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Orion Power Midwest, L.P. v. American Coal Sales Co.

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA


September 10, 2007

ORION POWER MIDWEST, L.P., PLAINTIFF,
v.
THE AMERICAN COAL SALES COMPANY, MAPLE CREEK MINING, INC., UMCO ENERGY, INC., AND ROBERT EUGENE MURRAY, DEFENDANTS.

The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge

MEMORANDUM ORDER

Now pending before the Court are Defendants' JOINT MOTION FOR RECONSIDERATION OF THE COURT'S ORDER OF MARCH 2, 2007 (Document No. 86) and PLAINTIFF'S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT (Document No. 90). Plaintiff has filed a brief in opposition to the motion for reconsideration (Document No. 91). In addition, both sides have forwarded letters from counsel to the Court.

Procedural History

The procedural history of this case ("Orion") is complex. The gravamen of the issue in dispute is whether Plaintiff can pierce the corporate veil to state a claim against Robert Eugene Murray, individually. There is a companion case, Shenango, Inc. v. American Coal Sales Co., et al, Civil Action No. 06-149 ("Shenango"). Shenango and Orion arise from coal-supply contracts that contain substantially different terms and conditions. However, the pleadings in the two cases are very similar and the cases have been consolidated for discovery. The cases were initially assigned to Judge Hardiman, who heard the parties' initial arguments regarding the motion to amend the complaint to pierce the corporate veil in the Orion case. Although Judge Hardiman did not issue a written opinion, he rejected defendants' argument that leave to amend the complaint should be denied as futile, and on March 2, 2007 Defendants' motions to dismiss the veil-piercing cause of action in Orion was denied. On March 16, 2007, Defendants filed an answer in Orion. On April 18, 2007, the Orion and Shenango cases were reassigned to this member of the Court.

While a parallel motion to dismiss in Shenango was pending, the United States Supreme Court issued its opinion in Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007). The parties disagree as to the breadth of the change Twombly represents in the fact/notice pleading standard now applicable in federal court. At a minimum, as all nine justices agreed, the oft-quoted standard that a complaint may not be dismissed "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief" has been retired and "is best forgotten." Id. at 1968. The Supreme Court explained that a complaint must allege enough "facts" to show that a claim is "plausible" and not merely conceivable.

On August 9, 2007, the Court issued a Memorandum Order granting Defendants' motion to dismiss the veil-piercing claims in Shenango. However, the Court provided Shenango with the opportunity to file an amended complaint and explained: "If a complaint is subject to Rule 12(b)(6) dismissal, a district court must permit a curative amendment unless such an amendment would be inequitable or futile." (citation omitted). Subsequently, Shenango provided notice of its intent to stand on the complaint as filed.

Defendants filed the instant Motion for Reconsideration based on the Twombly intervening change in controlling law. Because the veil-piercing claims in Orion and Shenango are very similar, Defendants contend that the substantive analysis set forth in the Court's August 9, 2007 Memorandum Order is equally applicable to the Orion amended complaint. Orion does not directly dispute this contention. Instead, Orion contends that by seeking leave to file a Second Amended Complaint, it has "provided Defendants with the only relief they reasonably could obtain through their Joint Motion" and therefore, Defendants' motion for reconsideration has been rendered moot.

Discussion

Both parties advance meaningful legal arguments. As an initial matter, the Court agrees with Defendants that the reasoning in its August 9, 2007 Memorandum Order in Shenango is applicable to this case and it is hereby incorporated by reference. Defendants' motion is not moot because the First Amended Complaint is still in place. The Court concludes that the veil-piercing counts in Plaintiff's First Amended Complaint do not satisfy the Twombly standard. Accordingly, Defendants' JOINT MOTION FOR RECONSIDERATION OF THE COURT'S ORDER OF MARCH 2, 2007 (Document No. 86) is GRANTED and Counts IV and V of Orion's First Amended Complaint are dismissed.

However, the Court agrees with Orion that it should be entitled to have an opportunity to replead its veil-piercing counts in order to meet the new Twombly pleading standard. The Court permitted Shenango to replead in response to the Twombly standard, and the same relief will be afforded Orion, as required by circuit precedent. Accordingly, PLAINTIFF'S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT (Document No. 90) is GRANTED. Orion shall be permitted to amend its complaint, if it can do so consistent with the Rules of Civil Procedure.*fn1 A second amended complaint, or notice of intent to stand on the first amended complaint, shall be filed by Orion on or before September 21, 2007.

Orion's counsel requested in a letter to chambers dated August 31, 2007 that the Second Amended Complaint be filed under seal because "some of the supplemental facts averred therein originate from documents the Defendants produced and designated as 'Confidential' pursuant to Judge Hardiman's May 30, 2006 Stipulated Consolidation and Confidentiality Order." Plaintiff's request to file under seal is GRANTED, unless Defendants formally consent to the filing of said Second Amended Complaint without such confidentiality protection.

SO ORDERED this 10th day of September, 2007.


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