Antitrust Law Daily Kansas antitrust law’s repealed damages provision not retroactive; company’s gas price-fixing claims advance
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Friday, October 18, 2019

Kansas antitrust law’s repealed damages provision not retroactive; company’s gas price-fixing claims advance

By Thomas G. Wolfe, J.D.

Because the repeal of the Kansas Restraint of Trade Act’s provision governing "full consideration damages" does not operate retroactively, a plaintiff gas purchaser’s price fixing claims against natural gas traders survive.

In reviewing the 2013 repeal of the Kansas Restraint of Trade Act (KRTA) provision that had previously allowed an injured party to recover "full consideration damages," the federal district court in Kansas City, Kansas, determined that the repealed statutory provision does not operate retroactively. Thus gas price fixing claims brought by Reorganized FLI, Inc., a gas purchaser, were allowed to advance against several natural gas traders. Consequently, noting that Reorganized FLI only seeks full consideration damages, or a full refund of its gas purchases, under the KRTA, the court denied the defendant gas traders’ request for summary judgment. In examining the legislative history of the applicable KRTA provisions and analyzing case law, the court determined that the Kansas "savings statute" does not clearly provide for retroactive application. Moreover, the Kansas Supreme Court has stated that Section 50-115 of the KRTA creates substantive rights and is "both remedial and substantive" (Reorganized FLI, Inc. v. The Williams Companies, Inc., October 15, 2019, Robinson, J.).

Backdrop. In 2005, Reorganized FLI filed its lawsuit against the defendant natural gas traders and their affiliates (The Williams Companies, Inc., Dynergy Marketing & Trade, CMS Energy Corporation, CMS Marketing Service & Trading Company, and CMS Field Service), alleging that they violated the KRTA by unlawfully manipulating the price of natural gas. Reorganized FLI contended that the defendants accomplished this price fixing by, among other things, reporting false information to price indices published by trade publications and by engaging in "wash sales."

Accordingly, Reorganized FLI sought full consideration damages, or a full refund of its gas purchases, under K.S.A. § 50-115. However, that KRTA provision was later repealed in 2013.

Procedural context; core issue. While Reorganized FLI filed its 2005 lawsuit in state trial court, the case was eventually removed to the Kansas federal district court. The case then proceeded for approximately 14 years in multi-district litigation in the federal district court in Nevada. In May 2019, the case was then remanded back to the federal district court in Kansas City, Kansas.

The parties to the litigation did not dispute that when Reorganized FLI filed its case in 2005, and prior to 2013, "full consideration damages were available under the KRTA’s provision, § 50-115." Rather, the parties disagreed as to "whether full consideration damages are still available" to Reorganized FLI. The defendants sought summary judgment, arguing that the 2013 repeal of Section 50-115 of the KRTA operated retroactively to prevent Reorganized FLI’s from pursuing its claim for full consideration damages.

Court’s decision. In approaching the issue of whether the repealed KRTA provision should be applied retroactively, the court viewed its task as one mainly "to predict what decision the Kansas Supreme Court would make if faced with the same facts and issue."

Reviewing the legislative history of the damages provisions of the KRTA, the court noted that, as a result of various amendments and the 2013 repeal, the cumulative effect is that "actual damages and treble damages are included," but "full consideration damages are not." In addition, as a general principle, Kansas statutes "will not be given retroactive effect unless it appears that such was the legislative intent" (emphasis added). While a law affecting procedure or remedies may be applied retroactively, it may not do so if it prejudicially affects the substantive rights of the parties. Further, in the court’s view, the Kansas "savings statute" (K.S.A. § 50-164) does not clearly provide for retroactive application.

After surveying Kansas case law on the legal issue, the court pointed out that the Nevada federal district court had addressed the same issue and interpreted Kansas law in In re Western States Wholesale Natural Gas Antitrust Litigation, deciding there that full consideration damages were not available on the issue of retroactivity and granting summary judgment to the pertinent defendants in that case. Ultimately, the Kansas federal district court disagreed with the Nevada federal district court’s 2017 decision.

Even if the language in the Kansas savings statute could be interpreted that Section 50-115 of the KRTA has retroactive application, the court stressed that Kansas law also states that "even where the legislative intent is clear, courts must still consider whether retrospective application of legislation will affect vested or substantive rights." Along these lines, the court examined prior declarations on the subject by the Kansas Supreme Court, noting that KRTA Section 50-115 "is a cause of action creating substantive rights" and that Section 50-115 is "both remedial and substantive." "This distinction is key in determining whether the repeal of §115 operates retroactively," the court concluded.

In denying the defendant natural gas traders’ motion for summary judgment, the court stated that it was predicting that "the Kansas Supreme Court would find that the repeal of § 50-115 does not have retroactive application to this case that has been pending since 2005."

The case is No. 05-CV-02389-JAR-GEB.

Attorneys: Donald D. Barry (Barry Law, LLC) for Reorganized FLI Inc. Mitchell F. Engel (Shook, Hardy & Bacon LLP) for Williams Companies, Inc. Edwin McAllister Buffmire (Jackson Walker, LLP) for Dynegy Marketing & Trade. Sean A. Commons (Sidley Austin LLP) for CMS Energy Corp.

Companies: Reorganized FLI, Inc.; Williams Companies, Inc.; CMS Energy Corp.

MainStory: TopStory Antitrust KansasNews

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