Public Power - November/December 2007 - (Page 29)

The antitrust laws bar companies from acting jointly to restrain trade, such as by agreeing to fix prices or divide markets. or that the facts that they alleged are not sufficiently “plausible” to permit their case to be heard even before they have to answer a complaint (and have to admit or deny plaintiff’s allegations), before the plaintiffs have had discovery from defendants of facts that may be in defendants’ sole possession and before any further proceedings take place. Procedural rules matter—We have long had what is called “notice pleading” under which a party bringing a suit need merely allege sufficient facts to put defendants on notice of a claim. If a defendant claims not to understand the complaint or needs more information, it may ask for clarification. It may move for dismissal of claims that are not legally justified or for summary judgment of a case that does not have a demonstrable factual or legal basis. If a summary judgment motion is made, the plaintiff can examine defendants under oath or seek other information about the basis for defendants’ contentions and can submit evidence to show the validity of his or her claims. However, except when statutes or specific rules provided otherwise, before Twombly a plaintiff did not have to prove his or her case in the complaint. This new requirement could lead to untold litigation about what complaints must allege and how much detail is necessary, perhaps increasing the wealth of trial lawyers and protecting some defendants, but not helping to resolve claims fairly and in a timely manner. Motions to dismiss, answers to such motions, and replies to answers leading, perhaps, to amended complaints and new rounds of motions, answers and replies create costs and delays. Disputed interpretations of appellate decisions can lead to endless wrangling. As the dissent states, if dismissal comes even before defendants must admit or deny the allegations in the complaint and before any discovery takes place, plaintiffs may have the impossible task of pleading facts that are in the sole possession of defendants and that cannot be found without discovery from defendants. Conscious parallelism—The court ruled that, to be entitled to relief, plaintiffs must show that there was an actual agreement between defendants, thereby limiting the availability of the “conscious parallelism” doctrine. Conscious parallelism occurs when competitors, conscious of each others’ conduct, act in parallel to achieve a common result. If competing wholesale power sellers agree to sell power at a certain price or to divide the territories in which they sell, nobody would doubt that such agreements constitute illegal price fixing or market divisions. In one case, Gainesville Utilities Department v. Florida Power & Light Co., the Fifth Circuit U.S. Court of Appeals found a Florida Power Corp.-Florida Power & Light Co. wholesale power territo- rial agreement illegal, where the companies would not sell wholesale power or otherwise deal with municipalities in the other’s service territory. Conscious parallelism occurs where sellers do not formally agree to such illegality, but act in parallel to achieve the same result. The availability of the conscious parallelism doctrine is very important to the public and to public power. The California energy crisis provides a vivid example. Suppose that California power sellers had no written contract with each other specifying that they would not bid to sell power at their incremental costs of production, the level that economists theorize sellers offer products in competitive markets. Or at least suppose that representatives of the public did not have a copy of any such an agreement, if one existed. But suppose that the sellers did bid to sell power at very high prices that yielded astronomical profits and that all sellers knew that if they bid their costs, others would follow and they would all earn less. Finally, suppose that sellers knew the amount of generation that was available, market prices and market demand. Clearly, this happened in California: sellers bid prices far above their costs aware that competitors would not undercut them. The California Energy Oversight Board estimated power costs in 2001 were $60 billion higher than in prior years. California claimed $8.9 billion in refunds of overcharges at FERC. What happened in California cannot be explained without reference to conscious parallelism, where sellers received excess profits and consumers paid exorbitant prices. The results were the same as occurs

Table of Contents Feed for the Digital Edition of Public Power - November/December 2007

Public Power - November/December 2007 Contents Washington Focus 10 Questions Connecting with the Customer Through Automation AMR or AMI? The High Court’s Antitrust Thunderbolts California’s Push for Demand-Response Plug-In Partners Get Plugged In Wiring Up for Double-Digit Growth For Engineers Safety Community Broadband For Governing Boards DEED Customer Service Hometown Connections Index to Advertisers Parting shot

Public Power - November/December 2007

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