Judge denies City Power’s motion to dismiss, but sides with City Power on de novo review issue

On August 10, Judge Bates of the U.S. District Court for the District of Columbia issued an order denying City Power’s motion to dismiss in FERC’s enforcement case against City Power.  Agreeing with the reasoning of Judge Mastroianni in Massachusetts, Judge Bates determined that the case is an ordinary civil action subject to the Federal Rules of Civil Procedure, including discovery and potentially a trial.  Thus, Judge Bates ruled that the case will follow the normal course of district court adjudication.  According to Judge Bates, if FERC is convinced that the agency record contains all of the relevant evidence and shows conclusively that City Power is liable, then FERC can move for summary judgment.  City Power would then be free to argue that without discovery it cannot present facts essential to justify its opposition, at which point the court might defer consideration of the motion until City Power has had the opportunity to gather those facts.  Judge Bates reserved judgment on whether City Power is entitled to a jury trial.

On the motion to dismiss, Judge Bates disagreed with City Power’s arguments about FERC’s claims.  Assuming the truth of FERC’s allegations, as the court must at this stage, Judge Bates ruled that FERC has stated plausible claims under both the FERC anti-manipulation rule and Market Behavior Rule 3 requiring accurate information.  Judge Bates ruled that FERC’s allegations—both those about the nature of UTC trading in PJM generally and those about City Power’s trading in particular—suffice to state a claim under the FERC’s anti-manipulation rule.  Judge Bates acknowledged that City Power will have the chance to argue that those allegations are unsupported by the evidence at later stages of this case.  Judge Bates also ruled in FERC’s favor on issues related to fair notice, FERC’s jurisdiction, individual liability under the Federal Power Act, and Market Behavior Rule 3.

A copy of Judge Bates’ opinion here.