A Fourth U.S. Circuit Court of Appeals panel recently handed Duke Energy a loss, reinstating a competing power provider’s antitrust lawsuit against it and instructing the trial judge who’s been handling the case to step aside.
Authored by Fourth Circuit Judge Paul Niemeyer, the unanimous ruling held that there are “genuine issues of material fact” at stake that merit sending the court battle between Duke and NTE Energy to a jury.
That overturned earlier rulings from the trial judge, Trump appointee Kenneth Bell, who sided with Duke.
Bell won’t preside over the case on remand, as Niemeyer and his colleagues ordered his removal from the litigation.
The Wake Forest-trained Bell had recused himself early in the case because a former law partner was representing Duke, but he returned it to after another judge also recused.
Though the previous conflict had been eliminated, Fourth Circuit precedent is that once a judge recuses from a case, he or she is out of it for good.
That “bright-line rule can be applied with ease and promotes the goal of ensuring public confidence in the impartiality of the judicial process,” said Niemeyer, a George W. Bush appointee to the Fourth Circuit bench.
The antitrust case concerns Duke’s response to competitive pressure from NTE, which in the 2010s built a gas-fired power plant near Kings Mountain and started selling electricity to a set of nine former Duke customers that included Western Carolina University.
Aside from any prestige factor, Duke’s problem was the NTE’s facility and the follow-up it wanted to build near Reidsville were “more cost-efficient than Duke’s own plants,” Niemeyer said.
Duke nonetheless had most of its customers signed to long-term contracts that kept them from jumping ship.
Fayetteville was a major exception, with a supply deal that was set to expire in 2024, and it quickly became the major battleground for the two companies. Duke secured that flank in 2019, when it signed a new deal with the city.
The company served up a discount on the remaining years of its predecessor contract, and agreed to pay a premium for excess-electricity buys from what Niemeyer termed Fayetteville’s “very inefficient” Butler-Warner Generation Plant.
Being the newcomer, NTE wasn’t able to offer Fayetteville a discount on the last three years of its existing contract with Duke.
Moreover, there’s evidence Duke’s “blend and extend” strategy involved charging higher prices than need be so that it could offer discounts when the need arose, Niemeyer said.
And company internal documents also told of a plan to “raise prices on other of Duke’s wholesale and retail customers to make up for the profit it lost on the Fayetteville deal,” Niemeyer said.
Meanwhile, the competitors were also at loggerheads about the Reidsville plant, which NTE reckoned would become the source of the electricity it would sell Fayetteville if it won that city’s business.
Long story short, the Reidsville plan stalled and Duke bumped it from the queue for a slot on its power-transmission network.
The key legal issue in the case is that Duke contends that all of its actions were “lawful in themselves,” and thus it couldn’t have committed an anti-trust violation. Bell agreed.
But writing for an appeals panel that also included Judges Stephanie Thacker (an Obama appointee) and Diana Motz (a Clinton appointee), Niemeyer said the Supreme Court has long recognized that a string of otherwise legal actions can add up to an antitrust violation when they serve an anti-competitive plan.
In any event, a pretrial dismissal wasn’t justified. “The facts supporting the parties’ conflicting positions, we conclude, are fairly disputed and therefore require a trial to resolve,” Niemeyer said.
