Sinclair Oil Corporation v. Oneok Energy Services Company

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS AUG 1 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

In re: WESTERN STATES WHOLESALE No. 17-16925 NATURAL GAS ANTITRUST LITIGATION, D.C. Nos. ______________________________ 2:03-cv-01431-RCJ-PAL 2:06-cv-00282-PMP-PAL SINCLAIR OIL CORPORATION,

Plaintiff-Appellant, MEMORANDUM*

v.

ONEOK ENERGY SERVICES COMPANY, L.P.,

Defendant-Appellee.

In re: WESTERN STATES WHOLESALE No. 17-16926 NATURAL GAS ANTITRUST LITIGATION, D.C. Nos. ______________________________ 2:03-cv-01431-RCJ-PAL 2:06-cv-00267-RCJ-PAL SINCLAIR OIL CORPORATION,

Plaintiff-Appellant,

EPRIME, INC. and XCEL ENERGY, INC.,

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Defendants-Appellees.

Appeals from the United States District Court for the District of Nevada Robert Clive Jones, District Judge, Presiding

Argued and Submitted July 12, 2018 San Francisco, California

Before: GRABER and HURWITZ, Circuit Judges, and LEMELLE,** District Judge.

Sinclair Oil Corporation claims in these consolidated actions that defendant

natural gas traders ePrime, Inc., Xcel Energy, Inc., and OneOK Energy Services

violated state antitrust laws by manipulating retail prices of natural gas. Concluding

that the class action settlement in In re Natural Gas Commodity Litigation, No. 03-

CV-06186-VM (S.D.N.Y. May 24, 2006) (“the NYMEX settlement”) barred

Sinclair’s claims, the district court granted summary judgment in favor of

Defendants. We have jurisdiction over Sinclair’s appeal under 28 U.S.C. § 1291 and

reverse.

1. “The interpretation of a settlement agreement, like that of a contract, is a

question of law subject to de novo review . . . .” Pekarsky v. Ariyoshi, 695 F.2d 352,

354 (9th Cir. 1982). The NYMEX litigation, in which Sinclair was a class member,

** The Honorable Ivan L.R. Lemelle, United States District Judge for the Eastern District of Louisiana, sitting by designation.

2 involved alleged price manipulation in natural gas futures and options contracts

traded on the New York Mercantile Exchange. The settlement agreement released

all claims by class members, including state-law antitrust claims,

arising from or relating in any way to trading in NYMEX Natural Gas Contracts (including purchasing, selling, or holding any NYMEX Natural Gas Contract, or taking or making delivery of physical natural gas pursuant to any NYMEX Natural Gas Contract, or any combination thereof, whether as a hedger or speculator), whether or not asserted in the Action, . . . .

The NYMEX settlement agreement does not release Sinclair’s claims in these

actions. The agreement covers only claims “arising from” or “relating” to “trading

in NYMEX Natural Gas Contracts,” which are defined in the settlement as “any

commodity futures (including any option thereon), basis, or swap contract related to

natural gas that was traded on NYMEX, or any combination thereof, that was

transacted or settled during the Class Period.” The transactions at issue in these cases

did not involve such trading; rather, they were direct retail purchases by Sinclair of

gas from Defendants. The NYMEX settlement only extends to claims involving

delivery of physical natural gas “pursuant to any NYMEX Natural Gas Contract;”

and the gas at issue in these cases was not delivered pursuant to such contracts. The

fact that the same collusive conduct that gave rise to the claims in the NYMEX case

may have also affected the prices of retail purchases (whose prices were pegged to

the NYMEX index) does not bring those retail purchases within the ambit of the

settlement.

3 2. Nor does the doctrine of claim preclusion bar Sinclair’s claims. “A

settlement can limit the scope of the preclusive effect of a dismissal with prejudice

by its terms.” United States ex rel. Barajas v. Northrop Corp., 147 F.3d 905, 911

(9th Cir. 1998). We therefore look to the terms of the settlement agreement, rather

than general principles of res judicata, to determine the preclusive effect of the

judgment in the NYMEX action. Because the settlement agreement covers only

claims arising from or relating to purchases of physical natural gas pursuant to

NYMEX Natural Gas Contracts, it does not preclude Sinclair’s claims in these cases.

See also Reorganized FLI, Inc. v. OneOK, Inc. (In re W. States Wholesale Nat. Gas

Antitr. Litig.), 725 F. App’x 560 (9th Cir. 2018) (rejecting argument that NYMEX

settlement precluded suit by retail buyers of natural gas).

REVERSED and REMANDED.1

1 Sinclair’s motions for judicial notice, Dkt. 36 (No. 17-16925) and Dkt. 35 (No. 17-16926), are GRANTED. Sinclair’s motions for summary reversal, Dkt. 33 (No. 17-16925) and Dkt. 32 (No. 17-16926), are DENIED.