energy, Inc. v. AEP Energy

Services, Inc., et al. (“Texas-Ohio”) and Abelman v. AEP

Energy Services, Inc., et al. (“Abelman”) alleged both

Sherman Act and parallel state antitrust claims. See In re

Western States Wholesale Natural Gas Antitrust Litig.,

368 F. Supp. 2d 1110 (D. Nev. 2005); In re Western States

Wholesale Natural Gas Antitrust Litig., 408 F. Supp. 2d 1055

(D. Nev. 2005). The core allegations in Texas-Ohio and

Abelman – that the defendant energy companies conspired to

manipulate the price indices – were similar to the allegations

in the present case.
20 IN RE: WESTERN STATES ANTITRUST LITIG.

The defendants in Texas-Ohio and Abelman moved to

dismiss the complaints in those cases on the grounds that all

claims were barred by the filed-rate doctrine

8

and that the

state-law claims were preempted by the NGA. In 2005, four

months before the first of the present cases was filed, the

District Court granted summary judgment to the Texas-Ohio

and Abelman defendants. It held that because the plaintiffs

asked for actual damages, any judgment by the court would

necessarily decide whether the privately-published price

indices (which the court concluded were effectively FERCapproved rates) were reasonable. Since the price indices used

to set the rates were FERC-approved, the federal and state

law claims were barred by the filed-rate doctrine. TexasOhio, 368 F. Supp. 2d at 1116; Abelman, 408 F. Supp. 2d at

1069.

Shortly after the judgments in Texas-Ohio and Abelman,

plaintiffs in Farmland,

9 Learjet, Breckenridge, Arandell, and

Heartland began filing suits alleging state antitrust claims in

Colorado, Kansas, Missouri, and Wisconsin state courts. 

Plaintiffs in Sinclair v. E-Prime and Sinclair v. Oneok

8 The filed-rate doctrine “is a judicial creation that arises from decisions

interpreting federal statutes that give federal agencies exclusive

jurisdiction to set rates for specified utilities” and bars “challenges under

state law and federal antitrust laws to rates set by federal agencies.” E. &

J. Gallo Winery v. Encana Corp., 503 F.3d 1027, 1033 (9th Cir. 2007). 

See also Arkansas Louisiana Gas Company v. Hall, 453 U.S. 571, 577

(1981) (stating that because the Natural Gas Act required sellers of natural

gas in interstate commerce to file their rates with FERC for FERC’s

approval, “[n]o court may substitute its own judgment on reasonableness

for the judgment of the Commission”).

9 As a result of bankruptcy proceedings, the name of the Plaintiff in this

case has changed to “Reorganized FLI, Inc.” For the sake of simplicity

we refer to this Plaintiff as “Farmland” in this opinion.
IN RE: WESTERN STATES ANTITRUST LITIG. 21

brought suit in federal court, alleging various state and

federal causes of action. The state cases were removed to

federal court on grounds of diversity of citizenship and all

cases were consolidated into the present multidistrict

litigation.

Defendants in the present case filed a number of motions

for summary judgment, alleging that the Plaintiffs’ claims

were barred by the filed-rate doctrine, or that their state

claims were preempted by the NGA. In 2006, the District

Court granted the Defendants’ motion to dismiss in

Farmland, finding that the NGA preempted the Plaintiffs’

claims under Kansas antitrust statutes. The District Court

reasoned that because the Defendants possessed blanket

marketing certificates that subjected Defendants and their

conduct to FERC’s jurisdiction under the NGA, FERC had

exclusive jurisdiction over the alleged anti-competitive

misconduct at issue. In July 2007, the District Court

reconsidered and vacated its prior ruling grantingDefendants’

motion to dismiss after Plaintiffs clarified that they did not

concede the factual question of whether Defendants

possessed blanket marketing certificates.

In September 2007, this court issued its decision in E. &

J. Gallo Winery v. Encana Corp., holding that the filed-rate

doctrine does not bar state or federal antitrust claims arising

out of manipulation of the price indices because the

challenged price indices were compiled using transactions

outside of FERC’s jurisdiction as well as transactions within

FERC’s jurisdiction. 503 F.3d at 1048.

In November 2007, Defendants filed a new motion for

summary judgment in in all of the present cases, arguing that

Plaintiffs’ state claims were preempted by the NGA. In May
22 IN RE: WESTERN STATES ANTITRUST LITIG.

2008, the District Court denied the motion, relying in part on

this court’s decision in Gallo.

In July 2008, Defendants filed a motion for

reconsideration of the District Court’s May 2008 order,

arguing that FERC had jurisdiction during the relevant time

period to regulate “any practice” affecting a rate subject to

the jurisdiction of the Commission (i.e., a “jurisdictional

rate”). In November 2009, the District Court held that

because the same price indices are used to set the prices in

transactions falling within and outside FERC’s jurisdiction,

any manipulation of these indices falls within FERC’s

exclusive jurisdiction under Section 5(a) of the NGA.

Section 5(a) provides:

[Whenever FERC finds] that any rate, charge,

or classification . . . [or] rule, regulation,

practice, or contract affecting such rate,

charge, or classification is unjust,

unreasonable, unduly discriminatory, or

preferential, the Commission shall determine

the just and reasonable rate, charge,

classification, rule, regulation, practice, or

contract to be thereafter observed or in force,

and shall fix the same by order.

15 U.S.C. § 717d (emphases added). The District Court

reasoned that pursuant to Section 5(a) of the NGA, FERC has

jurisdiction to regulate any “practice” by a jurisdictional

seller that affects a jurisdictional rate. The court ordered

Defendants to re-file their motion for summary judgment, and

in July 2011, the court granted the Defendants’ motion for

summary judgment as applied to all Plaintiffs. This appeal

followed.
IN RE: WESTERN STATES ANTITRUST LITIG. 23

III. The Natural Gas Act and Preemption

A. Standard of Review

This court reviews a district court’s grant of summary

judgment de novo. See Lee v. Gregory, 363 F.3d 931, 932

(9th Cir. 2004). Summary judgment is appropriate only

where the “pleadings, depositions, answers to interrogatories,

and admissions on file, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and

that the moving party is entitled to a judgment as a matter of

law.” Rosenbaum v. Washoe Cnty., 663 F.3d 1071, 1075 (9th

Cir. 2011) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322

(1986); Fed. R. Civ. P. 56(c)). “Viewing the evidence in the

light most favorable to the non-moving party,” this court

“must determine whether there are any genuine issues of

material fact and whether the district court correctly applied

the relevant substantive law.” Devereaux v. Abbey, 263 F.3d

1070, 1074 (9th Cir. 2001). This court also reviews a district

court’s decisions regarding preemption de novo. See Whistler

Investments, Inc. v. Depository Trust & Clearing Corp.,

539 F.3d 1159, 1163 (9th Cir. 2008).

B. Preemption

The “touchstone in every pre-emption case” is expressed

congressional intent. Wyeth v. Levine, 555 U.S. 555, 565

(2009). The Supreme Court recently emphasized that in

preemption cases, courts should “start with the assumption

that the historic police powers of the States were not to be

superseded by the Federal Act unless that was the clear and

manifest purpose of Congress.” Id. In the present case, the

presumption against preemption applies with particular force
24 IN RE: WESTERN STATES ANTITRUST LITIG.

in light of Congress’s deliberate efforts to preserve traditional

areas of state regulation of the natural gas industry.

The question presented by this appeal is as follows: does

Section 5(a) of the NGA, which provides FERC with

jurisdiction over any “practice” affecting jurisdictional rates,

preempt state antitrust claims arising out of price

manipulation associated with transactions falling outside of

FERC’s jurisdiction? We conclude that such an expansive

reading of Section 5(a) conflicts with Congress’s express

intent to delineate carefully the scope of federal jurisdiction

through the express jurisdictional provisions of Section 1(b)

of the Act. Our analysis is guided by several circuit court

decisions counseling in favor of a narrow reading of Section

5(a). As a result, we hold that the NGA does not preempt the

Plaintiffs’ state antitrust claims, and reverse the district

court’s order granting summary judgment to the Defendants.

1. When Congress enacted the NGA in 1938, it expressly

limited federal jurisdiction over natural gas to “the sale in

interstate commerce of natural gas for resale.” 15 U.S.C. 

§ 717(b). An earlySupreme Court case interpreting the scope

of the NGA described Congress’s intent as follows:

The omission of any reference to other sales,

that is, to direct sales for consumptive use, in

the affirmative declaration of coverage was

not inadvertent. It was deliberate. For

Congress made sure its intent could not be

mistaken by adding the explicit prohibition

that the Act “shall not apply to any other . . .

sale.”
IN RE: WESTERN STATES ANTITRUST LITIG. 25

Panhandle Eastern Pipe Line Co. v. Pub. Serv. Comm’n of

Ind., 332 U.S. 507, 516 (1947). A later Supreme Court

decision further emphasized Congress’s intent to limit the

reach of the NGA:

When it enacted the NGA, Congress carefully

divided up regulatory power over the natural

gas industry. It did not envisage federal

regulation of the entire natural gas field to the

limit of constitutional power. Rather it

contemplated the exercise of federal power as

specified in the Act.

Nw. Cent. Pipeline Corp. v. State Corp. Comm’n of Kan.,

489 U.S. 493, 510 (1989). Since the passage of the NGA,

Congress has further demonstrated its intent to limit the scope

of federal regulation by enacting statutes removing first sales

from FERC’s jurisdiction. See Natural Gas Wellhead

Decontrol Act of 1989, Pub. L. No. 101-60, 103 Stat. 157.10

2. This court’s decision in Gallo provides further support

for our holding that the NGA does not preempt all state

antitrust claims. The claims in Gallo were essentially the

same as the Plaintiffs’ claims in the present case. E. & J.

Gallo Winery alleged that EnCana Corp., a natural gas

supplier, conspired to inflate the price of natural gas by

manipulating the prices reported to private indices published

by natural gas trade publications and the execution of wash

10 In 1978 Congress enacted the Natural Gas Policy Act (“NGPA”), Pub.

L. No. 95-621, 92 Stat. 3352, which eliminated the low price ceilings on

wellhead sales. However, the Natural Gas Wellhead Decontrol Act of

1989 (“WDA”) completely eliminated FERC’s authority to set prices at

the wellhead.
26 IN RE: WESTERN STATES ANTITRUST LITIG.

trades. Gallo, 503 F.3d at 1030–32. Gallo’s complaint

consisted of federal and state antitrust actions, as well as

state-law damages claims. Id. at 1032. Encana Corp. moved

for summary judgment, claiming that the filed-rate doctrine

barred all of Gallo’s federal claims, and federal preemption

principles barred Gallo’s state claims. Id. at 1032. The

district court denied EnCana’s summary judgment motion,

and this court affirmed the district court. Id. at 1030.

We noted in Gallo that although FERC did not set the

rates charged by the natural gas companies, it did engage in

market oversight by granting blanket market certificates after

determining that the seller lacked market power. Id. at 1041. 

As a result of FERC’s market oversight, the court found “that

the market-based rate for natural gas transactions under

FERC’s jurisdiction are FERC-authorized rates, and cannot

be the basis of a federal antitrust or state damage action”

because of the filed-rate doctrine. Id. at 1043 (emphasis

added).

Although this court found that the filed-rate doctrine

barred claims based on FERC-authorized rates, it

distinguished claims based on FERC-authorized rates from

claims based on the rates reported in the price indices. Id. at

1045. It stated that the record reflected that “the indices

potentially include transactions that are under FERC’s

jurisdiction as well as transactions outside FERC’s

jurisdiction.” Id. There were two relevant categories of nonFERC-authorized rates included in the challenged price

indices:

First, there is evidence in the record some

index pricing inputs were misreported or

wholly fictitious. Misreported rates and rates
IN RE: WESTERN STATES ANTITRUST LITIG. 27

reported for fictitious transactions are not

FERC-approved rates, and barring claims that

such fictitious transactions damaged

purchasers in the natural gas market would

not further the purpose of the filed rate

doctrine.

Moreover, as part of its investigation of

the indices, FERC concluded that it “has

jurisdiction over most of the transactions that

form the basis for the indices.” . . . This

language indicates that at least some of the

transactions included in the indices are not

subject to FERC’s jurisdiction, and thus

would be subject to challenge by Gallo.

Id. at 1045 (internal citations omitted). The nonjurisdictional transactions included in the price indices

included first sales at the wellhead or via imports from

Canada or Mexico. Id.

We explained in depth why the removal of certain

transactions from FERC’s jurisdiction meant that claims

arising out of those transactions were not preempted by the

NGA. Id. at 1046. Most importantly, we assumed that

Congress was aware of the existing context of state and

federal antitrust law when it enacted the Wellhead Decontrol

Act and other statutes limiting FERC’s jurisdiction. Id. State

and federal antitrust laws complement Congress’s intent to

move to a less regulated market, because such laws support

fair competition. Id. (“By enabling private parties to combat

market manipulation and other anti-competitive actions, the

laws under which Gallo brought its claim support Congress’s

determination that the supply, the demand, and the price of
28 IN RE: WESTERN STATES ANTITRUST LITIG.

high-cost first sale gas be determined by market forces.”)

(internal quotations omitted). For these reasons, we

concluded that “Congress did not preclude plaintiffs from

basing damage claims on rates associated with first sales.” 

Id. Our reasoning in Gallo applies with equal force to the

question presented by this case: federal preemption doctrines

do not preclude state law claims arising out of transactions

outside of FERC’s jurisdiction.

C. The NGA’s Jurisdictional Limitations

The district court in the present case acknowledged this

court’s holding in Gallo, but distinguished that case on the

grounds that “Gallo did not address whether FERC’s

exclusive jurisdiction over natural gas companies and their

practices which affect jurisdictional rates preempts state

jurisdiction over the same subject matter.” It reasoned that

Defendants’ status as FERC-regulated entities, combined

with FERC’s authority under Section 5(a) of the NGA to

regulate “any rule, regulation, practice, or contract” affecting

a jurisdictional rate, conferred exclusive jurisdiction on FERC

to regulate the conduct at issue in this case.

The district court read the word “practices” in Section

5(a) of the NGA to preempt impliedly the application of state

laws to the same transactions (first sales and retail sales) that

Congress expressly exempted from the scope of FERC’s

jurisdiction in Section 1(b) of the Act. However, this reading

runs afoul of the canon of statutory construction that statutory

provisions should not be read in isolation, and the meaning of

a statutory provision must be consistent with the structure of

the statute of which it is a part. See, e.g., Waggoner v.

Gonzales, 488 F.3d 632, 636 (5th Cir. 2007) (“When

interpreting statutes . . . each part or section of a statute
IN RE: WESTERN STATES ANTITRUST LITIG. 29

should be construed in connection with every other part or

section to produce a harmonious whole.”). The district

court’s reading is also inconsistent with case law interpreting

the provisions of Section 5(a) of the NGA narrowly to

comport with the jurisdictional limitations established by

Section 1(b) of the Act. While the Ninth Circuit has not had

the opportunity to define the scope of Section 5(a), the

Supreme Court and other circuits have read Section 5(a)

narrowly to define the scope of FERC’s jurisdiction within

the limitations imposed by Section 1(b).

1. In Northwest Central Pipeline Corp. v. State

Corporation Commission of Kansas, the Supreme Court

relied on the jurisdictional limitations established in Section

1(b) of the NGA to uphold a state regulation on the

production of gas. 489 U.S. 493, 496 (1989). The State

Corporate Commission of Kansas (KCC) had adopted a

regulation governing the timing of natural gas production

from the Kansas-Hugoton field. Id. The regulation provided

that the right to extract assigned amounts of gas from the field

would be lost if pipelines delayed production for too long. Id.

at 497. Northwest Central Pipeline Corporation challenged

the regulation, arguing that it was preempted by federal

regulation ofthe interstate gas industrybecause the regulation

exerted pressure on pipelines to increase their purchases

from the Hugoton field and therefore affected the pipelines’

cost structures. Id. at 497, 507 (noting that Northwest

Central argued that “the federal regulatory scheme pre-empts

state regulations that may have either a direct or indirect

effect on matters within federal control”).

The Supreme Court rejected Northwest Central’s

argument, relying on the fact that Section 1(b) of the NGA

“expressly carve[d] out a regulatory role for the States” and
30 IN RE: WESTERN STATES ANTITRUST LITIG.

provided that states would retain jurisdiction over the

production of natural gas. Id. at 507. It also rejected the

pipeline’s claim that federal regulations preempted all state

regulations that may affect rates within federal control,

stating:

To find field pre-emption of Kansas’

regulation merely because purchasers’ costs

and hence rates might be affected would be

largely to nullify that part of NGA § 1(b) that

leaves to the States control over production,

for there can be little if any regulation of

production that might not have at least an

incremental affect on the costs of purchasers

in some market and contractual situation.

Id. at 514. 

In American Gas Association v. Federal Energy

Regulatory Commission, the D.C. Circuit examined FERC’s

refusal to use its authority under Section 5 of the NGA to

modify “take-or-pay” contracts11between natural gas

producers and pipelines. 912 F.2d 1496, 1503 (D.C. Cir.

1990). A “major premise” of FERC’s refusal to act was its

conclusion that its Section 5 power did not reach

nonjurisdictional contracts. Id. at 1505. The court

concluded, “As we read the Natural Gas Act, the Commission

11 Certain contracts entered into by producers and pipelines between

1977–1982 contained “take-or-pay” clauses requiring the pipelines either

to purchase a specified percentage of the producer’s deliverable gas or to

make “pre-payments” for that percentage. See Associated Gas Distribs.

v. FERC, 824 F.2d 981, 1021 (D.C. Cir. 1987).
IN RE: WESTERN STATES ANTITRUST LITIG. 31

was absolutely right: Congress clearly limited its § 5 powers

to jurisdictional contracts.” Id.

The petitioners in American Gas Association had offered

an argument similar to the one offered by the Defendants in

the present case: they isolated the phrase “contract affecting

such rates” and argued that FERC had jurisdiction to assess

the justness and reasonableness of the provisions of any

contract that would likely influence a pipeline’s end-ofpipelines prices. Id. FERC, on the other hand, interpreted

“contract affecting such rates” as being limited to contracts

involving a jurisdictional seller and directly governing the

rate in a jurisdictional sale. Id. at 1506. The D.C. Circuit

agreed with FERC, stating that “petitioners’ theory is, more

generally, an oxymoron – Commission jurisdiction over

nonjurisdictional contracts.” Id. The court also noted that the

petitioners’ expansive reading of Section 5 had no

“conceptual core” because under their interpretation, Section

5 would reach “pipelines’ contracts for every other possible

factor of production – even legal services.” Id. at 1507.

We find the analysis of these cases persuasive, and apply

them here. Interpreting the jurisdictional provision in Section

5(a) broadly to find FERC jurisdiction over price

manipulation associated with nonjurisdictional sales would

risk nullifying the jurisdictional provisions of Section 1(b),

which reserve to the states regulatory authority over

nonjurisdictional sales, such as first sales at the wellhead or

from sellers in Canada and Mexico. Under the broad reading

of Section 5(a) that Defendants propose, there is no

“conceptual core” delineating transactions falling within

FERC’s jurisdiction and transactions outside of FERC’s

jurisdiction. There would be nothing stopping a future court

from finding that first sales themselves (which are exempted
32 IN RE: WESTERN STATES ANTITRUST LITIG.

from FERC’s jurisdiction pursuant to Section 1(b) of the Act)

are “practices” affecting jurisdictional rates that fall within

the jurisdictional provision in Section 5(a). We reject this

broad reading and hold that the district court erred in

concluding that FERC had jurisdiction over the reporting

practices associated with nonjurisdictional sales under

Section 5(a).

2. Another D.C. Circuit case, California Independent

System Operator Corporation v. Federal Energy Regulatory

Commission, does not address the interplay between the

jurisdictional limits outlined in Section 1(b) and the

jurisdictional provision in Section 5(a), but it does provide

further support for a narrow interpretation of the word

“practices” in Section 5(a). 372 F.3d 395 (D.C. Cir. 2004). 

The California Independent System Operator Corporation

(CAISO) was a non-profit entity created by the state of

California to operate electric grid facilities in California. Id.

at 397. By statute, CAISO was obligated to follow certain

procedures for selecting a board of directors composed

exclusively of California residents. Id. After the energy

crisis of 2000, FERC directed CAISO to utilize a different

selection method for its board of directors. Id. at 397–98. 

FERC claimed that it had authority to issue such a directive

under Section 206 of the Federal Power Act,12 which

provided, “Whenever the Commission [shall find] that any

12 The language at issue from the Federal Power Act in CAISO is

identical to the language at issue from the NGA in the present case. The

Supreme Court noted inArkansas Louisiana Gas Company v. Hall that the

relevant provisions of the Federal Power Act and the Natural Gas Act “are

in all material respects substantially identical,” and therefore the Court’s

established practice is to “cit[e] interchangeably decisions interpreting the

pertinent sections of the two statutes.” 453 U.S. 571, 577 n.7 (1981)

(internal quotations omitted).
IN RE: WESTERN STATES ANTITRUST LITIG. 33

rule, regulation, practice, or contract affecting such rate,

charge, or classification is unjust, unreasonable, unduly

discriminatory or preferential,” the Commission shall

determine the just and reasonable practice to be observed

thereafter. Id. at 399 (quoting 16 U.S.C. § 824e(a)). 

Specifically, FERC claimed that the composition and method

of selection of a utility company’s governing board was a

“practice . . . affecting [a] rate,” and that because FERC had

found that CAISO’s selection method was discriminatory,

FERC had authority to determine a just and reasonable

practice. Id.

The D.C. Circuit began its analysis with the “plain

language” of the statutory text. Id. at 400. It found that the

word “practices” is a word of sufficiently diverse meanings

that the proper method for determining Congressional intent

was to apply the canon of statutory construction “noscitur a

sociis.”

13 The court looked at the word “practices” in context,

finding that Section 5(a) comes into play only after the

Commission has a hearing and determines that a “rate,

charge, or classification” employed by a regulated utility in

a jurisdictional transaction is unjust or unreasonable. Id. 

Therefore, the court found that by using the word “practice,”

Congress had intended to empower FERC to “effect a

reformation of some ‘practice’ in a more traditional sense of

actions habitually being taken by a utility in connection with

a rate found to be unjust or unreasonable.” Id. The court

noted that the implications of a broader reading of the word

“practices” would be “staggering” because FERC would have

13 Noscitur a sociis means that “a word is known by the company it

keeps,” and this canon is applied “where a word is capable of many

meanings in order to avoid the giving of unintended breadth to the Acts of

Congress.” Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307 (1961).
34 IN RE: WESTERN STATES ANTITRUST LITIG.

jurisdiction over a plethora of activities, such as the methods

of contracting for services, labor, or office space, as long as

FERC found that such “practices” affected the jurisdictional

rates. We agree with the D.C. Circuit’s approach to reading

the word “practices” narrowly as to not expand unduly the

scope of FERC’s jurisdiction.

3. Defendants rely on Mississippi Power & Light Co. v.

Mississippi ex rel. Moore, 487 U.S. 354 (1988) (“MP&L”) for

the proposition that “FERC’s jurisdiction over a practice or

contract affecting a jurisdictional rate preempts state law

from being used to regulate that practice or contract.” 

Mississippi Power & Light involved a FERC order requiring

four utility companies to purchase a particular share of a

nuclear power plant’s output at rates FERC determined to be

just and reasonable. Mississippi Power &Light Co., 487 U.S.

at 364. One of the utility companies, Mississippi Power &

Light, filed an application with the Mississippi Public Service

Commission (“MPSC”) seeking a substantial increase in its

retail rates to recoup the costs of purchasing a portion of the

nuclear power plant’s output. Id. at 365. The Mississippi

Supreme Court eventually ruled that the MPSC was required,

in accordance with state law, to review the prudence of

incurring costs associated with purchasing the nuclear power

plant’s output. Id. at 367.

The Supreme Court reversed. The Court stated that

FERC’s exclusive jurisdiction over wholesale rates also

encompassed “power allocations that affect wholesale rates.” 

Id. at 371. Because the “prudence inquiry” mandated by the

Mississippi Supreme Court required the state commission to

review the prudence of the FERC order determining the

allocation of costs associated with the nuclear power plant,

the inquiry was preempted by FERC’s exclusive jurisdiction. 
IN RE: WESTERN STATES ANTITRUST LITIG. 35

Id. The Court concluded, “FERC-mandated allocations of

power are binding on the States, and States must treat those

allocations as fair and reasonable when determining retail

rates.” Id. at 371.

We do not find Defendants’ reliance on Mississippi

Power & Light Co. to be persuasive. Mississippi Power &

Light Co. stands for the proposition that states cannot use

their jurisdiction over retail rates to second-guess or review

FERC-authorized rates that may affect retail rates. See Gallo,

503 F.3d at 1044 (relying on Mississippi Power & Light Co.

to “support EnCana’s position that wholesale sellers such as

EnCana may raise the filed rate doctrine as a defense to

actions putatively attacking retail rates, but having the effect

of disallowingFERC-approved wholesale rates.”). However,

Mississippi Power & Light Co. does not support Defendants’

broad reading of the phrase “practice . . . affecting

[jurisdictional] rates.” In Mississippi Power & Light Co.,

FERC had used its jurisdiction over practices affecting

wholesale rates to determine an equitable allocation of

nuclear power costs. Defendants attempt to analogize the

power allocations at issue in Mississippi Power & Light Co.

with the market manipulation associated with

nonjurisdictional transactions at issue in the present case. 

However, that analogy cannot be squared with the Gallo

court’s holding that the NGA does not preempt state antitrust

challenges to rates and practices associated with such

nonjurisdictional sales.

D. FERC’s Regulatory Authority

One final issue dividing the parties in this appeal is the

extent to which FERC had authority to regulate the market

manipulation that gave rise to the energy crisis in 2000–2001. 
36 IN RE: WESTERN STATES ANTITRUST LITIG.

The Defendants point to the Code of Conduct promulgated by

FERC in 2003 as evidence that FERC had regulatory

authority over the anticompetitive conduct at issue, including

the false price reporting and wash sales. FERC promulgated

the Code of Conduct by amending the blanket market

certificates governing jurisdictional sellers. See Amendments

to Blanket Sales Certificates, 68 Fed. Reg. 66,323 (Nov. 26,

2003). The Commission stated that the need for the Code of

Conduct “was informed by the types of behavior that

occurred in the Western markets during 2000 and 2001.” Id.

¶ 2. The Code prohibited jurisdictional sellers

14

“from

engaging in actions without a legitimate business purpose that

manipulate or attempt to manipulate market conditions,

including wash trades and collusion.” Id. ¶ 4. The Code

further provides that jurisdictional sellers are required to

provide complete and accurate transactional information to

publishers of gas price indices. Id. ¶ 5.

While Defendants rely on the promulgation of the Code

of Conduct as evidence that FERC had jurisdiction over the

market manipulation at issue, there are two significant flaws

in their argument. First, two years after the promulgation of

the Code, Congress enacted the Energy Policy Act of 2005

(“EPA”),15 which prohibits market manipulation and

14 Section III.A of the Commission’s final order is titled “Application of

Code of Conduct to Jurisdictional Sellers,” and paragraphs 14–22 discuss

the scope of FERC’s jurisdiction over the natural gas industry.

 

15 The EPA provides, in relevant part:

It shall be unlawful for any entity, directly or indirectly,

to use or employ, in connection with the purchase or

sale of natural gas or the purchase or sale of

transportation services subject to the jurisdiction of the
IN RE: WESTERN STATES ANTITRUST LITIG. 37

authorizes FERC to promulgate rules and regulations to

protect natural gas ratepayers. There is a canon of statutory

interpretation that counsels against reading acts of Congress

to be superfluous. See American Nat’l Red Cross v. S.G.,

505 U.S. 247, 263 (1992). This canon suggests that Congress

enacted the relevant provision of the EPA because FERC did

not alreadyhave regulatoryauthorityover the anticompetitive

conduct at issue.

The second flaw in Defendants’ argument is more

relevant to our jurisdictional analysis. Even if FERC did

have the statutory authority to promulgate the 2003 Code of

Conduct and to make it applicable to “first sales” and other

nonjurisdictional sales, a close reading of the Code reveals

that FERC limited the application of the Code to sales within

its jurisdiction. FERC acknowledged that because of acts

deregulating first sales of natural gas, such sales were outside

the scope of FERC’s jurisdiction. Amendments to Blanket

Sales Certificates, 68 Fed. Reg. 66,323 ¶ 14 (Nov. 26, 2003). 

FERC further noted that some commenters had raised

“concerns regarding the potential adverse effect of imposing

the proposed code of conduct only on the portion of the

natural gas market under the Commission’s jurisdiction,” id. 

¶ 16, and responded by stating, “The fact that the

Commission does not regulate the entire natural gas market

does not compel the Commission to refrain from exercising

its authority over that portion of the gas market which is

Commission, any manipulative or deceptive device or

contrivance. . . . in contravention of such rules and

regulations as the Commission may prescribe as

necessary in the public interest or for the protection of

natural gas ratepayers.

Pub. L. No. 109-58 tit. III, § 315 (codified at 15 U.S.C. § 717c-1).
38 IN RE: WESTERN STATES ANTITRUST LITIG.

within its jurisdiction to prevent the manipulation of prices.” 

Id. ¶ 21. The discussion of jurisdictional limitations within

the Code of Conduct itself suggests that the Code does not

support the Defendants’ argument that FERC had jurisdiction

over the anticompetitive behavior related to nonjurisdictional

sales. For these reasons, the 2003 enactment of the Code of

Conduct does not affect our conclusion that the NGA does

not grant FERC jurisdiction over claims arising out of false

price reporting and other anticompetitive behavior associated

with nonjurisdictional sales.

IV. The District Court’s Orders Denying Plaintiffs

Leave to Amend

The Farmland, Breckenridge, Learjet, and Heartland

Plaintiffs appeal the district court’s October 29, 2010, order

denying them leave to amend their complaints to add federal

antitrust claims. Their motions for leave to amend their

complaints were filed nine months after the March 2, 2009,

scheduling deadline to amend pleadings. The Breckenridge

Plaintiffs also appeal the district court’s April 21, 2008, order

denying them leave to amend their complaint to add a state

law treble damages remedy.

We review a district court’s decision denying leave to

amend pleadings for abuse of discretion. See Johnson v.

Mammoth Recreations, Inc., 975 F.2d 604, 607 (9th Cir.

1992). We hold that in the present case, the district court did

not abuse its discretion in denying either of the two motions

for leave to amend complaints, and therefore affirm both the

October 29, 2010, order denying the Farmland, Breckenridge,

Learjet, and Heartland Plaintiffs leave to amend their

complaints to add federal antitrust claims, as well as the April

21, 2008, order denying the Breckenridge Plaintiffs leave to
IN RE: WESTERN STATES ANTITRUST LITIG. 39

amend their complaint to add a state law treble damages

claim.

A. October 29, 2010, Order

We summarize briefly the procedural history of this case

to provide context for our decision to affirm the district

court’s October 29, 2010, order.

On April 8, 2005, the district court granted summary

judgment to the defendants in the Texas-Ohio and Abelman

cases on the ground that the plaintiffs’ claims in those cases

were barred by the filed-rate doctrine. See In re Western

States Wholesale Natural Gas Antitrust Litig., 368 F. Supp.

2d 1110 (D. Nev. 2005), rev’d by 243 Fed. App’x 328 (9th

Cir. 2007) and In re Western States Wholesale Natural Gas

Antitrust Litig., 408 F. Supp. 2d 1055 (D. Nev. 2005), rev’d

by 248 Fed. App’x 821 (9th Cir. 2007). Four months later,

the first of these present actions was filed. In September

2007, this court issued its decision in Gallo and

simultaneously reversed Texas-Ohio and Abelman, holding

that the filed-rate doctrine does not bar state or federal

antitrust claims arising out of the allegations that energy

traders manipulated the price index. See E. & J. Gallo

Winery v. Encana Corp., 503 F.3d 1027 (9th Cir. 2007); In

re Western States Wholesale Natural Gas Antitrust Litig.,

243 Fed. App’x 328 (9th Cir. 2007) (reversing Texas-Ohio);

In re Western States Wholesale Natural Gas Antitrust Litig.,

248 Fed. App’x 821 (9th Cir. 2007) (reversing Abelman). In

November 2007, Defendants in the present case filed a new

motion for summary judgment, and in May 2008, the District

Court denied the motion, relying in part on Gallo. In July

2008, Defendants asked the District Court to reconsider its

May 2008 order denying their preemption-based motion for
40 IN RE: WESTERN STATES ANTITRUST LITIG.

summary judgment. Finally, in November 2009 the District

Court agreed to reconsider its May 2008 order.

The deadline to amend pleadings in this case was March

2, 2009. On December 15, 2009 (approximately one month

after the District Court agreed to reconsider its May 2008

order denying summary judgment), Plaintiffs filed motions to

modify the scheduling order and for leave to amend their

complaints to add claims under the federal Sherman Antitrust

Act.

The district court denied the Plaintiffs’ motions to amend

their pleadings, noting that when a party seeks to amend a

pleading after the pretrial scheduling order’s deadline for

amending the pleadings has expired, the moving party must

satisfy the “good cause” standard of Federal Rule of Civil

Procedure 16(b)(4), which provides that “[a]schedule may be

modified only for good cause and with the judge’s consent,” 

rather than the liberal standard of Federal Rule of Civil

Procedure 15(a).16“Unlike Rule 15(a)’s liberal amendment

policy which focuses on the bad faith of the party seeking to

interpose an amendment and the prejudice to the opposing

party, Rule 16(b)’s ‘good cause’ standard primarily considers

the diligence of the party seeking the amendment.” Johnson,

975 F.2d at 609. While a court may take into account any

prejudice to the party opposing modification of the

scheduling order, “the focus of the [Rule 16(b)] inquiry is

16 Fed. R. Civ. P. 15(a) provides that a party may amend its pleadings

once as a matter of course within certain deadlines, and that in “all other

cases, a party may amend its pleading only with the opposing party’s

written consent or the court’s leave. The court should freely give leave

when justice so requires.” (emphasis added).
IN RE: WESTERN STATES ANTITRUST LITIG. 41

upon the moving party’s reasons for seeking modification . . .

[i]f that party was not diligent, the inquiry should end.” Id.

The district court in the present case noted, “The good

cause standard typically will not be met where the party

seeking to modify the scheduling order has been aware of the

facts and theories supporting amendment since the inception

of the action.” The district court found that Plaintiffs were

not diligent in seeking the amendment to add federal Sherman

Antitrust Act claims, because they had known since 2007

(after this court held in Gallo that federal antitrust claims

were not barred by the filed-rate doctrine) that federal

antitrust claims may be viable.

We hold that the district court did not abuse its discretion

in concluding that the Plaintiffs were not diligent in seeking

to amend their complaints to add federal antitrust claims. Our

analysis is guided by this court’s decision in Johnson v.

Mammoth Recreations, Inc., 975 F.2d 604 (9th Cir. 1992). In

Johnson, Dairl Johnson was injured while skiing at Mammoth

Mountain ski resort. Id. at 606. He filed a diversity action

against the ski lift manufacturer and Mammoth Recreations,

Inc., a holding company that owned a majority of the stock in

Mammoth Mountain Ski Area, Inc., the entity that actually

owned and operated the ski resort. Id. The district court filed

a scheduling order which established a cut-off date of

October 17, 1989, for joining additional parties. Id. Four

months after this deadline passed, Johnson moved to join

Mammoth Mountain Ski Area, Inc., claiming that he was

unaware of the existence of Mammoth Mountain Ski Area,

Inc., and its corporate relationship with Mammoth

Recreations, Inc. Id. at 607. The court found that Johnson

had failed to demonstrate good cause for his belated motion

to amend, since “Mammoth Recreation’s answer to the
42 IN RE: WESTERN STATES ANTITRUST LITIG.

complaint and response to interrogatories amply indicated

that Mammoth Recreations did not own and operate the ski

resort, and thus any theory of liability predicated upon that

fact would fail.” Id. at 609. As in Johnson, the Plaintiffs

here have failed to demonstrate good cause for their untimely

motion to amend, and thus, the district court did not abuse its

discretion in denying that motion. We therefore affirm the

district court’s October 29, 2010, order denying Plaintiffs

leave to amend their complaints to add federal antitrust

claims.

B. April 21, 2008, Order

On March 4, 2008, the Heartland Plaintiffs filed a motion

for leave to amend their complaint to add a treble damages

claim under the Colorado state antitrust statute. Previously,

their complaint had sought only a full refund. The district

court denied the motion, stating, “Plaintiffs have been aware

of the availability of an actual damages claim under the

Colorado antitrust statutes since the inception of the case, but

chose to plead under the full refund provision only.” The

district court found that Plaintiffs’ failure to seek leave to add

an actual damages claim was explicable during the time

between the district court’s 2005 ruling in Texas-Ohio and

Abelman that such claims were barred by the filed-rate

doctrine and this court’s decision in Gallo holding that such

claims were not barred. However, this court decided Gallo in

September 2007, and Plaintiffs did not move to amend their

complaint to add an actual damages claim until March 4,

2008.

The district court considered it relevant that Plaintiffs had

requested leave to amend to add an additional defendant on

October 12, 2007, but did not make a request to add the treble
IN RE: WESTERN STATES ANTITRUST LITIG. 43

damages claim at that time. The court denied the Plaintiffs’

March 4, 2008, motion for leave to amend to add a treble

damages claims, finding that Plaintiffs unduly delayed

amendment by waiting “until after this Court granted

summary judgment on the full consideration claim, several

months after Gallo, to seek leave to amend to add a new

theory of liability of which Plaintiffs have been aware since

the inception of this suit.”

Although Federal Rule of Civil Procedure 15(a) provides

that leave to amend “shall be freely given when justice so

requires,” it “is not to be granted automatically.” Jackson v.

Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990). This

court considers the following five factors to assess whether to

grant leave to amend: “(1) bad faith, (2) undue delay,

(3) prejudice to the opposing party, (4) futility of amendment;

and (5) whether plaintiff has previously amended his

complaint.” Allen v. City of Beverly Hills, 911 F.2d 367, 373

(9th Cir. 1990).

The district court in the present case relied heavily on the

fifth factor. It noted that a “district court’s discretion

[whether to grant leave to amend] is ‘particularly broad’ in

deciding subsequent motions to amend where the court

previously granted leave to amend.” This court’s decision in

Royal Insurance Company of America v. Southwest Marine,

194 F.3d 1009 (9th Cir. 1999) is instructive. Royal Insurance

Company sued Southwest for breach of contract, breach of

warranty, and negligence after Southwest allegedly caused

$900,000 of damage to a boat insured by Royal Insurance. 

Id. at 1013. Royal Insurance amended its complaint twice –

once to correct minor deficiencies in the original complaint,

and once to assert additional claims against Southwest. Id. at

1013 n.1. However, the district court denied Royal
44 IN RE: WESTERN STATES ANTITRUST LITIG.

Insurance’s motion for leave to file a third amended

complaint to assert further claims against Southwest, which

Royal filed after the district court granted summary judgment

in favor of Southwest. Id. at 1013.

On appeal, this court stated, “Late amendments to assert

new theories are not reviewed favorably when the facts and

the theory have been known to the party seeking amendment

since the inception of the cause of action.” Id. at 1016–17

(internal quotation marks omitted). We relied on the fact that

Royal Insurance had knowledge of the relevant facts from the

inception of the lawsuit, and also the fact that Royal had

twice before amended its complaint, to hold that the district

court did not abuse its discretion by denying Royal’s motion

for leave to file a third amended complaint. Id. at 1017

(“Considering that Royal had twice before amended its

complaint and moved to amend a third time only after the

district court dismissed its claims on summary judgment, the

district court did not abuse its discretion by denying Royal’s

motion to amend.”).

In the present case, we find that the district court did not

abuse its discretion in denying the Heartland Plaintiffs’

motion for leave to amend to add a treble damages state law

claim. We therefore affirm the district court’s order denying

that motion.
IN RE: WESTERN STATES ANTITRUST LITIG. 45

V. Dismissal of the AEP Defendants from the Arandell

and Heartland Lawsuits

The district court entered separate orders dismissing the

AEP Defendants17from the Arandell suit filed in Wisconsin

state court and dismissing the AEP Defendants from the

Heartland suit filed in Missouri state court prompted by the

AEP Defendants’ motions to dismiss for lack of personal

jurisdiction pursuant to Federal Rule of Civil Procedure

12(b)(2). This court reviews de novo a district court’s

determination that it does not have personal jurisdiction over

a defendant. See Schwarzenegger v. Fred Martin Motor Co.,

374 F.3d 797, 800 (9th Cir. 2004).

A. Facts

The operative facts alleged in each case are substantially

similar. The Arandell Plaintiffs filed a class action in

Wisconsin pursuant to the Wisconsin Antitrust Act,

Wisconsin Statutes ch. 133, brought by and on behalf of a

class consisting of all Wisconsin industrial and commercial

purchasers of natural gas for consumption in Wisconsin

between January 1, 2000 and October 21, 2002. Their

complaint alleged that during the relevant time period, the

Defendants conspired to restrain trade or commerce relating

to natural gas.

The Heartland Plaintiffs filed a class action in Missouri

pursuant to the Missouri Antitrust Laws, Missouri Statutes

§ 416.010 et seq., brought by and on behalf of a class

consisting of all Missouri industrial and commercial

17 The “AEP Defendants” are American Electric Power Company

(“AEP”) and its subsidiary, AEP Energy Services, Inc (“AEPES”).
46 IN RE: WESTERN STATES ANTITRUST LITIG.

purchasers of natural gas for consumption in Missouri

between January 1, 2000 and October 21, 2002. Their

complaint alleged that during the relevant time period, the

Defendants conspired to restrain trade or commerce relating

to natural gas.

None of the following basic facts about AEP’s corporate

structure are in dispute. AEP is a New York corporation with

its principal place of business in Columbus, Ohio. During the

relevant time period in each case, AEP wholly owned and

controlled its subsidiary, AEP Energy Services, Inc.

(AEPES), an Ohio corporation with a principal place of

business in Columbus, Ohio. AEP is a holding company that

derives its income from dividends on its subsidiaries’ stocks;

the AEP Defendants have no office, bank accounts, property,

or employees in either Wisconsin or Missouri; the AEP

Defendants have not qualified to do business in either

Wisconsin or Missouri and have not appointed a registered

agent for service of process in either of those states; the AEP

Defendants have not paid taxes, manufactured products, or

performed services in either Wisconsin or Missouri; and the

AEP Defendants have not directed advertising specifically at

Wisconsin or Missouri residents.

In the Arandell case, the Plaintiffs claim specific personal

jurisdiction18over the AEP Defendants because their actions

pursuant to the alleged conspiracy “were intended to have,

and did have, a direct, substantial, and reasonably foreseeable

effect on commerce in Wisconsin during the Relevant Time

Period.” Plaintiffs alleged that personal jurisdiction existed

over AEP based on the activities of its corporate affiliates,

18 The Arandell Plaintiffs do not argue that the district court could

exercise general personal jurisdiction over AEP or AEPES.
IN RE: WESTERN STATES ANTITRUST LITIG. 47

namely AEPES, which entered into a long-term “natural gas

supply agreement with Wisconsin Electric Power Company

during the Relevant Time Period, and sold natural gas to

Wisconsin Electric Power Company pursuant to that

agreement.”

The district court found that from 1998–2003, AEPES

entered into natural gas supply agreements with various

Wisconsin companies, and that trade confirmations evince

numerous sales made to companies with Wisconsin addresses

throughout 2001–2003. AEP acted as a guarantor for AEPES

during the relevant time period to facilitate AEPES’s

business, including issuing guarantees on AEPES’s behalf to

several Wisconsin-based entities. However, AEPES has

never entered into a contract or delivered gas to any of the

named plaintiffs in the case.

The Heartland case presents substantially similar facts. 

The Heartland Plaintiffs claim specific personal jurisdiction19

over the AEP Defendants because their actions pursuant to

the alleged conspiracy “were intended to have, and did have,

a direct, substantial, and reasonably foreseeable effect on

commerce in Missouri during the Relevant Time Period.” 

Plaintiffs allege that personal jurisdiction existed over AEP

based on the activities of its corporate affiliates, namely

AEPES, which sold natural gas to Missouri entities during the

relevant time period. The Plaintiffs also allege that one of the

primary Missouri entities that AEP traded with, Aquila

Merchant Services, was “an active member of the conspiracy

to manipulate natural gas prices.”

19 The Heartland Plaintiffs do not argue that the district court could

exercise general personal jurisdiction over AEP or AEPES.
48 IN RE: WESTERN STATES ANTITRUST LITIG.

The district court found that from 1997–2001, AEPES

entered into natural gas supply agreements with various

Missouri companies. From 2000–2002, AEPES sold billions

of dollars worth of natural gas to Missouri-based entities.

AEP acted as a guarantor for AEPES during the relevant time

period to facilitate AEP EnergyServices’s business, including

issuing guarantees on AEPES’s behalf to several Missouribased entities. However, AEPES has never entered into a

contract with either of the named Plaintiffs in this case.

B. Analysis

When a defendant moves to dismiss for lack of personal

jurisdiction, the plaintiff bears the burden of demonstrating

that the court has jurisdiction. Harris Rutsky & Co. Ins.

Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1128–29

(9th Cir. 2003). However, the plaintiff must make “only a

prima facie showing of jurisdictional facts to withstand the

motion to dismiss.” Doe v. Unocal Corp., 248 F.3d 915, 922

(9th Cir. 2001). For the purposes of deciding whether a

prima facie showing has been made, “the court resolves all

disputed facts in favor of the plaintiff.” Pebble Beach Co. v.

Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006).

Personal jurisdiction over a nonresident defendant is

proper if permitted by a state’s long-arm statute20and if the

20 The Wisconsin Supreme Court has held that Wisconsin’s long-arm

statute, Wis. Stat. § 801.05, allows for the exercise of jurisdiction to the

full extent allowed by the due process clause. See Rasmussen v. General

Motors Corp., 803 N.W.2d 623, 630 (Wis. 2011) (stating that “§ 801.05

was intended to provide for the exercise of jurisdiction over nonresident

defendants to the full extent consistent with the requisites of due process

of law”) (internal citations omitted). The “jurisdictional inquiries under

state law and federal due process merge into one analysis” when, as here,
IN RE: WESTERN STATES ANTITRUST LITIG. 49

exercise of that jurisdiction does not violate federal due

process. Fireman’s Fund Ins. Co. v. Nat’l Bank of Coops.,

103 F.3d 888, 893 (9th Cir. 1996). For the exercise of

jurisdiction to satisfy due process, a nonresident defendant, if

not present in the forum, must have “minimum contacts” with

the forum such that the assertion of jurisdiction “does not

offend traditional notions of fair play and substantial justice.” 

Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)

(internal quotation marks omitted). A federal district court

may exercise either general or specific personal jurisdiction. 

See Helicopteros Nacionales de Colombia, S.A. v. Hall,

466 U.S. 408, 414–15 (1984). To establish general

jurisdiction, the plaintiff must demonstrate that the defendant

has sufficient contacts to “constitute the kind of continuous

and systematic general business contacts that approximate

physical presence.” Glencore Grain Rotterdam B.V. v.

Shivnath Rai Harnarain Co., 284 F.3d 1114, 1124 (9th Cir.

2002) (internal quotation marks omitted). However, because

the Plaintiffs do not claim that the district court could

exercise general jurisdiction in either Wisconsin or Missouri

over the AEP Defendants in this case, the only relevant

question on appeal is whether the district court could exercise

specific personal jurisdiction over the AEP Defendants.

the state’s long-arm statute is “coextensive with federal due process

requirements.” Roth v. Garcia Marquez, 942 F.2d 617, 620 (9th Cir.

1991). In Missouri, however, the Missouri Supreme Court has held that

there are two separate inquiries: “one inquiry to establish if a defendant’s

conduct was covered by the long-arm statute, and a second inquiry to

analyze whether the exercise of jurisdiction comports with due process

requirements.” Myers v. Casino Queen, Inc., 689 F.3d 904, 909 (8th Cir.

2012) (citing Bryant v. Smith Interior Design Grp., Inc., 310 S.W.3d 227,

231 (Mo. 2010)).
50 IN RE: WESTERN STATES ANTITRUST LITIG.

This court uses the following three-part test to analyze

whether a party’s “minimum contacts” meet the due process

standard for the exercise of specific personal jurisdiction:

(1) The non-resident defendant must

purposefully direct his activities or

consummate some transaction with the forum

or resident thereof; or perform some act by

which he purposefully avails himself of the

privilege of conducting activities in the forum,

thereby invoking the benefits and protections

of its laws; (2) the claim must be one which

arises out of or relates to the defendant's

forum-related activities; and (3) the exercise

of jurisdiction must comport with fair play

and substantial justice, i.e. it must be

reasonable

Schwarzenegger, 374 F.3d at 802. “If any of the three

requirements is not satisfied, jurisdiction in the forum would

deprive the defendant of due process of law.” Omeluk v.

Langsten Slip & Batbyggeri A/S, 52 F.3d 267, 270 (9th Cir.

1995). While all three requirements must be met, this court

has stated that in its consideration of the first two prongs, “[a]

strong showing on one axis will permit a lesser showing on

the other.” Yahoo! Inc. v. La Ligue Contre Le Racisme Et

L’Antisemitisme, 433 F.3d 1199, 1210 (9th Cir. 2006) (en

banc). That means that a single forum state contact can

support jurisdiction if the cause of action arises out of that

particular purposeful contact of the defendant with the forum

state. Id. (citing Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir.

1987)). The district court in the Arandell and Heartland

cases focused its analysis on the allegations that AEPES

made sales to Wisconsin- and Missouri-based entities and
IN RE: WESTERN STATES ANTITRUST LITIG. 51

found that the Plaintiffs had not met their burden of proving

the second requirement for specific jurisdiction.21 This court

has referred to the second prong of the specific jurisdiction

test as a “but for” test. See Shute v. Carnival Cruise Lines,

897 F.2d 377, 385 (9th Cir. 1988), rev’d on other grounds,

Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991).22

Under the “but for” test, “a lawsuit arises out of a defendant’s

contacts with the forum state if a direct nexus exists between

those contacts and the cause of action.” Fireman’s Fund Ins.

Co., 103 F.3d at 894. The district court found that there was

no causal nexus between AEP Defendants’ activities in the

forum states (selling natural gas to non-Plaintiff third parties)

and the harm allegedly suffered by the Plaintiffs (buying gas

at inflated prices from third party sellers).

We need not decide whether personal jurisdiction could

be grounded on the AEP Defendants’ sales of natural gas in

the forum states to third parties. The Arandell and Heartland

Plaintiffs also predicated their antitrust claims on the AEP

Defendants’ manipulation of the price indices pursuant to a

conspiracy to inflate natural gas prices. The district court

conducted the personal jurisdiction analysis based on the

21 The district court assumed, without expressly deciding, that AEPES’s

sales to Wisconsin- and Missouri-based entities and delivery of natural gas

to the forum were sufficient to satisfy the “purposeful availment” prong

of the specific jurisdiction inquiry. Because it found that Plaintiffs failed

to show that their claims arose out of AEPES’s contacts with Wisconsin

and Missouri, it did not address the third prong of the specific jurisdiction

inquiry (whether the exercise of jurisdiction would be reasonable).

22

See Doe v. American Nat’l Red Cross, 112 F.3d 1048, 1051 n.7 (9th

Cir. 1997) (noting that even after the Supreme Court’s decision in Shute,

“the ‘but for’ test is still employed in determining whether a plaintiff’s

injuries arose out of the defendant’s forum-related activities.”).
52 IN RE: WESTERN STATES ANTITRUST LITIG.

natural gas sales only. We find that the district court erred in

failing to analyze whether Plaintiffs’ allegations of

anticompetitive behavior directed at the forum states are

sufficient to support the exercise of specific personal

jurisdiction.

There is no question that the Plaintiffs’ state antitrust

claims arise out of the AEP Defendants’ collusive

manipulation of the gas price indices.23

In other words, their

claims “arise[] out of or relate[] to” the Defendants’ alleged

forum-related activities. Schwarzenegger, 374 F.3d at 802. 

The second prong of the test for specific personal jurisdiction

is therefore satisfied. The key issue in this analysis is

therefore whether the AEP Defendants’ price manipulation

satisfies the first prong of the specific personal jurisdiction

inquiry, i.e., whether “[t]he non-resident defendant . . .

purposefully direct[ed] his activities or consummat[ed]some

transaction with the forum or resident thereof; or perform[ed]

some act by which he purposefully avail[ed] himself of the

privilege of conducting activities in the forum, thereby

invoking the benefits and protections of its laws.” Id. This

first prong is satisfied by showing either purposeful availment

or purposeful direction, which are two distinct concepts. See

Washington Shoe Co. v. A-Z Sporting Goods, Inc., 704 F.3d

668, 672 (9th Cir. 2012).

23 For example, the Arandell Plaintiffs allege, “The actions of the

defendants resulted in the plaintiffs paying inflated prices for natural gas

during the Relevant Time Period. During the Relevant Time Period,

natural gas prices in Wisconsin more than doubled. The plaintiffs paid

higher prices for natural gas than they otherwise would have paid if the

defendants’ conspiracy had not existed.”
IN RE: WESTERN STATES ANTITRUST LITIG. 53

“Purposeful direction” requires that the defendant

allegedly must have “(1) committed an intentional act,

(2) expressly aimed at the forum state, (3) causing harm that

the defendant knows is likely to be suffered in the forum

state.” Washington Shoe, 704 F.3d at 673 (quoting Mavrix

Photo, Inc. v. Brand Techs, Inc., 647 F.3d 1218, 1228 (9th

Cir. 2011)). This test for “purposeful direction” is based on

the Supreme Court’s test in Calder v. Jones, 465 U.S. 783

(1984).24

The facts alleged in these causes of action present a

compelling case for finding that the AEP Defendants

“purposefully directed” their anticompetitive behavior at the

forum states. The first two prongs of the “purposeful

direction” test ask whether there was an “intentional act”25

24 The plaintiff in Calder was an entertainer who lived and worked in

California. 465 U.S. at 785. She brought suit in California state court

against the National Enquirer after the tabloid published a story alleging

that the plaintiff had an alcohol problem. Id. at 784, 788 n.9. The article

was written in Florida, and the National Enquirer was published in Florida

with a large circulation in California. Id. at 785. The California courts

“concluded that a valid basis for jurisdiction existed on the theory that [the

defendants] intended to, and did, cause tortious injury to [the plaintiff] in

California.” Id. at 787. The Supreme Court affirmed, holding that

jurisdiction in California was proper because the defendants’ intentional

conduct in Florida was calculated to cause injury to the plaintiff in

California. Id. at 791.

25 This court has recently defined “intentional act” as “an external

manifestation of the actor’s intent to perform an actual, physical act in the

real world, not including any of its actual or intended results.” 

Washington Shoe, 704 F.3d at 674.
54 IN RE: WESTERN STATES ANTITRUST LITIG.

that was “expressly aimed at the forum state.”26 Here, the

pleadings contain allegations of “intentional acts” in the form

of anticompetitive behavior expressly aimed at the forum

states. The Wisconsin Arandell Plaintiffs alleged, for

example, that AEP “either directly or indirectly through one

of its controlled affiliates, engaged in the practice of wash

sales, and manipulated market indices through the reporting

of false trading information,” actions which were “intended

to have, and did have, a direct, substantial and reasonably

foreseeable effect on commerce in Wisconsin.” By alleging

acts “intended to have” an effect in Wisconsin, the Plaintiffs

went beyond alleging acts with a “mere foreseeable effect” in

the forum. See Pebble Beach, 453 F.3d 1156 (citing Bancroft

& Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1087

(9th Cir. 2000)). They alleged intentional acts by the AEP

Defendants that were “directed at the forum state” itself. Id.

at 1158.

The Arandell Plaintiffs further alleged that AEP’s officers

or directors made agreements “which tended to advance or

control the market prices of natural gas that its affiliates sold

in the United States or in Wisconsin” and that these officers

or directors made “strategicmarketing policies and decisions”

to report prices to natural gas price indices “that affected the

market prices of natural gas.” The policies and decisions,

alleged the Arandell Plaintiffs, were “implemented on an

operational level by affiliates, such as [AEPES].” The

Arandell Plaintiffs also claimed that allDefendants(including

26

“We have repeatedly stated that the ‘express aiming’ requirement is

satisfied, and specific jurisdiction exists, when the defendant is alleged to

have engaged in wrongful conduct targeted at a plaintiff whom the

defendant knows to be a resident of the forum state.” Washington Shoe,

704 F.3d at 675 (internal quotation marks omitted).
IN RE: WESTERN STATES ANTITRUST LITIG. 55

the AEP Defendants) “worked together to fraudulently

increase the retail price of natural gas paid by commercial

entities in Wisconsin.” This conspiracywas allegedly carried

out through unlawful acts that were “ordered and performed

by their officers, directors, agents, employees or

representatives while actively engaged in the management,

direction, control or transaction of defendants’ business or

affairs.” For example, the Plaintiffs alleged that “American

Electric Power Company and AEP Energy Services, Inc.

traders were instructed by their superiors to adjust the prices

and volumes of trades they had made and, in some cases, to

report trades that never occurred.” The “purpose and effect”

of this was to “collusively and artificially inflate the price of

natural gas paid by commercial entities in Wisconsin.” These

alleged facts, taken as true, establish that the AEP

Defendants’ price manipulation was “expressly aimed” at

Wisconsin, because the AEP Defendants knew and intended

that the consequences of their price manipulation would be

felt in Wisconsin. Ibrahim v. Dep’t of Homeland Sec.,

538 F.3d 1250, 1258 (9th Cir. 2008).

The third prong of the “purposeful direction” test asks

whether the intentional acts caused harm that the defendant

knows is likely to be suffered in the forum state. In the

present case, the Arandell Plaintiffs further alleged that each

defendant “committed one or more acts or omissions outside

of Wisconsin, which caused an injury to person or property

within Wisconsin.” Such injury included increases in the

price of gas, which was specifically alleged in the complaint

– for example, the Plaintiffs alleged that the city gate price

for natural gas in Wisconsin nearly quadrupled in the span of

a year, while the price for commercial consumers more than

doubled. The harm was magnified by increased price

volatility, which “caused commercial entities in Wisconsin to
56 IN RE: WESTERN STATES ANTITRUST LITIG.

incur greater expenses associated with hedging natural gas

costs,” further injuring the Plaintiffs by “depriving them of

the right and ability to make risk management, resource

allocation and other financial decisions relating to natural gas,

in a full and free competitive market.”

In this case, the amount of harm in Wisconsin, and the

specificity with which it was alleged, is sufficient to satisfy

the third prong of the “purposeful direction” test. Our case

law does not require that the “brunt” of the harm be suffered

in the forum state; as long as “a jurisdictionally sufficient

amount of harm is suffered in the forum state, it does not

matter that even more harm might have been suffered in

another state.” La Ligue, 433 F.3d at 1207. For these

reasons, we find that the Arandell Plaintiffs have alleged

sufficient facts to support the exercise of specific personal

jurisdiction over the AEP Defendants on the theory that the

AEP Defendants “purposefully directed” their

anticompetitive conduct at the forum state of Wisconsin.

The district court did not address the third prong of the

personal jurisdiction inquiry, whether the exercise of

jurisdiction would “comport with fair play and substantial

justice” – in other words, whether the exercise of jurisdiction

would be reasonable. Schwarzenegger, 374 F.3d at 802. 

Once the Plaintiffs have shown that the exercise of personal

jurisdiction satisfies the first two prongs of the personal

jurisdiction test, the burden shifts to the defendant to make a

“compelling case” that the exercise of jurisdiction would be

unreasonable. Burger King Corp. v. Rudzewicz, 471 U.S.

462, 476-77 (1985). This court considers the following seven

factors in determining whether the exercise of jurisdiction

would be reasonable:
IN RE: WESTERN STATES ANTITRUST LITIG. 57

(1) the extent of the defendant’s purposeful

interjection into the forum state, (2) the

burden on the defendant in defending in the

forum, (3) the extent of the conflict with the

sovereignty of the defendant’s state, (4) the

forum state’s interest in adjudicating the

dispute, (5) the most efficient judicial

resolution of the controversy, (6) the

importance of the forum to the plaintiff’s

interest in convenient and effective relief, and

(7) the existence of an alternative forum.

Bancroft, 223 F.3d at 1088. We find that the AEP

Defendants have not made a “compelling case” based upon

any of these factors that the exercise of personal jurisdiction

in Wisconsin would be unreasonable.

For these reasons, we reverse the district court’s order

dismissing the AEP Defendants from the Wisconsin Arandell

case for lack of personal jurisdiction. The Missouri

Heartland Plaintiffs alleged similar facts as the Wisconsin

Arandell Plaintiffs, and therefore our analysis applies with

equal force to the Heartland case. We note, however, that the

Heartland Plaintiffs appeal the district court’s dismissal of

AEPES for lack of personal jurisdiction, but do not challenge

the district court’s dismissal of AEP, the parent company.

27

The Heartland Plaintiffs thus appear to have waived any

argument for personal jurisdiction over AEP and we reverse

the district court’s order in Heartland dismissing the AEP

27 The Heartland Plaintiffs’ opening brief states, “the Heartland

plaintiffs are appealing the District Court’s dismissal of one defendant –

AEP Energy Services, Inc. – from that case for lack of personal

jurisdiction.”
58 IN RE: WESTERN STATES ANTITRUST LITIG.

Defendants for lack of jurisdiction in Heartland as to AEPES

only.

VI. Order Granting Duke Energy Trading and

Marketing’s Motion for Partial Summary

Judgment

Several Plaintiffs in Arandell Corp. v. Xcel Energy, Inc.

appeal the district court’s order granting Defendant Duke

EnergyTrading and Marketing, LLC’s (“DETM”) motion for

partial summary judgment based on the district court’s

interpretation of Wisconsin Statutes § 133.14.28 This court

reviews de novo a district court’s interpretation of state law. 

See Hauk v. J.P. Morgan Chase Bank USA, 552 F.3d 1114,

1118 (9th Cir. 2009).

Several Wisconsin corporations (Arandell Corp.,

Merrick’s, Inc., Safety-Kleen Systems, Inc., and Sargento

Foods) brought suit against natural gas sellers in Wisconsin

state court, alleging two causes of action under Wisconsin

state law. Count One arose under Wisconsin Statutes

§ 133.14, which voids contracts to which an antitrust

conspirator is a party and allows recovery of payments made

pursuant to such a contract. Count Two sought treble

damages under Wisconsin Statutes § 133.18, which provides

that “any person” injured, directly or indirectly, by a violation

of the Wisconsin Antitrust Act may recover treble damages.

28 The Plaintiffs have filed a Motion to Certify Question of Wisconsin

State Law to the Wisconsin Supreme Court. Because we find that the

plain text of Wisconsin Statutes § 133.14 is clear, we do not believe that

certification is necessary as a “means to obtain authoritative answers to

unclear questions of state law,” and we therefore deny the motion. Toner

v. Lederle Labs., Div. of Amer. Cyanamid Co., 779 F.2d 1429, 1432 (9th

Cir. 1986).
IN RE: WESTERN STATES ANTITRUST LITIG. 59

All but one of the named Defendants moved to dismiss or

for summary judgment on Count One of Plaintiffs’ Amended

Complaint. They argued that the Plaintiffs lacked standing to

assert a claim against them under Wisconsin Statutes

§ 133.14 because none of the named Plaintiffs purchased

natural gas directly from any of the moving defendants. 

Wisconsin Statutes § 133.14 provides:

All contracts or agreements made by any

person while a member of any combination or

conspiracy prohibited by [§] 133.03, and

which contract or agreement is founded upon,

is the result of, grows out of or is connected

with any violation of such section, either

directly or indirectly, shall be void and no

recovery thereon or benefit therefrom may be

had by or for such person. Any payment made

upon, under or pursuant to such contract or

agreement to or for the benefit of any person

may be recovered from any person who

received or benefitted from such payment in

an action by the party making any such

payment or the heirs, personal representative

or assigns of the party.

Wis. Stat. § 133.14 (emphasis added). In interpreting a state

statute, a federal court applies the relevant state’s rules of

statutory construction. See In re Lieberman, 245 F.3d 1090,

1092 (9th Cir. 2001). In Wisconsin, to determine the

meaning of a statutory provision, courts begin with the

statute’s plain language, “taking into consideration the

context in which the provision under consideration is used,”

and furthermore, “[s]tatutory language is given its common,
60 IN RE: WESTERN STATES ANTITRUST LITIG.

ordinary, and accepted meaning.” Burbank Grease Servs.,

LLC v. Sokolowsi, 717 N.W.2d 781, 788 (Wis. 2006).

We agree with the district court’s conclusion that the

statutory text at issue is unambiguous. Section 133.03 makes

illegal every contract, combination, or conspiracy in restraint

of trade or commerce. See Wis. Stat. § 133.03(1). The first

sentence of Section 133.14 therefore provides that any

contract made by a member of an antitrust conspiracy is void,

and no conspirator who is a party to that contract may recover

or benefit therefrom. The second sentence of Section 133.14

permits the partymaking a payment “upon, under or pursuant

to such contract” to recover those payments. There is no

provision authorizing recoverybyindirect purchasers or other

non-parties to the voided contract.29

Plaintiffs argue that the Wisconsin legislature intended for

the Wisconsin Antitrust Act to be interpreted as broadly as

possible. For example, they quote Wisconsin Statutes

§ 133.01, which provides, “It is the intent of the legislature

that this chapter be interpreted in a manner which gives the

most liberal construction to achieve the aim of competition.” 

However, evidence that the legislature intended the Act to be

applied broadly cannot overcome the plain text of Section

133.14, which does not provide for recovery for indirect

purchasers or other non-parties to the contract.

29 This is in contrast to Section 133.18, which does permit indirect

purchasers to recover treble damages. See Wis. Stat. § 133.18 (providing,

in relevant part, that “any person injured, directly or indirectly, by reason

of anything prohibited buy this chapter may sue therefor and shall recover

threefold the damages sustained by the person”) (emphasis added).
IN RE: WESTERN STATES ANTITRUST LITIG. 61

After the district court held on February 19, 2008, that

“the party seeking the recovery [under Section 133.14] must

have been a party to the void contract, or at least have made

payments based on the contractual obligation set forth in the

conspirator’s contract,” Plaintiffs Sargento, Merrick’s, and

Ladish admitted that they had no direct purchase agreements

with DETM. Therefore, the district court concluded, “No

genuine issue of material fact remains that Sargento,

Merrick’s, and Ladish did not purchase natural gas directly or

through an agent from DETM,” and granted summary

judgment on Count One of Plaintiffs’ Amended Complaint as

to these three Plaintiffs. Because we agree with the district

court’s conclusion that the plain text of Wisconsin Statutes

§ 133.14 allows recovery only by plaintiffs who were direct

purchasers under the voided contract, we affirm the district

court’s order granting partial summary judgment to DETM.

VII. Conclusion

We REVERSE the district court’s order granting

summary judgment to Defendants on preemption grounds,

REVERSE in part the district court’s orders dismissing the

AEP Defendants from the Wisconsin Arandell and Missouri

Heartland suits, and AFFIRM all other orders at issue in this

appeal. We REMAND to the district court for further

proceedings consistent with this opinion.30

REVERSED IN PART, AFFIRMED IN PART, AND

REMANDED.

 

30 The parties shall bear their own costs on appeal.