Antitrust Law Daily Wrap Up, ANTITRUST—S.D. Ohio: $81M settlement in energy price discrimination class action gets preliminary approval, (Oct 22, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in Columbus, Ohio has granted preliminary approval to a proposed settlement in a price discrimination class action brought by Ohio consumers against energy provider Duke Energy. Under the settlement, Duke Energy would pay nearly $81 million to resolve the claims in the case (Williams v. Duke Energy International, Inc., October 21, 2015, Sargus, E.).

Duke Energy is the largest electric power holding company in the U.S. In 2008, a group of Ohio customers filed suit against Duke and its former subsidiary, Duke Energy Retail Sales, for providing “indirect rebates” to large consumers in exchange for their withdrawal of objections to a rate-stabilization plan under review by the Public Utilities Commission of Ohio (PUCO). The complaining customers alleged that they would have had to pay substantially more for electricity than their competitors due to the rebates.

According to the plaintiffs’ motion for preliminary approval, Duke has agreed to pay $80,875,000 to resolve the case. The proposed settlement was the culmination of more than seven years of litigation and settlement occurred on the eve of trial. The plaintiffs conducted an extensive investigation of their claims, undertook significant expert and fact discovery, engaged in extensive arm’s-length negotiations, and participated in court-supervised mediation.

The settlement falls within the range of reasonableness, the order indicated. The fairness and adequacy of the settlement is underscored by consideration of the obstacles the plaintiffs would face in ultimately succeeding on the merits, as well as the expense and likely duration of the trial and potential post-trial proceedings. The proposed settlement has no obvious deficiencies, such a preferential treatment of the named plaintiffs or excessive attorney compensation.

In its order, the court also approved the proposed plan for the dissemination of notice. The hearing regarding the fairness and adequacy of the proposed settlement was set for April 18, 2016.

According to an announcement by Duke Energy, the settlement would be allocated as follows: (1) up to $25 million to Duke Energy Ohio residential customers who were customers at any time during the period beginning January 1, 2005 and ending December 31, 2008; (2) up to $25 million to Duke Energy Ohio non-residential customers, such as businesses and local governments, who were customers at any time during the period beginning January 1, 2005 and ending December 31, 2008; and (3) $8 million to fund energy-related programs to benefit Duke Energy Ohio customers who were customers at any time during the period beginning January 1, 2005 and ending December 31, 2008. The remaining funds will pay the plaintiffs’ legal fees, settlement fund distribution costs and other expenses.

The case is No. 1:08-cv-00046-EAS-NMK.

Attorneys: Paul M. DeMarco (Markovits, Stock & DeMarco, LLC) and Randolph H. Freking (Freking & Betz, LLC) for the plaintiffs.

Companies: Duke Energy International, Inc.

Cases: Antitrust OhioNews