Antitrust Law Daily Wrap Up, ANTITRUST—D. Nev.: Natural gas traders waived privilege in price fixing suit, (Jul 25, 2016)

By Greg Hammond, J.D.

In an action alleging that various traders manipulated the price of natural gas, traders’ fears of adverse legal action were too speculative to find that they involuntarily provided privileged materials to federal investigators. A magistrate judge therefore did not err in concluding that the traders waived the attorney-client and work-product privileges, according to the federal district court in Reno, and the traders’ objections to the magistrate judge’s order was denied (In re Western States Wholesale Natural Gas Antitrust Litigation, July 22, 2016, Jones, R.).

Retail buyers of natural gas claim that various traders manipulated the price of natural gas by reporting false information to price indices published by trade publications and engaging in wash sales. Several traders objected to a magistrate judge’s order denying them leave to amend their answers to plead a new theory of federal preemption, and other traders objected to the magistrate judge’s order compelling them to produce certain attorney-client privileged materials.

Answer amendments. Traders claim that the Magistrate Judge erred in refusing to permit them to amend their answers to plead field preemption of state antitrust claims. The court rejected this argument, finding that the magistrate judge did not abuse her discretion by refusing to permit the traders to plead the new theory because the traders already conceded that the Ninth Circuit had considered and rejected the upstream wholesale transaction issue that the traders now want to re-litigate, and she had already removed all field preemption defenses from their latest answer.

Privileged material. Other traders objected to the magistrate judge’s ruling that they waived the attorney-client and work-product privileges in part as to certain attorney notes previously turned over to a federal investigative task force, despite the fact that those disclosures were made in response to an investigatory process. The magistrate judge had determined that the traders had the option of moving to quash or modify the subpoena or document requests and that, by producing their attorney-client privileged materials to the government, the traders waived their attorney-client privilege for the information and materials disclosed.

This ruling, according to the court, was not clearly erroneous or contrary to the law. The traders claimed that they feared adverse legal action in the future if they did not cooperate, but this was too speculative to support a finding of involuntariness in cooperating with federal investigators. The court noted that without the threat of contempt, the mere existence of a subpoena does not render testimony or the production of documents involuntary.

Summary judgment. In a separate opinion, the court granted a retail purchaser plaintiff’s motion to clarify briefing due dates associated with traders’ motion for summary judgment.

The case is No. 2:03-cv-01431-RCJ-PAL.

Attorneys: Amy Irene Washburn (Kohner Mann & Kailas SC) and Dennis D. Palmer (Polsinelli Shughart, PC) for Arandell Corp. Donald D. Barry (Barry Law Offices, LLC) and Eric I. Unrein (Frieden, Unrein & Forbes LL) for Reorganized FLI, Inc. Joseph Duffy (Morgan Lewis & Bockius LLP) and Michael John Miguel (McKool Smith Hennigan PC) for Xcel Energy Inc. Brent Dwerlkotte and John Ryan McCambridge (Shook, Hardy & Bacon LLP) for Williams Companies, Inc. Amy Irene Washburn (Kohner Mann & Kailas SC) and Brent Cohen (Lewis Roca Rothgerber Christie LLP) for Sinclair Oil Corp. Amelia A. Fogleman (Gable & Gotwals) for OneOK Energy Services Co., LP.

Companies: Arandell Corp.; Reorganized FLI, Inc.; Xcel Energy Inc.; Williams Companies, Inc.; Sinclair Oil Corp.; OneOK Energy Services Co., LP

Cases: Antitrust NevadaNews