Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Supreme Court Refuses to Consider Electricity Consumer’s Questions Regarding Filed Rate, Indirect Purchaser Doctrines, (Apr 22, 2013)

By Jeffrey May, J.D.

The U.S. Supreme Court will not review a decision of the U.S. Court of Appeals in New York City, rejecting a consumer's federal and New York antitrust claims against KeySpan Corporation—a producer of electricity in New York—and Morgan Stanley Capital Group Inc.—a financial firm that allegedly facilitated KeySpan's anticompetitive conduct. Today, the Court denied a petition for certiorari, which was filed by Charles Simon, a retail consumer of electricity (Simon v. Keyspan Corp., Dkt. 12-919).

Simon filed a putative class action, alleging that KeySpan used a swap agreement—under which it acquired a financial interest in a competitor's capacity—to manipulate New York City electricity prices. In September 2012, the appellate court affirmed dismissal, concluding that Simon lacked standing to bring his federal antitrust claims as an indirect purchaser and that the filed rate doctrine barred the consumer's state and federal claims (694 F.3d 196, 2012-2 Trade Cases ¶78,059).

Because Simon purchased electricity from a seller of retail electricity—a customer of the wholesale provider—the consumer was an indirect purchaser barred under the Illinois Brick doctrine from pursuing an antitrust action for damages stemming from a wrongful overcharge. The retail seller was the only proper plaintiff, according to the appellate court.

The appellate court went on to say that Simon's federal and state claims were barred under the filed rate doctrine because they impermissibly sought to challenge as unreasonable the filed rates the defendant offered in wholesale auctions. The challenged rate was not directly set by the Federal Energy Regulatory Commission (FERC), it did not specifically determine that the rate was reasonable, and the challenged conduct undermined the competitive market scheme FERC and the New York Independent Service Operator had created. However, the market-based rate process established by FERC was sufficiently safeguarded such that the filed rate doctrine should apply, even through the rate arrived at was not the one FERC envisioned, according to the appellate court.

Simon questioned whether the "filed rate doctrine" should protect defendants who inflate market prices that are subject to the Federal Power Act and are not pre-filed with any agency before being charged and whether an "indirect purchaser" who bore 100% of an illegal overcharge should have standing.

Companies: KeySpan Corp.; Morgan Stanley Capital Group Inc.

Attorneys: Judith L. Spanier (Abbey Spanier Rodd & Abrams, LLP) for petitioner.

News: Antitrust