SCOTT BREIDING; AMY POLLUTRO; MIKAELA ORTSTEIN-OTERO; BENJAMIN ROSE; MARGARET LEWIS; RICHARD LEWIS; ERIC LONG; PETER STEERS; BRADFORD KEITH; JOHN ODUM; DAVID LEIGHTON; DONNA CORDEIRO; JANICE ANGELILLO; ANNA MARIA FORNINO; MICHELE CASSETTA; JUDY CENNAMI, on behalf of themselves and others similarly situated, Plaintiffs, Appellants,
EVERSOURCE ENERGY, a Massachusetts voluntary association; AVANGRID, INC., a New York corporation, Defendants, Appellees. ERIK ALLEN; NICHOLAS CORREIA; JANICE BRADY; OPAL ASH; ROBERTO PRATS; MARK LEJEUNE, Plaintiffs,
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS [Hon. Denise J. Casper, U.S. District Judge]
M. Sobol, with whom Kristie A. LaSalle, Bradley Vettraino,
Steve W. Berman, Hagens Berman Sobol Shapiro LLP, David F.
Sorensen, Michael Dell'Angelo, Glen L. Abramson, and
Berger Montague PC were on brief, for appellants.
Whitney E. Street, Block & Leviton LLP, Sandeep Vaheesan,
and Open Markets Institute on brief for Open Markets
Institute as amicus curiae.
Richard P. Bress and John D. Donovan, Jr., with whom Shannen
W. Coffin, Douglas G. Green, Steptoe & Johnson LLP, Chong
S. Park, Ropes & Gray LLP, Marguerite M. Sullivan,
Allyson M. Maltas, Caroline A. Flynn, and Latham &
Watkins LLP were on brief, for appellees.
Torruella, Selya, and Kayatta, Circuit Judges.
KAYATTA, Circuit Judge.
Energy and Avangrid, Inc. ("the defendants") are
two large energy companies that purchase natural gas directly
from producers and then resell that gas to retail natural gas
consumers throughout New England. In order to transport the
natural gas that the defendants purchase from far-away
producers to their own, localized system of pipeline
infrastructure for delivery to their customers, the
defendants reserve transportation capacity along the
interstate Algonquin Gas pipeline. The plaintiffs, a putative
class of retail electricity customers in New England, allege
that the defendants strategically reserved excess capacity
along the Algonquin Gas pipeline without using or reselling
it. This conduct, they claim, unduly constrained the volume
of natural gas flowing through New England, thereby raising
wholesale natural gas prices, which in turn resulted in
higher retail electricity rates paid by New England
plaintiffs brought this lawsuit in the U.S. District Court
for the District of Massachusetts, asserting that the
defendants' conduct violated section 2 of the Sherman
Act, 15 U.S.C. § 2, and various state antitrust and
consumer-protection laws. The district court dismissed the
plaintiffs' claims as being barred by the filed-rate
doctrine and, alternatively, for lack of antitrust standing
and the plaintiffs' failure to plausibly allege a
monopolization claim under the Sherman Act. Although our
reasoning differs from that of the district court in several
respects, we agree that the filed-rate doctrine presents an
insurmountable hurdle for the plaintiffs' federal and
state-law claims. We therefore find no need to reach the
district court's alternative grounds for dismissal.
the district court disposed of the plaintiffs' claims on
a motion to dismiss for failure to state a claim,
Fed.R.Civ.P. 12(b)(6), "we take as true all well-pleaded
facts in [their] complaint, scrutinize them in the light
most hospitable to [their] theory of liability, and draw all
reasonable inferences therefrom in [their] favor."
Fothergill v. United States, 566 F.3d 248,
251 (1st Cir. 2009). In so doing, we may also consider
"facts subject to judicial notice, implications from
documents incorporated into the complaint, and concessions in
the complainant's response to the motion to
dismiss." Arturet-Vélez v. R.J. Reynolds
Tobacco Co., 429 F.3d 10, 13 n.2 (1st Cir. 2005).
first trace the regulatory contours of the relevant markets
for natural gas and electricity before turning to the details
of the plaintiffs' antitrust and unfair competition
sales comprise the first step in the chain of market
transactions that readies extracted natural gas for
consumption in the form of retail electricity. At this
initial stage, natural gas producers sell natural gas to
direct purchasers through gas futures contracts, in which the
producer agrees to sell a specific quantity of natural gas at
some fixed time in the future to the direct purchaser.
Load-distribution companies (LDCs) -- those entities that
locally distribute natural gas, primarily to retail consumers
who use the gas for heating and cooking -- have a relatively
predictable need for natural gas and, thus, often make use of
this type of contract. Consumers with more variable demand for
natural gas, such as power generators, often purchase gas on
the secondary wholesale "spot market." The spot
market for natural gas allows direct purchasers that find
themselves with rights to excess, unneeded natural gas to
resell those rights in the immediate or near future.
Federal Energy Regulatory Commission (FERC) is the agency
charged with implementing and executing the Natural Gas Act
(NGA), "a comprehensive scheme of federal regulation of
'all wholesales of natural gas in interstate
commerce.'" N. Nat. Gas Co. v. State
Corp. Comm'n, 372 U.S. 84, 91 (1963) (quoting
Phillips Petroleum Co. v. Wisconsin, 347
U.S. 672, 682 (1954)); see also 15 U.S.C. §
717c(a) (tasking FERC with ensuring that rates charged for
sales of natural gas within FERC's jurisdiction are
"just and reasonable"). Notwithstanding the
comprehensiveness of this regulatory scheme, Congress also
exempted wellhead sales from FERC's regulatory
jurisdiction. See 15 U.S.C. § 3431(a)(1)(A).
Accordingly, market forces dictate the wellhead price of
natural gas. Id. § 3431(b)(1)(A) ("[A]ny
amount paid in any first sale of natural gas shall be deemed
to be just and reasonable."). And while the NGA grants
FERC regulatory authority over "sale[s] . . . for
resale" in the spot market for natural gas, see
15 U.S.C. § 717(b), FERC has issued a "blanket
certificate of public convenience and necessity" that
allows such transactions to proceed at market rates,
see 18 C.F.R. § 284.402.
purchasers of natural gas also pay for the transmission of
natural gas from the wellhead. The Algonquin Gas pipeline
serves as the primary interstate artery through which natural
gas is transported in New England. Direct purchasers in New
England must reserve transmission capacity -- that is, the
physical space in the pipeline needed to transport the
natural gas purchased from the producer -- along the
Algonquin pipeline commensurate with their transportation
needs. FERC also has "exclusive jurisdiction over the
transportation . . . of natural gas in interstate commerce
for resale" and is charged with "determin[ing] a
'just and reasonable' rate for [its]
transportation." Schneidewind v. ANR
Pipeline Co., 485 U.S. 293, 300–01 (1988).
Pursuant to this exclusive authority, FERC requires
interstate pipeline operators like Algonquin to allow LDCs to
purchase capacity using "no-notice" contracts.
See Order No. 636, 57 Fed. Reg. 13,267 (Apr. 16,
1992). Such contracts allow LDCs to adjust capacity
reservations downward or upward (up to their daily "firm
entitlements") at any time without incurring penalties.
Id. at 13,286. Importantly, FERC regulations allow,
but do not require, LDCs to resell unneeded ...