Petition for Writ of Certiorari — Colorado Interstate Gas Co. v. Natural Gas Pipeline Co. of America

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Rp a gupreme Court, U.S

QOD sl 7 rd FILED

me. SEP 1 4 1992

IN THE

| OFHOE OF THE CLERK

Suprenw Court of the Wuited States

OCTOBER TERM, 1992

COLORADO INTERSTATE GAS COMPANY,

Petitioner,

NATURAL GAS PIPELINE COMPANY OF AMERICA,

NGPL-TRAILBLAZER, INC.,

Respondents.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Tenth Circuit

PETITION FOR A WRIT OF CERTIORARI

MICHAEL L. BEATTY REX E. LEE *

REBECCA H. NOECKER CARTER G. PHILLIPS

COLORADO INTERSTATE MarRK E. HADDAD

GAS COMPANY RICHARD D. KLINGLER

Post Office Box 1087 SIDLEY & AUSTIN

Colorado Springs, CO 80944 1722 Eye Street, N.W.

WILLIAM C. MCCLEARN Washington, D.C. 20006

JOSEPH W. HALPERN (202) 736-8000

ELIZABETH A. PHELAN J. KENT RUTLEDGE

HOLLAND & HART LATHROP, RUTLEDGE & BOLEY

Post Office Box 8749 Post Office Box 4068

Denver, CO 80201 Cheyenne, WY 82003

MARILYN S. KITE Counsel for Petitioner

HOLLAND & HART

2020 Carey Avenue

Suite 500

Cheyenne, WY 82001

September 14, 1992 * Counsel of Record

aay

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

QUE

Whether a jury verdict that defendant attempted

monopolize, based on proof that defendant throug!

Ga con cl excluded Its lower-priced competito}

5 | ) + 3n ” . »

tnen charged s ipra-comipetitive prices, Can properly

' “thee ta

er ! ion appeal solely because:

\ 54 market share, though achieved through

; ; oes

| )} na resu ne In Ssupra-competitive

es 5: ) In Ul COUrtT S eStimation close enough

0 ti SUDD [ i verdict of attempted

monopolization; and

mono} ower and supra-competitive profits

i( 1 ¢ ab redatl VOU I { last 10} more

) siX\ \'é

W het} er recovery oI aan TPS AW irded by special

ict on a claim affirmed on appeal must be barred if

rl . . +4 \« + ae 4) baal

c rMne GQIStriect Cou Initially ellmina ec he Common

} } L.7

es on ft Clan VOI aouple recove

} } : }

based on a second clain nd

STIONS PRESENTED

PARTIES

The parties to the proceeding below were: Colorado

Interstate Gas Company, Natural Gas Pipe Line Com-

pany of America, and NGPL-Trailblazer, Inc. The parent

companies and subsidiaries ‘except wholly owned sub-

sidiaries) of petitioner include: The Coastal Corpora-

tion, Coastal Natural Gas Company, and Natural Fuels

Corporation.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED i

PARTIES li

TABLE OF AUTHORITIES iv

OPINIONS BELOW l

JURISDICTION 9

STATUTES INVOLVED 2

STATEMENT OF THE CASE 3

A. NGPL’s Anticompetitive and Tortious Conduct 4

B. The Proceedings Below 7

REASONS FOR GRANTING THE PETITION 1]

CONCLUSION 26

TABLE OF AUTHORITIES

CASES Page

ADP-Financial Computer Servs., Inc. Vv. First Nat’l

Bank, 703 F.2d 1261 (11th Cir. 1983) 16

Albergo v. Reading Co., 372 F.2d 83 (3d Cir.

1966), cert. denied, 386 U.S. 983 (1967) .......... : 18

Associated Radio Serv. Co. Vv. Page Airways, Inc.,

624 F.2d 1342 (5th Cir. 1980), cert. denied, 450

U.S. 1030 (1981) 14

Atlantic & Gulf Stevedores, Inc. Vv. Ellerman Lines,

Ltd., 369 U.S. 355 (1962) 19

Bankers Trust Co. v. Bethlehem Steel Corp., 761

F.2d 943 (3d Cir. 1985) 22

Beltran Vv. Myers, 701 F.2d 91 (9th Cir.), cert. de-

nied, 462 U.S. 1134 (1983) . 4

Berkey Photo, Inc. Vv. Eastman Kodak Co., 603 F.2d

268 (2d Cir. 1979), cert. denied, 444 U.S. 1093

(1980) 18

Board of Educ. Vv. Dowell, 111 S. Ct. 630 (1991) 24

Borchers Vv. Commissioner, 943 F.2d 22 (8th Cir.

1991) 22

Broadway Delivery Corp. Vv. United Parcel Serv.,

Inc., 651 F.2d 122 (2d Cir.), cert. denied, 454

U.S. 968 (1981) ’

Butler v. Eaton, 141 U.S. 240 (1891) aaa 25

Calamia v. City of New York, 879 F.2d 1025 (2d

Cir. 1989) 18

Christianson V. Colt Indus. Operating Corp., 486

U.S. 800 (1988) 12

Exxon Corp. Vv. United States, 931 F.2d 874 (Fed.

Cir. 1991) 22

Gainesville Utils. Dept. Vv. Florida Power & Light

Co., 573 F.2d 292 (5th Cir. 1978) ..... 19

Gallick v. Baltimore & Ohio R.R., 372 U.S. 108

(1963) LP aad ten - 19

Jackson V. Jackson, 276 F.2d 501 (D.C. Cir.), cert.

denied, 364 U.S. 849 (1960) 25

Jones V. Lewis, 957 F.2d 260 (6th Cir.), petition

for cert. filed (U.S. May 26, 1992) (No. 91-

8404) 22

Jones V. Miles, 656 F.2d 103 (5th Cir. Unit B

NS ane aso fees ae ata arn ack ae 18

TABLE OF AUTHORITIES—Continued

Page

Lessig V. Tidewater Oil Co., 327 F.2d 459 (9th

Cir.), cert. denied, 377 U.S. 9383 (1964) . 13

Liljeberg Vv. Health Servs. Acquisition Corp., 486

U.S. 847 (1988) 24

Luckey Vv. Miller, 929 F.2d 618 (11th Cir. 1991). 22

MCI Communications Corp. v. American Tel. & Tel.

Co., 708 F.2d 1081 (7th Cir.), cert. denied, 464

U.S. 891 (1983) . ise ene et

Maggard v. O’Connell, 703 F.2d 1284 (D.C. Cir.

1983) Paar reece, 22

Mercer Vv. Long Mfg. N .C., Inc., 671 F.2d 946 (5th

Cir. Unit A 1982) ... iss ee a 17

Mercer V. Theriot, 377 U.S. 152 (1964) nes 12

In re Merritt Logan, Inc., 901 F.2d 349 (3d Cir.

1990) ‘ 17

Messenger V. Anderson, 225 U.S. 486 (1912) 12

Michigan Surety Co. v. Service Mach. Corp., 277

F.2d 531 (5th Cir. 1960) _. 25

Morris V. Pennsylvania R.R., 187 F.2d 837 (2d. Cir.

1951) 19

Newball v. Offshore Logistics Int'l, 803 F.2d 821

(5th Cir. 1986) a SPA aa 22

Panama Processes, S.A. Vv. Cities Serv. Co., 789

F.2d 991 (2d Cir. 1986) ...... 22,24

Panama R.R. Vv. Napier Shipping Co., 166 U.S. 280

(1897) . 12

Parts & Elec. Motors, Inc. Vv. Sterling Elec., Inc.,

866 F.2d 228 (7th Cir. 1988), cert. denied, 493

U.S. 847 (1989) 22

Piambino V. Bailey, 757 F.2d 1112 (11th Cir. 1985),

cert. denied, 476 U.S. 1169 (1986) ... 22

Pierce Oil Corp. v. United States, 9 F.R.D. 619

(E.D. Va. 1949) Re AO aR) oye ine 25

Pratt v. Brown Mach. Co., 855 F. 2d 1225 (6th Cir.

1988) 16

Pritchard. v. Liggett & Myers Tobacco Co., 370

F.2d 95 (3d Cir. 1966), cert. denied, 386 U.S.

1009 (1967) aN: isin 19

TABLE OF AUTHORITIES—Continued

Quern V. Jordan, 440 U.S. 332 (1979) ..

Reece V. Georgia, 350 U.S. 85 (1955) ............

Rheuport Vv. Ferguson, 819 F.2d 1459 (8th Cir.

Robles v. Exxon Corp., 862 F.2d 1201 (5th Cir.),

cert. denied, 490 U.S. 1051 (1989) ..

Ryko Mfg. Co. v. Eden Servs., 823 F.2d 1215 (8th

Cir. 1987), cert. denied, 484 U.S. 1026 (1988)

Sherman Vv. Burke Contracting, Inc., 891 F.2d

1527 (lith Cir.), cert. denied, 111 S. Ct. 353

Gf RUPWOD oisaisniccnscinsssaxelaavectieneces chunaleenianiete lea eeeanens

Smith v. Bounds, 813 F.2d 1299 (1987), reh’g, 841

F.2d 77 (4th Cir. 1988), cert. denied, 488 US.

869 (1988) . -

Spectrum Sports, Ine. V. McQuillan, cert. “granted,

112 S. Ct. 1557 (1992) oe 3

Sprague Vv. Ticonic Nat’l Bank, 307 U.S. 161

(1939) aids cuiaoGncuacciaetaenaacaaee ata

Standard Oil Co. v. United States, 429 U.S. 17

(1976)

Stewart & Stevenson Servs., Inc. Vv. Pickard, 749

F.2d 635 (11th Cir. 1984) .

Video Int'l Prod., Inc. Vv. Warner-Amex Cable Con

munications, Inc., 858 F.2d 1075 (5th Cir. 1988),

cert. denied, 491 U.S. 906 (1989)

W.D. Lawson & Co. V. Penn Cent. Co., 456 F.2d

410 {G00 GUE, APPR) ocsieccceee

Walker v. Pettit Constr. Co., 605 F.2d 128, reh’g,

611 F.2d 950 (4th Cir. 1979) ......... 7

Washington V. Washington State Commercial Pas-

senger Fishing Vessel Ass’n, 443 U.S. 658

CE susan: 2sandeekecenesaens eee ee eee

Werner V. Carbo, 731 F.2d 204 (4th Cir. 1984)

Zant Vv. Stephens, 462 U.S. 862 (1983)

17,

16,

— [D> —

S on

Vil

TABLE OF AUTHORITIES—Continue

STATUTES AND RULES

49 (a)

60 (b)

OTHER AUTHORITIES

7 a: Moore, Moore ’s Fe de ral Practice 60.26

(1992)

IN THE

Suprenw Court of the United States

OCTOBER TERM, 1992

No. 92-

COLORADO INTERSTATE GAS COMPANY,

Pe titione

NATURAL GAS PIPELINE COMPANY OF AMERICA.

NGPL-TRAILBLAZER, INC..,

Re sponde ii fs.

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Tenth Circuit

PETITION FOR A WRIT OF CERTIORARI

Petitioner respectfully requests that a writ of certiorari

issue to review the judgments and opinions of the United

States Court of Appeals for the Tenth Cireuit in this case

or, at a minimum, that this petition be held in abeyance

pending this Court’s resolution of No. 91-10, Spectrum

Sports, Ine. V. McQ villan.

OPINIONS BELOW

The opinion of the court of appeals is reported at 962

F.2d 1528, and is included in the Appendix at pp. la-14a.

The order of the court of appeals denying rehearing is

included in the Appendix at pp. 110a-1lla. The order

of the district court appealed from is included in the

Appendix at pp. 42a-53a. The earlier opinion of the court

of appeals in this case is reported at 885 F.2d 683, and is

)

included in the Appendix at pp. 15a-4ta. The opinion of the

district court denying respondents’ ».0tion for judgment

notwithstanding the verdict and fur a new trial is re-

ported at 661 I. Supp. 1448, and is .neluded in the Ap-

pendix at pp. Sia-L09a. Tor the assistance of the Court,

the special verdict forms employed by the jury are in-

cluded in the Appendix at 112a-119a.

JURISDICTION

The opinion and judgment of the court of appeals was

entered on May 6, 1992. A timely petition for rehearing

was denied on June 16, 1992. The jurisdiction of this

Court is invoked pursuant to 28 U.S.C. § 1254¢1).

STATUTES INVOLVED

Section 2 of the Sherman Act provides in pertinent

part: “Every person who shall monopolize, or attempt to

monopolize ... shall be deemed guilty of a felony ws

15 U.S.C. § 2.

Section 4 of the Clayton Act provides in pertinent part:

A|ny person who shall be injured in his business or

property by reason of anything forbidden in the antitrust

laws may sue therefor... and shall recover threefold

the damages by him sustained, and the cost of suit, in-

cluding a reasonable attorney's fee.” 15 U.S.C. $ Lota).

Federal Rule of Civil Procedure 60(b) provides in rele-

vant part:

Qn motion and upon such terms as are just, the

court may relieve a party or a party’s legal repre-

sentative from a final judgment, order, or proceeding

for the following reasons: ... (5) the judgment has

heen satisfied, released, or discharged, or a prior

judgment upon which it is based has been reversed

or otherwise vacated ...; or (6) any other reason

justifving relief from the operation of the judgment.

Federal Rule of Civil Procedure 49(a) provides in rele-

Vant part:

The court may require a jury to return only a

written find-

ing upon each issue of so In that event the court

ay submit to the jury written questions susceptibl

of categorical or other brief answer or may ia

written forms of the several we findings which

might properly be made under the pleadings and evi-

special verdict in the form of a special

dence; or it may use such other etary of submitting

the Issues and requiring the written findings thereon

leems most approp ‘late. The court shall give to

jury such explanation and instruction concerning

natter thus submitted as may be necessary to

enable the jury to make its findings upon each issue.

STATEMENT OF THE CASE

Petitioner, Colorado Interstate Gas Company (“CIG"),

brought this case against respondents, Natural Gas Pipe-

line Company of America (“NGPL’) and NGPL-Trail-

blazer, Inc., alleging that NGPL had attempted to monop-

olize the market for long-distance transportation of Wy-

oming gas in violation of Section 2 of the Sherman Act.

CIG also claimed that NGPL tortiously interfered with a

CIG gas purchase contract and breached other duties. A

jury found in favor of CIG on all counts.

This case, which encompasses two appeals, presents

two separate issues. The Tenth Cireuit on the first ap-

peal affirmed CIG’s recovery on the tort claim and re-

versed the jury’s antitrust verdict by relying upon an

extreme standard for proving attempted monopolization

claims under Section 2 of the oe Act. On the sec-

ynd appeal, the Tenth Circuit limited CIG’s full recovery

of damages on the seem affirmed tort claim, solely

because damages common to the tort and antitrust awards

had been allocated to the antitrust award, which had

been reversed on the first appeal. The panel’s rule limit-

ing recovery merits this Court’s review, and, at a mini-

mum, this Court should hold the petition pending resolu-

tion of a case currently before this Court, Spectrum

Sports, Ine. V. McQuillan, No. 91-10.

A. NGPL’s Anticompetitive and Tortious Conduct.

CIG is a pipeline company that buys, transports, and

sells natural gas. CIG’s pipeline begins in southwest

Wyoming and runs east across Wyoming and then south

into the Oklahoma and Texas panhandles. There, CIG’s

pipeline connects with other major “trunk” lines that can

carry the gus to the Midwest.

NGPL is also a pipeline company. It owns one of the

trunklines that intersects with CIG’s in Oklahoma. That

pipeline runs northeast from Oklahoma to Chicago, I]-

linois, where NGPL. sells natural gas to consumers.

For many years, NGPL has purchased gas from CIG

that CIG bought in Wyoming and transported to Okla-

homa, where it delivered the gas to NGPL’s trunkline.

In 1982, CIG and NGPL entered into a seven-year con-

tract that required CIG to deliver and NGPL to purchase

substantial volumes of natural gas.

NGPL also has the largest economic interest in the

relatively new Trailblazer Pipeline System, which trans-

ports gas from southwest Wyoming to the midwest.

NGPL-Trailblazer, Inc., a wholly owned subsidiary of

NGPL, together with two partners, owns one of three

segments of the Trailblazer System. This pipeline runs

from southwest Wyoming, parallel to CIG’s pipeline as

far as Cheyenne, and then continues east, where it inter-

sects the NGPL pipeline. The System thus provides an

alternative to CIG’s pipeline for moving Wyoming gas

to the midwest.

FERC imposed an unusual rate structure upon the

Trailblazer System in which revenues would increase

sharply, but only as the amount of gas flowing through

the system (“throughput”) increased, thereby placing on

the pipeline owners the risk that either the supply or the

demand projections would not materialize. The Trail-

blazer System cost $500 million to build, 70 percent of

which was financed through debt. NGPL assumed roughly

50 percent of this debt and received control over roughly

50 percent of the System’s capacity. App. <>a.'

Soon after the Trailblazer System began transporting

gas in late 1982, NGPL found that throughput and con-

sequently revenues were far less than had been projected.

Consumption patterns ensured that there was little pros-

pect for increasing the flow of gas in the system. Indeed,

NGPL saw that under ordinary competitive conditions the

Trailblazer System could not draw business away from

other pipelines because the System, a new pipeline built

at higher cost, had to charge significantly higher trans-

portation rates than those of older, fully amortized pipe-

lines, such as CIG’s.

NGPL responded to this economic predicament with

“reprehensible conduct” (App. 32a! that lacked in legiti-

mate busi.ess justification: It manipulated its gas pur-

chases to exclude CIG from the market for transporting

natural gas, leaving Wyoming producers no choice but

to use the higher-priced Trailblazer System. /d. 63a-64a,

Sla-82a. Beginning in July 1983, NGPL refused to pur-

chase and accept delivery of gas from CIG. This re-

fusal effectively tied up roughly half of CIG’s long-

distance transportation capacity because both the Service

Agreement and the Natural Gas Act (“NGA”) required

CIG-to reserve this capacity for NGPL in the event NGPL

resumed purchases.’ /d. at 36a.

1NGPL’s substantial capacity control gave it the chief interest

in the Trailblazer Svstem. Although CIG owned one of the three

segments of the System, App. 30a n.14, it assumed a much smaller

percentage of the debt and therefore controlled far less of the

System’s capacity than did NGPL. CIG had no control over any

pipeline capacity east of Cheyenne, and no control whatsoever over

NGPL’s use of its capacity, even on the segment owned by CIG

“=NGPL then took additional steps to further its scheme to ex

clude CIG from the market. NGPI. deliberately interrupted C1IG’

attempts to provide transportation for new customers by n

strategically timed demands for vas from CIG ApT it 32

63a. NGPL also perpetuated the tie-up by refusing t

NGPL’s refusal to aecept gas from CIG forced CIG to

stop purchasing and ultimately to relinquish its rights to

purchase gas from several suppliers, including its largest,

Champlin Petroleum, which then had to use the higher-

priced Trailblazer System. /d. at 82a. CIG had arranged

facilities for transportation of the Champlin gas from the

fields to CIG’s system in Colorado. When NGPL’s ac-

tions forced CIG to relinquish its gas purchase rights,

CIG remained obligated to pay “demand charges’ for

. bo +4 ras wae 1a o rT’ ne &-. > .

ese gas transport facilities. These obligations formed

the basis for the jury’s subsequent finding of more than

land charge damages stemming from

th NGPL’s antitrust violation and NGPL’s tortious in-

() ers tn empted to use CIG’s pipelin

nte ed by NGPL’s strategically

| it ¢ s( de} ands Vnie! I reed nen ) ist the

er System. / 63a. B he time the filing of

CIt Vsu ed NGPL’s nticompetitive tactics

NGPL had managed to increase Trailblazer’s share of the

rket for long-distance transportation of Wyoming gas

1] to 54°°, while CIG’s fell from 23% to 13

j ri \Vlore it NGPL’s predatory tactics

left Trailblazer as the ‘‘one transportation alternative for

Wyoming natural gas” ‘id. at 68a), because the other

Wyoming pipelines were tied-up, or full-to-capacity as a

result of CIG’s tie-up, or otherwise unavailable. /d. Con-

sequently, NGPL’s actions harmed the market as well as

CIG: suppliers and shippers that needed long-distance

insportation were forced to pay ‘“supracompetitive

CIG renominate” a lower minimun irchasé

buyer in NGPL's position to deer

x | Sla, 31 2a. Ana, by in diatel

CIiG with } )

NGPI its { . iv rer

(Tt " O hu t

| |

(8a-82:;

20.

prices” (id. at 39a), which were then passed on to con-

y , . a

sumers. /d. at 64a-65a.

B. The Proceedings Below.

1. CIG filed this lawsuit in the United States District

Court for the District of Wyoming, alleging that NGPL

had attempted to monopolize the market for long-distance

interstate transportation of Wyoming natural gas, had

breached its contract, had breached its duty to perform

on the contract in good faith, and had tortiously inter-

fered with CIG’s contract with Champlin Petroleum. Af-

ter an eight-week trial, the jury returned special verdicts

for CIG on all counts.

The tortious interference verdict included demand

charge losses of approximately $15 million and more than

$24 million (later reduced to approximately $8 million)

in restitution. In the Judgment,

ter{ed] judgment on... the tortious interference claim

in the amount of $39,231,072.00.” Judgment, at 2 (Nov.

10, 1986; Doe. 578). The court also reduced

judgment amount for the combined claims because the

demend charge losses and certain future lost profits were

common to both the tort and antitrust claims. /d. The

court thereby avoided awarding a double recovery against

NGPL. The court expressly stated, however, that it was

permitting the jury throu lal i

| } S|

award demand charge damages as part of both the tor-

ls nte rire re?) ( ePrdhl nd ne ? ) aT Ve rade ~ a)

hat these damages would stand 1f either verdi Was al-

Ty) y°?) ed r nN , ¢ I") RR4AQ-5? ~ Sf }

a ¥ ‘ . » | , , , . ,

NGPL and CIG understood that the tort judgment was

: . . : , , ; ; ;

‘ + . +ity1t) > ‘ . lamonr rh « - ‘ ‘ :

Nased on vpotn restitution anda aen Md Chalrbee damages.

I} TS Moto? TO) ldgme! I na ne?! ] Ss briel n

ToT 1

; \ |) 4

! nere NU] | ‘ ? ~ ? al a.

: | s | ]

ind enarge | ~ Les ’ ‘ {v} ei | ‘ 1IST ) (

+ , WY x ,

court denied NGPL’s n gme!

+ ] } + }

@) ed ’ i ne ) y ‘ ’ y é ‘

| 5 |

} bs t ; y ' ’ ~ t)

~ i res (17 ] \

On the attempted monopolization claim, the district

court ruled that (1) “{tl{he jury could have concluded

that competition actually diminished” (App. at 64a);

(2) “a lower priced competitor was excluded in favor of

a higher-priced competitor without a corresponding in-

crease in allocative or productive efficiency” tid.) ; and

(3) “CIG’s exclusion resulted in higher prices to producers,

shippers, and consumers of natural gas.” /d. at 65a

The district court also recognized that CIG had proven a

dangerous probability of successful monopolization by

showing that NGPL had in fact succeeded in exercising

monopoly power:

The weight of the evidence supports the jury's find-

ine that NGPL possessed the power to control price s

and exclude competition, That evidence showed

NGPL’s aggressive conduct, CIG’s exclusion from the

market, the market’s vulnerability to increases in

transportation prices and that prices actually — in-

creased, This constitutes sufficient evidence from

Which the jury could conclude that CIG proved a

dangerous probability of success by a preponderance

of the evidence.

Id. at 76a (emphasis added }.*

2. The court of appeals reversed on all but the tortious

interference claim. The court held that the breach of con-

tract claims were pre-empted. The court also reversed the

jury’s verdict of attempted monopolization. The court

recognized that NGPL’s predatory conduct had enabled

NGPL both to increase the Trailblazer System’s market

share to 54% and “to charge supracompetitive prices.”

‘Regarding the element of a dangerous probability that the at-

tempt to monopolize would succeed, the jurv was instructed that

“a firm must possess market strength—market strength that ap

proaches monopoly power; that is, the ability to control prices anc

exclude competition.” Jury Instr. No. 33 (Doc. 574).

Id. at 36a, 39a.!| Nevertheless, the court of appeals held

hat this evidence was insufficient to support a claim of

attempted monopolization. Such a claim, the court held,

requires a showing that the defendant is likely to achieve

igher market share than 54%, typically “between 70

percent and 80 percent.” /d. at 34a-35a & n.18. The

court also rejected the claim because “the Trailblazer

System's ability to charge supracompetitive prices” would

likely last only six vears, at which point “the Trailblazer

System would be helpless to compete against the unused

and inexpensive capacity of CIG’s system.” Jd. at 39a-40a.

The court of appeals affirmed the tort verdict despite

NGPL’s continued argument on appeal that the tort

judgment did not support demand charge damages.* At

three points, without discussing damage issues, the court

simply stated that it was affirming the tort “verdict.”

App. 16a, 29a, 41a.

CIG filed a petition for a writ of certiorari from this

Court based in part on the conflict between the Ninth and

Tenth Circuits over the standard for attempted monopoli-

zation. After requesting the views of the Solicitor Gen-

eral, 110 8S. Ct. 2164 (1990), this Court denied the peti-

tion, 111 8. Ct. 441 (1990).

‘The court had no illusions about the reprehensible nature of

NGPUL’s actions:

Natural’s predatory conduct consisted of exercising its contract

rights with CIG to prevent CIG from offering transportation

services to long distance customers. Because Natural reserved

a certain amount of space in CIG’s pipeline, CIG could not offer

that space to others. By continuing to reserve large amounts

of gas and taking gas when CIG threatened to sell Natural’s

capacity, Natural insured that CIG could not offer Natural’s

reserved capacit to the market

*NGPL’s First Appeal Br. 46 n.387 (“The district court also

rred in awarding future tort damage r the leyedly useles

rights of CIG in Canyon Creek and Overthrust’”?) (emphasis added

3. On remand, the district court granted CIG’s motion

to execute the tort judgment. The court held that the

tort “verdict” as embodied in its Nov. 10, 1986 Judgment

affirmed on appeal required the judgment to include both

restitution and demand charge damages. App. 48a-50a. It

concluded: ‘The jury awarded damages to CIG for de-

mand charges under two different causes of action, anti-

trust and tortious interference. CIG could only recover

under one. Just because one of the causes of action fails

does not inean the plaintiff is not entitled to recover under

the remaining cause of action.” /d. at 50a.

The court of appeals reversed this order. The panel

10ted that the initial panel had “affirmed the tortious

interference part of the district court’s decision and

judgment,” id. at 9a, but held that the affirmance limited

the damages recoverable to those allocated solely to the

tort award before the antitrust judqment was reversed.

Id. at 9a-lla. Thus, CIG could not recover the damages

in tort that state law mandated, simply because the trial

court had allocated duplicative damages to an award later

reversed on appeal.

According to the court of appeals, CIG had defended

an antitrust judgment that supported the demand charge

damages and could not recover those damages even if they

were damages caused by NGPL’s tortious conduct. /d.

at 10a. The court reasoned that the district court had

“originally deducted these demand damages because the

jury duplicated them in both the tort and antitrust claim

awards,” and, on remand, the district court was limited

to the “ministerial” task of entering the truncated tort

award of approximately $8 million in restitution damages,

plus post-judgment interest. /d. at lla, 12a.

The court also held that Rule 60(b) did not justify the

district court’s remand order. It held that Rule 60(b) 16)

could not be ‘used to alter the substantive content of

a judgment once it has been affirmed on appeal except in

extraordinary situations.” Jd. at lla. The court held

that this rule applied to bar full recovery on the tort

claim even though the contemporaneous antitrust judg-

ment had been reversed.

REASONS FOR GRANTING THE PETITION

This case presents two issues of broad importance

whose resolution by the Tenth Circuit conflicts with deci-

sions of this Court or other courts of appeals. First, the

panel’s antitrust ruling sets forth an unprecedented and

extreme standard regarding the proof required to estab-

lish attempted monopolization under Section 2 of the

Sherman Act. Because this Court has granted certiorari

in another case to resolve this precise issue, see Spectrum

Sports, Ine. Ve MeQuillan, No. 91-10, the petition should

at least be held in abeyance pending resolution of that

case.

Second, the panel has crafted a rule that bars full

recovery of damages for claims affirmed on appeal, when-

ever a portion of those damages is allocated to other claims

to avoid doubie recovery, and those other claims are re-

versed on appeal. This rule conflicts with the established

practice of several other circuits, as well as with broader

principles mandating full recovery upon claims embodied

in a judgment affirmed on appeal. The rule also is wholly

inconsistent with Rule 49(a), which provides for the use

of special verdicts in multiple claim cases in order to

ensure complete recovery of damages awarded by a jury,

while avoiding retrial in the event of a partial reversal

on appeal.

In addition, the panel’s decision marks an unwarranted

and harmful departure from established practice under

Fed. R. Civ. P. 6016115) and 60(b) (6). Except in the

Tenth Circuit, affirmance of a judgment does not preclude

relief otherwise available pursuant to Rule 60(b! (6),

except for matters clearly resolved on appeal, and Rule

60(b)(5) provides for relief where, as here, recovery

upon one claim is dependent upon another judgment

later reversed on appeal. The rule that emerges from the

Tenth Circuit’s decision creates great uncertainty and

promises to produce unfair results in a broad range of

cases,

This case should be held pending the resolution of No.

91-10, Spectrum Sports, Inc. Vv. McQuillan, cert. granted,

ll2 8. Ct. 1557 (1992), which addresses the precise issue

of the standard for determining attempted monopolization

that also underlies the Tenth Circuit’s antitrust deter-

mination. The Tenth Circuit set aside an antitrust award

in CIG’s favor on the ground that the jury and district

court erred in determining that NGPL had violated the

prohibition in Section 2 of the Sherman Act against at-

tempted monopolization." In Spectrum Sports, this Court

will address the standard to be applied in Section 2 at-

tempted monopolization cases, The grant of certiorari is

limited to a single question:

Whether a manufacturer’s distributor expressly ab-

<olved of violating Section 1 of the Sherman Act can.

"Tt is well established that issues raised upon a previous appeal

may be subject to review before this Court after a subsequent ap

peal because “{a]| petition for writ of certiorari can expose the

entire case to review.” Christianson vy. Colt Indus. Operating Corp.,

186 U.S. 800, 817-18 (1988); see Mercer v. Theriot, 277 U.S. 152.

153 (1964) (“We now consider all of the substantial federal qu

tions determined in the earlier stages of the litigation, for it. is

settled that we may consider questions raised on the first appeal, as

well as those that were before the court of appeals upon the second

appeal”) ‘internal quotations omitted); see also, e.g. Recee Vv.

Georgia, 350 U.S. 85, 87 (1955); Messenger v. Anderson, 225 U.S.

436, 444 (1912); Panama R.R.v. Napier Shipping Co., 166 U.S. 280,

283-84 (1897). This is so even when this Court has denied a peti

tion for a writ of certiorari to review the first appeal. See, e.a.,

Washington v. Washington State Commercial Passe nger Fishing

Vessel Ass'n, 443 U.S. 658, 672 & n.19 (1979): Mercer. 377 US.

at 153.

Withou ali\ evidence of market power Or specific

intent. be found liable for attempting to monopolize

<olely by virtue of a unique Ninth Circuit rule?

Petition For A Writ of Certiorari (No. 91-10): 112 S. Ct.

L557 (1992),

Courts of appeals have adopted a variety of positions

regarding the proof required to establish attempted

monopolization under Section 2. At one extreme is the

rule applied by the Ninth Cireuit in Spectrum Sports.

In Lessig v. Tidewater Oil Co., 327 F.2d 459 (9th Cir.)

cert, denied, 377 U.S. 933 (1964), the Ninth Circuit

iblished that attempted monopolization could be in-

ferred from the defendant’s conduct alone and need not

be based upon market analysis showing the defendant's

probability of actual monopolization.

Other courts of appeals require precisely the market

analysis that may be omitted in the Ninth Circuit. Most

apply a standard that assesses market power rather than

any particular market share. Their rule recognizes that

“market share should constitute, at most, a point of

departure in assessing the existence of monopoly power,”

but that “!ulltimately, that analysis must focus directly

on the ability of the regulated company to control prices

or exclude competition.” MCI Communications Corp. V.

American Tel. & Tel. Co., 708 F.2d 1081, 1107 (7th Cir.),

cert. denied, 464 U.S. 891 (1983). For example, the Sec-

ond Circuit has stated that proof of market share is not

“invariably a requirement of a monopolization claim’? and

is unnecessary where there is “unambiguous evidence that

the defendant has the power to control prices or exclude

competition.” Broadway Delivery Corp. v. United Parcel

Serv., Inc., 651 F.2d 122, 130 (2d Cir.), cert. denied, 454

U.S. 968 (1981). Focusing upon market power, the Fifth

Circuit has found attempted monopolization in cireum-

stances indistinguishable from this case: predatory con-

duct, a market share of 50, and the ability to charge

supracompetitive |

Radio Serv. Co. v. Page Airways, Inc., 624 F.2d 1342

ices for several years. See -issociated

+ cas (

(Sth Cir. L9OSO), cert. de nied, 450 U.S. 1030 (1981).

At the other extreme from the Ninth Circuit's rule is

the standard applied to NGPL’s conduct by the Tenth Cir-

cuit in this case. The Tenth Circuit required a particular

showing cf market share for the exercise of monopoly

power (70° -80°7 , App. 34a & n.18), rather than a showing

of market power.? And it compounded this error by holding

that no attempied monopolization claim may lie when

supracompetitive prices are charged for a fixed period

‘in this case, six years). Thus, even though the panel

acknowledged that NGPL’s conduct made Trailblazer

the exclusive transporter of new Wyoming gas and

enabled Trailblazer to charge “Supracompetitive” prices,

the panel employed its extreme rule to set aside the at

tempted monopolization judgement.

This divergence in standards for proving attempted

monopolization clearly indicates that this petition should

he held pending the outcome of Spectrum Sports. Tf in

that case this Court approves any version of the Ninth

Circuit rule, the panel’s decision in this case would have

’ The extreme nature of the panel's dec) lon] unde cored |

how the market share figures on which the panel focused (the ij

share from 41% to 547) do not simply tndicate potential

crease in

monopoly power, but measure NGPL's sueress In achieving market

power. The Tenth Circuit expressly recognized that NGPL, by its

“tie up of CIG’s pipeline capacity,” succeeded both in “shift!ine

13° of the market to the Trailblazer System” and in forcing cus

36a, 39a. More

over, Trailblazer’s 54°7 share understates Trailblazer’s actual powe)

because NGPL’s predatory tactics left Trailblazer as the “one trans

portation alternative for Wyoming natural gas.” Id. at 63a. A

the only pipeline with available capacity, Trailblazer thus effective!

tomers to pay “supracompetitive prices.” App

had 100° of the market for new transportation services. Even so.

the panel reversed the antitrust judgment because the 54° shar

was too low and because Trailblazer could charg: supracompetitive

prices for only six vears

to be reversed Upol reconsideration because CIG has

ciearly met the Ninth Circuit standard. Even if the Court

In Spectrum Sports adopts the rule of the majority of

courts of appeals, remand to the panel would be required.

lor example, if the Court were to emphasize in Spectrum

Sports that evidence of market power should guide reso-

lution of an attempted monopolization claim, then the

panel's decision, which rested on market sliare instead.

should be reversed on remand. In sum, the reasoning of

this Court In Spectrum Sports will in all likelihood sig-

nificantly affect the validity of the Tenth Circuit’s hold-

ing on the antitrust claim in this case. Under these

circumstances, the Court should hold the petition pending

Its disposition of Spectrum Sports and then dispose of the

petition as appropriate in light of that decision.

ven if the Tenth Circuit were correct in its extreme

limitations upon Section 2 of the Sherman Act, no justifi-

cation exists for the panel's subsequent disallowance of

damages as found by a jury on CIG’s tort claim and

awarded in the judgment that was affirmed on appeal.

Reversal of one claim is no justification for limiting com-

mon damages supported by a surviving claim.

The Tenth Circuit’s ruling that limits recovery of dam-

ages determined by special verdict for a claim affirmed on

damages is reversed, is worthy of this Court’s review.

The panel’s rule denies full recovery of damages upon

valid claims, contrary to the rule adopted in other cir-

cults and to general principles of recovery. Further, the

panel's rule undermines the function of juries and s}

verdicts, and will create uncertainty and will guarantee

unfair outcomes in multiple claim litigation. Finally, the

panel adopted an unprecedented holding concerning the

scope of an appellate mandate and departed from estab-

lished doctrine governing the availability of relief pursuant

to Fed. R. Civ. P. 60¢b).

1. The panel's decision creates a clear conflict among

the circuits. The panel disallowed recovery of any dam-

ages included in the antitrust award reversed on appeal,

even though that result prevented full recovery of demand

charge damages that a jury by special verdict also had

attributed to the tort claim, that were awarded by the

court in the judgment, and that the panel had affirmed

on appeal. App. 9a-12a,

In direct contrast, the Eleventh Circuit rule is “that

Where an award of damages is authorized under two al-

ternat/ive| theories of recovery, and the jury’s finding of

liability on one theory of recovery is supported by the

evidence, the verdict and award will be affirmed on ap-

peal.” Stewart & Stevenson Servs., Ince. Ve. Pickard, 749

Pi2d 635, 644-45 (11th Cir, 1984) (reversing one of

multiple claims, but upholding damage award supported

by surviving claims'. Thus, in another case, even though

the Eleventh Circuit set aside a claim under 42 U.S.C.

S 1981, it upheld the related award of compensatory dam-

ages because they could also be attributed to a surviving

Title VII claim. See Sherman Vv. Burke Contracting, Ine.,

S91 F.2d 1527 (11th Cir), cert. denied, 111 S. Ct. 353

(1990): ef. ADP-Financial Computer Servs., line. Vv. First

Natl Bank, 703° F.2d 1261, 1266-67 (11th Cir. 1983).

The Sixth Circuit employs the same rule: for example,

it allowed recovery of damages that had been attributed

only to a claim reversed on appeal, on the ground that

those damages also could be recovered under surviving

claims. See Pratt v. Brown Mach. Co., 855 F.2d 1225,

1232 n.9, 1242 (6th Cir. 1988); see also WWD. Lawson &

Co. Vv. Penn Cent. Co,, 456 F.2d 419, 424 (6th Cir. 1972)

‘full damages on remaining claim upheld despite re-

versal of one of two claims); ef. Zant Vv. Stephens, 462

U.S. 862 11983) (reversal of one of several aggravating

circumstances set forth in special verdicts does not re-

quire setling aside death penalty, so long as each circum-

stance would support penalty!.> If the rule of these cir-

cuits had been applied in this case, CIG would have been

able to recover the entire award of damages, including

demand charge damages.

The Tenth Circuit’s decision is also inconsistent with

cases that hold that when one of several claims is set aside,

full recovery must be allowed for damages attributable to

the claim affirmed on appeal. The Fifth Circuit ordered

a new trial after setting aside one of several claims

because the original allocation of damages among the

different claims would prevent the plaintiff’s full recovery

on the claims that the court of appeals upheld. including

an antitrust claim. See Video Int'l Prod., Ine. v. Warner-

Amex Cable Communications, Inc., 858 F.2d 1075, 1080,

1085-86) (5th Cir. 1988), cert. denied, 491 U.S. 906

(1989); see also Mercer ve Long Mfg. N.C., Inc., 671

P.2d 946, 949 (5th Cir, Unit A 1982) (“Had the special

interrogatories in the original trial been framed in such a

manner that the assessment of damages had been segre-

gated for each theory of liability, we would willingly affirm

both the finding of liabilitv under strict liability and the

award of damages”). In Ryko Manufacturing Co. v. Eden

Services, 823 F.2d 1215 (8th Cir. 1987), cert. denied, 484

U.S. 1026 11988), a jury found liability on antitrust,

fraud, and breach of contract claims, but awarded dam-

ages only pursuant to the antitrust claim. On appeal, the

Kighth Circuit reversed the antitrust claim, but directed

retrial on the fraud and contract claims. The Court di-

rected retrial on the contract claims because the judgment

~The Third Circuit has applied an even more aggressive rule:

it upheld a damage award linked solely to a claim reversed on appeal,

on the ground that the damages were supported by a related claim

presented to, but not expressly passed upon by, the jury. See In

re Merritt Logan, Inc., 901 F.2d 349, 353. 363-64 (3d Cir. 1990).

had contained no damages separately attributable to the

contract claim. /d. at 1239. See also Berkey Photo, Inc. \

Bastman Kodak Co., 603 F.2d 268, 279-90, 299-304 (2d

Cir, 1979) (Sherman Act Section 2 claim and related dam-

age award set as:de. but retrial ordered to allow full recov-

ery of damages on alternative, Section 1 claim upheld on

appeali, cart. denied, 444 U.S. 1093 (1980) ."

At bottom, these circuits would allow a plaintiff in

CIG’s position to recover the full amount of damages

attributable to conduct such as NGPL’s. Under the Tenth

Circuit’s rule, plaintiffs in these cases would have re-

covered only damages that had not been initially attrib-

uted to the claim reversed on appeal.

2. The Tenth Circuit’s rule also marks an unjustified

departure from other circuits’ treatment of Rule 49/a)

and from their use of special verdicts. In this case, the

jury found by special verdiet—which the trial court held

Was supported by substantial evidence—that C'G suf-

fered more than $23 million in damages from NGPL’s

tortious interference with contract. Rule 49(a) pro-

vides for special verdicts to operate in precisely these

circumstances to allow the appellate court to set aside

only that portion of the damage award attributable solely

to the claim reversed on appeal.

The purpose of a Rule 49(a! special verdict is to

avoid confusion, appellate uncertainty and the need

® See also Calamia Vv. City of New York, 879 F.2d 1025, 1036 (2d

Cir. 1989) (damage award set aside to allow full recovery on affirmed

claims when one of multiple claims reversed, only because no spe-

cial verdicts existed to allow affirmances of full award on remaining

Claim); Jones V. Miles, ae 5 F.2d 103 (5th Cir. Unit B 1981) (same) ;

Albergo Vv. Reading Co., 372 F.2d 83, 85-86 (3d Cir. 1966) (same),

cert. denied, 386 US. 983 (1967); MCI Communications Corp.

V. American Tel & Tel. Co., T08 F.2d 1081, 1168 (7th Cir.) (several

of multiple monopolization counts found to be without basis, requir-

ing retrial of damages to ensure recovery upon affirmed counts),

cert. denied, 464 U.S. 891 (1983).

for additional proceedings by identifying the bases

i Which the jury rendered its verdict. In cases such

us this, involving multiple, alternative theories of

recovery, the Rule 49(a) special verdict has been

described as a ‘wonder to behold.’ Brown, Federa!

Special Verdicts: The Doubt Eliminator, 44 F.R.D.

bos, S44 (1967). This is so because the use of a

special verdict in multiple theory of recovery cases

eliminates the uncertainty as to whether the jury’s

verdict was based wholly on an improper theory

requiring retrial of the case, as with a general ver-

dict, and ‘reveals the whole case for what it is, both

; fact and law, for complete and final acceptance of

the correct legal theory by the reviewing Court.’

[?d. |, at 345.

Stewart & Sfevenson Servs., Ine., 749 F.2d at 644 (cita-

tions omitted! ; see Gainesville Utils. Dept. v. Florida

Power & Light Co., 573 F.2d 292, 294 n.3 (5th Cir.

1978) (citing cases). Other circuits, too, have given this

full effect to special verdicts in similar circumstances.'"

The Tenth Circuit’s rule conflicts with this approach to

special verdicts and entirely destroys their utility. See,

e.g. Atlantic & Gulf Stevedores, Inc. Vv. Ellerman Lines,

Ltd., 309 U.S. 355, 364 (1962) (appellate courts must

give special verdicts full effect unless they are in ir-

reconcilable conflict); Robles Vv. Ewvon Corp., 862 F.2d

1201, 1204 (5th Cir.) (citing cases!, cert. denied, 490

U.S. 1051 (1989); Morris v. Pennsylvania R.R., 187

F.2d &37, 840-41 (2d Cir. 1951) ‘citing cases): ef.

Gallick Vv. Baltimore & Ohio R.R., 372 U.S. 108, 119-22

(1963). Here, the special verdicts returned permitted

the court of appeals ‘or district court on remand) to

assess precisely the full extent of CIG’s damages from

1 See, €.8., ‘pra, pp. 16-18; cf. Rheuport vo Ferguson, 819

F.2d 1459, 1464 (8th Cir. 1987): Walker vo Pettit Constr. Co., 605

F.2d 128, 131, rehk’g, 611 F.2d 950 Ith Cir. 1979): Pritehard \

Liggett & Myers Tobacco Co., 370 F.2d 95, 95-96 (3d Cir. 1966)

cert, denied, 386 U.S. 1009 (196

_—_—

ems only issues “directly in issue” and necessarily re-

solved; “|wlhile a mandate is controlling as to matters

Within its compass, on the remand 2 lower court is free

as to other issues.”’ Spraque V. Ticonie Nat'l Bank. 307

U.S. 161, 168 (1939). “The doctrine of law of the case

comes into play only with respect to issues previously

Quern V. Jordan, 440 U.S. 332. 347 n.18

(19791. Until this ease, courts of appeals have consistently

limited the mandate rule, and related doctrine of law of

the case, to issues decided on appeal “expressly or by

‘9

determined.

necessary Implication.” Piambino v. Bailey, 757 F.2d

L112, 1120 (11th Cir. 1985), cert. denied. 476 U.S. 1169

(1986) :

The Tenth Circuit’s treatment of the mandate abandons

the great advantage of the Sprague rule, which is that the

appellate opinion clearly communicates to al] parties and

the district court which issues have been definitively

resolved. In cases such as this, where the court of appeals

reverses one of multiple claims, the parties and district

court will act at their peril regarding the extent of

recovery that the surviving claims wil] support. Even for

simple affirmances of claims, the extent to Which the court

See also. €:2.. Jones Yy. Leu . 957 F.2d 260). 26? Gth Cir.

pet tion Pay CETT. filed Liss: May 26. 1992 (No. 4] R104

Borchers Vv. Commissioner, 942. F.2d 22, 23 (8th Cir. 1991): FB

Co? Dp. y. Unite d Stite Ss, O31 I’ 2d S74. S77 ey (| Cir. 199] cl? qd

cases cited); Luekey vo Mille r, 929 F.2d 618, 621 (11th Ci) 1991

(and cases cited); Parts & Elec. Motors, Ine. v. Sti rling Elec., Ine.

866 F.2d 228, 231-32 (7th Cir. 1988) (and cases cited), cert. de nied,

193 U.S. 847 (1989): Smith vy. Bounds, 813 F.2d 1299. 12306 (198%

reh’g, 841 F.2d 77 | Ith Cir. 1988). cert. denis f, 488 U.S. 869 (1988

Newball vy. Offshore Logistics Int'l, 802 F.2d 821, 826 (Sth Cir

L986); Panama Processes, S.A. Vv. Cities Serv. Co., 789 F.2d 99).

JUG (2d iy 1986 ) ; Banke rs Trust Co. V. Bethlehe m Steel Cor i.

761 F.2d 943, 950 (3d Cir. 1985) (and cases cited): Megqgard \y

O'Connell, 703. F.2d 1284, 1289 (D.C. Cir. 1983); Beltron vo Mayes

701 F.2d 91, 93 (9th Cir.). cert. de nied, 462 U.S. 1134 (1983)

of appeals has fixed damages or resolved related damage

issues Will always remain in doubt.

The panel’s decision also imposes what is in essence a

novel federal election of remedies requirement upon the

formulation and appeal of a judgment containiny multiple

claims. The panel reasoned that CIG should not be al-

lowed tort damage recovery because “CIG had the demand

charges within the antitrust damages award” and “vigor-

ously fought through that {initial appeai] to sustain that

judgment and arrangement of the damage award.”’ App.

10a. This innovation is unsound: election of reme-

dies requirements serve to prevent double recovery of

damages—the very result directly obtained by the pro-

cedure followed by the district court in this case and by

other circuits generally. The panel’s newly crafted rule

does nothing but unfairly deprive plaintiffs ‘including

CIG) of damages granted by jury verdicts and approved

in district court decisions affirmed as to that verdict on

appeal.

4. Rule 60(b), relied upon by the panel, is relevant

to fuil recovery upon the tort claim only to the extent that

relief from the judgment is required: CIG argues, of

course, that the affirmed verdict and judgment already

support award of the demand charge damages. See supra

pp. 15-23. Even so, the Tenth Circuit’s interpretation

of Rule 60(b) also departs from the governing rules es-

tablished by this Court and other courts of appeals, and

the panel’s nove! requirement will bar full recovery in a

broad range of cases.

The panel’s decision reimposes a long-abandoned and

improper restriction on the operation of Rule 60(b) (6).

The panel determined that “Rule 60(b) (6) cannot be

properly used to alter the substantive content of a judg-

ment once it has been affirmed on appeal except in extraor-_

dinary situations,” and “{f]ollowing appellate disposition

the judgment is no longer subject to district court

amendment beyond the ministerial dictates of the man-

date.” App. lla-12a.

Contrary to the panel’s decision, affirmance of a judg-

ment does not restrict relief otherwise available pursuant

to Rule 60(b). Prior to 1976, the courts of appeals were

divided on the question whether leave must be had of

the court of appeals before a district court could provide

relief from an affirmed judgment. This Court resolved

this issue by holding that leave was not required because

affirmance of a judgment did not alter the availability of

relief pursuant to Rule 60(b). Standard Oil Co. v. United

States, 429 U.S. 17 (1976) (per curiam). The interest

in finality was no greater after affirmance than before

and, “{llike the original district court judgment, the

appellate mandate relates to the record and issues then

before the court, and does not purport to deal with pos-

sible later events. Hence the district judge is not flouting

the mandate by acting on the motion.” Jd. at 18. Since

Standard Oil Co., courts have routinely applied the same

Rule 60'b) standard to judgments affirmed by prior ap-

peal that is applied to initial judgments."

The panel’s conclusion that relief from judgment could

be had, if at all, pursuant to Rule 60(b) (6) is also con-

trary to the accepted operation of Rule 60(b1 (5). which

requires relief in the circurnstances presented by this

case.”

Rule 60(b1 (5) supports relief from the tort judgment,

to include the demand charge damages, because the

4 See, e.g., Lilieberg v. Health Servs. Acquisition Corp., 486 US

847 (1988); Panama Processes, S.A., 7839 F.2d at 993-99. Cf. Board

of Educ. Vv. Dowell, 111 S. Ct. 680 (1991).

™ Rule 60(b)(5) provides for relief from judgment when “the

judgment has been satisfied, released or discharged, or a prior

judgment upon which it is based has been reversed or otherwise

vacated, or it is no longer equitable that the judgment should have

prospective application.”

‘ orior” antitrust judgment was reversed. In contrast to

the Tenth Circuit panel, the Fourth Circuit has set forth

the rule that a judgment is “prior” for purposes of Rule

60'bi(5! when it is legally precedent to or forms the

basis of another judgment, even when the judgments are

contemporaneous. See Werner v. Carbo, 731 F.2d 204,

207-08 (Ath Cir. 1984): Pierce Oil Corp. V. United States,

9 F.R.D. 619 (E.D. Va. 1949) (Rule 60(b) supported

restoration of common damages to judgment after reversal!

of contemporaneous judgment to which common damages

were allocated). Several circuits have established that it

is an abuse of discretion not to modify a dependent, con-

temporaneous judgment once the predicate judgment has

been reversed on appeal. See Werner, 731 F.2d at 206,

209; ef. Michigan Surety Co. Vv. Service Mach. Corp., 277

F.2d 531 (5th Cir. 1960): Jackson v. Jackson, 276 F.2d

501 (D.C. Cir.), cert. denied, 364 U.S. 849 (1960).'* The

Tenth Circuit has now established that it is reversible

error to modify the dependent judgment following re-

versal of the predicate judgment.

The Tenth Circuit’s treatment of Rules 60(b) (5) and

60(b) (6) directly affects plaintiffs’ ability to recover the

full damages attributable to claims affirmed on appeal.

Whenever a district court’s construction of damages

makes full recovery under one claim dependent in any

manner upon affirmance of another claim, the Tenth Cir-

cuit rule will stand as a potential obstacle to the recovery

mandated by the federal or state claim affirmed on appeal.

The proper interpretation of a fundamental rule of civil

procedure on which the courts of appeals disagree is the

quintessential issue requiring review by this Court.

6 The usual practice is to adjust the dependent decision on appeal

when the predicate judgment is altered, see, ¢.g., Butler v. Eaton,

141 U.S. 240 (1891), but the district court may make that adjust-

ment upon remand if the court of appeals does not do so. See

7 J. Moore, Moore’s Federal Practice © 60.26[3). at 60-248 (1992).

CONCLUSION

The petition for a writ of certiorari should be granted

or, at a minimum, the petition should be held pending

this Court's disposition of Spe ctrum Sports, Inc. Vv. Me-

Quillan, No. 91-10.

Respectfully submitted,

MICHAEL L. BEATTY REX E. LEE *

REBECCA H. NOECKER CARTER G. PHILLIPS

COLORADO INTERSTATE MARK E. HADDAD

GAS COMPANY RICHARD D. KLINGLER

Post Office Box 1087 SIDLEY & AUSTIN

Colorado Springs, CO 80944 1722 Eye Street, N.W.

WILLIAM C. MCCLEARN Washington, D.C. 20006

JOSEPH W. HALPERN (202) 736-8000

ELIZABETH A. PHELAN J. KENT RUTLEDGE

HOLLAND & HART LATHROP, RUTLEDGE & BOLEY

Post Office Box 8749 Post Office Box 4068

Denver, CO 80201 Cheyenne, WY 82003

MARILYN S. KITE Counsel for Petitioner

HOLLAND & HART

2020 Carey Avenue

Suite 500

Cheyenne, WY 82001

September 14, 1992 * Counsel of Record

APPENDICES

\PPENDIX A

Decision of the United States Court of Appeals fe

the Tenth Circuit, Mav 6, 1992

Decision of the United States Court of Appeals f

the Tenth Circu sep 1, 1989

\PPENDIX (

Order the United States District Court for t

District of Wyoming, March 26, 1990

APPENDIX D

Order of the United States District Court for

l) ‘ fF WW ) Ma GQ 1OR7

\PPENDIX |]

Verdict For ind Spe Interrogatorie yf th

United States District Cour r the Distri

W mine. Oct. BO. 1986

APPENDIX A

UNITED STATES CO

URT OF APPEALS

TENTH CI

R’

.CUIT

No. 90-8045

COLORADO INTERSTATE GAS COMPANY.

Plaintiff -c ‘ounte rclain

Di fe nda nt-A ppe ‘lee,

NATURAL GAS PIPELINE COMPANY OF AMERICA and

NGPL-TRAILBLAZER, INC..

Di f ndants-Co ipite rclain ants-

Appellants,

WYOMING INTERSTATE COMPANY, LTD.. and the

COASTAL CORPORATION,

Counterclaim Defendants-

Appellees.

MIDCON VENTURES, INC..

(C‘ountercla ima nt

May 6, 1992

Before HOLLOWAY and BARRETT, Circuit Judges,

ind BROWN,* District Judge.

* The Honorable Wesley E. Brown, Senior United St:

Judge for the District of Kansas, sitting by designation

a ©

HOLLOWAY, Circuit Judge.

This is the second appeal to this court by defendants,

Natural Gas Pipeline Company of America and NGPL-

Trailblazer ‘collectively Natural), following an order of

the United States District Court, District of Wyoming,

entering judgment in favor of the plaintiff, Colorado In-

terstate Gas Company (CIG). See Colorado Interstate Gas

Co. v. Natural Gas Pipeline Co., 661 F.Supp. 1448 (D.

Wyo.1987 (CIG 1), rev'd in part and aff'd in part,

589 F.2d 683 (10th Cir.1989) (CIG /1). In this most

recent appeal, Natursi argues, inter alia. that the district

court erred on remand in determining that Colorado law.

rather than Wyoming law governs CIG’s pendent state

law tort claim against Natural.

I. Background

CIG and Natural are competing owners of pipelines

Which transport natural gas. For many years, Natural

has purchased gas from CIG transporting it to states in

the midwest and east. In 1981-82 a new pipeline, the

Trailblazer System, was constructed to transport newly

discovered reserves of natural gas out of the Overthrust

region of Wyoming. The Trailblazer System is composed

of three connected segments of pipeline. CIG and its

affiliates have ownership interests in the two westernmost

segments, the Overthrust and the WIC pipelines. Natura!

owns a one-third interest in the third, easternmost seg-

ment of the Trailblazer System, the Trailblazer Pipeline.

Under an existing contract, CIG had agreed to purchase

gas from Champlin Petroleum’s Whitney Canyon reserves

in the Overthrust region (the Whitney Canyon contract),

CIG transported this gas through the two western pipeline

sections in the Trailblazer System to its own offshoot pipe-

line which intersects the system at a point west of Natu-

ral’s Trailblazer pipeline.

In July 1982, CIG and Natura] entered into a contract

(the Service Agreement) which required CIG to deliver

and Natural io purchase specified quantities of natural

gas from. the Overthrust area. The Service Agreement

set forth how much gas Natural was required to purchase

and also contained a minimum bill provision. Because

the Service Agreement involved the interstate sale of

nautral gas, the rates and terms specified required ap-

proval by the Federal Energy Regulatory Commission

(FERC). In a proceeding before that body, FERC modi-

fied the terms of the Service Agreement to reduce the

price Natural had to pay for unpurchased gas.

In July 1983, Natural sharply reduced its gas purchases

from CIG, choosing instead to pay CIG for the unpur-

chased gas at the lower FERC mandated rate. Natural

then purchased gas from other sources to replace lost

volumes from CIG, often paying more for the gas. Under

the Service Agreement, CIG was obligated to be ready to

deliver volumes of gas requested by Natural. Thus, CIG

could not use the pipeline capacity reserved for Natural

to ship gas for other customers. Moreover, Natural oc-

casionally resumed purchases of gas from CIG when CIG

sought to sell gas to new customers, terminating these

purchases after the new customers went elsewhere. Due

to the oversupply of gas in CIG’s system created by

Natural’s refusal to take gas, CIG was forced to stop

purchasing gas from some of its suppliers. One of these

suppliers was Champlin Petroleum (Champlin).

Despite its refusal to purchase gas from CIG, Natural

negotiated with Champlin to acquire the Whitney Canyon

reserves, In the ensuing discussions, Natural agreed to an

increase in the purchase price for Champlin gas if

Champlin obtained a release of CIG’s rights to the gas

under the Whitney Canyon contract. When CIG attempted

to negotiate revisions to that contract because of its in-

ability to take Champlin gas, Champlin insisted that CIG

release its rights. CIG acceded. The next day, Natural

bought Champlin’s Whitney Canyon gas, although it still

refused deliveries from CIG. Natura] shipped the Whit-

ney Canyon gas through the Trailblazer Pipeline.

IT. Prior Proceedings

CIG brought this action alleging that Natural violated

federal antitrust laws by attempting to monopolize the

market for the long-distance transportation of Wyoming

natural gas, that Natural conspired to monopolize that

market, that Natural breached the Services Agreement

and its duty of good faith and fair dealing, and that

Natural tortiously interfered with CIG’s contractual rela-

tions with Champlin.

In CIG J, the jury awarded CIG $724,033,361 in dam-

ages based on CIG’s antitrust, breach of contract and

tortious interference with contractua] relations claims.

Following deduction for duplicative awards, the district

court reduced the total jury award to $412,237,972, and

entered judgment for CIG on that amount. Natural

appealed.

In CIG IT, a panel of this court reversed the antitrust

and breach of contract verdicts. See CIG II, 885 F.2d at

697. However, the panel affirmed the verdict for tortious

interference with contractual relations, rejecting Natural’s

assertion that the award interfered with FERC’s author-

ity. See id. at 690-91.

Accordingly, we remanded to the district court to enter

judgment on the tort award alone. Our mandate, ex-

pressed in our judgment and opinion, was that the district

court’s judgment was affirmed in part and reversed in

part, concluding: ‘|t]he cause is remanded to the United

States District Court for the District of Wyoming to

enter judgment in accordance with the opinion of this

court.”

III. On Remand

Returning to the district court. CIG moved to have

$15,204,555 in demand charges awarded by the jury in

the original verdict reinstated in the new judgment re-

quired by the remand. In C/G /, the district court had

entered judgment on the tort award for $39,231,072, but

reduced this award to $24,026,517 “because the jury

awarded Colorade Interstate . .. demand charge losses

(315,204,555) under the attempt to monopolize and torti-

ous interference claims|.]” I R. Doc. 578 at 2.' CIG

had apparentiv agreed to have the demand charges listed

undex the antitrust award, thus benefitting from the treble

damages permitted by the statute.

Over Natural’s objections, the district court agreed to

reinstate the demand charges cf $15,204,555 in the iudg-

ment on the tort award. The court stated that its Judg-

ment of November 10, 1986, “made it clear that the

tortious interference award included damages for restitu-

tion and for demand charges.” Order on Post Appeal

Motions, IT R. Doe. 694 (Pleadings) at 12, 15 (“Remand

Order”), The court noted that it had specifically with-

held a jury instruction prohibiting duplicative awards

“so that in the event any one count failed there could be

1 cmplete answer by the jury on the other counts!.]”

//d. The court concluded that CIG was entitled to recover

the demand charges because the jury intended that it

should and the only reason for deducting them at all was

“to avoid duplicative damages on two different causes of

action|.|”’ /d. at 18, 15.

' Additionally, in C7G J, the district court further reduced the

remaining $24,026,517 of restitution damages in the tort award

(‘after deducting the demand charges) by two-thirds to reflect. the

fact that Natural owned only one-third of the Trailblazer Pipeline

Company and received only one-third of the funds in question. See

CIG 7, 661 F.Supp. at 1479. Thus, in CJG IJ, the tort award ap-

pealed to this court then totalled $8,008,839. See CIG II, 885 F.2d

at 691 n. 12.

Although this court’s original opinion incorrectly made reference

to $8,000,839 In restitutionary tort damages, see CIG JI, 885 F.2d

at 691 n. 12, the actual amount of tort damages awarded by the

district court and affirmed by this court is $8,008,839. See CIG J,

601 F.Supp. at 1479.

By an opposing motion, Natural sought to have the tort

judgment set aside in toto on the basis of an intervening

decision by the Wyoming Supreme Court, Price v. Sorrell,

784 P.2d 614 (Wyo.1989), which was decided after C/G

HT. Natural argued that Price required the district court

to enter Judgment against CIG because Wyoming had now

made clear that it refused to adopt § 766A of the Restate-

ment (Second) of Torts (1979), the basis of CIG’s tort

claim. Natural argued that since federal courts are obliged

to apply the most recent controlling state court decision

on state substantive law, Natural was entitled to judgment

on the state law tort claim because the district court had

found Wyoming daw to govern, and that law would not

allow such tort recovery,

The district court conceded that in CIG I it had stated

that “Wyoming would recognize a cause of action under

$ 766A.” Remand Order at 6 (quoting C/G I, 661 F.Supp.

at 1449). The court also acknowledged that the Price case

demonstrated that its C/G J “prediction proved wrong.”’

Id. at 7. Nevertheless, the court stated:

this Court disputes Natural’s contention that Wyo-

ming substantive law applies. This Court never care-

fully considered whether Wyoming or Colorado law

applied in this instance since, at that time, neither

Colorado nor Wyoming courts had addressed the

adoption or rejection of §$ 766A. So by default, this

Court applied what it presumed Wyoming law would

be. The situation has changed, however, with Wyo-

ming rejecting § 766A in Price and Colorado adopting

s 766A in Westfield Development Co. v. Rifle Invest-

ment Associates, 1786 P.2d 1112 (Colo.1990) |,

Remand Order at 7-8. Accordingly, the court conducted a

choice of law analysis.

The court observed that Wyoming applies the rule of

lex loci delicti in tort cases. Which requires application of

“the substantive law of the state Where the harm or

]

injury to the plaintiff occurs|.|” Jd. at 8. Assuming that

the place of the wrong was ‘‘where the last event necessary

to make an action liable for an alleged tort” took place,

Restatement (First) of Conflicts § 377 (1934), the court

held that:

the last element of a tort cause of action is damages.

. Ina physical injury tort claim, damages generally

ave incurred in the state where the plaintiff is physi-

cally injured by the defendant. In this instance, the

injuries inflicted were financial. Defendants torti-

ously interfered with CIG’s ability to conduct its

business. ‘The “last event necessary” in this tort is

the construction of plaintiff’s opportunities, and that

occurs Where the plaintiff experiences it, i.e., his

place of residence.’ Cesnik v. Chrysler Corp., 490

F.Supp. 859, 872-73 (M.D.Tenn.1980). . . . More-

over, even if one were to look at the actions taken

by the parties, the last event necessary for liability to

be imposed upon Natural. was Natural’s agreement

to purchase gas from Champlin Petroleum, the same

eas Natural forced CIG to give up. This agreement

took place in Colorado, not Wyoming.

Under this analysis, the Court now finds that

Colorado substantive law applies to CIG’s tortious in-

terference with a contract claim. Colorado, as con-

trasted with Wyoming, recognizes $ 766A causes of

action. Accordingly, CIG’s tort claim is still valid.

Remand Order at 9-10 (citations omitted).

By an order filed March 26 1990, the district court

entered judgment on the tort claim in favor of CIG for

$23,215,594 in damages. The court added $4,827,129 in

post-Judgment interest pursuant to the 5.75% rate set in

the original November 10, 1986 judgment order. The

court’s order set a new post-judgment interest rate of

8.56% to run from the date of its new judgment. By

order of April 6, 1990, the court denied Natural’s motions

for a new trial and JNOV. Natural then timely appealed.

aaa

IV. Discussion

Un appeal Natural makes a number of arguments: 1)

the district court erred in its choice of law analysis; 2)

the court improperly awarded demand charge damages

because such damages are preempted by FERC’s authority,

violate the filed rate doctrine, and are based on false

evidence presented at trial; 3) the district court erred in

applying post-judgment interest at two different rates;

4) the court erred by applying interest on the demand

charges dating back to the original judgment. We need

not reach these arguments, however, because the district

court’s error Was more fundamental—the court acted

beyond the scope of our mandate and accorded relief not

available on post affirmance remand.

On remand, both parties moved to have the district

court alter the scope of the tort judgment which this

court had affirmed in C/G IJ. We conclude that the dis-

trict court could not properly act on either motion, and

accordingly vacate and remand for an entry of ju .gment

in favor of CIG on the tort award for $8,008,839, in ae-

cord with our clear mandate and our judgment affirming

that award. See 885 F.2d at 691 and n. 12. 697.

A. CIG’s Motion to Revise the Tort Judgment Amount

After this court’s decision in C/G II, CIG moved to

have the district court declare that the tort judgment is

for $23,213 394 plus post-judgment interest.: Although

“CIG apparently also moved pursuant to Fed.R.Civ.P. 54(b) to

have the tort judgment restated as a separate award. As indicated

in the text above, however, we construe this motion as one actually

brought pursuant to Rule 60(b)(6). Rule 54(b) was not a proper

vehicle for this request because the rule is designed to permit a

party to gain an immediate appeal of a severable portion of multi-

ple claim litigation. Moreover, after our disposition in C/G JI, the

precondition to use of Rule 54(b), that there be “more than one

claim for relief” presented to the district court did not exist. Our

decision in CIG IJ eliminated all of CIG’s causes of action except

not stylized as such, we must construe this motion to be

pursuant to Fed.R.Civ.P. 60(b). In C/G II, we affirmed

the tortious interference part of the district court’s deci-

sion and judgment, and remanded with instructions “to

enter judgment in accordance with the opinion of this

court.” II R. Doe. 679 at 2. By this action, the tort

portion of the district court’s original judgment became

final, with only the ministerial function remaining of

entry of a corrected judgment therefor.

As a result, there were very few options available to

CIG to have the district court’s judgment changed in any

way.* CIG’s motion could not properly have come pursu-

ant to Rule 59(e), to alter or amend the judgment, be-

cause it was out of time. In our view, Rule 60(b) appears

to provide the only vehicle by which CIG could have pos-

sibly presented its request that the district court rein-

state the demand charges into the tort judgment.

Rule 60(b), however, only provides relief from judg-

ment under certain specified conditions. The Rule pro-

vides that:

(b) Mistakes; Inadvertence; Excusable Neglect;

Newly Discovered Evidence; Fraud, ete. On motion

and upon such terms as are just, the court may

relieve a party or a party’s legal representative from

a final judgment, order, or proceeding for the follow-

ing reasons: (1) mistake, inadvertence, surprise, or

excusable neglect; (2) newly discovered evidence

which by due diligence could not have been discovered

in time to move for a new trial under Rule 59(b);

the affirmed tort award. Thus, there was nothing from which the

tort award could be declared separate.

3% As an aside, CIG could have, but did not, seek rehearing or to

have this court recall its mandate for any correction it thought

was necessary to the district court’s judgment. (IG, instead, filed a

petition for certiorari in the Supreme Court. This petition was

denied,

10a

(3) fraud (whether heretofore denominated intrin-

sic or extrinsic), misrepresentation, or other miscon-

duct of an adverse party; (4) the judgment is void;

(>! the judgment has been satisfied, released, or dis-

charged, or a prior judgment upon which it is based

has been reversed or otherwise vacated, or it is no

longer equitable that the judgment should have pro-

spective application: or (6) any other reason justify-

ing relief from the operation of the judgment.

Of the reasons listed, the only one possibly applicable

to the facts of this case is number (6), which permits

relief for “any other reason justifying relief.” In Collins

v. City of Wichita, 254 F.2d 837 (10th Cir.1958), we

noted that “in extraordinary situations. yelief from final

judgment may be had under Rule 60‘b) (6), when such

action is appropriate to accomplish justice.” Jd. at 839

femphasis added!. Based on the facts before us, We must

conclude that the relief sought by CIG—a change in the

content of the judgment affirmed by this court—is un-

supported by an extraordinary reason to justify relief.

Before the district court originaily imposed its jude-

ment, the demand charges were removed from the tort

portion of the judgment, with the result that CIG had this

amount trebled as part of the antitrust damages under

15 U.S.C. $15 (1914). Thus. as the prior appeal came

to us in C/G II, CIG had the demand charges within the

antitrust damages award in its favor, with the benefit

of trebling. CIG vigorously fought through that appeal in

C/G IT to sustain that judgment and arrangement of the

damage award, but unfortunately for CIG, it lost when

the antitrust judgment was rejected by this court. C/G

IT, 885 F.2d at 697. We cannot agree that these circum-

stances furnish a basis for extraordinary relief from the

judgment we affirmed.

Additionally, we believe that concerns of finality die-

tate that the district court must be circumscribed by our

mandate. See Collins, 254 F.2d at 839 ‘noting that

lla

“{]]itigation must end sometime”). As we noted in Hicks

v. Gates Rubber Co., 928 F.2d 966, 969 (10th Cir.1991),

“ltlo decide whether the district court violated the man-

date, it is necessary to examine the mandate and then

look at what the district court did.” Here, the district

court originally deducted these demand damages because

the jury duplicated them in both the tort and antitrust

claim awards. See I R.Doc. 578 at 2. In its later opinion

denying Natural’s motion for JNOV, the court again

stated that following CIG’s acceptance of the ordered

remittitur, “/t]hé sum owed by [Natural] totals

$8,008,839[,]” C/G I, 661 F.Supp. at 1479, this figure

being the one-third of the $24,026,517 restitutionary tort

award given to CIG of profits of Trailblazer Pipeline

Company. Thus, we must ayree with Natural that

“(tl]his Court never addressed the propriety of awarding

the demand charge payments as tort damages.” Appel-

lant’s Reply Brief at 19.

Our mandate to the district court instructed it to enter

judgement on the tort award that was before this court in

CIG II, The rule is well established that a district court

must comply strictly with the mandate rendered by the

reviewing court. See Laffey v. Northivest Airlines, Ine.,

642 F.2d 578, 584-85 (D.C.Cir.1980) (district court has

“no power to reconsider issues laid to rest” on prior

appeal). As a corollary to this rule, we are convinced that

Rule 60(b) (6) cannot be properly used to alter the sub-

stantive content of a judgment once it has been affirmed

on appeal except in extraordinary situations. To hold

otherwise would be to permit a district court to violate

our mandate that a judgment be entered “in accordance

with the opinion of this court.” II R.Doc. 679 at 2. Hav-

ing thoroughly reviewed the briefs submitted in the first

appeal and the careful decision in C/G IT, we believe the

panel in C/G II intended to, and did, resolve all the

issues presented to it. Accordingly, a second appeal should

not now be entertained to challenge the affirmed tort

award.

12a

We are unable to find any authority for revision of a

judgment as was made here, and none is cited. A suit is

deemed “ ‘pending until the appeal is disposed of,’ and

until disposition any judgment appealed from it is. still

sub judice.” de Rodulfa v. United States, 461 F.2d 1240,

1253 (D.C.Cir.) (quoting Mackenzie v. A. Bngelhard &

Sous Co., 266 U.S. 181, 142-43, 45 S.Ct. 68, 69, 69 L.Ed.

209 1192415, cert. denied, 409 U.S. 949, 93 S.Ct. 270, 34

L.Ed.2d 220 (1972): Nicastro v. United States, 206 F.2d

8, 92 (10th Cir.1953). Following appellate disposition,

however, the judgment is no longer subject to district

court amendment beyond the ministerial dictates of the

mandate, which encompasses the full scope of jurisdic-

tional power granted to the district court on remand.

Accordingly, we vacate the district court’s decision to

grant CIG’s motion to reinstate the demand charges re-

moved from the tort judgment entered on November 10,

1986.

B. Natural’s Motion to Apply Intervening State Law

or similar reasons, we also reject Natural’s contention

that the choice of law issue cannot be avoided. Natural

argues that the district was required to apply Price v.

Sorrell because the Supreme Court has declared that

“until such time as a case is no longer sub Judice, the

duty rests upon federal courts to apply state law under

the Rules of Decision statute in accordance with the

then. controlling decision of the highest state court.”

Vandenbark v. Owens-lilinois Glass Co, 311 U.S. 538.

943, 61 S.Ct. 347, 350, 85 L.Ed. 327 (1941). Sce also

Huddleston v. Dwyer, 322 U.S. 232. 236, 64 S.Ct. 1015,

1017, 88 L.Ed, 1246 (1944). As mentioned above, how-

ever, We conclude that the question of which state law

properly applied was no longer sub judice after this court

disposed of the appeal in C/G // and the time for a peti-

tion for certiorari had passed.

More importantly, for the same reasons that we believe

CIG’s motion must come, if at all, under Rule 60(b) (6),

13a

we also conclude that Natural’s motion is controlled by

that vale! Over thirty vears ago, this court held in

Collius that “lal change in the 'aw or in the judicial

view of an established rule of law is not such an extraor-

dinary circumstance which justifies relief” under Rule

6Orbi. Jd. at S893: but ef, Pierce ve. Cook & Co., 518

Ped 720, 722-23 (10th Cir.1975)' ten bane) ‘finding

extraordinary circumstances where the change in law

arose out of the same accident in which the plain-

tiffs had been involved!, cert. denied, 423 U.S. 1079, 96

S.Ct. 866, 47 L.Ed.2d 89 (1976). The Collins holding

is still the rule in this circuit. See Van Shiver v. United

States, 952 F.2d 1241, 1244-45 (10th Cir.1991). Thus,

Natural had no basis on which it could have asked the

district court to apply the Price case: this case was al-

ready over for purposes of selecting the governing law.

'We note that Natural also argued to the district court on re

mand that CIG had possibly perpetrated a frand or misrepresenta-

tion on the court with respect to these demand charges. CIG = re-

covered these charges because it proved at trial that it could not

use its rights to the Canvon Creck and Overthrust facilities without

the Champlin eas misappropriated by Natural. Natural alleged

that immediately after trial, CIG began using these allegedly

useless” facilities and profiting thereby. Natural apparently made

this assertion to the district court after trial, and renewed it on

remand,

In its order on remand, the district court noted that Natural

proffered an affidavit of CTG’s Vice President which stated that

CTG had shipped some gas through the facilities. The court noted,

however, that the same affidavit showed that the shipped gas be-

longed to a third party, not CIG, and that the revenue received

was minimal. The district court held that “/t]he evidence does not

support Natural’s contention of inequity.” Remand Order at 15.

To the extent that this motion properly comes within Rule

HO;b).3)'s provision tor fraud, misrepresentation or misconduct of

another .

this argument on remand had there been demand

charges remaining in the affirmed tort award. However, the elimi

nation of the demand charge damage award in CIG J] mooted this

issue so it need not have been reached either.

arty, we beheve the district court could properly have

entertaines

easier

l4a

Accordingly, the revised judgment of the district court

entered March 26, 1990, now on appeal, must be

)

}

VACATED; the case is REMANDED with instructions

for entry of judgment in favor of CIG on its tort award

for $8,008,839, plus post-judgment interest to run from

November 10, 1986.

15a

APPENDIX B

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

Nes. 87-2109, 87-2123

COLORADO INTERSTATE GAS COMPANY,

Plaintiff Count rclaim-

Defendant / Appellee,

NATURAL GAS PIPELINE COMPANY OF AMERICA;

NGPL-TRAILBLAZER INC..,

Dr fe ndants Counte )-

Claimants A pp llants.

WYOMING INTERSTATE COMPANY, LTD.:

the COASTAL CORPORATION,

Counterclaim-Defendants / Appellees.

MIDCON VENTURES, INC.,

Counterclaimant.

FEDERAL ENERGY REGULATORY COMMISSION,

Amicus Cunae.

Sept. 11, 1989

Before MOORE, ANDERSON, and BALDOCK, Circuit

Judges.

JOHN P. MOORE, Circuit Judge.

This is an appeal from an order of the district court

refusing to grant judgment notwithstanding the verdict

or a new trial for the defendants, Natural Gas Pipeline

Company of America (Natural) and NGPL-Trailblazer.

16a

661 F.Supp. 1448. The jury awarded the plaintiff, Colo-

rado Interstate Gas Company (CIG), $724,033,361 in

damages based on CIG’s claim that Natural attempted to

monopolize the market for long distance transportation of

Wyoming gas, breached its contract with CIG, and tor-

tiously interfered with CIG’s contractual relations. While

the district court reduced the jury award to $412,237.972,

Natural argues that the district court failed to rectify the

underlying legal errors on which the judgment was based.

Natural deploys a two-pronged attack against each of

CIG’s claims. First, it asserts that the award of damages

for conduct approved by the Federal [energy Regulatory

Commission (FERC) impermissibly interferes with

I ERC’s authority to regulate gas sales and transportation

markets. Second, Natural argues, in the alternative, that

the substantive law of contracts, torts, and antitrust, re-

quires the reversal of the jury’s verdict on each claim.

We hold that in light of FERC’s orders concerning the

basic issues underlying the breach of contract dispute,

deference to FERC authority requires that we reverse the

breach of contract verdict. We further hold that CIG

failed to establish there was a dangerous probability that

Natural would monopolize the long distance transportation

market. Therefore, we reverse the antitrust verdict. The

claim for tortious interference with contractual relations

neither interferes with FERC’s authority nor is substan-

tively flawed; thus, the jury’s verdict on that claim wil]

stand.

I. Jntroduction

CIG and Natural are owners of pipelines which trans-

port natural gas. For many years, Natural has purchased

‘as from CIG and transported that gas to markets in the

Midwest and East. In July 1982, CIG and Natural en-

tered into a new contract (the Service Agreement or

Avreement) which obliged CIG to deliver and Natural to

purchase specified quantities of natural gas. CIG sold

two types of gas to Natural. Field gas was sold at 2

lower rate (F-1 rate) than gas which was delivered from

17a

CIG’s main transmission line (H-1 rate). The contract

set forth how much gas Natural was required to purchase,

both on an annual and on a daily basis. Like previous

service agreements between Natural and CIG, the i982

Service Agreement also contained a minimum bill pro-

vision which allowed CIG to bill Natural at a predeter-

mined rate for gas which Natural reserved but did not

purchase.

Because CIG’s Service Agreement with Natural in-

volved the interstate sale of natural gas, the rates and

terms specified in the Agreement el approval by

FERC. When, in 1982, CIG sought FERC approval, Nat-

ural intervened to protest both the rate increase and its

contractual obligation to pay CIG for gas it did not

purchase. In response to Natural’s intervention, FERC

modified the terms of the Service Agreement to reduce

the price Natural was required to pay for unpurchased

eas,

In July 1983, Natural sharply reduced its gas pur.

chases from CIG. Natural paid CIG what Natural de-

termined to be the FERC modified rate for unpurchased

gas. Natural’s decrease in purchases forced CIG to stop

purchasing gas from some of its suppliers. One of those

suppliers, Champlin Petroleum, supplied gas to CIG from

the Whitney Canyon gas fields in southern Wyoming. Al-

though Natural claimed that it quit purchasing gas from

CIG because it had an oversupply of gas, the evidence

made this claim problematical. As soon as CIG ceased

purchasing Whitney Canyon gas, Natural made arrange-

ments to purchase that gas directly from Champlin. In-

deed, CIG presented evidence that Natural purchased gas

from many sources to replace lost volumes from CIG.

This substitute gas was often more expensive than CIG’s

gas. On occasion, Natural resumed purchases of gas from

CIG when CIG was attempting to sell gas to new cus-

tomers. Natural’s decision to stop purchasing gas and the

losses CIG experienced as a result of that decision form

the basis of this litigation.

18a

II. CIG’s Common Law Claims

A. Breach of Contract

The district court instructed the jury that it could find

Natural breached the Service Agreement only if Natural

failed to purchase gas and refused to pay CIG the rate

that FERC decided was appropriate for volumes not pur-

chased. Neither party disputes that Natural refused to

purchase gas. The parties dispute the rate FERC deter-

mined to be appropriate for gas not taken. Natural

argues that the district court should have directed a

verdict on the breach of contract claim in its favor because

it paid CIG the FERC determined rate for gas not pur-

chased. We agree.

In order to apprehend the parties’ arguments on this

issue, it is necessary to examine the long history of the

dispute over Natural’s minimum purchase obligation be-

fore FERC.' For many years the service agreements

between CIG and Natural contained two provisions which,

together, defined Natural’s minimum purchase obliga-

tions.” Section 2 of the Service Agreement, the “minimum

'The difficulty that CIG and Natural faced with the minimum

purchase obligation was not unique. Minimum purchase obligations

in gas contracts became a problem for the industry in the early

1980’s, as u nationwide gas surplus forced many purchasers to

curtail their takes. The huge liability incurred by purchasers forced

FERC to take action on two procedural levels. First, FERC con-

sidered purchasers’ objections to minimum purchase requirements

on a case by case basis and modified service agreement provisions

where necessary. Second, because minimum purchase obligations

were wide-spread in the natural gas industry, FERC issued general

orders that modified certain provisions in all gas contracts. Thus,

the conflict between CIG and Natural was just a small part of a

significant problem which required FERC’s continued attention.

“For purposes of this opinion we are using the term “minimum

purchase obligation” to refer to contract terms which seek to insure

that gas buyers purchase a minimum volume of gas. These pro-

visions are sometimes called ‘take or pay,” “minimum bill,” or

“minimum take” provisions. Although the precise details or mecha-

nisms of these provisions might differ, they have similar effects.

pgm ance ere a

19a

daily take provision,” required Natural to accept each day

YO‘: of its General Daily entitlement.’ Section 4 of the

Service Agreement, the “minimum annua] bill,” required

Natural to purchase each year 90°: of its Total Annual

Kntitlement, or pay CIG a predetermined rate for gas not

purchased.'

Natural first objected to the minimum purchase obliga-

tion in the Service Agreement when CIG sought approval

of the rates and terms of the Agreement from FERC in

1982. The reasonableness of the minimum purchase obli-

gation was considered in administrative proceedings be-

fore an administrative law judge in 1983. The judge

found the “minimum bill provisions” to be unreasonable

and ordered CIG to modify the Service Agreement so that

CIG could collect from Natural only the fixed costs as-

* Section 2 of the Service Agreement entitled “POINTS OF DE-

LIVERY, MAXIMUM DAILY VOLUME OBLIGATIONS, AND

PRESSURES” includes Natural’s daily purchase obligation. It

states:

Variations in daily takes may be made at Buyer’s election at

H-1 delivery points to meet its varying load conditions, how-

ever, Buyer shall not request total daily volumes on any day

hereunder less than 90 percent of the General Daily Entitle-

ment,

* Section 4 entitled “MINIMUM BILL” states, in relevant part:

The minimum bill shall be . . . determined by multiplying the

Total Annual Entitlement by a factor of 90 percent, such

volume hereinafter referred to as “Minimum Volume.” .. . Jn

the event the Buyer's actual purchases for the fiscal year are

less than the Minimum Volume, then any deficiency shall be

billed at the unit fired cost component under Rate Schedule

P-l....

(Emphasis added.)

* Fixed costs are costs which CIG must incur regardless of the

volume of gas it sells. The fixed cost component of the commoadity

charge also includes a sum representing profits on CIG’s operations.

The major nonfixed (variable) cost, which CIG was forced. to

eliminate from the rate it could charge Natural, was the cost of

gas.

20a

sociated with the sale of gas. This decision was appealed

to FERC, which, in response, modified the precise mecha-

nism by which CIG could collect money for unpurchased

gas but left unchanged the basic ruling that CIG could

collect only fixed costs for unpurchased gas."

In response to FERC’s ruling, CIG submitted to FERC

a modification of its Service Agreement by which it sought

to collect F-1 fixed costs for F-1 gas which Natural did not

purchase and H-1 fixed costs for unpurchased H-1 gas.

Since the fixed cost component of gas rates included profits

on the sale of gas, CIG’s submitted rate would have

insured full profits on unsold gas. However, FERC did

not approve this rate for unpurchased gas.’ It ruled that

CIG could collect only F-1 fixed costs for whichever type

of gas Natural did not purchase. CIG appealed FERC’s

order to this court asserting that it should collect full

profits on unsold gas. We rejected this appeal. Colorado

Interstate Gas Co. v. FERC, 791 F.2d 803 (10th Cir.

1986), cert. denied, 479 U.S. 1043, 107 S.Ct. 907, 93

L.Ed.2d 857 (1987).

CIG now argues that these extensive proceedings only

considered one aspect of the minimum purchase obliga-

tion, namely, the minimum annual bill provision (Section

4) of the Service Agreement. It insists FERC simply

overlooked the minimum daily take requirement (Section

2) in the individual proceedings. CIG asserts that the

minimum daily take requirement was later modified by

FERC’s Order No. 380-C which ruled that minimum take

provisions were meant to be governed by Order No. 380.

“On the same day, FERC issued Order No. 380 which required

gas sellers to modify their minimum bill provisions to collect: only

fixed costs for unpurchased gas.

FERC explained that allowing CIG to collect only F-1 fixed

costs for the more expensive H-1 gas would give CIG «a strong

incentive to sell H-1 gas instead of merely collecting fees for un

delivered gas.

2la

Although FERC’s general orders treated minimum bill

provisions identically with minimum take provisions, CIG

argues that because FERC Order No. 380-C states sellers

may collect fixed costs,* CIG may collect F-1 fixed costs

fur unsold F-1 gas and H-1 fixed costs for unsold H-1

gas. If we Were to accept CIG’s argument, CIG could

collect a higher rate for each year that Natural failed

to purchase gas by adding up its compensation for

Natural’s daily failure to take gas than it could by using

the individually tailored FERC formula for determining

CIG’s compensation for Natural’s annual failure to pur-

chase gas. Aside from the irrationality of this result, we

think it ignores the fact that FERC has plainly examined

both the minimum annual bill and the minimum daily take

vequirements in the Service Agreement since the original

ALJ decision.

As noted earlier, the ALJ stated that he found the

minimum bill provisions to be unjust and unreasonable.

CIG apparently assumes this reference to the minimum

bill provisions meant that the ALJ only considered the

minimum annual bill (Section 4) of the contract. Yet,

the rest of the opinion makes clear that the ALJ con-

sidered both Sections 2 and 4 of the Service Agreement.

lor instance, in describing the Service Agreement the

ALJ stated, “CIG’s mode of billing to Natural under the

’-1 and H-1 Rate Schedules is explained for the situation

When the minimum bill provisions operate because Natural

failed to take 90 percent of its daily or annual volumetric

entitlements.” Colorado Interstate Gas Co., 3 F.E.RC.

"© 63,012, 65,015 (Oct. 18, 1983) (emphasis added). The

ALJ clearly understood that the Service Agreement pro-

vided a single rate of compensation for failure to purchase

gas on a daily or annual basis and that he was modifying

that rate.

‘Since Order No, 380-C was a general order, it did not specify

the precise value of the fixed cost CIG, or any other sellers, could

collect for unsold gas.

22a

This conclusion is confirmed by subsequent FERC or-

ders. In its order of June 1985, FERC surveyed the entire

history of CIG’s proceedings before the agency on the

minimum purchase issue. FERC stated the ALJ found

“Doth the minimum annual volume and the minimum daily

take requirement in CIG’s Service Agreement” to be un-

reasonable. Colorado Interstate Gas Co., 31 F.E.R.C.

individualized proceedings required CIG to modify both

the minimum annual bill and the minimum daily take

provisions to eliminate variable costs. Jd. The only

formula for the elimination of variable costs approved in

the individualized proceedings required CIG to charge F-1

fixed costs for failure to purchase either F-1 gas or H-1

gas. The inescapable conclusion is that FERC regarded

this as the sole remedy for failure to purchase gas under

either contractual provision.

Finally, FERC’s amicus brief explains its current in-

terpretation of the FERC proceedings on the minimum

purchase issue. The amicus brief states:

|T|he district court erred in holding that the Com-

mission did not deal with the minimum _ purchase

obligations and that therefore CIG may litigate that

issue in this case . .. the Commission treated the

minimum bill as the remedy for Natural’s failure to

live up to its minimum purchase obligation .. . there-

fore, the district court erred in its perception that

the minimu:n bill and take provisions were separate

and discrete matters establishing distinct remedies.

In light of the deference we owe to FERC’s interpreta-

tions of its own orders, Colorado Interstate Gas, 791 F.2d

at 810; Distrigas of Massachusetts Corp. v. Boston Gas

Co., 693 F.2d 11138, 1119 (1st Cir.1982), and the plain

meaning of the orders themselves, there is simply no room

for CIG’s assertion that FERC’s individualized proceed-

ings left the minimum daily take provisions (Section 2)

of the Service Agreement unaffected.

23a

B. Breach of Duty of Good Faith and Fair Dealing

Natural argues the jury’s verdict on bad faith breach

of contract must be reversed because FERC’s modifica-

tion of the rate Natural was required to pay CIG@ for

unpurchased gas gave Natural the unqualified right to

stop purchasing gas, provided it paid CIG the FERC

established price for unpurchased gas. Natural insists

that by awarding CIG damages for bad faith failure to

purchase gas that were greater than FERC’s established

rate for failure to purchase, the district court allowed

state common law to impinge upon FERC’s regulatory

authority. CIG asserts that Natural’s bad faith alters

the character of Natural’s conduct so that the FERC

rate for unpurchased gas does not apply. While we are

unwilling to embrace Natural’s claim that FERC’s orders

shield it from all liability for failure to purchase gas, we

do agree that Natural is free from liability for failure to

purchase gas based upon the implied duty of good faith

and fair dealing in the Service Agreement.

The Supreme Court is wary of attempts by parties,

dissatisfied with determinations of federal agencies, to

neutralize the effect of those determinations through com-

monlaw actions for damages. Chicago & N.W. Transp.

Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 324, 101 S.Ct.

1124, 1133, 67 L.Ed.2d 258 (1981): Arkansas Louisiana

Gas Co, v. Hall, 453 U.S. 571, 577 n. 6, 101 S.Ct. 2925,

2930 n. 6, 69 L.Ed.2d 856 (1981). These cases are bot-

tomed on the principle that the Supremacy Clause re-

quires state regulation not thwart federal policy. Kalo

Brick & Tile, 450 U.S. at 326, 101 S.Ct. at 1134. Com-

mon-law claims that seek to litigate matters already de-

cided by a federal agency are therefore preempted.

For instance, in Kalo Brick & Tile, 450 U.S. at 311,

101 S.Ct. at 1127, a shipper of goods by rail, sought to

assert a state, common-law tort action for damages caused

by a regulated rail carrier’s decision to eliminate service

on a rail line. The Supreme Court unanimously held that

24a

because the Interstate Commerce Commission had, in ap-

proving the cessation of service in administrative pro-

ceedings, ruled on all the issues underlying the shippers

state-court suit, the common-law action was preempted.

The Court stated: “It is difficult to escape the conclusion

that the instant litigation represents little more than an

attempt by a disappointed shipper to gain from the Iowa

courts the relief it was denied by the commission.” Jd. at

324, 101 S.Ct. at 1133.

Through its common-law claim of breach of the con-

tractual duty of good faith and fair dealing, CIG obtained

an award of damages that allowed it to collect H-1 fixed

costs for unpurchased H-1 gas. FERC and this court have

repeatedly denied CIG’s request to modify the minimum

purchase obligation of the Service Agreement to allow it

to collect this rate for failure to purchase gas. Colorado

Interstate Gas, 791 F.2d at 808-09. By allowing CIG to

press this claim, the district court gave CIG a second

chance to which it was not entitled.

Nevertheless, CIG argues that this case is distinguish-

able from Kalo Brick & Tile” and is not a collateral at-

tack upon FERC’s decision because FERC denied CIG

H-1 fixed costs for unpurchased H-1 gas only if Natural

decided not to purchase gas in good faith. CIG contends,

once Natural decided to “shut in’ CIG’s gas in order to

harm CIG, FERC’s remedy for failure to purchase gas,

a remedy which did not allow collection of H-1 fixed costs,

was no longer intended by FERC to apply. Essentially,

CIG is asking us to imply a good faith limitation upon

the scope of FERC’s remedy for failure to purchase gas.

® The Court in Kalo Brick & Tile emphasized that the ‘“commis-

sion has actually addressed the matters [the customer! wishes to

raise in state court.” 450 U.S. at 327, 101 S.Ct. at 1135. The Court

reserved the question of whether “a state court suit is barred when

the commission is empowered to rule on the underlying issues.” Id.

In this case, FERC was not explicitly confronted with the question

of whether Natural’s motive for not purchasing gas would be rele-

vant to the rate CIG could collect for that gas.

25a

While we find CIG’s argument forceful, we cannot ig-

nore the Supreme Court’s vigorous effort to insure agency

action is not blunted by state regulation. See, e.g., Nanta-

hala Power and Liaht Co. v. Thornburg, 476, U.S. 953,

106 S.Ct. 2349, 90 L.Ed.2d 943 (1986) (state regulated

rate for retail sale of gas did not give enough weight to

FERC determined rate for wholesale gas sales); Kalo

Brick & Tile, 450 U.S. at 326, 101 S.Ct. at 1134. We

think that limiting the scope of the FERC developed rem-

edy for failure to purchase gas in the manner suggested

by CIG would permit circumvention of FERC authority

through state contract law. In order for FERC’s remedy

to be effective, it must have room to breathe. As the

Supreme Court has stated, “Respondents’ theory of the

case would give inordinate importance to the role of con-

tracts between buyers and sellers in the federal scheme

for regulating the sale of natural gas.” Arkansas Loui-

siana Gas, 453 U.S. at 582, 101 S.Ct. ata 2932. We think

this statement applies with equal force to this case.

Further, the limited evidence we have suggests FERC

intended the collection of F-1 fixed costs to be the exclu-

sive contract remedy for failure to purchase gas. FERC’s

amicus brief notes the jury awarded damages for anti-

trust, tort, and breach of contract claims. Nevertheless,

FERC only sought to have ihe damages for breach of

contract reversed. FERC did not distinguish between the

breach of contract damages awarded for bad faith failure

to purchase gas and those awarded for failure to pur-

chase gas under Section 2 of the Service Agreement.'’

1 The district court did not ask the jury to award damages sepa-

rately for breach of Section 2 of the Service Agreement and breach

of the contractual obligation of good faith and fair dealing. This

is troubling because we cannot determine what damages, if any,

the jury intended to award for each breach.

Further, the jury incorrectly found that Natural breached its

obligation to purchase gas under Section 2 of the Service Agree-

ment. Having found that Natural deliberately breached the Service

Agreement by deciding not to purchase gas, it is difficult te see how

26a

This interpretation of FERC’s intent mirrors FERC’s

Interpretation of the scope of its actions in a close'y

analovous context. During the vas shortage of the ear V

70's, FERC permitted sellers of gas to curtail their

contractually agreed upon deliveries of gas, if the curtail-

ment was carried out in accordance with plans on file

with FERC. See, e.g., United Gas Pine Line Co. v. FERC.

824 F.2d 417, 421 (5th Cir.1987). Buyers who did not

receive gas they contracted for sued sellers based upon

breach of contract and various tort theories. Jd.; see also

CF Industries vv. Transcontinental Gas Pipe Line, 614

F.2d 33 (4th Cir.1980). In response, sellers sought to

have FERC modify their service agreements to exculpate

them from liability for failure te deliver gas to buyers

curtailed under curtailment plans. FERC declined to deny

the purchasers all remedies for the sellers’ failure to de-

liver gas stating:

Claims that are essentially “breach of contract” in

nature and arise because of curtailments initiated

and conducted in accordance with effective curtail-

ment tariffs are preempted by federal law, which

nullifies them. But claims that require a finding of

negligence to permit recovery remain unaffected.

Transcontinental Gas Pipe Line, 35 F.E.R.C. °° 61.043.

61,080 (April 7, 1986) (emphasis added) .™

the jury could objectively consider the question of whether Natura!

acted in good faith

Thus, even if we were to find that the bad faith claim was not

preempted, we would have to order a new trial. First. th jury

would have to evaluate CIG’s bad faith claim in light of the fact

that Natural did not breach Section 2 of the Service Agreement.

Second, even if the jury still found that Natural breached its cor

tractual obligation of good faith and fair dealing, it would have to

determine the appropriate damages for this breach.

1! Significantly, one seller challenged FERC’s decision alleging

that if buyers were permitted to sue based upon a seller’s necligent

or willful misconduct, some state courts might conclude that actio

for “breach of a good faith duty” were not pre mpted. United Ga

27a

We believe FERC intended to draw the same line for

failure to take gas as it drew for failure to purchase. Ac-

tions based upon tort were not meant to be preempted

by FERC’s modification of the contract, while actions

based upon breach of contract were. Any other distinc-

tion would impermissibly undermine the effectiveness of

FERC orders. Thus, the jury’s verdict for bad faith

breach of contract must be reversed.

C. Tortious Interference with Contract

The gravamen ot CIG’s tortious interference with con-

tract claim is that Natural intentionally stopped taking

gas from CIG in order to force CIG to relinquish its con-

tractual right to purchase Whitney Canyon gas from

Champlin Petroleum. CIG alleged Natural was moti-

vated by a desire to acquire the rights to purchase

Whitney Canyon gas. After CIG gave up its rights to

the Whitney Canyon reserves, Natural did, in fact,

acquire the gas.

Natural argues that the jury’s verdict, awarding dam-

ages for tortious conduct, must be reversed because CIG’s

claim is preempted by FERC’s modification of the mini-

mum purchase provisions. Natural also asserts that be-

cause the Service Agreement allowed it to stop purchasing

gas, it may not be held liable for tortious interference

based on that conduct. We disagree.

FERC’s modification of the contract remedy for failure

to purchase gas does not limit CIG’s right to seek dam-

ages for tortious interference with contract. As noted

above, in an analogous situation, FERC decided that al-

though it eliminated a gas seller’s contractual liability

Pipe Line, 824 F.2d at 428. The Fifth Circuit rejected the sugges-

tion that state courts could interpret FERC orders which allowed

actions based upon negligence to permit actions for “breach of a

good faith duty.” Thus, at least one other court has interpreted

FERC orders prohibiting suits based upon breach of contract to

also forbid suits based upon breach of the contractual obligation

of good faith and fair dealing.

28a

for failure to sell gas to curtailed customers, buyers who

did not receive contractually agreed upon volumes of gas

wid maintain suits based upon a seller's negliqcnt or

mill ful prisconduct, United Gas Pipe Line, 824 F.2d at

130. By not contesting tortious interference damages,

FERC apparently made the same distinction in this ease.

Although Kalo Brick & Tile requires preemption of tort

actions which conflict with agenev orders, 450 U.S. at

326-27, 101 S.Ct. at 1184-35, we decline to find preemp-

tion where FERC currently perceives no conflict.

More difficult to evaluate is Natural’s assertion that its

contractual right to choose between purchasing gas or

paying CIG for gas not purchased immunized it from a

tortious interference claim based upon failure to purchase.

There is some support for the proposition that conduct

which is otherwise lawful ought not form the basis of a

tortious interference claim simply because the alleged

tort-feasor is motivated by a desire to interfere with the

plaintiff's contractual relations. See Circo v. Spanish

Gardens Food Mfq. Co., 648 F.Supp. 51, 56 (W.D.Mo.

1985): Perlman, Interference with Contract and Other

Economic Expectations: A Clash of Tort and Contract

Doctrine, 49 U.Chi.L.Rev. 61, 128 (1982). Advocates of

this position are reluctant to impose limitations on con-

duct which is otherwise permitted in an economy based

upon vigorous competition. Perlman, supra at 78.

While we are sympathetic to this view and recognize

that the law of tortious interference is evolving, see Re-

statement (Second) of Torts, ch. 37, introductory note at

5 (1977), we believe that the better position is that taken

by the Restatement and followed by many courts. This

line of authority holds that motive can be a determinative

factor in converting otherwise lawful behavior into “im-

proper” conduct for which the defendant will be liable.

Restatement (Second) of Torts $ 767 comment d (1977);

Alyeska Pipeline Serv. Co. v. Aurora Air Serv., Ine., 604

P.2d 1090, 1093 (Alaska 1979); see also Perlman, /iter-

29a

ference with Contract, 49 U.Chi.L.Rev. 61, 78 (1982).

Indeed, Professor Prosser has described the contours of

the tort stating that “no specific conduct is prohibited

and liability turns on the purpose for which the de-

fendant acts.” W. Prosser, Law of Torts § 129, at 979

(5th ed. 1984).

Natural’s interest in being free to adjust its purchases

of gas is not so strong that it cannot be limited by a re-

quirement not to exercise its discretion for the purpose

of interfering with CIG’s contractual relationships.

Alyeska Pipeline, 604 P.2d at 1093 (right to terminate

contract at will did not prevent liability for tortious inter-

ference based upon termination of that contract). The

tortious interference verdict will stand.'*

Ill. CIG’s Antitrust Claim

CIG claims that in addition to being a violation of the

Service Agreement and a means of stealing CIG’s custom-

ers, Natural’s decision to stop purchasing gas was also

the cornerstone of an attempt by Natural to monopolize

the market for the long distance transportation of natural

gas." Since an attempt to monopolize typically involves

12 Natural also asserts the award of $8,000,839 in restitutionary

damages was Inappropriate. It argues that restitutionary damages

are unavailable for tortious interference claims under Section 766A

of the Restatement. While it cites one case to this effect, Mares,

Stowell &@ Beye Gov't Sees., Inc. v. Jefferson Inv. Corp., 797 F.2d

227, 231-22 (5th Cir. 1986), the weight of authority holds that

restitutionary damages are available for tortious interference with

contract. See Zippertubing Co, v. Teleflex, Inc., 757 F.2d 1401,

1411-12 (3d Cir. 1985); Federal Sugar Ref. Co. v. United States

Sugar Equalization Bd., 268 F. 575, 582 (D.C.N.Y. 1920 b> National

Merchandising Corp. v. Leyden, 370 Mass. 425, 348 N.E.2d 771,

775-76 (1976): D. Dobbs, Remedies § 6, at 465 (1973).

13 Natural also asserted an antitrust counterclaim against CIG

Natural alleged that CIG monopolized or attempted to monopolize

the purchase of Wyoming natural gas by intervening and threaten-

ing to intervene in FERC proceedings in which CIG’s competitors

30a

an attempt by a firm which does not possess monopolistic

control over a market to become a monopolist in that mar-

ket, CIG’s claim is unusual because it does not allege that

Natural was attempting to gain control of the transporta-

tion market for itself. Rather, CIG alleges Natural

stopped purchasing gas in order to give CIG’s chief com-

petitor, the Trailblazer System,'* a monopoly in the long

distance gas transportation market.

Natural asserts that a party may not be held liable

for attempting to give monopoly power to another party

which it does not control. This is especially true, it as-

serts, when the intended beneficiary of the monopolist is

not a single entity but three separately operated entities

owned in significant part by the alleged victim of the

monopolistic scheme,

Nevertheless, Section 2 of the Sherman Act does not

explicitly state that a party can only monopolize for itself.

We need not decide this thorny issue because even if we

assume that it is possible to create a monopoly for the

proposed building new pipelines leading out of Wyoming. The dis-

trict court ruled that the Noerr-Pennington doctrine barred evi-

dence of CIG’s activities before FERC.

The Noerr-Pennington doctrine requires that attempts to in-

fluence the government, including attempts to influence administra-

tive agencies, be exempt from attack under the Sherman Act. Cali

fornia Motor Transp. Ce, v, Trucking Unlimited, 404 U.S, 508, 511-

12, 92 S.Ct. 609, 612-13, 30 L.Ed.2d 642 (1972); Bright v. Moss

Ambulance Serv., Inc., 824 F.2d 819 (10th Cir. 1987). We agree

with the district court that nothing in CIG’s activities before FERC

so corrupts the judicial or administrative process that those activi

ties amount to a sham and therefore are exempted from the Noerr-

Pennington doctrine. Hydro-Tech Corp. v. Sundstrand Corp., 673

F.2d 1171, 1176-77 & n. 7 (10th Cir. 1982).

M4 Tt is important to distinguish between NGPL-Trailblazer, one

of the defendants, and the Trailblazer System. The Trailblazer

System is a series of three separately owned and operated pipelines

joined end-to-end which stretches from Wyoming to Nebraska.

When built in 1982, the Trailblazer System greatly expanded the

capacity of producers to move their gas from Wyoming to eastern

3la

benefit of a third party, CIG did not establish each of the

elements of an attempted monopolization claim."

CIG alleges that Natural attempted to monopolize the

market by preventing CIG from offering gas transpor-

tation services to customers who might choose between

CIG and the Trailblazer System. Because CIJG was re-

quired to maintain capacity in its pipeline for the volume

of gas Natural chose to reserve under the Service Agree-

ment, CIG was not able to replace lost income from

Natural’s reduced purchases by offering “firm” ' trans-

portation services to new customers. In the summer of

1984, after Natural had stopped taking gas from CIG,

CIG offered Natural the opportunity to reduce the capacity

it reserved on the CIG system. Instead of reducing its

reservation, Natural chose to increase it. Thus, Natural

markets. The westermost segment of the Trailblazer System, Over-

thrust, is owned by CIG and Natural, as well as four other com-

panies. The middle segment, WIC, is owned by CIG alone. The east-

ernmost and longest segment of the system, Trailblazer, is owned

jointly by NGPL-Trailblazer and two other companies. The Trail-

blazer Svstem, the alleged beneficiary of Natural’s predatory con-

duct, is not even a party to this case.

5 The difficulty with punishing a firm for attempting to create

a monopoly for a third party which does not act as a single entity,

is that the threat to competition after the monopoly is achieved is

obscure. In a more typical case in which a firm is attempting

through unfair means, to gain control of a market for itself, one

can be quite certain the firm will not hesitate to exercise its newly

acquired monopoly power. In this case, the alleged monopolist’s

(Natural’s) conduct says little about its intended beneficiary’s (the

Trailblazer Svstem’s) proclivity or ability to monopolize. Section 2

of the Sherman Act does not punish the mere possession of monop-

oly power. Standard Oil Co. of New Jersey v. United States, 221

U.S. 1, 62, 31 S.Ct. 502, 516, 55 L.Ed. 619 (1911).

16 Gas can be sold on either a firm or interruptible basis. Firm

sales guarantee the purchaser that he will receive the volumes of

gas he reserves, while interruptible sales only guarantee deliveries

if customers with higher priority do not demand the gas. Since

CIG had a firm obligation to sell gas to Natural, CIG could only

offer to sell interruptible service to new customers.

32a

continued to tie up CIG’s capacity, while refusing to

purchase gas.

Further, CIG attempted to offer interruptible service

to new customers to utilize the capacity left vacant by

Natural’s decreased purchases. Soon after CIG began to

service the new customers, Natural resumed purchases of

cas, forcing CIG to interrupt its service to the new

customers. Beeause the Trailblazer System could offer

inexpensive, uninterrupted service, CIG’s new customers

switched to the Trailblazer System.

While Natural’s alleged manipulation of its gas pur-

chases in an effort to disrupt CIG’s ability to service new

customers may be reprehensible conduct, the antitrust

laws cannot be invoked to punish all forms of unseemly

business activity. If a party does not have monopolistic

control over a market, its unfair business conduct impli-

cates the attempt provision of the antitrust laws only if

that conduct threatens to create a monopoly. Indiana

Grocery, Inc. v. Super Valu Stores, Inc., 864 F.2d 1409,

1413 (7th Cir.1989); cf. Continental T.V., Inc. v. GTE

Sylvania, lie., 433 U.S. 86 54, 97 S.Ct. 2549, 2559, 53

L.Ed.2d 568 (1977) (“an antitrust policy divorced from

market considerations would lack any objective bench-

arks”), The defendant need face the added sanction of

antitrust triple damages only if the plaintiff can establish

each element of an antitrust offense.

In this circuit, four elements must be proven to establish

an attempt to monopolize under Section 2 of the Sherman

Act: (1) relevant market (including geographic market

and relevant product market) in which the alleged at-

tempt occurred; (2) dangerous probability of success in

monopolizing the relevant market; (3) specific intent to

monopolize; and (4) conduct in furtherance of such an

attempt. Shoppin’? Bag of Pueblo, Ine, v. Dillon Compa-

nies, T83. F.2d 159, 161 (10th Cir.1986). In addition, any

private plaintiff seeking treble damages under Section 4

of the Clayton Act must show antitrust injury. Bruns-

33a

wick Corp v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488,

97 S.Ct. 690, 697, 50 L.Ed.2d 701, cert. denied, 429 US.

1090, 97 S.Ct. 1099, 51 L.Ed.2d 535 (1977). While Nat-

ural argues that CIG has failed to establish each element

of the attempted monopolization claim, CIG’s failure to

show a dangerous probability of successful monopolization

reveals the fundamental difficulty in CIG’s claim."

In order to satisfy the dangerous probability of success

element of an attempt claim, the plaintiff must show that

there was a dangerous probability the defendant would

achieve monopoly status as the result of the predatory con-

duct alleged by the plaintiff. Shoppin’ Bag, 783 F.2d at

162; Lektro-Vend Corp. v. Vendo Co., 660 F.2d 255, 271

17 Several commentators have noted approvingly that the danger-

ous probability of success element of the attempt to monopolize

offense prevents courts from expanding the Sherman Act into a

broad unfair competition statute. For instance, Handler & Steuer

state:

[T]here is ample reason for excluding single-firm behavior

from the serious penalties of the antitrust laws when no dan-

gerous probability of monopolization exists. When one firm

monopolizes an economically significant market or threatens

such a monopoly, competition is immediately and seriously

jeopardized. It was largely to combat this peril that section 2

of the Sherman Act was passed, fortified with the formidable

deterrent of treble damages and criminal penalties. Short of

this situation, however, single firm behavior does not present

so significant a threat to competition as to warrant such harsh

consequences.

Handler & Steuer, Attempts to Monopolize and No Fault Monop-

alization, 129 U.Pa.L.Rev. 125, 175 (1980) (footnote omitted): see

also 3 P. Areeda & D. Turner, Antitrust Law § 833 (1978) (here-

inafter Areeda & Turner); cf. Cooper, Attempts Answer to the

Prophylactic Riddle of Section Two, 72 Mich.L.Rev. 373, 454-55

(1974) (warning against expansion of the attempt provision into

an unfair competition statute); but see Blecher, Attempt to Mo-

nopolize Under Section 2 of the Sherman Act: “Dangerous Prob-

ability” of Monopolization Within the “Relevant Market,” 38 Geo.

Wash.L. Rev. 215, 222 (1969); Note, Attempt to Monopolize Under

the Sherman Act: Defendant's Market Power as a Re quisite to a

Prima Facie Case, 73 Colum.L.Rev. 1451, 1459-61 (1973).

34a

(7th Cir.1981), cert. denied, 455 U.S. 921, 102 S.Ct. 1277,

71 L.Eed.2d 461 (1982). The likelihood of successful mo-

nopolization is typically evaluated by examining the de-

fendant’s share of the relevant market. Shoppin’ Bag, 783

i’.2d at 161. Reformulated in the terms of market share,

the plaintiff must show that there was a dangerous proba-

bility that the defendant’s conduct would propel it from a

non-monopolistic share of the market to a share that

would be large enough to constitute a monopoly for pur-

poses of the monopolization offense.'* The higher the firm’s

initial market share, the greater the likelihood that it will

eventually gain monopolistic control over the market. Jd.

at 162.

CIG asserts the fact that the Trailblazer Svstem’s mar-

ket share rose from 41% to 53° is sufficient evidence to

support the jury’s finding that there was a dangerous

probability that the Trailblazer System would attain a

monopoly. If this were a typical attempted monopolization

case In which the defendant was attempting to acquire a

monopoly for itself through the use of economic coercion,

we would have little difficulty in affirming the jury’s find-

ing of dangerous probability. First, a market share at

the commencement of the defendant’s predatory conduct

of 41°: would show that the defendant would not have to

acquire much additional market share in order to attain

monopoly control over the market.

More importantly, however, a 41° market share typi-

cally indicates that a firm has substantial economic power

in the market, and therefore, has the tools at its disposal

to elevate its market share to monopolistic levels. In other

words, a high market share indicates that the defendant

has the economic capacity to monopolize the market. Jd.

18 While the Supreme Court has refused to specify a minimum

market share necessary to indicate a defendant has monopoly power,

lower courts generally require a minimum market share of between

70% and 80%. 2 E. Kintner, Federal Antitrust Law § 12.6 (1980) :

35a

However, proximity to monopolistic status is not enough;

the defendant must also have the ability to propel itself to

monopolistic control over the market. Jndiana Grocery,

Ine. v. Super Valu Stores, Inc., 864 F.2d 1409 (7th Cir.

1989) (50° market share insufficient to show dangerous

probability of successful monopolization); Richter Con-

crete Corp. v. Hilltop Concrete Corp., 691 F.2d 818 827

(6th Cir.1982) (“the real test is whether [the defendant]

possessed sufficient market power to achieve its aims’);

United States v. Empire Gas Corp., 537 F.2d 296, 305

(8th Cir.1976), cert. denied, 429 U.S. 1122, 97 S.Ct. 1158,

51 L.Ed.2d 572 (1977) (50° market share insufficient to

show dangerous probability of successful monopolization).

While the Trailblazer System’s substantial market share

demonstrates its proximity to monopoly status, it does not

indicate Natural’s capacity to raise the Trailblazer Sys-

tem’s market share to a monopolistic level.

CIG did not attempt to offer evidence of Natural’s share

of the transportation market. One might initially imagine

that evidence of a firm’s market share would be required

in order to assess that firm’s ability to obtain or confer

market power, but this is not necessarily true. In this

case, Natural’s capacity to create a monopoly for the

Trailblazer System cannot be measured by Natural’s mar-

ket share because Natural did not use economic coercion in

its attempt to monopolize. Rather, Natural took advan-

tage of its contractual right to stop purchasing gas from

CIG to magnify the Trailblazer System’s position in the

market.'” In evaluating the probability of successful

mpnopolization “we must consider the firm’s capacity to

commit the offense, the scope of its objective, and the

character of its conduct.” Kearney & Trecker Corp. v.

Giddings & Lewis, Inc., 452 F.2d 579, 598 (7th Cir.1971),

'° The record does not clearly disclose how much of the Trail-

blazer System’s market share gain reflected increased transporta-

tion volumes because CIG was unavailable as a competitor, and how

much the market share gain simply resulted from the Trailblazer

System’s constant sales level in comparison with CIG’s sales losses.

36a

cert. denied, 405 U. 1066, 92 S.Ct. 1500. 31 L.Ed.2d 796

(1972). In this case ei of these factors is strictly deter-

mined and ultimately limited by the Service Agreement

between Natural and CIG.

Natural’s predatory conduct consisted of exercising its

contract rights with CIG to prevent CIG from offering

transportation services to long distance customers. Be-

cause Natural reserved a certain amount of space in

CIG’s pipeline, CIG could not offer that space to others.

By continuing to reserve large amounts of gas and tak-

ing gas when CIG threatened to sell Natural’s reserved

capacity, Natural insured that CIG could not offer Nat-

ural’s reserved capacity to the market. Yet, Natural’s

ability to exclude CIG was strictly limited by Natural’s

ability to insure its reserved capacity went empty. By

exercising al/ its rights under the Service Agreement to

tie up the entire capacity it had reserved, Natural was

still only able to raise the Trailblazer System’s market

share to 54%

Thus, from the beginning, Natural’s decision to quit

purchasing gas presented no danger that Natural could

do anything more than shift 13° of the market to the

Trailblazer System. The necessarily limited scope of

Natural’s objective leaves no room for speculation about

the probability that the Trailblazer System would gain a

monopoly. There was simply no reasonable chance, let

alone a dangerous probability, that Natural, through the

exercise of its contractual rights, could imbue the Trail-

blazer System with sufficient market share to be a mo-

nopolist.””

“0 We agree with the proposition that it is no defense to an at-

tempted monopolization charge that the defendant's attempt. to

monopolize proved to be unsuccessful. United States vo. American

Airlines, Inc., 743 F.2d 1114, 1119 (5th Cir. 1984). Simply because

a plan fails to succeed does not mean there was no probability that

it could have succeeded. A flipped coin which lands heads still had

a 50% chance of landing tails before it was flipped. The capacity

37a

Further, market share statistics sometimes overesti-

mate a firm’s market power. See, e.g., Ball Memorial

Hosp., Inc. v. Mutual Hosp. Ins., Inc., 784 F.2d 1325,

1335 (7th Cir.1986)); Landes & Posner, Market Power

in Antitrust Cases, 94 Harv.L.Rev. 937, 950 (1981). In

this case, if we look beyond market share statistics, we are

further convinced that Natural’s conduct did not threaten

to give the Trailblazer System the degree of market

power that would constitute a monopoly for purposes of

the monopolization offense. One measure of the degree

of market power is the persistence of a firm’s ability to

profitably charge monopoly prices.*’ If the evidence dem-

of the defendant to monopolize must be evaluated at the commence-

ment of the predatory scheme.

We also note our holding in this case does not require that in

every instance where a party iatends to eliminate a competitor

through unfair means, the elimination of the competitor must give

the predator a monopolistic market share. For instance, when a

party with a substantial market share eliminates a smaller com-

petitor through economic coercion, increased market power will give

it even greater coercive power to eliminate other competitors. There

is no reason to wait until the predator attacks a competitor that

would put it just over the brink of monopolization before it can be

stopped, See Note, Attempt to Monopolize Under The Sherman Act:

Defendants Market Power as a Requisite to a Prima Facie Case,

73 Colum.L.Rev. 1451, 1462-63 (1973

In this case, Natural sought to take advantage of a unique op-

portunity its contract afforded to temporarily harm a competitor of

an entity in which it had an economic stake. Unlike the ordinary

situation in which a firm’s market share is crucial to the firm’s

ability to engage in predatory conduct and every predatory act

makes future predation easier, Natural’s ability to engage in preda-

tory conduct would not be enhanced by conferring market share

upon the Trailblazer System.

21 Although most courts do not explicitly discuss the persistence

of a firm's ability to charge supracompetitive prices as a measure

of a firm’s market power, courts indirectly consider the potential

longevity of supracompcetitive pricing whenever they use market

share to evaluate the degree of market power. Market share statis-

tics are a useful measure of market power, in large part, because

they indicate the relative durability of supracompetitive pricing

38a

onstrates that a firm’s ability to charge monopoly prices

will necessarily be temporary, the firm will not possess

the degree of market power required for the monopoli-

zation offense.-- 3 P. Areeda & D. Turner, Antitrust Law,

capacity. The greater a firm’s market share, the longer it will be

able to charge monopoly prices because it will take longer for its

small competitors to increase their output enongh to discipline

prices. See H. Hovencaump, Economics and Federal Antitrust Law

$3.1, at 583 (1985).

The durability of a firm’s ability to charge supracompetitive

prices also underlies another factor used to evaluate the degree of

market power. Barriers to entry are often used by courts to deter-

mine whether an alleged monopolist has sufficient market power for

purposes of the monopolization offense. 2 E, Kintner, Federal Anti-

trust Law § 12.9 (1980). Barriers to entry are market characteris-

tics Which make it difficult or time-consuming for new firms to enter

a market. For instance, if market entry requires the construction

of large manufacturing plants, Cargill, Inc. v. Monfort of Colarodo,

Inc., 479 U.S. 104, 119, 107 S.Ct. 484, 494, 93 L.Ed.2d 427 (1986),

or obtaining governmental approval to enter the market, United

States v. Marine Bancorporation, Inc., 418 U.S. 602, 628-29, 94 S.Ct.

9856, 2873-74, 41 L.Ed.2d 978 (1974), the market is sald to have

high barriers to entry. Often courts refuse to find a sufficient

degree of market power for the monopolization offense when thes

determine that a market has low barriers to entry. Sec, e.g., Ball

Memorial Hosp., 784 F.2d at 1335. While a firm may have the

capacity to charge supracompetitive prices in a market with low

barriers to entry, that capacity is likely to be temporary.

22 Some courts and commentators label the deyree of market

power necessary for the monopolization offense as “monopol)

power.”” See L. Sullivan, Antitrust § 22, at 75 (1977) (“Monopoly

power can be distinguished from a lesser amount of market power

only in degree.”); Dimmitt Agri Indus., Inc. v. CPC Int'l, Inc., 679

F.2d 516, 529 (5th Cir. 1982), cert. denied, 460 U.S. 1082, 103 S.Ct.

1770, 76 L.Ed.2d 244 (1983). One commentator has suggested that

in the future courts might more precisely define monopoly power

by “focus[ing] on the permanence of market power, with mere

market power sugyesting that supranormal profits wiil be quickly

croded by new entry, and monopoly power suggesting significantly

greater insulation from the long-run forces of entry.” G. Ilay,

Single Firm Conduct, 57 Antitrust LJ. 75, 81 (1988) (emphasis

added). While we do not adopt this commentator’s nomenclature,

39a

at § 807; Williamsburg Wax Museum, Inc. v. Historic

Figures, Ine., 810 F.2d 248, 252 (D.C.Cir.1987) ; Dim-

mitt Agri Indus., Inc. v. CPC Int'l, Inc., 679 F.2d 516,

530 (5th Cir.1982), cert. denied, 460 U.S. 1082, 103 S.Ct.

1770, 76 L.Ed.2d 344 (1983); Metro Mobile CTS, Ine. v.

Newvector Communications, Inc., 661 F.Supp. 1504, 1523-

24 (1987); cf. Copperweld v. Independence Tube Corp.,

467 U.S. 752, 767-68, 104 S.Ct. 2731, 2739-40, 81 L.Ed.2d

628 (1984) ‘antitrust laws are only meant to condemn

conduct with long-run anticompetitive effects).

In this case, the Trailblazer System’s ability to charge

supracompetitive prices could last only as long as Natural

had the contractual right to tie up CIG’s pipeline ca-

pacity. This right was strictly limited by the duration

of the Service Agreement.** Once Natural’s control over

we do agree with his assertion that market power must be persistent

to make a firm a monopolist for purposes of the antitrust laws.

“3 A sugyestion that unidentified market forces will eventually

correct supracompetitive pricing will not suffice to show that market

power will be temporary. Only when an alleged monopolist faces

substantial competition from a known competitor who will enter

the market in a definite period of time, ought courts to decline to

find sufficient market power to satisfy the requirement for the

monvupolization offense. Williamsburg Wax Museum, 810 F.2d at

252 (defendant did not have monopoly in the wax figure market

because a known competitor could, within a year, begin to deliver

wax figures); Metro Mobile CTS, 661 F.Supp. at 1523-24 (defend-

amt did not possess monopoly power for purposes of the monopoliza-

tion or attempted monopolization offense even though it controlled

100°; of the market because a known competitor had both the plans

and capacity to enter the market within three years). Cf. Landes &

Posner, Market Power in Antitrust Cases, 94 Harv.L.Rev. 937, 950,

n. 28 (1981) (difficulty in identifying potential competitors forces

courts to assume that a firm’s ability to charge monopoly prices will

be persistent).

“4 The Service Agreement was to expire in 1989. Thus, the Trail-

blazer System would be free from competition for a longer period

of time than the defendants in either Williamsburg War Museum

(1 year) or Metro Mobile CTS (3 years). Yet, the actual number of

years that the Trailblazer System would be free from competition

————————————————

ee a ee

40a

CIG’s capacity ended, the market would return to the

status quo-* since the Trailblazer System would be help-

less to compete against the unused and inexpensive ca-

pacity of CIG’s system.

This analysis, which requires a plaintiff to show that

an attempted monopolist’s conduct °° threatened to create

substantial and persistent changes in the marketplace,

may allow some unfair and potentially harmful methods

of competition to go unpunished by the antitrust laws.

But the Supreme Court, in a now oft quoted phrase, has

stated “the antitrust laws ... were enacted for ‘the pro-

tection of competition not competitors.’ ”’ Brunswick Corp.

from CIG is not the deciding factor in this case. Rather the cer-

tainty that the market will return to the status quo at a predeter-

mined date and the fact and the Trailblazer System has no power

to prevent the erosion of its market share, convince us that the

market implications of Natural’s conduct are not the subject of the

antitrust laws.

*5 There is no suggestion in the record that Natural was in danger

of driving CIG completely out of the transportation business before

the expiration of the Service Agreement. Indeed, considering C1G’s

financial resources and record profitability during Natural’s tie-up,

it is unlikely that Natural could have completely excluded CIG. By

attacking CIG, Natural could not alter the competitive structure

of the industry which is based on a permanent superstructure. See

Cargill v. Monfort, 479 U.S. at 119, n. 15, 107 S.Ct. at 494, n. 15.

“° One treatise has stressed that courts ought to take a long-run

view when evaluating allegedly anticompetitive conduct. In attempt-

ing to distinguish between conduct that should be addressed by the

antitrust laws and conduct which should be regulated by tori law,

Professors Areeda and Turner state:

[Mjost important, is our doubt that the torts and other activi-

ties considered in this Paragraph would very often seriously

impair the competitive opportunities of rivals in any signifi-

cant or permanent way. We must beware of the inclination to

condemn a monopolist on the basis of antisocial behavior that

could possibly give him an improper advantage in the market.

The antitrust court must, therefore, insist on . . . signifi-

cant and more-than-temporary harmful effects on compe ition.

4la

v. Pueblo Bowl-O-Mat, Ine., 429 U.S. 477, 488, 97 S.Ct.

690, 697, 50 L.Ed.2d 701 (quoting Brown Shoe Co. v.

Unmted States, 370 U.S. 294, 320, 82 S.ct. 1502, 1521,

8 L.Ed.2d 510 (1962)), cert. denied, 429 U.S. 1090, 97

S.Ct. 1099, 51 L.Ed.2d 535 (1977). The Court has long

recognized that the Sherman Act “does not purport to

afford remedies for all torts committed by or against per-

sons engaged in interstate commerce.” Hunt v. Crumboch,

325 U.S. 821, 826, 65 S.Ct. 1545, 1548, 89 L.Ed. 1954

(1945). We believe the triple damage sanction of the

Clayton Act is too harsh a remedy for unfair methods of

competition that only threaten to have a transitory im-

pact on the marketplace. Since there was no dangerous

probability that Natural would bestow upon the Trail-

blazer System the degree of market power, either in terms

of market share or persistence, necessary for the monopo-

lization offense, the jury’s antitrust verdict must be

reversed.

IV. Conclusion

In conclusion, we hold that because FERC has already

determined the appropriate contractual rate for failure to

purchase gas, and Natural has paid CIG that rate, the

verdicts for breach of contract and bad faith breach of

contract awarding a different rate are reversed. The

antitrust verdict is reversed because CIG failed to pre-

sent sufficient evidence for a jury to find a dangerous

probability of successful monopolization. The verdict for

tortious interference with contract is affirmed.

42a

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF WYOMING

No. C84-0139-B

COLORADO INTERSTATE GAS COMPANY,

an Plaintiffs,

NATURAL GAS PIPELINE COMPANY OF AMERICA

and NGPL-TRAILBLAZER, INC.,

Defendants.

NATURAL GAS PIPELINE COMPANY OF AMERICA,

MIDCON VENTURES, INC., and NGPL-TRAILBLAZER, INC.,

. Counterclaim-Plaintiffs,

VS.

COLORADO INTERSTATE GAS COMPANY,

WYOMING INTERSTATE COMPANY, LTD., and

THE COASTAL CORPORATION,

Counterclaim-Defendants,

ORDER ON POST-APPEAL MOTIONS

[Filed Mar. 26, 1990]

This matter comes before the Court on plaintiff's mo-

tion for an order declaring that the tort judgment is for

$23,213,394 plus post-judgment interest, restating the

tort judgment as a separate judgment pursuant to Fed.

R. Civ. P. 54(b), and permitting execution of the tort

judgment, and defendants’ motion for judgment and for

an order releasing appellate security from escrow. The

Court, having considered the motions and pleadings, hay-

ing heard the arguments of counsel, and being fully ad-

vised in the premises, now FINDS and ORDERS as

follows:

43a

Background

This action originated due to a lawsuit brought by

plaintiff Colorado Interstate Gas Company (CIG) against

defendants Natural Gas Pipeline Company (Natural) and

NGPL-Trailblazer, Inc. In 1982, Natural and CIG en-

tered into a contract (Service Agreement) obligating CIG

to deliver and requiring Natural to purchase specified

quantities of natural gas. Natural later sharply reduced

its gas purchases from CIG. This resulted in CIG de-

creasing its gas purchases from its suppliers. The day

after CIG released one of these suppliers, Champlin Petro-

leum, from its contract to supply gas to CIG, Natural

stepped in and negotiated the sale of gas directly from

Champlin Petroleum to Natural. Natural still continued

to refuse CIG gas shipments, however, oftentimes pur-

chasing substitute gas from more expensive sources, ac-

cording to CIG. CIG filed suit alleging, amongst other

‘auses of action, attempted monopolization of the long-

distance gas transportation market in violation of anti-

trust laws, breach of the Service Agreement between

CIG and Natural, and tortious interference with CIG’s

business relationship with Champlin.

This case was presented to the jury in which the jury

awarded damages of $159,797,156 for breach of contract.

$175,001,711 for antitrust violations, and $39,231,072 for

tortious interference. The original verdict total was

$724,033,361 after trebling the antitrust claim. Under

the November 10, 1986, Judgment, this Court entered a

judgment in favor of the plaintiff, CIG, for the total

verdict amount of $724,033,361, but reduced the verdict

by $175,001,711, to $549,031,650, to avoid duplication of

awards. The breakdown is as follows:

44a

Breach of Tortious

Contract Antitrust Interference

Lost Profits —8106,580.792 106,580,792

NW Pipeline 53,216,364 53,216,364

Demand Charges 15,204,555 $15,204,555

Restitution 24,026,517

Subtotal $159,797,156 $175,.001,711 $39,231,072

Reduction by Court

to avoid

duplication < 159,797,156 > < 15,204,555 >

Subtotal $ 1) $175,001,711 $24,026,517

Trebling x 8

$ 0 $525,005,133 $24,026,517

New Judgment Total $549,031,650

While the November 10, 1966, Judgment did not specify

which causes of action the duplicate awards would be de-

ducted from. the mathematics of the judgment make it

clenar. If the duplicate damages had been deducted from

the antitrust cause of action column, the new judgment

total clearly would have been different due to the effect

of trebling.

In its consideration of the parties’ post-trial motions,

this Court reduced the judgment even further. The Court

held Natural responsible for only one-third of the $24,-

026,517 tortious interference award, and found that

$60,388,000 of the total $106,580 792 lost profits damages

—awarded under both the brench of contract and antitrust

claim—was not awardable as antitrust damages. A re-

mittitur of $16,017,678 on the tortious interference and

$181,164,000 ($60,388,000 trebled) on the antitrust award

was ordered. The total remittitur was $197,181,678.

This Court also reinstated the breach of contract damage

award of $60,388,000. New award totals were $60 388,-

000 for breach of contract, $114,613,711 for antitrust, and

$8,008,839 for tortious interference. Colorado Interstate

45a

Gas Co. v. Natural Gas Pipeline Co. of America, 661 F.

Supp. 1448 (D. Wyo. 1987). Plaintiffs accepted the re-

mittitur and after trebling, the damages awarded totaled

: 37, 972. See Order Following Remittitur Filed,

39-B (D. Wyo. June 9, 1987).

Natural appealed this Court’s decision to the Tenth

Circuit Court of Appeals. The Tenth Circuit, on Septem-

ber 11, 1989, reversed the breach of contract and anti-

trust verdicts, and affirmed the tortious interference ver-

dict. Colorado Interstate Gas Co. v. Natural Gas Pipe-

line Co. of America, 883 F.2d 683 (10th Cir. 1989). Its

December 20, 1989, mandate with respect to the tortious

interference judgment has not been stayed. Plaintiff CIG

filed a motion on January 4, 1990, requesting this Court

issue an order declaring the tortious interference judg-

ment to be $23,213,394 plus post-judgment interest, re-

state the tort judgment as a separate judgment pursuant

to Fed. R. Civ. P. 54(b), and permit execution of the

judgment. Defendants objected and on February 16,

1990, filed their own motion that CIG take nothing on

the judgment and for an order releasing defendants’ se-

curity from escrow. The Court will consider the defend-

ants’ motion first.

Defendants’ Motion for Judgment and for an Order

Releasing Appellate Security from Escrow

The tortious interference cause of action was predi-

eated on the Restatement (Second) of Torts $ 766A and

involved the actions taken by Natural that forced CIG

to release Champlin Petroleum from its obligation to

supply CIG with gas and resulted in Natural immediately

acquiring the rights CIG gave up. Colorado Interstate

Gas Co, v. Natural Gas Pipeline Co., 661 F. Supp. 1448,

1469 (D. Wyo. 1987). The language in this opinion

clearly implied that this Court applied Wyoming subs‘an-

tive law to the tortious interference claim. At that time.

this Court believed “‘Wyoming would recognize a cause of

46a

action under § 766A.” Jd. This prediction proved wrong.

Recently, the Wyoming Supreme Court in Price v. Sorrell,

784 P.2d 614, 615-16 (Wyo. 1989), refused to adopt

s 766A. Defendants argue that since the Wyoming Su-

preme Court refused to adopt § 766A, CIG’s tort claim

must now fail because Federal courts are obliged to apply

the most recent and controlling state court decisions on

state substantive law. Judgment, therefore, should be

entered in faver of defendants on the tort claim.

Natural’s reading of the Price opinion is accurate.

However, this Court disputes Natural’s contention that

Wyoming substantive law applies. This Court never care-

fully considered whether Wyoming or Colorado law ap-

plied in this instance since, at that time, neither Colorado

nor Wyoming courts had addressed the adoption or rejec-

tion of § 766A. So, by default, this Court applied what it

presumed Wyoming law would be.' The situation has

changed, however, with Wyoming rejecting § 766A in

Price and Colorado adopting $ 766A in Westfield Devel-

opment Co. v. Rifle Investment Associates, No. 88SC628.

slip op. at 11 (Colo. Feb. 12, 1990) (en bane). The Court

believes it must now make a clear determination on which

substantive law to apply.

Wyoming’s choice of law principles mandate applying

the rules of lex loci delicti to determine the applicable

state law in tort cases. Duke v. Housen, 589 P.2d 334,

342 (Wyo.), cert. denied, 444 U.S. 863 (1979). Under

lex loci, the substantive law of the state where the harm

or injury to the plaintiff occurs is the law to be applied,

even if the defendants’ acts occur in a different state.

Richards v. United States, 369 U.S. 1, 9-12 & n.24

1The Tenth Circuit’s opinion also never makes a determination

as to whether Wyoming or Colorado law applies. The court simply

states that it believes that the position taken by the Restatement

(Sectnd) of Torts is valid and well supported by the weight of

authority. The court determined that CIG has a cause of action

under it. Colorado Interstate Gas Co., 885 F.2d at 691 & n.12.

’

47a

(1962); see also Bodrug v. United States, 832 F.2d 136,

137 (10th Cir. 1987) (dictum); Sack v. Low, 479 F.2d

360, 366 (2d Cir. 1973); Lachman v. Bank of La. in New

Orleans, 510 F. Supp. 753, 760-61 & n.2 (N.D. Ohio

1981).

Determining where the injury occurs in a multi-state

tort is difficult. Natural argues that the Restatement of

Conflicts $377 (1934), cited in Duke, 589 P.2d at 341,

should be adopted here.* Taking this position. Natural

contends that the taking of the Champlin gas was the last

event giving rise to CIG’s § 766A tort claim. Since the

actual taking of the gas occurred in Wyoming, Wyoming

is the location of the tort and Wyoming law should apply.

CIG contends that the place of injury is where the

plaintiff suffers harm, not necessarily where the last act

occurs. CIG argues it suffered harm at its place of busi-

ness, Colorado Springs, Colorado and, therefore, Colorado,

not Wyoming, law should apply.

Assuming Natural’s position is correct, it is this

Court’s position that the last element of a tort cause of

action is damages. Sack, 479 F.2d at 365; Lachman, 510

F.Supp. at 760 n.2. In a physical injury tort claim, dam-

ages generally are incurred in the state where the plain-

tiff is physically injured by the defendant. In this in-

stance, the injuries inflicted were financial. Defendants

tortiously interfered with CIG’s ability to conduct its

business. “The ‘last event necessary’ in this tort is the

constriction of plaintiff’s opportunities, and that occurs

where the plaintiff experiences it, i.e.. his place of resi-

dence.” Cesnik v. Chrysler Corp., 490 F. Supp. 859, 872-

2 Section 377 of the Restatement of Conflicts (1934) states: “The

place of wrong is in the state where the last event necessary to

make an actor liable for an alleged tort takes place.” Wyoming

adopted this definition stating that “the law of the place where the

plaintiff sustains injury to her person controls.” Duke, 589 P.2d at

341.

48a

73 (M.D. Tenn. 1980). See also Engine Specialties, Inc.

v. Bombardier, Ltd., 605 F.2d 1,19 (1st Cir. 1979). More-

over, even if one were to look at the actions taken by the

parties, the last event necessary for liability to be imposed

upon Natural, was Natural’s agreement to purchase gas

from Champlin Petroleum, the same gas Natural forced

CIG to give up. This agreement took place in Colorado,

not Wyoming.

Under this analvsis, the Court now finds that Colorado

substantive law applies to CIG’s tortious interference

With a contract claim. Colorado, as contrasted with Wy-

oming, recognizes § 766A causes of action. Accordingly,

CIG’s tort claim is still valid. Defendants’ motion is

hereby denied.

Plaintiffs Motion for an Order Declaring the

i Tort Judgme nt for $23,213,394 and

Permitting Execution of the Judqment

Plaintiff CIG requests that this Court enter an order

declaring the tortious interference judgment is for $23.-

213, 394 plus post-judgment interest dating from Novem-

ber 10, 1986, restating this tort judgment in a separate

judgment pursuant to Fed. R. Civ. P. 54(b), and per-

mitting execution of the tort judgment against defend-

ants’ escrowed security. The $23,213,394 plaintiff seeks

comprises $8,008 839 for restitution and $15,204,555 for

demand charge damages.

The original jury verdict for tortious interference dam-

ages was $39,231,072. Judgment was entered for this

amount on November 10, 1986, by this Court. This in-

cluded $24,026,517 for restitution and $15,204,555 for

demand charges. As noted previously in the background

discussion, the $15,204,555 was deducted from the tor-

tious interference award to avoid duplication since the

jury also awarded the same amount under antitrust dam-

ages. In the Court’s Order on Post-Trial Motions dated

May 29, 1987, the $24,026,517 restitution award was re-

49a

duced by two-thirds to $8,008,839, and a remittitur or-

dered for $16 017,678, which plaintiff later accepted.

Colorado Interstate Gas Co. v. Natural Pipeline Co. of

America, 661 F. Supp. 1448, 1480 (D. Wyo. 1987).

Natural contends that CIG is only entitled to $8,008,-

839, the amount of the tortious interference award re-

maining after the reduction for duplication and the re-

mittitur. Natural argues that the $15,204,555 demand

charges damages were eliminated from the tortious inter-

ference award at CIG’s request and cannot now be rein-

stated. Natural maintains that the Tenth Circuit’s af-

firmance of the tort claim was for the $8,008,839 only.

Furthermore, awarding demand charges as tort damages

is preempted by FERC decisions according to Natural.

As a final argument, Natural asserts that reinstatement

of the demand charges would be inequitable.

The Court’s Novemebr 10, 1986, Judgment made it clear

that the tortious interference award included damages for

restitution and for demand charges. It was only for the

purpose of avoiding duplication of damages that the de

mand charges were deducted from the tortious interefer-

ence award. The Court never indicated that the tortious

interference award was being “permanently” reduced.

This position is supported by the Court’s statements

and actions during and after the trial. In a conference

with counsel to discuss a question presented by the jury

regarding the award of duplicate damages, the Court

indicated that it pulled the jury instruction on no dupli-

cate recovery “so that in the event any one count failed

there could be a complete answer by the jury on the other

counts, ... thereby prevent[ing| the retrial of the case.”

Record at 8851.

The Court took this very action with regard to future

lost profits. In its Order on Post-Trial Motions, the Court

determined that $60,388,000 of lost profits were not re-

coverable as antitrust damages. Colorado Interstate Gas,

50a

661 F. Supp. at 1479-80. The $60,388,000 was originally

deducted from the breach of contract award to avoid

duplicative awards in the Court’s November 10, 1986,

Judgment. When the Court reduced the antitrust award

by the $60,388,000 for lost profits, it reinstated the

amount as a breach of contract award. There was no

dispute that the $60,388,000 was recoverable under the

breach of contract claim. Jd. at 1480.

The Court sees no reason to treat the reinstatement of

the $15,204 555 in demand charges any differently. The

jury awarded damages to CIG for demand charges under

two different causes of action, antitrust and tortious in-

terference. CIG could only recover under one. Just be-

cause one of the causes of action fails does not mean the

plaintiff is not entitled to recover under the remaining

cause of action.

Natural argues that FERC decisions pri empt awarding

of tortious interference damages. The Tenth Circu: con-

sidered this argument and ruled otherwise. Colorado

Interstate Gas Co. v. Natural Gas Pipeline Co. of America,

S85 F.2d 683, 690-91 (10th Cir. 1989). Furthermore,

there is no language in the Tenth Circuit’s opinion limit-

ing the tortious interference award to restitution only.

Id. This Court has also continuously held that demand

charges were recoverable under a tortious interference

claim. Colorado Interstate Gas Co., 661 F. Supp. at 1469-

71, 1478-79.

Natural finally contends’ reinstatement of the

$15,204,555 verdict would be inequitable. The basis for

this verdict was CIG’s contention that it could not use

its rights to the Canyon Creek and Overthrust facilities

without the Champlin Petroleum gas. Natural alleges

that CIG proceeded immediately after trial to put these

rights to valuable use. This use has continued, Natural

contends, for the last 2 1/2 years. Natural argues that

the revenues from these rights should offset any demand

charge damages claimed by CIG.

5la

To support its position, Natural points to the affidavit

of CIG’s Assistant Vice President, Steven Zuckweiler,

provided by CIG. Mr. Zuckweiler stated that “CIG has

shipped gas through the facilities of Canyon Creek Com-

pression Company and Overthrust Pipeline Company,

from the trial of this case in the fall of 1986 to the pres-

ent.” Affidavit of Steven Zuckweiler at 1, January 24,

1990 (CIG’s Memorandum in Opposition to the Motion of

Defendants Natural and NGPL-Trailblazer for entry of

$8,008,839 Final Judgment, Exhibit D.)

Natural fails to point out, however, that the same affi-

davit also states that the gas shipped through the pipe-

line is not CIG’s, but belongs to a third-party. The third-

party merely compensates CIG for CIG’s right to use the

pipeline. The revenues received by CIG as a result of

this shipping is small. Under the third-party shipping

agreements, Mr. Zuckweiler states: “CIG does not re-

alize a net contribution towards its demand charge obli-

gations |from these gas shipments] .... |T]he revenue

CIG has received for third-party transportation over Can-

yon Creek and Overthrust do not reduce the damage

charge damages CIG has sustained.” Jd. at 2-8 (emphasis

deleted). The evidence does not support Natural’s con-

tention of inequality. Accordingly, CIG’s motion is

granted and judgment is entered for the full tort claim

amount of $28,213,394.

Natural argues that post-judgment interest of 5.75%

compounded annually, dating from the entry of judgment,

November 10, 1986, should be paid only on the $8,008,839.

Interest on the $15,204,555, if the Court should reinstate

that award, should begin as of the date of this judgment.

The November 10, 1986, Judgment entered by this

Court included the $15,204,555 as part of the tortious

interference award, It was only to avoid duplicative dam-

ages on two different causes of action that this Court re-

duced the jury's verdict, decreasing the tortious inter-

52a

ference award to the amount of restitution awarded.? The

judgment entered for tortious interference damages in-

cluded both the $8,008,839 restitution and the $15,204,555

demand charge damages. Interest, therefore, began ac-

cruing on both as of that date. Accordingly, pursuant to

prior order of this Court and 28 U.S.C. See. 1961, CIG

is entitled to post-judgment interest at the rate of 5.75%,

compounded annually, from November 10, 1986, until the

date of this Order and accompanying Judgment.

The interest earned, compounded annually, on the

judgment is as follows:

Tortious Interference Award $23,213,394

Interest earned 11/10/86-11 10787 1,334,770

Subtotal $24,548,164

Interest earned 11/10 87-11 10/88 1,411,519

Subtotal $25,959,683

Interest earned 11 10/88-11/10/89 1,492,682

Total $27,452,365

Per diem interest earned

from 11/10/89-11/10/90 $4,324.69

There is no just reason for delay in entering a separate

and new final judgment pursuant to Fed. R. Civ. P. 54(b)

on CIG’s tortious interference claim or for delay in ex-

ecution of that judgment. This Court will enter judgment

in accordance with the Judgment of the United States

Court of Appeals for the Tenth Circuit and this Order.

ACCORDINGLY, IT IS

ORDERED, ADJUDGED, and DECREED that judg-

ment be entered in favor of plaintiff Colorado Interstate

Lod

% The restitution originally awarded was $24,026,517. This was

later reduced via a remittitur to $8,008,839, one-third the original

amount, Colorado Interstate Gas, 661 F.2d at 1479.

53a

Gas Company on its claim for tortious interference with

a contract in the aggregate amount of $28,040,523, rep-

resenting $23,213,394 in damages and $4,827,129 in post-

judgment interest dating from November 10, 1986 to the

date of this Order, together with post-judgment interest

of 8.36% on the new aggregate amount as provided by

law from and after the date of this new Judgment and

Order hereof. It is further

ORDERED that any stay of execution previously en-

tered by this Court in this matter is vacated to permit

execution of the judgment contained herein. It is further

ORDERED that pursuant to the Escrow Agreement ap-

proved by this Court on August 3, 1987, Wyoming Na-

tional Bank, Cheyenne, N.A.,° (formerly Norwest Bank

Cheyenne, N.A.) shall distribute cash or cash equivalents

in the form o* certificates of deposit with total value

equal to the amount of judgment. It is further

ORDERED that after Wyoming National Bank, Chey-

enne, N.A., has complied with the order of the previous

paragraph, Wyoming National, Bank, Cheyenne, N.A.,

shall distribute the balance of the certificates of deposit

held by it as Escrow Agent to defendant Natural Gas

Pipeline Company of America.

Dated this 26th day of March, 1990.

s Thomas C. Brimmer

Chief Judge

United States District Court

ota

APPENDIX UD

NITED STATES DISTRICT COURT

DD. WYOMING

No. C84-189-B

\ IN STA GAS COMPANY

Plaa ;

Vv,

rn AL GAS ELINE COMPANY OF AMERICA and

NATURAL GAS PIPELINE COMPANY OF AMERICA,

Ixc.. and NGPL-TRAILBLAZER, INC.,

. 55a

ment notwithstanding the verdict, for new trial, or for

a remittitur. The Court, having heard the arguments of

counsel, having reviewed the pleadings, and being fully

advised in the premises, FINDS and ORDERS as follows:

Plaintiff Colorado Interstate Gas Company (CIG) and

defendants, Natural Gas Pipeline Company of America

and NGPL-Trailblazer, Inc. ‘hereinafter collectively re-

fered to as “NGPL’’), compete to transport natura! gas.

In July 1982, NGPL and CIG entered a contract (the

Service Agreement) obligating CIG to deliver and re-

quiring NGPL to purchase specified quantities of natural

gas. The Service Agreement requires CIG to maintain

sufficient gas reserves and pipeline transportation capa-

city to ensure delivery of NGPL’s entitlements. Section

2 of the Service Agreement commits NGPL to purchase a

minimum daily volume of gas or to pay the fixed costs of

the volumes not taken.

In 1981-1982 a new pipeline, the Trailblazer System,

was constructed to transport natural gas out of the Over-

thrust region of Wyoming. Three pipeline, segments form

the Trailblazer System: the Overthrust Pipeline, the

Wyoming Interstate Company or WIC Pipeline, and the

Trailblazer Pipeline. NGPL-Trailblazer owns the Trail-

blazer Pipeline in partnership with two other companies.

NGPL-Trailblazer is the operator. Trailblazer competes

with CIG to transport natural gas from the Overthrust.

In July 1983, NGPL refused to accept gas from CIG.

The Natural Gas Act nevertheless obligated CIG to be

ready to deliver any volumes requested by NGPL. CIG

could not use the pipeline capacity reserved for NGPL to

ship natural gas for other customers.

CIG was consequently unable to purchase gas from its

own suppliers, so it shut-in gas owned by Champlin Pe-

troleum in the Whitney Canyon area of Wyoming. Cham-

plin and CIG began renegotiating their contract. Cham-

plin insisted that CIG release its rights to purchase Whit-

ney Canyon gas. CiG acceded. The next day, NGPL

56a

bought Champlin’s Whitney Canyon gas, although NGPL

suid refused deliveries from CIG. NGPL = shipped the

Whitney Canyon gas through the Trailblazer Pipeline.

In addition to acquiring Champlin’s Whitney Canyon re-

serves, NGV

This text is long and has been trimmed here. Open the source document for the complete record.

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