Simon v. Keyspan Corporation
2012 U.S. App. LEXIS 19815
2d Cir.2012Background
- Simon, a retail NYC electricity consumer, sues KeySpan and Morgan Stanley alleging antitrust violations tied to KeySpan’s high-capacity bidding and Morgan Stanley’s facilitation.
- District court dismissed federal and state claims as to lack of antitrust standing and due to the filed rate doctrine; preemption of state claims was considered but not reached on merits.
- NYISO/MBR market in NYC relies on installed capacity auctions; price is set by bid stacks, with cap bids often determining market price.
- KeySpan and Astoria allegedly entered into two agreements (KeySpan Swap and Astoria Hedge) via Morgan Stanley to assure a fixed income and keep profits high, effectively subsidizing high market prices.
- DOJ settled its antitrust suit with KeySpan; FERC reported no market manipulation but acknowledged KeySpan’s cap-based behavior; the market remained under FERC oversight.
- On appeal, the Second Circuit affirms dismissal, holding lack of antitrust standing for an indirect purchaser and application of the filed rate doctrine to the market-based rate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Antitrust standing for indirect purchaser Simon | Simon argues a cost-plus-like pass-through exists. | KeySpan/Morgan Stanley contend indirect purchaser rule bars suit. | Simon lacks federal antitrust standing. |
| Filed rate doctrine applicability to market-based rates | Simon argues MBRs are not barred by the doctrine. | Court should apply doctrine to MBRs when regulator reviewed rate. | Filed rate doctrine bars claims in this MBR context. |
| Applicability of cost-plus contract exception (Kansas precedent) | ConEd passed 100% of costs to customers, suggesting cost-plus protection. | Kansas rejected broad cost-plus exception for regulated utilities. | Cost-plus exception not satisfied; does not救 stand. |
Key Cases Cited
- Illinois Brick Co. v. Illinois, 431 U.S. 720 (U.S. 1977) (direct purchaser rule for antitrust standing; indirect purchasers generally barred)
- Hanover Shoe, Inc. v. United Shoe Mach. Corp., 392 U.S. 481 (U.S. 1968) (antitrust standing rationales; pass-through concerns)
- Keogh v. Chicago & N.W. Ry. Co., 260 U.S. 156 (U.S. 1922) (origin of the filed rate doctrine; regulatory rate approval faith)
- Arkla Gas Co. v. Hall, 453 U.S. 571 (U.S. 1981) (extension of filed rate doctrine to regulated utilities)
- Kansas v. UtiliCorp United, Inc., 497 U.S. 199 (U.S. 1990) (utility cost-pass-through; limitations on standing under regulation)
- Town of Norwood, Mass. v. New Eng. Power Co., 202 F.3d 408 (1st Cir. 2000) (application of filed rate doctrine to MBRs)
- Utilimax.com, Inc. v. PPL Energy Plus, LLC, 378 F.3d 303 (3d Cir. 2004) (application of filed rate doctrine to market-based rates)
- Tex. Commercial Energy v. TXU Energy, Inc., 413 F.3d 503 (5th Cir. 2005) (MBR tariff under state regulation; filed rate doctrine)
- Pub. Util. Dist. No. 1 of Grays Harbor Cnty. Wash. v. IDACORP Inc., 379 F.3d 641 (9th Cir. 2004) (upholding applicability of filed rate doctrine to MBRs)
- Entergy Louisiana, Inc. v. La. Pub. Serv. Comm’n, 539 U.S. 39 (U.S. 2003) (FERC-rate framework and closure of wholesale rate oversight)