Opinion
No. 00-cv-3222 (WGB).
December 21, 2001
Paul F. Carvelli, Esq., McCUSKER, ANSELMI, ROSEN, CARVELLI WALSH, P.A. Chatham, New Jersey. Albert P. Lindemann, Jr., Esq., Gary C. Adler, Esq., O'CONNOR HANNAN, L.L.P., Washington, D.C., Attorneys for Plaintiff.
Stuart Alderoty, Esq., LeBOEUF, LAMB GREENE MacRAE, L.L.P., Newark, New Jersey, Attorneys for Defendant.
M E M O R A N D U M O P I N I O N
Before the Court are the motion of Defendant Cogen Technologies Linden Venture, L.P. ("Cogen") for summary judgment pursuant to Fed.R.Civ.P. 56, and the cross-motion of Plaintiff Infineum U.S.A. L.P. ("Infineum") to strike portions of Defendant's argument. Because a material question of fact exists as to whether Plaintiff has standing to pursue its antitrust claims, the Court will deny Defendant's motion for summary judgment. Accordingly, Plaintiff's motion to strike is dismissed as moot.
1. BACKGROUND
Cogen is in the business of generating electricity and steam. Infineum and non-party Tosco Corporation's Bayway Refinery ("BRC" or "Tosco") are the only consumers who purchase Cogen's steam. Steam pipes run from Cogen's facility to BRC, and onward through BRC's refinery to a number of facilities owned by Infineum. Infineum does not produce steam, but allegedly has a contractual right to re-sell some portion of Cogen's steam to BRC.
Cogen also sells its electricity directly to BRC, and into the national power grid.
In the dispute now before the Court, Infineum contends that Cogen committed an antitrust violation when it offered BRC electricity at cost, contingent upon receiving a commitment from BRC to buy steam only from Cogen and not from Infineum. Infineum, whose resale of steam to BRC was terminated by BRC's agreement with Cogen, claims to have been injured by Cogen's unfair practice of "tying" its sale of cheap electricity to its sale of steam.
1. Cogen's Summary Judgment Motion
Cogen contends that Infineum failed to comply with a contractual obligation that required it to measure the quantity of steam it purchased from Cogen, and that without this measurement Infineum had no right to re-sell steam to BRC. Cogen theorizes that unless Infineum measured the steam it purchased, Infineum physically had no steam to sell to BRC. According to Cogen, if Infineum had no steam to sell, then Infineum could never have been considered a steam-sales-competitor of Cogen's. If Infineum was not a competitor of Cogen's, then it could not have been injured by Defendant's exclusive steam sales arrangement with BRC. If Infineum was not injured by Cogen's practices, then Infineum now lacks standing to pursue an antitrust claim against Cogen challenging Cogen's practices. See Barton Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178 (3d Cir. 1997) (No antitrust standing when plaintiff not a competitor in the relevant market).
The narrow question of Infineum's standing, as premised upon its alleged right to re-sell steam to BRC, was the subject of a limited discovery order entered by Magistrate Judge Dennis Cavanaugh on October 11, 2000. (Alderoty Cert. Ex. D.) That ordered confined discovery:
to the issues of whether Infineum has an obligation to measure and report the quantity of steam actually received by Infineum from Cogen pursuant to the agreement entered into by Infineum and Cogen on February 4, 1999 effective January 1, 1999 and, if so, has Infineum failed to meet is obligation or has Cogen waived the agreement's requirements (the "Measuring Issue").
(10/11/2000 Order, ¶ 1.) Also pursuant to Judge Cavanaugh's order, after a period of expedited discovery on the Measuring Issue Defendant Cogen was given the right to file "a dispositive motion . . . limited to a) the Measuring Issue; and b) whether, based on the Measuring Issue, Infineum has standing to maintain an antitrust claim against Cogen." (10/11/2000 Order, ¶ 5.) In accordance with Judge Cavanaugh's order, Defendant ultimately filed this motion for summary judgment.
Because the Court's jurisdiction rests entirely on Plaintiff's antitrust claims pursuant to 15 U.S.C. § 1 et seq. and 28 U.S.C. § 1331 and 1337, if the Court were to grant Defendant's summary judgment motion and dismiss Plaintiff's antitrust claims for lack of standing, only Plaintiff's state law claims would remain. Accordingly, the Court would be in a position where it could decline to exercise supplemental jurisdiction over those state law claims pursuant to 28 U.S.C. § 1367(c)(3), and dismiss the remainder of the action without prejudice. Therefore, resolution of Plaintiff's antitrust standing is potentially dispositive of this entire action.
At oral argument on September 7, 2001 the Court questioned sua sponte whether there was a sufficient nexus with interstate commerce in this case to vest the Court with subject matter jurisdiction under the Sherman Act, 15 U.S.C. § 1. At the Court's request the parties submitted additional briefing on the issue. Having considered the parties' submissions, the Court concludes that although this dispute exists on a "purely local level," it has jurisdiction because Plaintiff's allegations, if true, "substantially affect interstate commerce." See,e.g., Harold Friedman, Inc. v. Thorofare Markets, Inc., 587 F.2d 127 (3d Cir. 1978). The Court reaches this conclusion because the companies involved are citizens of different states, because the financial implications of this dispute are substantial, and because one of the allegedly tied products, electricity, flows in interstate commerce.
Defendant claims that if the Court finds Infineum to have no right to re-sell steam to BRC, that finding will be dispositive of the entire dispute, and that as a result the Court should dismiss the entire action with prejudice. Plaintiff has moved to strike this argument, on grounds that it exceeds the limited scope of any dispositive motion contemplated by Judge Cavanaugh's discovery order. Because Defendant's motion for summary judgment will be denied, the Court need not reach the question of whether the entire action would properly be dismissed with prejudice if Infineum were found not to have a right to re-sell steam to BRC. Accordingly, Plaintiff's motion to strike is dismissed as moot.
2. History of the Parties' Relationship
In 1990, Exxon Corporation owned a large tract of land in Linden, New Jersey that contained a petroleum refinery, a chemical plant, and a technology center. Exxon leased Cogen a portion of the tract to construct a cogeneration facility, which would provide electricity and steam to the various Exxon operations located within the Linden complex.
In 1993, Exxon sold the refinery to Tosco Corporation, but continued to operate the chemical plant and technology center within the Linden complex. A steam purchase agreement in place between Exxon and Cogen provided that if the refinery were sold, the purchaser would be obligated to enter into a steam purchase contract with Cogen. Pursuant to that agreement, after the refinery was sold Cogen began to sell steam directly to BRC.
Also in 1993, Exxon and Cogen began negotiating a new steam sales agreement that would take into account the sale of the refinery to Tosco. Prior to finalization of that agreement, effective January 1, 1999 Exxon's remaining interests in the Linden Complex were assigned to Infineum. On February 4, 1999 Infineum and Cogen entered into an agreement which restated and amended the original steam sales agreement between Exxon and Cogen. This new agreement took into account the sale of the refinery to Tosco in 1993, as well as the assignment of Exxon's interest to Infineum in 1999.
3. The Steam Agreement Between Cogen and Infineum
The relationship between Cogen and Infineum as to the purchase and re-sale of steam is entirely governed by the agreement entered into between the parties on February 4, 1999, made retroactively effective to January 1, 1999 ("the Agreement"). (Alderoty Cert. Ex. A.) According to Cogen, Cogen simultaneously entered into a separate, parallel steam sales agreement with BRC that governs Cogen's sale of steam to BRC. By the terms of Cogen's agreement with Infineum:
Cogen shall sell to Infineum and deliver to the Points of Delivery of Steam, Steam for Infineum's Complex and Infineum's Technology Center up to a maximum rate of 181 K lbs. per hour for the months October through and including May, and up to a maximum rate of 109 K lbs. per hour for the months June through and including September . . .
If at any time Infineum requests steam at Infineum's Complex and Infineum's Technology Center [at a rate greater than the above amounts] Cogen shall meet such requests to the extent Cogen is able to do so, provided that Cogen is not materially adversely affected under the Power Purchase Agreement or Cogen's other agreements to sell steam to other steam users.
The "Points of Delivery of Steam" are defined as "the points where Cogen's steam supply system connects to [BRC's] steam pipeline at [BRC's] existing steam headers . . ." (Article 1.23.)
(Agreement Article 3.1(A).)
Once Cogen has delivered Infineum's steam to the Points of Delivery, Infineum must "make the necessary arrangements for the delivery of Steam sold [under the Agreement] from the Points of Delivery of Steam to Infineum at Infineum's Complex and Infineum's Technology Center." (Article 5.2(A).) Notwithstanding Infineum's duty pursuant to Article 5.2(A), "Infineum shall not be liable to Cogen for steam actually delivered by Cogen to the Points of Delivery of Steam in accordance with Article 3.1(A) of the Agreement, but that is not received by Infineum." (Article 3.2(C).)
BRC's steam and Infineum's steam are delivered from Cogen through the same series of pipes. In order to determine how much steam is delivered by Cogen to BRC and how much is delivered to Infineum:
Cogen shall design, install, operate, maintain, and own all measuring equipment necessary for an accurate determination of the quantity of Steam delivered to the Points of Delivery of Steam. Except as provided in Article 6.4, Cogen's meters shall be used for quantity measurements under this Agreement.
(Article 6.2.) Article 6.4, which Defendant claims is at the center of this dispute over standing, states in relevant part:
Infineum shall be required to measure the quantity of Steam received by Infineum. Such measurements shall be determined by one or a combination of the following methods:
A. Using the registration of any meter or meters of Infineum, if installed and accurately registering; or
B. In the absence of an installed and accurately registering meter of Infineum, making a calibration test or mathematical calculation, if the percentage of error is ascertainable; or
C. In the absence of both an installed and accurately registering meter of Infineum and an ascertainable percentage of error, estimating by reference to quantities measured during periods under similar conditions when Infineum's meter was registering accurately. Infineum shall repair and recalibrate any inaccurate meter in a timely manner; or
D. In the absence of an ability to use any of the above methods of measurement, estimating by reference to Infineum's operating records for Infineum's Complex and Infineum's Technology Center for the period in question.
. . . on the first day of each calendar month during the term of this Agreement, Infineum shall determine the quantities of Steam delivered to Infineum during the immediately preceding calendar month, and notify Cogen in writing of such quantities. . . .
(Article 6.4.)
Because the steam pipeline between Cogen, BRC, and Infineum is a closed system, Cogen was traditionally able to rely on Infineum's quantity measurements to determine how much steam was used by BRC. This was accomplished by taking Infineum's monthly steam quantity report and subtracting it from the total amount delivered to the Points of Delivery by Cogen. With narrow exception, any amount that reached the Points of Delivery that did not reach Infineum's complex was assumed to have been used by BRC, and was accordingly billed to BRC.
4. Infineum's Steam Credits
In 1990, when Exxon originally leased Cogen land in its Linden complex for the construction of a cogeneration facility, the parties anticipated that Cogen would be able to provide Exxon with electricity at below-market prices. After regulators objected, it was agreed that Cogen would instead provide Exxon with "steam commitment credits," which were provided "because of Exxon's commitment to purchase steam at the initial planning stage of the development of the Cogeneration Facility [which] reflects a change from Cogen's previous plan to provide electricity to Exxon." (Article 4.3.)
To the best of the Court's understanding, these steam credits function in a manner akin to airline frequent flyer miles. Based on a complex formula, during some periods Exxon's steam usage would generate a credit which would be applied to the value of steam used by Exxon at the end of the month. If in a given month Exxon generated steam credits with a greater value than that of the steam it consumed (which was a possibility anticipated by the parties), the unused credits would be carried over to the following month. At the end of each calendar year, any remaining unused steam credits expired. (See Article 4.3-4.5.)
When Exxon sold its refinery to BRC in 1993, the right to accrue steam credits did not transfer from Exxon to BRC. Because BRC had traditionally used approximately 80% of Cogen's steam output, Exxon, and later Infineum, found themselves in a position where more credits were being generated than could be used. In order to recapture the lost steam credits, as early as 1994 Plaintiff contends that it sought the right to purchase additional steam from Cogen using the excess credits, and re-sell the purchased steam to BRC. Defendant contends that it ultimately refused to allow Infineum to recapture lost steam credits by purchasing additional steam with excess credits, and selling that steam on to BRC.
Although there is no mention of re-capturing steam credits in the 1999 Agreement between Infineum and Cogen, there is a provision which gives Infineum the express right to re-sell steam:
[Infineum shall] [h]ave the right to sell and deliver Steam purchased from Cogen to any person who owns or operates facilities within Infineum's Complex, at Infineum's Technology Center, at Exxon Turbo Oil, or on property transferred by Exxon to Bayway Refining Company as part of the purchase by Bayway Refining Company of Exxon's Refinery; provided, however, that Infineum shall first provide Cogen with a declaratory order of the New Jersey Board of Public Utilities or other official assurances satisfactory to Cogen that such sale and delivery would not cause or would not be likely to cause the Cogeneration Facility to cease to be a "qualifying cogeneration facility" . . .
Exxon sought and received such a declaratory order in May, 1998. (Alderoty Decl. Ex. K.) Defendant has made an argument that Infineum should be judicially estopped from arguing before this Court that it does not have a duty to meter the steam it sold to BRC, because of representations that were made before the Board of Public Utilities. After reviewing Exxon's application and the Board's declaratory order, the Court finds that Cogen's judicial estoppel arguments are entirely without merit.
(Article 5.2(C).)
5. Infineum's Steam Sales to BRC
In January, 1999, Infineum, allegedly relying on Article 5.2(C), began to recapture steam credits by reporting to Cogen that it wished to take more steam than usual for the month, and that it would pay for the additional steam taken with the credits that had been generated. Infineum then re-sold to BRC the additional steam it had acquired from Cogen via what would otherwise have been excess steam credits. Because Infineum had acquired the steam with steam credits, it was able to re-sell steam to BRC at a price 35% less than Cogen's price for steam. By Infineum's own admission, the volume of steam sold by Infineum to BRC varied from month to month depending on the value of the steam commitment credits available for use by Infineum.
Infineum's steam re-sale efforts were somewhat akin to the following hypothetical: a frequent flyer acquires an airline ticket with un-used frequent flyer miles that would otherwise expire at the end of a given year, and re-sells the ticket for cash to a traveler who has a trip planned but has yet to buy a ticket. The traveler acquires the ticket for 35% less than what the airline would have charged, had the ticket been purchased for cash directly from the airline. The result is that the frequent flyer recoups cash value for miles that would otherwise have been lost when they expired, and the traveler acquires a ticket for an already-planned trip for less money than the airline would have charged them directly.
During the period in which Infineum was selling steam to BRC, there was no change in the mechanics of the delivery of steam by Cogen. In fact, there is no evidence in the record that Infineum's steam sales to BRC were anything but a purely notional exercise in accounting. Infineum would measure how much steam it used in a given month, pay for that steam with any credits that were generated, and determine how many credits remained available to it. Infineum would then submit a usage report to Cogen that included both its own consumption and some portion of BRC's monthly consumption, up to whatever the full value of Infineum's steam credit was for the given month. Accordingly, BRC would pay Infineum for the portion of BRC's steam consumption that Infineum had been able to acquire from Cogen using steam credits, and submit a usage report to Cogen for the remaining amount of steam it had used but not been able to acquire from Infineum. Essentially BRC, acting in concert with Infineum, would report steam "takes" from Cogen that reflected BRC's total usage, minus whatever portion of its monthly usage it was able to purchase from Infineum. As a result, Infineum's larger steam take from Cogen and BRC's smaller steam take from Cogen should have theoretically reflected the entire volume of steam delivered by Cogen to the Points of Delivery of Steam. (See, e.g., Alderoty Cert. Ex. P; Adler Cert. Ex. GG.)
The interactions and intentions of Cogen and Infineum as they relate to Infineum's steam sales to BRC are in dispute, but it is uncontested that from January, 1999 until June, 1999 Infineum sold steam to BRC. (See Alderoty Cert. Exs. M-R; Adler Cert. Exs. S-GG.) On or about July 1, 1999 BRC indicated that its steam purchases from Infineum would be curtailed, because BRC had allegedly entered into an exclusive steam purchase agreement with Cogen. Approximately one year later, Infineum initiated its antitrust suit against Cogen, alleging that but for Cogen's actions, it would have continued to sell steam to BRC after July 1, 1999.
2. DISCUSSION
1. The Summary Judgment Standard
The standard for granting summary judgment pursuant to Federal Rule of Civil Procedure 56 is a stringent one. Summary judgment is appropriate only if all the probative materials of the record "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir. 1986); Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir. 1983). The court must resolve all reasonable doubts in favor of the nonmoving party when determining whether any genuine issues of material fact exist. Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n. 2 (3d Cir. 1983); Smith v. Pittsburgh Gage Supply Co., 464 F.2d 870, 874 (3d Cir. 1972).
2. Whether Infineum Has Standing to Pursue its Claims
To establish antitrust standing, a plaintiff must prove that it has suffered some antitrust injury, "which is to say injury of the type the antitrust laws were intended to prevent and that flows from that which makes the defendants' acts unlawful. The injury should reflect the anticompetitive effect either of the violation or of anticompetitive acts made possible by the violation." Brunswick Corp. v. Pueblo Bowl-o-Mat, Inc., 429 U.S. 477, 489 (1977). In this case, Infineum can only have been injured by the alleged anti-competitive practices of Cogen if in fact Infineum was a competitor of Cogen's. See Barton Pittinos, 118 F.3d at 184.
Whether or not Infineum was a competitor of Cogen's depends entirely on whether Infineum had a right to re-sell Cogen's steam to BRC. Cogen contends that when Infineum re-sold steam to BRC that it never measured pursuant to Article 6.4, it re-sold steam that it had never actually "received," presumably because the steam never physically reached either Infineum's facility or any of its meters. The question, then, is whether Infineum had a right to purchase and re-sell steam that was delivered to it at the Points of Delivery of Steam by Cogen, but that was never "received" by Infineum, i.e. that never reached Infineum's facility, and thus was never measured en-route by Infineum.
As Defendants rightly note, "interpretation of the contractual language is the first step towards proper construction," so that the Court can ascertain the intent of the parties as memorialized in their agreement.Williams v. Metzler, 132 F.3d 937, 947 (3d Cir. 1997). The Agreement makes it plain that Infineum does have the "right to sell and deliver [to BRC] steam purchased from Cogen." (Art. 5.2(C).) Although at first glance Article 5.2(C) appears dispositive of the standing issue because it gives Plaintiff an unambiguous right to sell steam, Defendant has not challenged that Plaintiff has a right in some circumstances to sell steam. Instead, Defendant has argued that because Plaintiff's right to sell steam hinges entirely on Plaintiff's right to first buy the steam it sells, Plaintiff has no steam to sell until it has satisfied all of the contractual preconditions associated with the purchase of Cogen's steam.
Defendant theorizes that Infineum lacked the ability to purchase the steam it sold to BRC because Infineum did not measure its entire steam "take" delivered by Cogen pursuant to Article 6.4. Defendant's argument finds support in the language of Article 6.4, which directs that "Infineum shall be required to measure the quantity of Steam received by Infineum . . . [and] determine the quantities of Steam delivered to Infineum during the immediately preceding calendar month, and notify Cogen in writing of such quantities." (Emphasis added).
Even assuming for purposes of argument that Article 6.4 imposed an absolute obligation on Infineum to measure every wisp of steam it received from Cogen, given the nature of the relationship between Cogen, Infineum, and BRC it would theoretically be possible for Infineum to measure all of the steam "received" and used by it at its facility, and without additional measuring determine the quantity of some different volume of steam "delivered" to it for billing purposes. This would be possible if the additional volume of steam was delivered to Infineum but ultimately never received by it, i.e. was accepted at the Points of Delivery of Steam by Infineum, but then used by BRC before it arrived at Infineum's facility.
While 6.4 clearly obligates Infineum to measure all the steam it "receives," and obligates Infineum to determine how much steam was ultimately "delivered" to it in a given month, there is no indication in the agreement that these volumes must be the same. This discrepancy is possible because the agreement defines neither the point at which Infineum "receives" its steam nor the mechanism by which Infineum can purchase steam from Cogen that it never intends to use (and instead plans solely to re-sell).
Although the Agreement expressly defines the points at which Cogen delivers its steam (Article 1.23), the Agreement is entirely silent as to the point where Infineum receives its steam. Under the original agreement between Exxon and Cogen, ownership of steam passed from Cogen to Exxon when it was measured by a meter as it exited the cogeneration plant and entered the refinery through a master header. (Pl's. Statement of Undisputed facts, ¶ 42.) After the sale of the refinery, the point of delivery did not change, but there is some indication that the point at which Infineum became liable for the steam delivered did.
While one might assume that Infineum "received" its steam at the same physical point in space where the steam was "delivered," certain provisions of the Agreement undermine that assumption. Even though Cogen's obligations as to the delivery of steam stop at the Points of Delivery of Steam, the Agreement expressly provides that Infineum must "make the necessary arrangements for the delivery of Steam sold [under the Agreement] from the Points of Delivery of Steam to Infineum at Infineum's Complex and Infineum's Technology Center." (Article 5.2(A).) Further, "notwithstanding [Infineum's duty pursuant to Article 5.2(A)], Infineumshall not be liable to Cogen for steam actually delivered by Cogen to the Points of Delivery of Steam in accordance with Article 3.1(A) of the Agreement, but that is not received by Infineum." (Article 3.2(C) (emphasis added).)
Given that Article 3.2(c) expressly differentiates between steam delivered and steam received, and given that the Agreement is of no further assistance in reconciling the distinction, the Court will look to the conduct of the parties in attempting to gauge the parties' intentions as they relate to the purchase of steam by Infineum. As Defendants note, "[a] contract must be interpreted in light of the meaning which the parties have accorded to it as evidenced by their conduct in its performance." James v. Zurich-American Ins. Co. of Ill., 203 F.3d 250, 255 (3d Cir. 2000) (quotations omitted).
Although Cogen has certainly made a valid argument for why Infineum did not have the right to sell steam to BRC that had been "delivered" by Cogen but never "received" by Infineum at its facility, Plaintiff has placed a contrary set of facts before the Court. In a light most favorable to the Plaintiff, those facts demonstrate that the practice of the parties may have been to allow Infineum to purchase steam for re-sale at the Points of Delivery of Steam, even though that steam was never "received" at Infineum's facility and was never measured by Infineum.
By letter dated January 27, 1999, Infineum requested that "its steam purchase under [the Agreement] be increased by up to an additional 250 klb/h . . . for the months of January through April of 1999. The additional steam will be sold to Tosco refinery. This steam purchase and sale is to enable us to consume our current excess commitment credit that we are entitled to under our agreement." (Adler Cert. Ex. T (emphasis added.)) Internal Cogen e-mail reflects that Cogen's initial objection was not to the steam sales themselves, but instead to Infineum's request to take steam above the maximum provided for in Article 3.1(A). (Adler Cert. Ex. U.) In fact, an earlier internal Cogen e-mail sent in reference to Infineum's efforts to acquire steam for re-sale said "I believe we will have to start living with this as we've given Exxon/Infineum the right to do this." (Adler Cert. Ex. A.)
By way of reply to Infineum's January 27, 1999 letter, Cogen's Director of Operations sent a letter back to Infineum on February 9, 1999 asking that Infineum provide information on its best estimates of steam usage for the remainder of 1999, including an "estimate [of] who will use this steam and the nature of the steam consuming activities." (Adler Cert. Ex. V.) On February 25, 1999 Infineum provided this information, but did not differentiate between Infineum's usage and BRC's usage, indicating that "the steam taken will be used by Infineum and some will be sold to the Tosco Refinery." (Adler Cert. Ex. W.)
On March 3, 1999 Cogen's Procurement Manager sent a second response to Infineum's request of January 27, 1999. (Adler Cert. Ex. X). This letter reiterated Cogen's understanding of Infineum's request for steam volumes above the maximums provided for in Article 3.1(A), and Cogen's understanding that this steam would be re-sold to BRC. Cogen's response to this request stated, in relevant part:
Paragraph 3.1A of the Agreement requires Cogen to meet a request by Infineum for steam above the Maximums only if, among other protections, meeting such request would not materially adversely affect Cogen pursuant to any other steam sale agreement. Since Cogen would be materially adversely affected under its steam sale agreement with Bayway should Cogen grant your request for steam above the Maximums, Cogen is hereby denying your request for steam above the Maximums.
Pursuant to Section 7.1C of the Agreement, enclosed please find a corrected invoice for January, 1999 reflecting Infineum's steam take at the maximum level allowed by the Agreement. Invoices for February, 1999 and thereafter will reflect Infineum's steam take at the lesser of Infineum's reported volumes or the maximum provided for in Section 3.1A of the Agreement.
(Adler Cert. Ex. X.)
When on March 8, 1999 Cogen received Infineum's steam take numbers for the month of February, 1999, Infineum had again claimed steam above the maximum provided for in Article 3.1(A). (Adler Cert. Ex. Y.) Rather than disallow all sales to BRC, an internal Cogen e-mail indicated that a bill would be created which:
allocates 181 klbs/hr total . . . for the month of February. I ask that Pat confirm . . . whether or not BRC reported the same volumes . . . and adjust their billing to the total export less the Infineum maximums.
(Adler Cert. Ex. Y(emphasis added).)
Additional Cogen correspondence indicates that, at least until the exclusive sales agreement was entered into with BRC in July of 1999, Cogen was willing to tolerate Infineum's steam sales to BRC so long as they did not exceed the maximums provided for in Article 3.1(A). (See Adler Cert. Exs. AA, EE.)
Given that the Agreement is silent as to whether Infineum may purchase steam that is delivered to it and never "received" at its facility, and that the apparent conduct of the parties allowed such purchases to occur, it would be inappropriate for the Court to grant Defendant's motion for summary judgment. The Court concludes that Defendant's motion should be denied because a material question of fact exists as to whether Infineum had an obligation to measure steam it never "received," and as to whether Infineum needed to "receive" steam at its facility before it could re-sell it.
3. CONCLUSION
For all of the foregoing reasons, Defendant's motion for summary judgment is denied. Accordingly, Plaintiff's motion to strike is dismissed as moot.
Even though the Court was required to deny Defendant's motion after it viewed all of the evidence in a light most favorable to the Plaintiff, the Court still believes that a determination of Plaintiff's right to sell steam to BRC without measuring is potentially dispositive of this entire action.
As discovery has been completed on this narrow issue but has yet to commence on the merits of Plaintiff's antitrust claims, the Court believes that the interests of justice and efficiency may be advanced by severance of the standing issue for a separate trial pursuant to Fed.R.Civ.P. 42(b).
Although Plaintiffs have requested a jury trial, in the event the standing issue is severed the Court would be willing to conduct a bench trial on that narrow issue in the near future. Should the result of that trial be a conclusion that Plaintiffs have standing, the matter would proceed to expedited full discovery. After a period for the filing of appropriate dispositive motions, Plaintiffs could proceed to a trial before a jury.
The Parties should arrange a conference with the Court to discuss the severance issue, at a time mutually agreeable to both the parties and to the Court.
An Appropriate Order follows.