Opinion ID: 1373126
Heading Depth: 2
Heading Rank: 1

Heading: The O & T Agreement

Text: First, the district court concluded that CIPCO's state law claims are based on federal law because they necessarily depend on the resolution of whether the O & T Agreement was violated. We agree with the district court and the appellees that generally the O & T Agreement has the same legal force as a federal regulation because it is part of a FERC-filed tariff. See 18 C.F.R. § 35.2(b) n. 1 (defining a tariff as a compilation ... of rate schedules of a particular public utility); id. § 35.2(b) (defining a [r]ate schedule as including a statement of rates and charges for or in connection with [electric] service, and all classifications, practices, rules, regulations or contracts which in any manner affect or relate to [such] service, rates, and charges (emphasis added)); see also Bryan v. BellSouth Commc'ns, Inc., 377 F.3d 424, 429 (4th Cir.2004) ([A] filed tariff carries the force of federal law.), cert. denied, 543 U.S. 1187, 125 S.Ct. 1398, 161 L.Ed.2d 190 (2005). But we do not agree that the mere fact that the O & T Agreement is listed as a grandfathered agreement under an attachment to the MISO OATT converts every legal dispute implicating the O & T Agreement into one over which the FERC exercises exclusive jurisdiction. See In re Mirant Corp., 378 F.3d 511, 519 (5th Cir. 2004) (recognizing that the FPA preempts breach-of-contract claims that challenge FERC-filed rates, but also observing that the FPA does not provide FERC with exclusive jurisdiction over the breach of a FERC approved contract to the extent the claimed breach does not challenge the filed rate). If CIPCO must prove a violation of the O & T Agreement to recover under its state law claims, and if proving that violation challenges FERC-filed rates, then those claims would raise a federal issue. But as we explain below, CIPCO need not establish a violation of the O & T Agreement to succeed in proving its state law claims. As an initial matter, it is unclear how CIPCO could demonstrate that the appellees violated the O & T Agreement given that only CIPCO and Alliant are parties to the Agreement. [2] Even though the O & T Agreement is on file with the FERC, there is no indication in the record that Alliant assigned all of its rights and obligations under the O & T Agreement to MISO, specifically those related to Alliant's management of CIPCO's portion of the ITS, when it transferred functional control of its facilities (but not CIPCO's) as well as certain operating agreements to MISO. The appellees conceded at oral argument that MISO, RPGI, and its members are not parties to the O & T Agreement, a private contract, and MISO also clearly agreed that it is not an assignee of Alliant under the O & T Agreement. Notwithstanding their non-party status under the O & T Agreement, the appellees maintain that the O & T Agreement is relevant and central to CIPCO's state claims. (MISO's Br. at 23; RPGI's Br. at 26.) But relevance is not the operative question here, where no federal question is alleged on the face of CIPCO's state court petition. Rather, the question is whether CIPCO's state law claims necessarily depend on a showing that the O & T Agreement was violated in such a way as to implicate the FERC-filed rates. This inquiry demands precision; if the appellees' argument is correct, they should be able to point to the specific elements of CIPCO's state law claims that require proof that the O & T Agreement was violated and explain why that proof is necessary. See Grable, 545 U.S. at 315, 125 S.Ct. 2363 (concluding that [w]hether Grable was given notice within the meaning of the federal statute [was] an essential element of its quiet title claim). Illustratively, none of the appellees even discuss the elements of CIPCO's state law claims in any detail. Our review of the nature and elements of CIPCO's state law implied contract and tort claims convinces us that adjudication of those claims does not require CIPCO to prove a violation of the O & T Agreement. Any right CIPCO has to damages for breach of an implied-in-fact contract under Iowa law is independent of its express contractual right to compensation for third-party use under the O & T Agreement vis-a-vis Alliant. See Roger's Backhoe Serv., Inc. v. Nichols, 681 N.W.2d 647, 651 (Iowa 2004) (describing the showing required to make out an implied-in-fact contract claim and relying on the Restatement (Second) of Contracts § 69). And because it is clear and undisputed that none of the appellees are parties to or assignees of the O & T Agreement, a court is not required to determine whether the O & T Agreement was violated to adjudicate CIPCO's unjust-enrichment claim. State ex rel. Palmer v. Unisys Corp., 637 N.W.2d 142, 154-55 (Iowa 2001) (describing the showing required to recover under the theory of unjust enrichment). In sum, we are unconvinced that CIPCO's implied contract claims against the appellees require CIPCO to prove that the appellees violated an express contract that none of the appellees are a party to; in our view, CIPCO can succeed on its claims independent of the O & T Agreement. See Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 817 (4th Cir.2004) (en banc) ([I]f the plaintiff can support his claim with even one theory that does not call for an interpretation of federal law, his claim does not `arise under' federal law for purposes of § 1331.). Likewise, none of CIPCO's tort claims require interpretation of the O & T Agreement. See Restatement (Second) of Torts § § 158, 217 (describing the elements of a trespass-to-real-property and trespass-to-chattel claim); Nichols v. City of Evansdale, 687 N.W.2d 562, 572-73 (Iowa 2004); (applying the Restatement to an Iowa trespass claim); Condon Auto Sales & Serv., Inc. v. Crick, 604 N.W.2d 587, 593 (Iowa 1999) (describing the elements of conversion). The O & T Agreement has no bearing on whether any of the appellees wrongfully dispossessed CIPCO of its property under any of the three state law tort claims because none of the appellees were an original party to the Agreement. Further, none are assignees of Alliant, without which, they can gain no possessory interest to CIPCO's system pursuant to the O & T Agreement. Moreover, insofar as the state court may have occasion to consider the O & T Agreement in adjudicating CIPCO's state law claims, we do not think that the state court's consideration of the two-party Agreement disturbs the congressionally approved balance of federal and state judicial responsibilities, Grable, 545 U.S. at 314, 125 S.Ct. 2363; we are confident in the adjudicating state court's ability to analyze the plain language of the private contracta bread-and-butter state court issue, see Empire Healthchoice Assurance, Inc., 547 U.S. at 701, 126 S.Ct. 2121 (concluding that the respondent's fact-bound..., situation-specific, and nonstatutory state-law reimbursement claim could not be squeezed into the slim category Grable exemplifies, and noting that [t]he state court in which the personal-injury suit was lodged is competent to apply federal law). We recognize that CIPCO's state court petition makes several references to the O & T Agreementreferences that, when read in isolation, tend to support the conclusion that CIPCO itself has made its state law claims dependent on showing a violation of the O & T Agreement. But after reviewing the state court petition in its entirety, and considering the legal theories relied on by CIPCO, we think that the petition's references to the O & T Agreement are best construed as important factual background. Nowhere in the petition does CIPCO make a violation of the O & T Agreementan express contractthe legal basis for its implied-contract and tort claims. CIPCO's references to the O & T Agreement in its state court petition do not raise a federal question sufficient to establish federal jurisdiction in the federal district court.