State may see multimillion dollar lawsuits over natural gas price fixing

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The U.S. Supreme Court will let a group of businesses that bought natural gas from interstate pipelines go forward with lawsuits against companies that own those lines.

Robert Gegios, an attorney for the Wisconsin companies involved in the lawsuit, said the next step will be to get his clients’ lawsuits back into state courts.

The Wisconsin plaintiffs had originally filed three lawsuits from in-state district courts and the Western District from 2006 to 2009, alleging that interstate pipelines had violated Wisconsin antitrust laws by conspiring to double the retail prices for natural gas from 2000 to 2002. The lawsuits were moved to the federal court’s 9th Circuit and consolidated with other lawsuits from Kansas, Missouri and Colorado because of earlier-related California cases and legislation.

“We’re elated that Wisconsin is getting to protect its own interest,” Gegios said Wednesday of the court’s decision. “It means people can’t walk into state of Wisconsin and feel that they don’t have to follow the state antitrust laws.”

He said that his clients would be seeking hundreds of millions of dollars in damages. That amount, Gegios said, would be half of the total amount sought by the plaintiffs from other states that were named in the lawsuit that was before the Supreme Court. An exact figure of how much in damages the companies would get depends on whether they are awarded traditional treble damages by Wis. Stat. 133.18, which are three times the amount the pipeline companies had overcharged them plus attorney fees; or if the courts award them damages by the full consideration statute, Wis. Stat. 133.14, which would give them back money they paid for the natural gas.

The court’s decision Tuesday that federal natural gas laws do not take precedence over state anti-trust laws favored of a group of businesses operating in Wisconsin named as plaintiffs in the consolidated case: Wauwatosa-based Briggs & Stratton Corp, Kenosha-based Carthage College, Middleton-based Merrick’s Inc., Menomonee Falls-based Arandell Corp., Plymouth-based Sargento Foods Inc., Pittsburgh-based Ladish Co. Inc. and Memphis, Tenn.-based Newpage Wisconsin System Inc.

The defendants in the suit, including Minneapolis, Minn.-based Xcel Energy, argued that the Natural Gas Act pre-empted state anti-trust laws. The Federal District for the Court for the District of Nevada had ruled in the defendants’ favor, awarding them summary judgment. But the 9th Circuit reversed that decision, noting that the alleged price manipulation affected both wholesale and retail sales.

The pipeline companies then asked the Supreme Court to decide whether the Natural Gas Act trumped state antitrust laws. The court sided with the 9th Circuit 7-2 with Justice Clarence Thomas concurring, and justices Antonin Scalia and John Roberts dissenting.

“Petitioners’ arguments are forceful, but we cannot accept their conclusion,” wrote Justice Stephen Breyer in the high court’s decision. “As we have repeatedly stressed, the Natural Gas Act ‘was drawn with meticulous regard for the continued exercise of state power, not to handicap or dilute it in any way.’” Follow @erikastrebel