Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Personal jurisdiction over energy companies will not be considered by Supreme Court, (May 4, 2015)

By Jeffrey May, J.D.

After recently ruling that the doctrine of field preemption did not bar state law antitrust claims against natural gas pipelines for their purported manipulation of price indices, the U.S. Supreme Court has now refused to disturb a determination of the U.S. Court of Appeals in San Francisco, allowing the exercise of personal jurisdiction over alleged participants in the anticompetitive conduct. AEP Energy had questioned a Ninth Circuit panel's analysis to determine that specific personal jurisdiction existed over out-of-state firms for allegedly conspiring with 20 other companies to manipulate natural gas prices in violation of the state antitrust laws. Today, the Court denied the petition for certiorari (AEP Energy Services v. Heartland Regional Medical Center, Dkt. No. 14-1).

Calling the Ninth Circuit panel's standard for personal jurisdiction “misguided,” the petitioners had asked the High Court to resolve an “entrenched” split among the circuits on this issue. According to the petitioners, the Ninth Circuit panel departed from the approach taken by the vast majority of courts that jurisdiction exists only when the forum qualifies as the focal point of the conduct, with the brunt of the harm felt there. The panel did not require a showing that the forum was specially targeted or that any injury was centered there, it was argued.

Specifically, the petitioners had asked:

1. Whether due process permits a court to exercise specific personal jurisdiction over non-consenting, out-of-state defendants based on the plaintiffs' bare allegation that the defendants engaged in a nationwide conspiracy outside the forum that had an intended effect inside the forum (as well as presumably in every other state); and

2. Whether due process permits a court to exercise specific personal jurisdiction over non-consenting, out-of-state defendants when the defendants' limited forum conduct bears no causal relationship to the plaintiffs' claim.

The underlying suits were brought in Missouri and Wisconsin and later consolidated in multidistrict litigation. The district court had held that Missouri and Wisconsin lacked personal jurisdiction over AEP Energy Services and its subsidiary. On appeal, the Ninth Circuit ruled that the nexus requirement was satisfied because the claims arose out of the alleged collusive manipulation of gas price indices in which the petitioner purportedly participated.

“As applied to a nationwide conspiracy, the Ninth Circuit's rule permits each and every state to exercise jurisdiction without any requirement that a particular forum be singled out or specially targeted,” the petitioners had warned.

Just one day after the AEP Energy Services petition was filed, the Supreme Court agreed to review the Ninth Circuit's holding that the state law antitrust claims were not preempted by the Natural Gas Act. The petitioners noted that, in the event the earlier petition was granted, the later petition should be held for appropriate disposition pending resolution of that matter. If the Ninth Circuit's preemption ruling was reversed, there would be no need to consider the personal jurisdiction issued raised in this second petition. Although the Court upheld the Ninth Circuit on the issue of preemption, the Court in any event denied the petition for review.

Attorneys: Jessica L. Ellsworth (Hogan Lovells US LLP) for AEP Energy Services. Jennifer Gille Bacon (Polsinelli PC) for Missouri Respondents. Robert L. Gegios (Kohner, Mann & Kailas, S.C.) for Wisconsin Respondents.

Companies: AEP Energy Services

News: Antitrust