Judge: AG Hood's case against Entergy belongs in federal court

By John O'Brien | Aug 28, 2012


JACKSON, Miss. (Legal Newsline) - A federal judge has refused to move Mississippi Attorney General Jim Hood's lawsuit against Entergy Corp. back to a state court.

U.S. District Judge Henry Wingate on Saturday denied Hood's motion to remand in a case that was originally brought in Hinds County Chancery Court before being removed to federal court. Hood claims the company overcharged customers in the state.

Wingate's ruling came 31 months after Hood moved to remand the case. He had to decide if the case was more of a mass action fit for federal court, or a lawsuit brought by Hood under his parens patriae power to represent individuals in his state.

"(W)hile the State has both a proprietary interest in this lawsuit as a ratepayer and may have the right to bring this suit in its parens patriae capacity, the individual ratepayers who were allegedly overcharged and stand to recoup their payments to (Entergy Mississippi) are also real parties in interest," Wingate wrote.

"Because of the citizenship of these parties, which includes several hundred thousand Mississippi customers of Entergy, must be considered in the analysis of jurisdiction, this court finds that minimal diversity exists between the parties in this lawsuit."

Wingate's ruling is in line with one made by the U.S. Court of Appeals for the Fifth Circuit in a Hurricane Katrina case brought by Louisiana Attorney General Buddy Caldwell.
Wingate also found that exceptions to the Class Action Fairness Act, which requires class actions meeting certain requirements to be heard in federal court, did not apply.

The local controversy exception would have applied if Hood could have shown that two-thirds of the members of the plaintiff group are residents of Mississippi. Entergy said Hood's class would be those Mississippi residents he claims were overcharged since 1974.

In attempting to prove the local controversy exception, Hood argued that his complaint does not explicitly demand restitution for former EMI customers. Former customers may no longer be Mississippi residents.

In a transcript provided by Entergy, Hood argued that the Hinds Chancery Court had jurisdiction over the Public Service Commission because the court had the authority to award damages to current and past customers.

"The Attorney General, prosecutor of this action, has made statements on the record in a state court proceeding which indicate that he intends to claim restitution for individual ratepayers both past and present," Wingate wrote.

"The language of the complaint is not conclusive in this regard, but provides a clear legal vehicle to enforce restitution 'to restore to any person in interest any monies or property which may have been acquired by means of any practice prohibited by this chapter.'"

The last exception the two sides argued over was the general public exception. It says "a mass action shall not include any civil action in which all of the claims in the action are asserted on behalf of the general public (and not on behalf of individual claimants or members of a purported class)."

"Even if the State has a quasi-sovereign interest in protecting Mississippi consumers from being overcharged for a basic utility, the presence of the discrete group of EMI ratepayers who have a substantive legal right to receive restitution for alleged overcharges for their electricity means that 'all of the claims in the action' are not asserted on behalf of the general public," Wingate wrote.

Entergy has filed two motions for judgment on the pleadings. The State will have time to respond to both once Entergy advises the court if it plans to abandon or supplement them.

Hood claims Entergy Mississippi is buying gas at an inflated cost from the other Entergy companies and is driving prices up for Mississippi consumers.

From Legal Newsline: Reach John O'Brien at jobrienwv@gmail.com.

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