Trigen-Oklahoma City Energy Corp. v. Oklahoma Gas & Electric Co.

244 F.3d 1220
CourtCourt of Appeals for the Tenth Circuit
DecidedApril 3, 2001
DocketNos. 00-6047, 00-6068
StatusPublished
Cited by9 cases

This text of 244 F.3d 1220 (Trigen-Oklahoma City Energy Corp. v. Oklahoma Gas & Electric Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Trigen-Oklahoma City Energy Corp. v. Oklahoma Gas & Electric Co., 244 F.3d 1220 (10th Cir. 2001).

Opinion

Paul KELLY, Jr., Circuit Judge.

Trigen-Oklahoma Energy Corp. (“Trigen”) sued Oklahoma Gas & Electric (“OG & E”) in federal district court, alleging violations of the federal antitrust laws, Oklahoma antitrust laws, and Oklahoma tort law. A jury returned a verdict for Trigen on all counts except attempted monopolization, 15 U.S.C. § 2. The court awarded Trigen over $20 million in damages. OG & E appeals the jury’s verdict and Trigen cross-appeals the damages award. We have jurisdiction pursuant to 28 U.S.C. § 1291. Because we find that OG & E is immune from federal antitrust liability under the state action doctrine and that Trigen’s remaining claims are within the exclusive jurisdiction of the Oklahoma Corporation Commission (“OCC”), we reverse.

Background

A. The Parties

Appellant-Defendant Oklahoma Gas & Electric Co. (“OG & E”) is a regulated electric utility that serves communities in Oklahoma and Arkansas. The OCC and the Arkansas Public Service Commission regulate the rates, terms, and conditions for OG & E’s retail electricity sales. The Federal Energy Regulatory Commission regulates OG & E’s wholesale electricity sales. Aplt. Br. at 8.

Trigen, a wholly-owned subsidiary of Trigen Energy Corporation, operates urban and industrial “district heating-and-cooling systems” around the country. VI Aplt.App. at 1181-82. In 1989, Trigen entered the Oklahoma City market by acquiring district heating-and-cooling plants from another company. At its plants, Trigen produces steam and chilled water, which are then pumped from a central station through Trigen’s underground pipeline to Trigen’s customers. In order to use Trigen’s system, buildings must be accessible to Trigen’s underground pipeline. Trigen’s Oklahoma City sales are not regulated. Id. at 8-9.

OG & E and Trigen compete indirectly in Oklahoma City. OG & E attempts to persuade Trigen’s customers to purchase cooling equipment (“chillers”) from a third party and install it in the customers’ buildings. Buildings that use electric chillers consume more electricity for cooling than buildings served by Trigen. Obviously, buildings with electric chillers for cooling also do not need Trigen’s services. Id. at 9; Aplee. Br. at 3. Significantly, without a chiller, OG & E’s electricity is not a substitute for Trigen’s district-cooling system. OG & E only sells electricity — it does not manufacture or sell chillers. OG & E also has no control over its electricity prices as its rates are set by the OCC. Aplt. Br. at 10.

B. The Conduct at Issue

At trial, Trigen sought twenty years of lost profits from OG & E based on three allegedly anticompetitive incidents. First, Trigen and OG & E competed for Oklahoma County’s buildings. The County had originally signed a contract with Trigen in December 1989. However, this contract lapsed at the end of every fiscal year, as the Oklahoma Constitution prohibits political subdivisions from entering into contracts exceeding one fiscal year. I Aplt. Sep. Add. Ex. 85, ¶¶ 2-3. In 1993, the County Board became dissatisfied with Trigen’s rates and began to investigate installing on-site electric chillers. OG & E conducted a study for the County that concluded the County could save significant amounts of money by installing on-site chillers. Convinced by the study, the County Board began negotiations with Tri[1224]*1224gen, with Trigen ultimately agreeing to reduce the County’s capacity charge by about $200,000 annually. At trial, Trigen sought to regain these “lost profits” as damages from OG & E. Aplt. Br. at 17-18; Aplee. Br. at 5-7.

Second, OG & E and Trigen competed to win the contract to serve the City’s Myriad Convention Center. The City ultimately selected OG & E, after OG & E offered to include the City in the experimental Real Time Pricing (“RTP”) tariff recently approved by the OCC. Aplt. Br. at 18. Under the RTP tariff, the customer is given a schedule of hourly prices a day (or a week) in advance, and the customer may adjust its usage accordingly. Id. at 20. The OCC’s approval of the RTP program gave OG & E complete discretion to select customers. Id. An outside consulting firm, hired by OG & E, estimated (but did not guarantee) that by using RTP, the City could achieve an average rate of 1.8 cents per kilowatt-hour. Id. at 21. Trigen contends that OG & E misrepresented the RTP rate to the City. Aplee. Br. at 32-36. Again, Trigen sought lost profits as damages from OG & E.

Third and finally, OG & E and Trigen competed for the business of Corporate Tower, a non-governmental building. Trigen succeeded to the Corporate Tower contract when it entered the Oklahoma City market in 1989. Corporate Tower’s contract with Trigen had a primary term of ten years, with two five-year renewal periods. Aplt. Br. at 25; II Sep. Add. Ex. DX5A at ¶ 2. The first of these renewal periods expired in September 1995. In anticipation of that expiration, OG & E attempted to persuade Corporate Tower to install an on-site cooling system. To this end, OG & E provided information to the building manager on how to evaluate on-site cooling, offered to pay for a feasibility study, sponsored an informational breakfast meeting and an energy conference, and had its lawyers evaluate Corporate Tower’s contract with Trigen for legal termination options. Aplt. Br. at 24-26. Corporate Tower decided to terminate its relationship with Trigen at the end of the first contract-renewal period and install on-site chillers and heaters. At trial, Trigen sought to recover twenty years of lost profits from the loss of Corporate Tower’s business based on the assumption that, but for OG & E, Trigen would have received a twenty-year contract extension. See I Sep. Add. Ex. PX515.

C. The Litigation

In September 1996, Trigen filed this action in federal district court alleging monopolization and attempted monopolization in violation of § 2 of the Sherman Act, 15 U.S.C. § 2; unreasonable restraint of trade and discrimination in violation of Okla. Stat. tit. 79, §§ 1, 4; and tortious interference with contract and prospective business advantage. I ApltApp. Doc. 2 (First Am. Compl.). The trial took place in December 1998, and the jury returned a verdict for Trigen on all counts except attempted monopolization. Ill ApltApp. Doc. 23. .OG & E made three motions for judgment as a matter of law: during trial, XI ApltApp. at 3024-38, at the close of all the evidence, XII ApltApp. at 3151, and after the jury verdict, IV ApltApp. Doc. 35. The trial court denied the motions. XI ApltApp. at 3072; XII ApltApp. at 3151; V ApltApp. Doc. 47. In January 2000, the trial court trebled the damages award and entered judgment for $20,641,548 against OG & E. V ApltApp. Doc. 48.

Discussion

Trigen brought federal antitrust claims against OG & E, as well as state antitrust and tort claims.

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Bluebook (online)
244 F.3d 1220, Counsel Stack Legal Research, https://law.counselstack.com/opinion/trigen-oklahoma-city-energy-corp-v-oklahoma-gas-electric-co-ca10-2001.