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Federal Trade Commission v. Equitable Resources

May 21, 2007

FEDERAL TRADE COMMISSION, PLAINTIFF,
v.
EQUITABLE RESOURCES, INC, DOMINION RESOURCES, INC., CONSOLIDATED NATURAL GAS COMPANY, THE PEOPLES NATURAL GAS COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Arthur J. Schwab United States District Judge

ELECTRONICALLY FILED

MEMORANDUM OPINION DENYING PLAINTIFF FTC'S MOTION FOR AN INJUNCTION (DOC. NO. 73)

Introduction and Background

This Court held, on May 14, 2007, that to grant the FTC's motion for a preliminary injunction (doc. no. 3) "would cause public harm and harm to many other interested parties by substantially delaying, and for all practical purposes barring the implementation of the PUC's determination that the transaction is in the public interest." Memorandum Opinion (doc. no. 70), at 4. Said proposed injunction would have interfered with and abrogated the statutory duty of the PUC to protect the interest of the public in Pennsylvania. Id.

The FTC now comes before the Court seeking an injunction pending appeal pursuant to Fed.R.Civ.P. 62(c), which places it in the position of requesting the very relief, pending appeal, that this Court has just decided it is not entitled to receive. Although Rule 62(c) recognizes that such apparently anomalous relief may sometimes be appropriate, the party seeking such relief is, not surprisingly, deemed to bear a very heavy burden of persuasion. See Fullmer v. Michigan Dep't. of State Police, 207 F.Supp.2d 663, 664 (E.D. Mich. 2002) (because Rule 62(c) factors for equitable relief pending appeal are same factors the court considers in deciding whether to grant a preliminary injunction, an applicant seeking a stay will have more difficulty establishing the first factor, likelihood of success on the merits, due to the difference in procedural posture; a party seeking such relief must ordinarily demonstrate to a reviewing court that there is a likelihood of reversal, not merely the possibility of success on the merits); United States v. Texas, 523 F.Supp. 703, 723 (D.C.Tex.1981) (since stay of decisions granting equitable relief pending appeal interrupts ordinary process of judicial review and postpones relief for prevailing party, stay of equitable order is extraordinary device that should be sparingly granted); Wright Miller and Kane, 11 Fed. Prac. & Proc. Civ.2d § 2904 (burden of meeting the Rule 62(c) standard for stays and injunctions pending appeal is a heavy one). The FTC has not met this heavy burden in this case.

On May 14, 2007, this Court issued a Memorandum Opinion and an Order of Court (docs. no. 70, 71) dismissing Plaintiff FTC's complaint in equity and its motion for preliminary injunction on the basis of the state action immunity doctrine, holding as follows:

This Court grants the Motion to Dismiss (doc no. 18) because the PUC's approval of the transaction qualifies for state action immunity. See California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97 (1980); Parker v. Brown, 317 U.S. 341 (1943). Further, the granting of the requested preliminary injunction would cause public harm by substantially delaying, and for all practical purposes barring, the implementation of the PUC's determination (PUC Opinion and Order, dated April 13, 2007) that the transaction is in the public interest. Said proposed injunction thus would interfere and abrogate the statutory duty of the PUC to protect the interest of the public in Pennsylvania.

Memorandum Opinion (doc. no. 71), at 4

Pending before the Court is the Motion of the Federal Trade Commission for an Injunction Pending Appeal Pursuant to Fed.R.Civ.P. 62(c) or, in the Alternative, an Injunction Pending Resolution by the Court of Appeals of an Emergency Motion for an Injunction (doc. no. 73). Defendants, Equitable Resources, Inc, Dominion Resources, Inc., Consolidated Natural Gas Company, and the Peoples Natural Gas Company, have filed a response in opposition to the requested injunctive relief pending appeal (doc. no. 75). For the reasons to follow, the Court will deny the FTC's motion for an injunction pending appeal.

The Court will not recount the factual background at length, as the United States Court of Appeals for the Third Circuit will have this Court's full analysis and recitation before it in due course.*fn1 To summarize, the FTC sought preliminary injunctive relief to halt an intra-state merger-acquisition between public utilities who supply gas to residential and commercial customers in Pennsylvania, Peoples Natural Gas Company ("Peoples Gas") by defendant Equitable Resources Inc. ("Equitable Gas"). The proposed merger-acquisition had recently been approved by the Pennsylvania PUC, after substantial and extensive documentation, hearings, and fact findings by Administrative Law Judge John H. Corbett, Jr. (the "ALJ") and by the PUC's subsequent Opinion and Order of April 13, 2007, finding the transaction to be in the public interest after the PUC's studied consideration of a myriad of facts and circumstances surrounding the proposed transaction and its impact upon customers, the utilities, employees and commerce.

As this Court explained:

Pennsylvania has a unique situation in that in a few locales there are two (2) gas distribution systems. This "gas-on-gas" distribution competition herein permits approximately 500 industrial and commercial customers to negotiate substantially lower prices from the currently separate Equitable Gas and Peoples Gas. In evaluating and approving the transaction, the PUC found that the benefit of gas-on-gas distribution competition to these 500 customers caused increased prices to the other 600,000 plus customers (primarily retail customers), and in the exercise of the PUC's statutory authority after consideration of a host of statutory considerations, concluded that this limited, and solely intra-state, gas-on-gas distribution competition was inefficient, and that the elimination of said competition through the proposed transaction would produce greater overall efficiencies, eliminate costly duplication, and be in the public interest, including the interest of the 600,000 plus customers who would be impacted.

Memorandum Opinion (doc. no. ...


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