Antitrust Law Daily Filed-rate doctrine bars RICO claims against alleged manipulators of California’s energy rates
Tuesday, May 16, 2017

Filed-rate doctrine bars RICO claims against alleged manipulators of California’s energy rates

By Mark Engstrom, J.D.

A federal district court did not err in holding that the filed-rate doctrine barred RICO claims that California energy consumers had asserted against J.P. Morgan Ventures Energy Corporation (JPM Ventures) and its parent company, JPMorgan Chase & Company (JPM Chase), the U.S. Court of Appeals in San Francisco has ruled. The decision of the district court was therefore affirmed (Woolsey v. J.P. Morgan Ventures Energy Corp., May 12, 2017, per curiam).

The plaintiffs alleged that JPM Ventures and JPM Chase had fraudulently manipulated the rates in California’s wholesale electricity market, and thereby created higher electricity costs for retail consumers. The district court held that the filed-rate doctrine barred the plaintiff’s RICO claim.

The plaintiffs appealed, arguing that the filed-rate doctrine was inapplicable to their RICO claims based on the Ninth Circuit’s decision in Carlin v. DairyAmerica, Inc., 705 F.3d 856 (9th Cir. 2012). In Carlin, the Ninth Circuit refused to apply the filed-rate doctrine to bar RICO claims involving price manipulation in the milk industry because the rate-setting agency had explicitly rejected the relevant rates as resulting from fraud and attempted to recalculate them.

In addition, the Ninth Circuit had "carefully cabined" its holding in Carlin to the particular facts that were presented in that case, and it specifically indicated that its reasoning in Carlin would not extend to claims involving rates that were set by the Federal Energy Regulatory Commission (FERC)—the rate-setting agency in this case. On its face, Carlin did not encompass claims involving FERC-approved rates.

According to the court, the plaintiffs could not escape the fact that they were fundamentally alleging that the FERC-approved electricity rates in California’s wholesale market were too high. Because the Ninth Circuit’s precedents had made it clear that the only redress for that type of complaint was with FERC, the RICO claims were properly barred.

The case is No. 15-56697.

Attorneys: Joseph Siprut (Siprut PC) for Catherine Woolsey. Richard P. Bress (Latham & Watkins LLP) for J.P. Morgan Ventures Energy Corp. and JPMorgan Chase & Co.

Companies: J.P. Morgan Ventures Energy Corp.; JPMorgan Chase & Co.

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