Atlantigas Corp. v. Nisource, Inc.

290 F. Supp. 2d 34, 157 Oil & Gas Rep. 1073, 2003 U.S. Dist. LEXIS 18484, 2003 WL 22387136
CourtDistrict Court, District of Columbia
DecidedOctober 10, 2003
DocketCIV.A. 02-1078(PLF)
StatusPublished
Cited by94 cases

This text of 290 F. Supp. 2d 34 (Atlantigas Corp. v. Nisource, Inc.) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Atlantigas Corp. v. Nisource, Inc., 290 F. Supp. 2d 34, 157 Oil & Gas Rep. 1073, 2003 U.S. Dist. LEXIS 18484, 2003 WL 22387136 (D.D.C. 2003).

Opinion

OPINION

PAUL L. FRIEDMAN, District Judge.

This matter is before the Court for consideration of the defendants’ motions to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Plaintiff Atlanti-gas Corp. originally filed this suit against three groups of related corporate entities and one partnership, charging violations of the Sherman and Clayton Antitrust Acts and the Racketeer Influenced and Corrupt Organizations Act (“RICO”); it also made various state tort claims. Plaintiff earlier dismissed with prejudice two of the corporate group defendants (the “PEPCO” and “Shell” defendants). As a result, four corporate defendants remain (collectively, the “Columbia Defendants”), as does Cove Point LNG LLP (“Cove Point”).

The Columbia Defendants filed motions to dismiss under Rule 12(b)(2), asserting that the amended complaint fails to allege facts sufficient to support personal jurisdiction over any of the Columbia Defendants and that no personal jurisdiction in fact exists, and under Rule 12(b)(6) for failure to state a claim. Cove Point filed its own Rule 12(b)(2) motion, joined the Columbia Defendants’ Rule 12(b)(6) motion, and made the additional claim that because the amended complaint does not seek relief or a determination of liability with respect to Cove Point, the partner *37 ship should be dismissed from the suit under Rule 12(b)(6). After briefing on these motions was complete, the Court denied plaintiffs motion for leave to file a second amended complaint based on the prejudice to the defendants that would result. See Order of March 5, 2003.

The Court heard oral argument on defendants’ Rule 12(b)(2) motions on April 8, 2003. Because plaintiff raised several new arguments at oral argument, the Court directed the parties to file supplemental briefs on the newly-raised issues. After carefully considering the briefs and supplemental briefs and the oral arguments presented by counsel, the Court granted the Rule 12(b)(2) motions to dismiss for lack of personal jurisdiction in an Order dated September 29, 2003. 1 This Opinion explains the reasons for that decision.

I. BACKGROUND

This case concerns the highly regulated natural gas storage and transportation industry, which is distinct from the industry involved in the sale of natural gas to the consumer. Among other things, plaintiff is a purchaser, marketer and shipper of natural gas on interstate pipelines. See Amended Complaint (“Amm. Cplt.”) ¶ 1. Plaintiff alleges that the defendants (two interstate pipelines and their subsidiaries and a partnership of those subsidiaries) provided illegally discounted gas supply, storage and transportation services on interstate natural gas pipelines for approximately nine interstate shippers (“Select Shippers”) in exchange for percentages of the illegal profits obtained by those Select Shippers from the eventual sale of the gas to end-users, to the detriment of plaintiff and other similarly situated competitors of the Select Shippers (the “Gas Scheme”). See id. ¶¶ 2-3.

A. Industry Background

According to the amended complaint, the storage and transportation of natural gas in the United States functions in the following way: Most of the natural gas in the United States originates in the southern Gulf states (Louisiana, Oklahoma and Texas) and is delivered from its source to local distribution companies (“LDCs”) that then transport the gas to consumers. See Amm. Cplt. ¶ 41. The capacity of the pipelines used to transport natural gas is limited and, during the peak use season, winter and its surrounding months, demand outweighs the supply available from the pipelines. To respond to this problem, the pipeline owners have built storage facilities at specific points along the pipelines in which gas is stored in the off-peak months for use during the winter. See id. ¶¶ 42-44. Pipeline companies do not ship natural gas directly to LDCs, but instead only provide storage and transportation services to other shippers that in turn market the gas to their LDC customers. See id. ¶ 47.

The Federal Energy Regulatory Commission (“FERC”) regulates the natural gas transportation and storage industry, including regulation of the process by which the agreements between pipeline owners and natural gas shippers and wholesalers (“transportation capacity agreements”) are made. See Amm. Cplt. ¶ 48. There are two types of transportation capacity agreements: “firm” agreements, under which pipeline capacity is always available to the contracting shipper at a fixed rate, and “interruptible” agreements, under which supply may be preempted by firm agreement require *38 ments. See id. Certain LDCs own most of the firm pipeline capacity available, and competing shippers must negotiate with those LDCs for the release and assignment of any surplus firm capacity rights. See id. ¶49. Plaintiff alleges that this system provides those LDCs that have firm agreements a quasi-monopoly during the peak season that allows those LDCs (1) to demand low purchase prices from natural gas suppliers, because only the LDCs with firm capacity can deliver natural gas to end-users, (2) to take accounts away from suppliers with no firm capacity rights, and (3) to render interruptible agreements useless. See id. ¶ 53. 2

FERC regulates through a tariff system most other aspects of the storage and transportation of natural gas, a system developed in response to early regulatory failures to adapt to the ever-changing non-regulated aspects of the markets. See Amm. Cplt. ¶¶ 65-80. In the 1990’s, FERC reduced its own responsibilities so it no longer micro-managed each storage and transportation agreement. It promulgated new regulations intended to “level the playing field” by requiring interstate pipeline companies to allow firm transportation customers to release or assign their excess firm capacity to other market participants only by auction to the highest bidder on an equal access basis. It further required the pipelines to execute the release and award of their own capacity on public, regulated electronic bulletin boards. See id. ¶¶ 73-80.

B. Defendants’ Allegedly Illegal Activities

1. ■ The Defendants

In the amended complaint, the Columbia Defendants are described as follows: Ni-source Inc. is the parent corporation that owns the rest of the Columbia Defendants. Columbia Gas Transmission Co. (“Columbia Gas”) and Columbia Gulf Transmission Co. (“Columbia Gulf’) are regulated interstate pipeline owners, and Columbia LNG Corp. and CLNG Corp. are a general and limited partner, respectively, in Cove Point. See Amm. Cplt. ¶¶ 25-29. Plaintiff alleges that Cove Point is a partnership comprised of several defendant entities that manages and operates shipping and storage facilities in Maryland (“Cove Point Facilities”) and an 87-mile pipeline running between Maryland and Virginia.

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290 F. Supp. 2d 34, 157 Oil & Gas Rep. 1073, 2003 U.S. Dist. LEXIS 18484, 2003 WL 22387136, Counsel Stack Legal Research, https://law.counselstack.com/opinion/atlantigas-corp-v-nisource-inc-dcd-2003.