Antitrust Law Daily Wrap Up, ANTITRUST—DColo: Claims Against Gas Pipeline Companies Not Barred by Res Judicata, (Dec 18, 2012)

By Jeffrey May, J.D.

The federal district court in Denver has refused to dismiss an antitrust action alleging foreclosure of competition in the exploration for and production of natural gas from Colorado's Ragged Mountain Area on res judicata grounds or for failure to seek administrative remedies (Buccaneer Energy (USA) Inc. v. Gunnison Energy Corp., December 14, 2012, Matsch, R.).

Buccaneer Energy (USA), Inc. brought the action against three companies—Gunnison Energy Corporation, SG Interests I Ltd., and SG Interests VII Ltd. These same three companies are defendants in a Department of Justice Antitrust Division enforcement action alleging anticompetitive bidding practices for mineral rights leases that is pending before the same court.

Buccaneer alleged that the defendants restrained access to the pipelines they own and control in the Ragged Mountain Area with intent to drive out competition in the production, gathering, processing, transportation, and sale of natural gas, produced from that field. Buccaneer had purchased the assets of a natural gas producing company, Riviera Drilling & Exploration Company. Riviera had sold natural gas to Gunnison, the operator of the pipeline system, co-owned by SGI. After the purchase, Gunnison allegedly made unreasonable demands for transporting gas from the Riviera leases.

The suit was not precluded by the doctrine of res judicata based on a prior action against Gunnison by Riviera, the court ruled. The dismissal with prejudice of that action was not an adjudication on the merits of the case. The dismissal was ordered after withdrawal of counsel shortly before a scheduled trial and Riviera’s inability to retain new counsel and pay the costs of litigation, according to the court. There had never been a full and fair opportunity to litigate the claims made by Riviera which had survived summary judgment.

The defendants’ argument that the claim should be dismissed for failure to seek administrative remedies also was rejected as meritless. “While the price and conditions for transportation of gas through the pipelines might be challenged administratively, the thrust of this complaint is the use of the control of that system to foreclose competition in the exploration for and production of natural gas from the Ragged Mountain Area,” the court explained.

This is Civil Action No. 12-cv-01618-RPM.

Ronald L. Wilcox (Peters Mair Wilcox) for Buccaneer Energy (USA) Inc. Timothy R. Beyer (Bryan Cave) for Gunnison Energy Corp.

Cases: Antitrust ColoradoNews