Norwood, Town Of v. N.E. Power Co.
Case Date: 02/08/2000
Court: United States Court of Appeals
Docket No: 99-1047
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For the First Circuit No. 99-1047 TOWN OF NORWOOD, MASSACHUSETTS, Plaintiff, Appellant, v. NEW ENGLAND POWER COMPANY, NEW ENGLAND ELECTRIC SYSTEM (NEES), PACIFIC GAS & ELECTRIC COMPANY, and PG&E CORPORATION, Defendants, Appellees. APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Patti B. Saris, U.S. District Judge] Before Boudin, Stahl and Lipez, Circuit Judges. Charles F. Wheatley, Jr. with whom Wheatley & Ranquist, Kenneth M. Barna, Alan K. Posner and Rubin & Rudman were on brief for plaintiff. Edward Berlin with whom Robert V. Zener, Swidler Berlin Shereff Friedman, LLP, John F. Sherman, III, Associate General Counsel, The NEES Companies, David H. Erichsen, Peter A. Spaeth and Hale and Dorr LLP were on brief for appellees New England Power Company and New England Electric System (NEES). Steven W. Phillips with whom Richard M. Brunell, Robert L. Bocchino, Jr. and Foley, Hoag & Eliot LLP were on brief for appellees Pacific Gas & Electric Company and PG&E Corporation. February 2, 2000 BOUDIN, Circuit Judge. The Town of Norwood, Massachusetts ("Norwood") filed a complaint against New England Power Company ("New England Power") and others alleging antitrust violations and breach of contract. The district court dismissed the complaint and Norwood now appeals. This decision assumes a familiarity with our decision today in Nos. 98-1847 et al., Town of Norwood v. FERC, resolving petitions filed by Norwood and another challenging orders of the Federal Energy Regulatory Commission ("FERC") in related administrative proceedings. I. THE HISTORY To summarize the facts, New England Power is a major wholesaler of electric power in New England, and Norwood owns and operates a municipal utility that distributes retail electric power to residents and businesses in the town. For some years Norwood purchased its power at wholesale from Boston Edison Company, but in the 1970s Norwood sought instead to purchase its power from New England Power and have that power delivered over the intercity transmission network of Boston Edison. Boston Edison and New England Power resisted, but the matter was resolved by settlement after Norwood brought an antitrust suit against them. The settlements, arrived at in 1980 and 1983, included the agreement of Boston Edison to "wheel" power for Norwood over Boston Edison's transmission network and the agreement of New England Power to furnish all of Norwood's requirements for electricity through October 31, 1998, under New England Power's FERC Tariff No. 1 "as [it] may be amended from time to time." Under that tariff, New England Power then supplied power to its own retail affiliates such as Massachusetts Electric Company ("Mass Electric"). The decree in the antitrust case directed that the annexed settlement agreement and power contract were "approved as a settlement of this case and shall be carried out by both parties." The parties amended the power contract in 1989 to give Norwood an option to extend the minimum term, and it then exercised the option to extend the contract to at least October 31, 2008. Each side could terminate on seven years' advance notice. New England Power had somewhat similar requirements contracts with its own affiliates and with other independent retailers embodying similar lengthy periods of notice before termination. The function of such lengthy notice periods is to permit stability for each side; the wholesaler, for example, ordinarily makes investments or other arrangements to assure a stable supply of power either by generation, purchase contracts of its own, or both. See generally Kentucky Utils. Co. v. FERC, 766 F.2d 239, 243 (6th Cir. 1985). Beginning in December 1996, New England Power made a set of regulatory filings to restructure itself and to revise its existing tariffs for wholesale power sales in Massachusetts and Rhode Island. These filings, described in more detail in our companion decision, had several aims: approval by FERC of the sale of New England Power's non-nuclear generating facilities to a west coast utility; the release of New England Power affiliates like Mass Electric from their long-term obligations to purchase their power from New England Power; and the restructuring of New England Power's wholesale rates to affiliates and interested purchasers to facilitate customer choice and market-based pricing at both the wholesale and retail level. To accommodate policies of both the Massachusetts and Rhode Island state utility commissions, New England Power also proposed a temporary, non-cost-based wholesale offering called "standard offer service." This temporary offering was to provide power at predetermined rates, increasing rapidly over a multi-year period, to those retailers required by the states to offer counterpart retail standard offer rates to their own customers; the states were introducing competition at the retail level and wanted retail purchasers to have an initial low-rate offering as a backup while competitive sources of supply developed for them, e.g., In re Massachusetts Elec. Co., Mass. D.P.U. 96-25, at 23-25 (Feb. 26, 1997); see also Mass. Gen. Laws ch. 164, 1B(b); R.I. Gen. Laws 39-1-27.3. Such retail sellers include Mass Electric and other investor-owned retailers but not municipalities like Norwood, which have no obligation to allow competitive access to their customers. See Mass. Gen. Laws ch. 164, 47A. The prospective sale by New England Power of its low-cost hydroelectric and fossil generating facilities posed a potential problem for existing requirements-contract purchasers like Norwood, since New England Power's existing tariff rates (filed with FERC and incorporated by reference into power contracts) were normally amended to provide for price increases as New England Power's costs went up. To meet this objection, New England Power proposed to implement a rate freeze that would prevent increases in wholesale rates for its requirements-contract customers, including Norwood, during the term of their agreements. While the initial filings of various proposals were under consideration by FERC, Norwood, on April 14, 1997, filed the present suit in the district court; this complaint, as later amended, named as defendants New England Power, its parent New England Electric System, and two companies that were part of the California-based parent utility system (collectively "PG&E") whose subsidiary ("USGenNE") was to acquire New England Power's non- nuclear generating facilities in New England. Between the original filing of the complaint and its later substantial revision through two amendments, additional events took place that are important to the present action. First, in the FERC proceedings, the Commission ultimately approved a settlement agreement permitting (on payment of contract termination charges) early termination of requirements contracts by the affiliates of New England Power, New England Power Co., 81 F.E.R.C. 61,281 (1997), reh'g denied, 83 F.E.R.C. 61,265 (1998); approved the offering of the new backup wholesale standard offer service, id.; approved the transfer of generating facilities and associated contracts to USGenNE, New England Power Co., 82 F.E.R.C. 61,179 (1998), reh'g denied, 83 F.E.R.C. 61,275 (1998); and agreed to the FERC Tariff No. 1 rate freeze that would prevent post-divestiture rate increases to purchasers who chose to avoid the termination charge by continuing as wholesale customers of New England Power under their existing contracts, id. Second, regarding itself as disadvantaged by the wholesale standard offer service made available to New England Power's retail affiliates--whom Norwood regards as retail competitors--Norwood notified New England Power on March 4, 1998, that it was switching to a different wholesale supplier, Northeast Utilities; a tariff and agreement to that effect were filed with FERC and have gone into effect. Two weeks later, on March 18, 1998, New England Power filed a revised FERC Tariff No. 1 permitting its non-settling wholesale customers like Norwood to terminate their contracts early, and on only 30 days' notice, with the condition that the customers pay a large contract termination charge. The charge was calculated based on the revenues that New England Power would have expected to collect had a customer continued to pay the now-frozen tariff rate through the contract term, less the expected costs avoided by not providing service. As finally amended in April 1998, Norwood's complaint made a number of separate claims. In count 1, it charged that New England Power had violated the prior 1983 antitrust decree and power contract by divesting itself of its generating facilities, shifting Norwood to a fixed rate based on pre-divestiture costs, and proposing to serve its own affiliates on a quite different basis than the fixed rate (namely, market-based rates subject to the availability of the initially low-cost wholesale standard offer service). The remaining three counts in Norwood's second amended complaint charged violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. 1-2, and sections 3 and 7 of the Clayton Act, 15 U.S.C. 14, 18. The company attacked the contract termination charge imposed on Norwood under the revised FERC No. 1 Tariff as an illegal restraint of trade, an unlawful tying arrangement, and, in combination with the standard offer rates, an illegal price squeeze; it alleged a conspiracy to fix prices in the wholesale market; and it alleged a lessening of competition from the transfer of New England Power's non-nuclear generating assets to USGenNE. After a motion by Norwood for partial summary judgment and motions to dismiss by the defendants, the district court on September 28, 1998, entered a decision dismissing the complaint under Fed. R. Civ. P. 12(b)(6). Town of Norwood v. New England Power Co., 23 F. Supp.2d 109 (D. Mass. 1998). In doing so, the court considered the allegations in the complaint, documents attached to it, and matters of public record including FERC decisions. In substance, the court rested its decision on FERC's scrutiny of the same transactions, the so-called filed rate doctrine, and the terms of the settlement agreement and power contract between Norwood and New England Power. II. DISCUSSION 1. At the threshold of this appeal is a substantial claim by New England Power that a procedural error by Norwood deprives us of jurisdiction to consider Norwood's main claims. After the district court entered its decision and judgment, Norwood filed a timely motion under Fed. R. Civ. P. 59(e) to alter or amend the judgment; after this was denied, it filed a notice of appeal in this court challenging the denial. Norwood then filed a motion under Fed. R. Civ. P. 60(b) for relief from the judgment on grounds of newly discovered evidence and, in the alternative, moved for a second time under Fed. R. Civ. P. 59(e) to alter or amend the judgment. The district court denied both of the new motions, and Norwood then filed an amended notice of appeal challenging the denial of its post-judgment motions; but Norwood did not mention in either its original or amended notice of appeal the district court's original decision and judgment. New England Power points out that Norwood's brief is directed almost entirely to the original decision and judgment from which it says that Norwood did not appeal. The law on this issue is less clear than the cases claim it to be. On the one hand, courts often say that a notice of appeal that names only a post-judgment order as the subject of the appeal does not bring the original judgment before the appellate court. E.g., Mariani-Giron v. Acevedo-Ruiz, 945 F.2d 1, 3 (1st Cir. 1991). On the other hand, because in such cases the failure to name the underlying judgment is usually a slip of the pen and rarely causes any prejudice to the other side, courts then go through endless contortions to rescue the technically defaulted portion of the appeal. See 11 Wright, Miller & Kane, Federal Practice and Procedure 2818, at 192-93 & n.11 (2d ed. 1995) (collecting cases). Sometimes this resurrection can be justified in common- sense terms where, for example, the caption of the notice refers to a post-judgment order but the body also refers to the underlying judgment, see In re San Juan Dupont Plaza Hotel Fire Litig., 45 F.3d 564, 567 (1st Cir. 1995), or where the appellant previously filed a premature notice of appeal challenging the underlying judgment, ineffective by itself but illustrating an intent to attack the judgment, see Foman v. Davis, 371 U.S. 178, 180-82 (1962); LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 839-40 (1st Cir. 1993), cert. denied, 511 U.S. 1018 (1994). The latter is what occurred in Foman, relied upon by Norwood in this case. But Norwood did not file a premature notice of appeal designating the original judgment. Cf. Gottesman v. INS, 33 F.3d 383, 388 (4th Cir. 1994). However, Norwood's timely first motion to alter or amend the judgment--from denial of which Norwood did file a timely appeal--is not an ordinary Rule 59(e) motion limited to a narrow criticism or new objection. Instead, the motion covers (in 59 pages) more or less the same points that Norwood had earlier made to the district court and now repeats to us; indeed, the district court tersely denied the motion relying on its original decision. Under these circumstances, it seems to us that Norwood's appellate arguments are within the scope of its Rule 59(e) motion and are properly before us on appeal from the denial of that motion. 2. Turning to the merits, the first count in Norwood's complaint--effectively, a contract claim--rests on its assertion that New England Power breached its 1983 promises. According to Norwood, New England Power was obligated to supply Norwood with power during the contract term, on a cost-justified, FERC-regulated basis, at the same rate level at which power was offered to affiliates of New England Power. Norwood asserts that New England Power breached these supposed promises by selling its low-cost generation facilities, providing Norwood with a substitute fixed rate based on pre-divestiture costs, and switching to market-based and standard offer rates for sales to its own affiliates. The explicit target of this count is the contract termination charge imposed by the amended FERC Tariff No. 1 on non- settling purchasers who choose to terminate their requirements contracts without giving the requisite multi-year notice. Since other Tariff No. 1 purchasers (including the affiliates) appear to have settled, Norwood may be the only purchaser left in this category--although the other purchasers will also pay contract termination charges computed on a somewhat different basis. Norwood says the alleged breach by New England Power excuses Norwood's own abandonment of the contract, thereby avoiding a termination charge allegedly amounting to about $78 million over the remainder of the ten-year period. The district court rejected Norwood's contract claim on two different grounds. It said that the claim was barred by the filed rate doctrine which--in the aspect pertinent here--limits attacks outside the regulatory process on tariffed rates filed with federal regulatory agencies. E.g. Arkansas La. Gas Co. v. Hall, 453 U.S. 571 (1981). The district court also ruled, in the alternative, that the agreements were not breached by New England Power, because all it had promised to do was to provide FERC Tariff No. 1 rates to Norwood, which New England Power continued to do until Norwood itself renounced its requirements contract in March 1998. Town of Norwood, 23 F. Supp.2d at 119. We agree with Norwood that the filed rate doctrine does not bar Norwood's contract claim. It is true that, absent some exception, Norwood could not use its contract claim as a vehicle to attack the validity of the FERC tariff imposing the termination charge; the filed rate doctrine protects the agency's authority over tariffed rates and prefers a prevailing tariff (unless set aside by the agency) over any separate contractual arrangements, AT&T v. Central Office Tel., Inc., 524 U.S. 214, 222-24 (1998). While the termination charge is not a traditional "rate" for continuing service, the filed rate doctrine sweeps more broadly and governs ancillary conditions and terms included in the tariff. Id. at 224-25. Yet, under the amended tariff itself, whether a termination charge applies depends on whether there is a requirements contract in force. And FERC has at most approved only the generic terms of the amended tariff; it has not determined whether Norwood's prior obligation to buy from New England Power was vitiated by a breach on the part of New England Power, New England Power Co., 84 F.E.R.C. 61,175, at 61,920 (1998), or some other means. See note 2, above. Perhaps it could have decided such issues, but it often leaves contract breach issues to courts, Southern Cal. Edison Co., 85 F.E.R.C. 61,023, at 61,069 (1998), and it appears to have done so here. Thus, the tariff may be protected by the filed rate doctrine but whether the tariff applies to Norwood depends on the extent of Norwood's contractual obligations. This brings us to the district court's alternative holding that New England Power did not breach the contract. The facts claimed by Norwood to be such a breach are undisputed; they are the sale of facilities, the new terms for other customers, and the freezing of Norwood's rate. The question is whether those acts comprised a breach of contractual terms, an issue of law to be determined from the words of the contract, if they are unambiguous, and otherwise by the words along with whatever extrinsic evidence may cast light on the parties' intent. Bank v. IBM, 145 F.3d 420, 424 (1st Cir. 1998). Here, the district court found that the words alone refuted Norwood's claim. Town of Norwood, 23 F. Supp.2d at 119. The original 1983 power contract is pithy in its pertinent language: New England Power promises to supply Norwood its requirements pursuant to the former's FERC No. 1 Tariff, "filed with FERC, as [it] may be amended from time to time." At the time, New England Power's FERC Tariff No. 1 was its general cost-based offering of power to wholesale customers. But nothing in the contract explicitly required that the power be furnished from any specific set of generating facilities, or that New England Power's own affiliates continue to buy their power under this tariff, or that the rates be based upon costs calculated under any specific cost formula covering any specific period. Norwood argued in the district court that the agreement's terms were ambiguous and, specifically, that "FERC Tariff No. 1" had a specialized meaning and reflected implicit conditions, i.e., that the rates be based on current costs and used equally for New England Power's own affiliates. But while extrinsic evidence can be admitted to show ambiguity and to resolve it, see Donoghue v. IBC USA (Publications), Inc., 70 F.3d 206, 215 (1st Cir. 1995), Norwood's affidavits show only that its aim was to achieve those goals and that FERC Tariff No. 1 was at that time structured as a traditional utility offering. Accordingly, we agree with the district court that the contract did not contain a promise that ownership of New England Power's facilities or equality of treatment vis |