In Re: Western States Wholesale Natural Gas Antitrust Litigation (MDL 1566), No. 2:2003cv01431 - Document 1960 (D. Nev. 2010)
Court Description: ORDER Granting CMS Energy Corporation, CMS Energy Resources Management Co., and Cantera Gas Company's Motion to Dismiss filed as document #10-6 in 2:09-cv-1103-PMP-PAL. Signed by Judge Philip M. Pro on 11/10/10. (Copies have been distributed pursuant to the NEF - EDS)
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In Re: Western States Wholesale Natural Gas Antitrust Litigation (MDL 1566) Doc. 1960 1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 7 8 9 10 11 12 13 *** IN RE: WESTERN STATES ) WHOLESALE NATURAL GAS ) ANTITRUST LITIGATION ) ___________________________________ ) ) ARANDELL CORP., et al., ) ) Plaintiffs, ) ) v. ) ) CMS ENERGY CORPORATION, et al., ) ) Defendants. ) ) MDL 1566 2:03-CV-01431-PMP-PAL BASE FILE 2:09-CV-01103-PMP-PAL ORDER RE: DEFENDANTS’ MOTION TO DISMISS (Doc. #10-6 in 2:09-CV01103-PMP-PAL) 14 Presently before the Court is Defendants’ Motion to Dismiss (Doc. #10-6 in 2:09- 15 16 CV-01103-PMP-PAL), filed in this Court on June 19, 2009. Plaintiffs filed an Opposition 17 (Doc. #1675) on June 29, 2009. Defendants filed a Reply (Doc. #1695) on July 13, 2009. 18 I. BACKGROUND This case is one of many in consolidated Multidistrict Litigation arising out of the 19 20 energy crisis of 2000-2001. Plaintiffs originally filed this action in the Eastern District of 21 Michigan on March 25, 2009. (Compl. [Doc. #10-2 in 2:09-CV-01103-PMP-PAL].) The 22 Judicial Panel on Multidistrict Litigation (“MDL”) entered a Transfer Order pursuant to 28 23 U.S.C. § 1407 centralizing the foregoing action in this Court for coordinated or 24 consolidated pretrial proceedings. 25 /// 26 /// Dockets.Justia.com Plaintiffs Arandell Corporation, Merrick’s Inc., Sargento Foods Inc., Ladish Co., 1 2 Inc., Carthage College, and Briggs & Stratton Corporation are Wisconsin corporations or 3 private educational institutions. (Id. at 2-3.) According to the Complaint, Defendants CMS 4 Energy Corporation (“CMS”), CMS Energy Resource Management Company (“MST”), and 5 Cantera Gas Company (“Cantera”) are Michigan corporations. (Id. at 4.) In this litigation, 6 Plaintiffs allege Defendants conspired among themselves and with others to engage in anti- 7 competitive activities with the intent to manipulate and artificially increase the price of 8 natural gas for consumers. (Id. at 9-50.) Specifically, Plaintiff alleges Defendants 9 conspired to manipulate the natural gas market by knowingly delivering false reports 10 concerning trade information to trade indices and engaging in wash trades, in violation of 11 Wisconsin Statutes chapter 133. (Id.) The Complaint asserts two causes of action. Count one arises under Wisconsin 12 13 Statutes § 133.14, which voids contracts to which an antitrust conspirator is a party and 14 allows recovery of payments made pursuant to such a contract. (Id. at 59-60.) Count two 15 seeks trebled actual damages under Wisconsin Statutes § 133.18 for Defendants’ alleged 16 antitrust violations. (Id. at 60-61.) The Complaint largely mirrors a similar Complaint filed in another MDL case, 17 18 Arandell Corp. v. Xcel Energy Inc., 2:09-CV-01019-PMP-PAL (“Arandell I”), which was 19 filed in Wisconsin. This Court previously dismissed CMS, MST, and Cantera as 20 Defendants in Arandell I for lack of personal jurisdiction in Wisconsin.1 Plaintiffs 21 thereafter filed this action in Michigan against the dismissed Defendants. 22 /// 23 /// 24 25 1 26 The Court since has reinstated Defendant MST as a defendant in Arandell I. (Order (Doc. #1946).) 2 Defendants move to dismiss, arguing that under Michigan choice-of-law rules, 1 2 Michigan’s four-year limitations period for antitrust actions2 would apply. Defendants 3 argue Plaintiffs’ claims are untimely because Plaintiffs knew or should have known of their 4 claims in 2002, when several natural gas companies admitted they provided false price 5 information to index publishers. Defendants further argue the alleged misconduct was the 6 subject of widely reported government investigations and reports in 2002 and 2003. 7 Defendants note that beginning in 2002, other plaintiffs began filing suit alleging the same 8 misconduct Plaintiffs allege in this action. Defendants contend that even under Wisconsin’s 9 longer limitations period, Plaintiffs’ claims are untimely. Further, Defendants argue that 10 Plaintiffs cannot argue fraudulent concealment because Plaintiffs knew of their claims no 11 later than when they filed Arandell I, and Plaintiffs did not file the present suit within two 12 years of that date. Plaintiffs respond that Wisconsin’s six-year limitations period for antitrust 13 14 claims3 applies. Plaintiffs also contend that even if Michigan’s limitations period applies, 15 Plaintiffs are entitled to tolling of the period because they did not discover their claims until 16 March 26, 2002, when a report was issued by the Federal Energy Regulatory Commission 17 (“FERC”), and because Michigan has statutory tolling rules which apply to Plaintiffs’ 18 Complaint. 19 II. LEGAL STANDARD In considering a motion to dismiss, “all well-pleaded allegations of material fact 20 21 are taken as true and construed in a light most favorable to the non-moving party.” Wyler 22 Summit P’ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998) (citation 23 omitted). However, the Court does not necessarily assume the truth of legal conclusions 24 25 2 Mich. Comp. Laws § 445.781(2). 26 3 Wis. Stat. § 133.18(2). 3 1 merely because they are cast in the form of factual allegations in the plaintiff’s complaint. 2 See Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994). There is a 3 strong presumption against dismissing an action for failure to state a claim. Ileto v. Glock 4 Inc., 349 F.3d 1191, 1200 (9th Cir. 2003). The issue is not whether a plaintiff ultimately 5 will prevail but whether the plaintiff is entitled to offer evidence to support its claims. 6 Mohamed v. Jeppesen Dataplan, Inc., 614 F.3d 1070, 1100 (9th Cir. 2010). A plaintiff 7 must make sufficient factual allegations to establish a plausible entitlement to relief. Bell 8 Atl. Corp. v Twombly, --- U.S. ----, 127 S. Ct. 1955, 1965 (2007). Such allegations must 9 amount to “more than labels and conclusions, [or] a formulaic recitation of the elements of 10 a cause of action.” Id. at 1964-65. “A claim may be dismissed under Rule 12(b)(6) on the 11 ground that it is barred by the applicable statute of limitations only when the running of the 12 statute is apparent on the face of the complaint.” Von Saher v. Norton Simon Museum of 13 Art at Pasadena, 592 F.3d 954, 969 (9th Cir. 2010) (quotation omitted). 14 III. DISCUSSION 15 This Court sitting in diversity applies the “forum state’s choice of law rules to 16 determine the controlling substantive law.” Fields v. Legacy Health Sys., 413 F.3d 943, 17 950 (9th Cir. 2005) (quotation omitted). Generally, Michigan applies its own law “unless a 18 rational reason to do otherwise exists.” Frydrych v. Wentland, 652 N.W.2d 483, 485 (Mich. 19 Ct. App. 2002). To determine whether a rational reason exists to apply another state’s law, 20 the Court first determines whether any foreign state has an interest in having its law applied. 21 Id. “If no state has an interest, the presumption that Michigan law will apply is not 22 overcome.” Id. However, if a foreign state does have an interest in having its law applied, 23 the Court then determines “whether Michigan’s interests mandate that Michigan law be 24 applied, despite any foreign state interest.” Id. at 485-86. 25 26 While these are Michigan’s general choice-of-law rules, Michigan statutorily has adopted a choice-of-law rule for statutes of limitations in certain situations. Parish v. B. F. 4 1 Goodrich Co., 235 N.W.2d 570, 572 (Mich. 1975) (referring to borrowing statutes, 2 including Michigan’s, as enacted “to resolve the possible conflicts of laws that may arise 3 when a plaintiff’s claim accrues outside of the forum”); Smith v. Elliard, 312 N.W.2d 161, 4 164 (Mich. Ct. App. 1981).4 Consequently, in the statute of limitations context, Michigan 5 looks to its “borrowing” statute instead of its normal choice-of-law rules. Bechtol v. 6 Mayes, 499 N.W.2d 439, 440-41 (Mich. Ct. App. 1993); Erickson v. Am. Motors Corp., 7 683 F. Supp. 644, 646 (E.D. Mich. 1987). 8 Michigan’s borrowing statute provides: 9 An action based upon a cause of action accruing without this state shall not be commenced after the expiration of the statute of limitations of either this state or the place without this state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of this state the statute of limitations of this state shall apply. 10 11 12 Mich. Comp. Laws § 600.5861. Under this statute, a “cause of action accruing in another 13 state or jurisdiction commenced in Michigan by a nonresident of this state is barred upon 14 expiration of either the applicable Michigan limitation period or the applicable limitation 15 period of the other state or jurisdiction.” Hover v. Chrysler Corp., 530 N.W.2d 96, 98 16 (Mich. Ct. App. 1994); Bechtol, 499 N.W.2d at 440. This rule applies even where the cause 17 of action at issue is a statutorily-created claim with a built-in statute of limitations. See 18 Lambert v. Calhoun, 229 N.W.2d 332, 336 (Mich. 1975). To determine whether the plaintiff’s claim is barred under either applicable 19 20 limitations period, the Court must determine where and when the action accrued. Scherer v. 21 Hellstrom, 716 N.W.2d 307, 310 (Mich. Ct. App. 2006); CMACO Auto. Sys., Inc. v. 22 Wanxiang Am. Corp., 589 F.3d 235, 243 (6th Cir. 2009) (applying Michigan law). 23 24 25 26 4 The Michigan Court of Appeals once stated that § 600.5861 “is a statute of limitations rather than a choice-of-law statute.” Pryber v. Marriott Corp., 296 N.W.2d 597, 600 (Mich. Ct. App. 1980). However, the Michigan Supreme Court has referred to it as a choice-of-law provision. Parish, 235 N.W.2d at 572. 5 1 Michigan generally holds that a cause of action accrues at the place of injury. CMACO 2 Auto. Sys., Inc., 589 F.3d at 246. A cause of action accrues “without” the state of Michigan 3 if the action “accrued without any essential facts giving rise to the cause of action occurring 4 in Michigan.” Scherer, 716 N.W.2d at 310. With respect to when a claim accrues, 5 Michigan statutorily provides that a claim accrues at the time provided in certain statutory 6 sections,5 “and in cases not covered by these sections the claim accrues at the time the 7 wrong upon which the claim is based was done regardless of the time when damage 8 results.” Mich. Compl. Laws § 600.5827. Plaintiffs are non-residents and therefore the borrowing statute applies to their 9 10 claims if the claims accrued “without” Michigan. Under Michigan accrual rules, Plaintiffs’ 11 claims accrued at the place of injury, Wisconsin, where Plaintiffs are residents and where 12 they purchased the natural gas at allegedly manipulated prices. Plaintiffs do not dispute 13 their claims accrued in Wisconsin. (Pls.’ Opp’n to Defs.’ Mot. for J. on the Pleadings (Doc. 14 #1675) at 15.) Accordingly, the Michigan borrowing statute applies.6 As a result, Plaintiffs 15 must have brought their claims within four years of accrual under Michigan’s closest 16 analogous antitrust provision.7 Mich. Compl. Laws § 445.781(2). 17 18 19 20 21 22 23 24 25 26 5 Sections 600.5829 (right to make entry on and the claim to recover land); 600.5831 (to recover the balance due upon a mutual and open account current); 600.5833 (breach of warranty of quality or fitness); 600.5834 (claim by common carriers to recover for charges arising out of interstate transportation); 600.5835 (actions on life insurance contracts); 600.5836 (claims on installment contract); 600.5837 (claims for alimony payments); 600.5838 (malpractice claims); and 600.5839 (medical malpractice claims). 6 The Court therefore expresses no opinion on what law controls the substantive claims in Plaintiffs’ Complaint, as Michigan’s borrowing statute is directed only at the statute of limitations. 7 Michigan antitrust law is different from Wisconsin antitrust law. Wisconsin law provides for a full consideration remedy, while Michigan does not. Mich. Compl. Laws § 445.778(2); Wis. Stat. § 133.14. Further, Michigan requires a higher showing for treble damages than does Wisconsin. Mich. Compl. Laws § 445.778(2); Wis. Stat. § 133.18(1)(a). However, the cause of action at issue is an antitrust price fixing conspiracy. Michigan’s antitrust statute, while not an exact parallel in terms of 6 By the Complaint’s allegations, Defendants engaged in the price manipulation 1 2 conspiracy from January 1, 2000 through October 31, 2002. Plaintiffs’ claim thus accrued 3 no later than October 31, 2002. Because Plaintiffs did not file the present action until 4 March 25, 2009, well beyond four years since their claims accrued, the claims are barred 5 unless some tolling provision applies. Under Michigan’s borrowing statute, Michigan’s tolling rules apply when the 6 7 Michigan statute of limitations applies. Hover, 530 N.W.2d at 98. Michigan used to 8 recognize the discovery rule for tolling limitations periods in certain cases. See, e.g., 9 Larson v. Johns-Manville Sales Corp., 399 N.W.2d 1, 5 (Mich. 1986) (collecting cases). 10 However, in 2007, the Michigan Supreme Court held that because the legislature had 11 enacted a comprehensive legislative scheme designating specific limitations periods and 12 specific exceptions thereto, the statutory scheme superseded the common law. Trentadue v. 13 Buckler Lawn Sprinkler, 738 N.W.2d 664, 671 (Mich. 2007). Consequently, the discovery 14 rule does not apply unless an applicable statutory section so provides.8 Id. Michigan has enacted some tolling provisions beyond the discovery rule. For 15 16 example, a statute of limitations is tolled “[a]t the time the complaint is filed, if a copy of 17 the summons and complaint are served on the defendant within the time set forth in the 18 supreme court rules.” Mich. Comp. Laws § 600.5856(a). This rule applies even where the 19 court lacked subject matter jurisdiction or personal jurisdiction over the defendant, so long 20 as the defendant timely was served with the summons and complaint. See Hoekstra v. 21 22 23 24 25 26 available remedies, is the most analogous cause of action under Michigan law. The Court therefore will apply the limitations period in § 445.778(2), rather than the limitations period for “other personal actions” as Plaintiffs argue. 8 The Michigan Supreme Court has granted leave to appeal in a separate case, Colaianni v. Stuart Frankel Dev. Corp., Inc., inviting the parties to address whether Trentadue was decided correctly. 777 N.W.2d 410 (Mich. 2010). However, the Court must apply Michigan law as it exists, and not predict possible changes in that law. Hemmings v. Tidyman’s Inc., 285 F.3d 1174, 1203 (9th Cir. 2002). 7 1 Bose, 655 N.W.2d 298, 300 (Mich. Ct. App. 2002); Ralph Shrader, Inc. v. Ecclestone 2 Chem. Co., 177 N.W.2d 241, 241-43 (Mich. Ct. App. 1970). Here, however, Plaintiffs did not file the action in Wisconsin until after the 3 4 Michigan statute of limitations already had expired. As discussed previously, Plaintiffs’ 5 claim accrued under Michigan law in October 2002. Plaintiffs thus had four years from that 6 date to file a timely action. Plaintiffs filed the action in Wisconsin December 2006, two 7 months too late to take advantage of the Michigan tolling provision. Plaintiffs do not 8 identify any other tolling provisions under Michigan law that applies to their claims. Because Plaintiffs’ claims are untimely under Michigan’s statute of limitations, 9 10 Plaintiffs’ claims are barred. The Court therefore will grant Defendants’ motion to dismiss. 11 III. 12 13 CONCLUSION IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss (Doc. #10-6 in 2:09-CV-01103-PMP-PAL) is hereby GRANTED. 14 15 DATED: November 10, 2010 16 17 18 _______________________________ PHILIP M. PRO United States District Judge 19 20 21 22 23 24 25 26 8
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