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Nev. AG Masto loses Enron-related antitrust case

By John O'Brien | Oct 2, 2012


CARSON CITY, Nev. (Legal Newsline) - Nevada Attorney General Catherine Cortez Masto has lost an antitrust case that alleged Reliant Energy made a secret deal with now-bankrupt Enron Corp.

Masto joined a class action lawsuit against the Reliant and affiliated companies that alleged customers in southern Nevada paid inflated rates from 2000-01 because of a price-rigging scheme.

The Nevada Supreme Court dismissed the lawsuit on Sept. 27, ruling that the claims were preempted by federal law.

"(T)he conclusion that there is no preemption leads to the imposition on interstate natural gas wholesalers 50 different sets of state rules concerning anticompetitive behavior," Chief Justice Michael Cherry wrote.

"From a practical standpoint, if each state intervened in this field with different regulations, the result would be a maelstrom of competing regulations that would hinder (the Federal Energy Regulatory Commission's) oversight of the natural gas market.

"We cannot conclude that this is what Congress intended through the use of purposeful deregulation. State antitrust law cannot coexist peacefully with the natural gas federal regulations."

The plaintiffs alleged Reliant engaged in rapid bursts of purchasing natural gas followed by rapid bursts of selling the same gas, which resulted in higher prices and considerable profits.

Reliant was alleged to have reached an agreement with Enron that allowed the scheme to work because it ensured it would always have a sufficient supply of natural gas.

The state Supreme Court's decision upheld an earlier ruling by District Judge Kathy Hardcastle.

FERC had investigated the matter but found the company had not violated federal regulations.

Masto argued that preemption was inapplicable to her case because at the time of the alleged market manipulation, the field had been deregulated and was no longer subject to FERC control.

"FERC used deregulation as a means to increase market competition," Cherry wrote. "It did not use this tool as a means to open up regulation to all 50 states."

Also representing the plaintiffs were Houston attorney James Tynan Kelly; Boies Schiller & Flexner, which is a national firm with an office in Las Vegas; and Las Vegas attorney Douglas Mitchell.

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

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