Midwest Gas Services v. IN Gas Co Inc ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 01-2727
MIDWEST GAS SERVICES, INC.
and MIDWEST GAS STORAGE, INC.,
Plaintiffs-Appellants,
v.
INDIANA GAS COMPANY, INC.,
INDIANA ENERGY SERVICES, INC.,
and PROLIANCE ENERGY, LLC,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Southern District of Indiana, Indianapolis Division.
No. IP-99-0690-C-D/F—Richard L. Young, Judge.
____________
ARGUED JANUARY 16, 2002—DECIDED JANUARY 22, 2003
____________
Before BAUER, ROVNER, and WILLIAMS, Circuit Judges.
WILLIAMS, Circuit Judge. The plaintiffs in this antitrust
action, Midwest Gas Services, Inc. (Services) and Midwest
Gas Storage, Inc. (Storage), appeal from the district court’s
dismissal of their lawsuit. In granting separately filed
motions to dismiss defendants Indiana Gas Company, Inc.
(IG), Indiana Energy Services, Inc. (IES), and ProLiance
Energy, LLC (ProLiance), the district court ruled that the
plaintiffs failed to properly show that they had standing
to sue under the antitrust laws and had suffered injuries
2 No. 01-2727
covered by the antitrust laws. For the reasons described be-
low, we affirm the district court in part, reverse in part, and
remand for further proceedings.
I. BACKGROUND
Indiana Gas, a local natural gas utility, services 50
counties in southern and central Indiana. The natural gas
industry is partially deregulated, with companies like
Indiana Gas providing traditional public utility services
for small customers within their service area. These util-
ities, called Local Distribution Companies (LDCs), are
regulated by the relevant state authority.1 In Indiana, the
state authority is the Indiana Utility Regulatory Com-
mission (IURC), which allows LDCs such as IG to unbundle
their distribution charges. This allows large volume cus-
tomers or “transport eligible customers,” including indus-
trial and institutional buyers, to buy their gas and inter-
state transportation of that gas from the source to its
destination on the open market. Gas delivered through
interstate pipelines for transport-eligible users is brought
as far as the connection to IG’s distribution network. Indi-
ana Gas, as an LDC, is required to transport the gas from
that point to the end user, receiving a fee for this last
piece of the transportation puzzle. This is compared to the
traditional fee structure used by LDCs for their residen-
tial and other small-quantity customers, who pay one
bundled rate combining gas and all of the gas transport
charges.
The right to transport natural gas within the interstate
pipeline system from one point to another on a specific
1
LDCs do not fall under the authority of the Federal Energy
Regulatory Commission (FERC) jurisdiction except for those
operations that cross state lines.
No. 01-2727 3
pipeline is “capacity” and may be freely bought and sold
by the pipelines, LDCs, transport-eligible end users, or
brokers. In addition, capacity can be partitioned using sec-
ondary delivery points. For example, a holder of capacity
on a particular pipeline from Point A to Point Z (the two
primary delivery points) can sell their rights so that one
party buys the Point A-to-Point D segment, another ac-
quires the Point G-to-Point Q segment, and a third pur-
chases the Point S-to-Point Z segment, with Points D, G, Q,
and S being secondary points where gas is put into or tak-
en out of the pipeline. This means that instead of relying
on one pipeline to transport gas from the wellhead to its
final destination, a “virtual pipeline” can be constructed
by piecing together capacity along different intersecting
pipelines to its final destination. Of course, most end users
are not willing to take on these logistics, so companies
like Services and ProLiance act as brokers who put to-
gether supply and transport contracts for their customers.2
See generally FERC Order No. 637, Regulation of Short-
Term Natural Gas Transportation Services, Etc., 65 Fed.
Reg. 10,155, 10,157-58, 10,185-95 (Feb. 25, 2000); John
Decker, Note, Authorization of Natural Gas Pipeline
Construction: Moving Decisions From Regulators to the
Marketplace, 12 VA. ENVTL. L. J. 505, 508 (1993).
2
“Transport eligible” customers can purchase two types of gas
transport services—firm and interruptible. Firm service is the
guaranteed right to receive a certain volume of gas via a spe-
cific pipeline. Interruptible service is the right to receive a cer-
tain volume of gas from a pipeline out of the excess capacity
the pipeline has available, i.e., the pipeline’s surplus capacity
left after the pipeline has met the needs of its firm service cus-
tomers. Interruptible service customers usually have alterna-
tive fuel sources for their energy needs, such as fuel oil or coal,
while firm capacity customers are able to use natural gas as
their exclusive fuel source. This case only involves firm capacity.
4 No. 01-2727
An LDC is required to provide guaranteed service for its
residential customers and those other small-scale custom-
ers who rely on the LDC for bundled gas and gas transport
services. To guarantee that it will have enough capacity
during times of peak demand (such as the winter heating
season), an LDC must purchase capacity in excess of its
average needs. It could turn around and sell this excess
capacity via short-term contracts just like any other hold-
er of capacity. IG, as an LDC, was required by the IURC to
make its excess capacity available to the market on an
equal-access basis, where it could be acquired by others
intending to use or resell the capacity.
ProLiance was formed in 1996 as a 50/50 joint venture
between a sister company of IG, IGC Energy, Inc.,3 and
a wholly-owned subsidiary of a different LDC in Indiana,
Central Gas & Coke Utility (CG). ProLiance works with
IG and CG to provide all of their gas supplies, purchasing
sufficient capacity to serve both IG and CG’s requirements.
In addition, ProLiance acts as a marketer of gas and gas
transportation for transport-eligible end users, selling the
surplus capacity it acquires as a result of servicing IG and
CG’s needs back into the marketplace. Because ProLiance
does not provide any public utility functions, ProLiance
is not subject to IURC regulations and, therefore, unlike
IG and CG, is not required to sell off its surplus capacity
to the general marketplace. From 1994-96, before ProLi-
ance was created, IG created a marketing affiliate, IES,
which provided similar services in the same manner as
ProLiance, but only for IG.
Storage operates a gas storage field in Clay County,
Indiana, and is the only independent gas storage field
in IG’s service area. Storage functions as a kind of gas
3
Both IGC Energy, Inc. and IG are wholly-owned subsidiaries
of Indiana Energy, Inc.
No. 01-2727 5
warehouse, where customers can store gas in preparation
for high-demand times, or as a kind of bridge, routing the
gas from one pipeline connected into the storage field,
through the field, and out a different pipeline. Storage
was authorized by FERC to operate the field in 1991. The
field was once connected to the Terre Haute Gas Com-
pany’s distribution system, which was in turn connected
to Texas Gas Transmission’s (TGT’s) interstate pipeline.
IG purchased the Terre Haute facilities in 1990. The field
is also located close to the Panhandle Eastern Pipeline’s
interstate pipeline (PEPL), and a connection between the
PEPL pipeline and the storage field was completed in 1994.
Services, a marketing affiliate of Storage, saw an oppor-
tunity in the storage field’s proximity to the TGT and
PEPL pipelines. The TGT pipeline transports gas to Indi-
ana from wells on the coast of the Gulf of Mexico, gas that
costs more than the PEPL gas from north Texas and
Oklahoma. If Storage could connect to the IG/Terre Haute
system, transport-eligible customers in IG’s distribution
system who had previously purchased high-priced gas from
the TGT pipeline could buy cheaper gas from the PEPL
pipeline, using the storage field as a shortcut which would
eliminate the extra transportation fees that would other-
wise make such a choice financially unattractive. Also,
Services could market the storage field to customers for
gas storage, allowing them to hedge against seasonal
upswings in gas prices. The problem with this plan was
that Storage’s storage field was no longer connected to the
Terre Haute/ IG system. Though the necessary connections
would only have to span thirty feet at one point and
a mile at another, Storage needed to negotiate with IG to
establish the interconnect between the respective facilities.
After a series of failed negotiations with IG in an at-
tempt to establish the interconnect, the plaintiffs filed a
complaint in February 1999 alleging antitrust violations
by IG and two state law claims. They then filed an amended
6 No. 01-2727
complaint which named IES and ProLiance as additional
defendants and added a claim of anticompetitive tying. IG
moved for judgment on the pleadings, which the district
court denied. On a motion for reconsideration, the district
court granted IG’s motion regarding the tortious inter-
ference with prospective economic advantage claim, but
otherwise found that the plaintiffs had standing to as-
sert their claims. ProLiance moved to dismiss the claims
against it pursuant to Federal Rule of Civil Procedure
12(b)(6), and the district court granted the motion, find-
ing that the plaintiffs failed to establish both antitrust in-
jury and antitrust standing. Acting sua sponte, the district
court reconsidered IG’s motion for judgment on the plead-
ings and granted the motion on the same grounds as
ProLiance’s motion. IES then moved for judgment on the
pleadings, and the district court granted IES’s motion on
the same grounds.
II. ANALYSIS
We review a district court’s grant of a Rule 12(b)(6) mo-
tion to dismiss and a Rule 12(c) motion for judgment on the
pleadings de novo. See Velasco v. Ill. Dept. of Human Servs.,
246 F.3d 1010, 1016 (7th Cir. 2001). Grants of either mo-
tion are proper only if “it appears beyond doubt that the
plaintiff cannot prove any facts that would support his
claim for relief.” N. Ind. Gun & Outdoor Shows, Inc. v.
City of South Bend, 163 F.3d 449, 452 (7th Cir. 1998);
Gustafson v. Jones, 117 F.3d 1015, 1017 (7th Cir. 1997). In
evaluating the motion, we accept all well-pleaded allega-
tions in the complaint as true, drawing all reasonable in-
ferences in favor of the plaintiff. Forseth v. Village of Sus-
sex, 199 F.3d 363, 368 (7th Cir. 2000); Gustafson, 117 F.3d
at 1017.
In its orders granting the defendants’ motions to dis-
miss and for judgment on the pleadings, the district
No. 01-2727 7
court found that the plaintiffs did not allege injuries suf-
ficient to maintain antitrust claims. Relying on the Sixth
Circuit’s opinion in Indeck Energy Servs., Inc. v. Con-
sumers Energy Co., 250 F.3d 972 (6th Cir. 2000), the district
court found that as competitor companies, the plaintiffs
could only demonstrate an antitrust injury if their exclu-
sion from the marketplace eliminated a superior compet-
ing product or lower-cost alternatives.
Here, the district court concluded, ProLiance competed
with Services. Services’ revenues from transportation
and gas sales were reduced, but it could not demonstrate
that it had a superior or cheaper product. Since it be-
lieved that Services was a competitor and not a customer
of the defendants, and since Storage was neither a com-
petitor nor consumer of the defendants, the district court
concluded that the plaintiffs could not demonstrate that
they had standing to bring an antitrust claim. The dis-
trict court further explained that even if the plaintiffs
could demonstrate that they were proper parties to bring
an antitrust suit against the defendants, it considered
dispositive the Indiana Supreme Court’s finding that
ProLiance’s formation was in the public interest and did
not injure competition. See United States Gypsum, Inc.
v. Ind. Gas Co., Inc., 735 N.E.2d 790, 803-04 (Ind. 2000).
Since, according to United States Gypsum, ProLiance did
not injure competition, the district court concluded that
the plaintiffs could not establish that they had suffered
an antitrust injury, making dismissal of their claims ap-
propriate.
The district court’s reliance on Indeck is misplaced
because the plaintiffs here allege more and different
allegations than those in that Sixth Circuit case. In Indeck,
the plaintiff energy supplier was rebuffed by Consumers
Energy when Consumers required additional energy to
service its accounts. Instead, Consumers purchased power
from one of its affiliates. Indeck claimed that it lost busi-
8 No. 01-2727
ness to a competitor that was affiliated with the cus-
tomer, but not “that a less-than-arm’s-length transaction
destroyed or damaged the competitive environment in
power generation.” Indeck, 250 F.3d at 978. Here, the
plaintiffs allege antitrust claims not only based on the
affiliation between the defendants, like Indeck, but also
that certain business practices by and between the de-
fendants injure competition.
The district court here, relying on the reasoning of In-
deck, found that neither plaintiff was able to show that
it was a proper plaintiff to bring an antitrust claim. We
keep in mind that to survive a motion to dismiss or judg-
ment on the pleadings, a plaintiff need not include the
particulars of his claim; only a “short and plain statement”
is needed. FED. R. CIV. P. 8(a)(2); see MCM Partners, Inc.
v. Andrews-Bartlett & Assocs., Inc., 62 F.3d 967, 976
(7th Cir. 1995). This is also true for antitrust cases. Though
the “short and plain statement” of an antitrust claim must
demonstrate “antitrust injury” and “antitrust standing,”
antitrust plaintiffs need not plead to a heightened level
of particularity. See Leatherman v. Tarrant Cty. Narcot-
ics Intelligence & Coordination Unit, 507 U.S. 163, 168
(1993); S. Austin Coalition Cmty. Council v. SBC Com-
munications Inc., 274 F.3d 1168, 1171 (7th Cir. 2001);
Hammes v. AAMCO Transmissions, Inc., 33 F.3d 774, 782
(7th Cir. 1994). While we agree with the district court
that the plaintiffs do not have standing to assert certain
antitrust claims, for the same reasons that the Sixth Cir-
cuit found in Indeck, we also find that they have shown
their ability to assert other claims. We address these al-
legations in turn.
A. Conspiracy to Restrain Trade
The plaintiffs’ conspiracy claim alleges that IG and PEPL
conspired to prevent Storage from existing as a viable gas
No. 01-2727 9
storage facility by refusing to allow it physical access to
their facilities, which frustrated Services’ contracts with
customers in IG’s service area. The amended complaint
describes communications between PEPL and IG officials
who apparently discussed ways to prevent Storage from
both establishing an interconnect with the IG distribu-
tion system and being designated a secondary receipt
point for gas transported by PEPL. The frustration of
these efforts, according to Services, prevented it from
selling gas services to customers who would have used
Storage’s storage field and its interconnects with the IG
distribution system and PEPL’s pipeline.
For Services to properly plead an antitrust suit under § 4
of the Clayton Act, it is required to show that it has
“antitrust standing,” i.e., that its claimed injuries “reflect
the anticompetitive effect of either 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); see also AlliedSignal, Inc. v. B.F. Goodrich Co.,
183 F.3d 568, 575 (7th Cir. 1999). Whether a plaintiff has
antitrust standing depends on offense-specific factors, in-
cluding: “(1) [t]he causal connection between the alleged
anti-trust violation and the harm to the plaintiff; (2)
[i]mproper motive; (3) [w]hether the injury was of a type
that Congress sought to redress with the antitrust laws; (4)
[t]he directness between the injury and the market re-
straint; (5) [t]he speculative nature of the damages; (6) [t]he
risk of duplicate recoveries or complex damages appor-
tionment.” Sanner v. Bd. of Trade of City of Chicago, 62
F.3d 918, 927 (7th Cir. 1995) (listing factors drawn from
Assoc. Gen. Contractors of Cal. Inc. v. Cal. State Council
of Carpenters, 459 U.S. 519, 535-36 (1983)). Of these fac-
tors, we need only be concerned here with the directness
between Services’ claimed injury and the alleged market
restraint.
10 No. 01-2727
Services’ claimed injury did not stem directly from the
purported IG-PEPL conspiracy, but rather the alleged
conspiracy’s effect on Storage, whose position as a bridge
between the TGT and PEPL pipelines was necessary for
Services to create the arbitrage opportunities for its cus-
tomers. Services is not alleging that it was completely
prevented from supplying its customers, but that it
could not promote and take advantage of the opportunity
that an IG-Storage connection would have provided. Ser-
vices’ injury, therefore, is derivative to that of Storage,
which is the party directly injured by the alleged conspir-
acy. Since Services cannot demonstrate that it has suf-
fered an antitrust injury directly resulting from the con-
spiracy, the district court properly dismissed Services’
conspiracy claim.
The defendants argue that Storage has pleaded itself
out of a claim due to the amended complaint’s description
of the relevant market as “the market for transporting
and selling gas to end users that are allowed by tariff to
receive transported natural gas in the 50 counties in
north central, central and southern Indiana in which In-
diana Gas is an LDC.” The defendants point out that be-
cause Storage is not permitted under its FERC opera-
ting certificate to sell natural gas or gas transport to end
users, it cannot be a participant in the market which it
claims is injured by the defendants’ actions.
While it is true that Storage’s operating certificate only
allows it to construct and operate the storage field, not
to sell or market natural gas, FERC Order Issuing Cer-
tificate, Docket No. CP90-454-000, at 13 (April 30, 1991),
storing natural gas is integral to its transportation. Just
as a pipeline that bridges two other pipelines is part of
the transportation network that the appellants claim as
their market, so is a storage field that is connected to dif-
ferent pipelines. FERC recognized this when it described
“transportation” to include “storage, exchange, backhaul,
No. 01-2727 11
displacement, or other methods of transportation” in its
regulations concerning natural gas transportation. 18
C.F.R. § 284.1 (emphasis added). We therefore find that
Storage is a participant in the relevant market and for
that reason is not barred from asserting its claims.
Storage further alleges that IG, ProLiance, and PEPL
conspired to isolate Storage by refusing it access to their
transportation facilities, thereby preventing Storage from
being able to deliver gas to end users. Because Storage
is directly affected by this alleged conspiracy, and Ser-
vices is not, Storage is the proper plaintiff to bring this
claim. To properly allege a conspiracy under § 1 of the
Sherman Act, a plaintiff need only allege that the con-
spiracy unreasonably restrained competition in a rele-
vant market. See MCM Partners, 62 F.3d at 976. Since
Storage has described such a conspiracy and is a partici-
pant in the claimed market, we find that the district
court erred when dismissing this claim.
B. ProLiance as an Illegal Combination
The plaintiffs’ second § 1 claim alleges that the forma-
tion of ProLiance by Indiana Gas and Central Gas is a
combination that acts as an unreasonable restraint of
trade. ProLiance is a 50/50 joint venture that combined
IG and CG’s gas marketing and sales arms; it does not
transport gas itself, nor does it involve IG or CG’s other
regulated utility functions. As described by the plaintiffs
in the amended complaint, ProLiance “competes direct-
ly with other gas marketers, such as Services. ProLiance
markets to the large commercial and industrial customers
Services contracted with and hoped to contract with.”
However, the amended complaint does not allege that
ProLiance’s market dominance came from combining the
market shares of these two offices. Transfer of a business
from one company to another, without alleging an effect on
12 No. 01-2727
competition as a result of the combination, cannot be
an antitrust violation, because “the antitrust laws . . .
were enacted for ‘the protection of competition, not com-
petitors.’ ” Brunswick, 429 U.S. at 488 (quoting Brown
Shoe Co. v. United States, 370 U.S. 294, 320 (1962)).
Plaintiffs claim that as a result of ProLiance’s formation,
they have been unable to gain enough customers to profit
from the regulations that allow brokers to sell gas and
gas transportation to transport-eligible customers. How-
ever, ProLiance has simply taken on the role that IG’s
marketing department assumed earlier, though with
greater success. The transfer of a competitor’s business
to a different competitor, one who is able to more effec-
tively compete in the marketplace, is not an antitrust
violation. What the plaintiffs describe in their complaint
regarding the formation of ProLiance is no different than
the situation in Brunswick, where a number of failing
businesses were acquired by a large corporation that was
able to place them on a solid footing and have them compete
effectively in the marketplace. Brunswick, 429 U.S. at
488. While plaintiffs may be able to show that ProLiance
acquired advantages in the gas transportation market
based on dealings with Indiana Gas and CG, “[a] private
antitrust plaintiff . . . does not acquire standing merely
by showing that he was injured by the defendant’s con-
duct.” Serfecz v. Jewel Food Stores, 67 F.3d 591, 597 (7th
Cir. 1995); see also Cargill, Inc. v. Monfort of Colo., Inc., 479
U.S. 104, 115-17 (1986). Because the plaintiffs could not
demonstrate that they had standing, the district court
correctly dismissed this § 1 claim.
The defendants also point to the IURC’s approval of
ProLiance’s formation, a decision affirmed by the Indi-
ana Supreme Court in United States Gypsum. They claim
that as a result of this decision, ProLiance’s formation
has been immunized via the state action doctrine (though
ProLiance, as a non-regulated entity, is not strictly under
No. 01-2727 13
the jurisdiction of the IURC). While it is true that Pro-
Liance’s formation was found to be “in the public interest,”
plaintiffs’ failure to adequately plead a viable § 1 claim re-
garding ProLiance’s formation means that we need not
address this affirmative defense.
C. Tying
ProLiance allegedly has been illegally tying its sale of
natural gas to its sale of gas transport services, i.e., cus-
tomers have been told that in order to purchase gas trans-
port, they must purchase the gas itself from ProLiance.
When evaluating a tying claim, “the essential characteris-
tic of an invalid tying arrangement lies in the seller’s ex-
ploitation of its control over the tying product to force
the buyer into the purchase of a tied product that the
buyer either did not want at all, or might have pre-
ferred to purchase elsewhere on different terms.” Jefferson
Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 12 (1984).
An underlying question regarding this tying claim is
whether the plaintiffs have suffered an antitrust injury
as a result. Suits cannot be brought under § 4 of the Clay-
ton Act unless “a private party is adversely affected by an
anticompetitive aspect of the defendant’s conduct.” Atl.
Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 339
(1990) (citing Brunswick, 429 U.S. at 487) (emphasis in
original). Neither plaintiff claims that the prices that
ProLiance charged for the gas itself or its transportation
were predatory, or that ProLiance somehow injured its
customers by charging excessive prices for either gas
transportation or gas. Rather, the plaintiffs claim injury
because they “have been unable to profit from Rates 45, 60
and 70, or to otherwise compete with ProLiance and IES
in the sale of natural gas and its transportation. Plaintiffs
have lost the transportation fees and marketing profits they
otherwise would have earned had they been permitted to
14 No. 01-2727
compete in the relevant market.” While they may have
lost profits as a result of ProLiance’s sales, failure to real-
ize expected profits due to competition is not an anti-
trust injury, because “a plaintiff can only recover if the
loss stems from a competition-reducing aspect or effect
of the defendant’s behavior.” Atl. Richfield, 495 U.S. at
344. The plaintiffs’ claim is, in essence, that ProLiance is
able to use its large market share to purchase natural
gas in bulk, and sell that gas, along with the gas trans-
portation it controls, to customers at a lower margin
than its competitors because of its high sales volumes.
That the plaintiffs’ losses stem from this behavior and
not behavior that is anticompetitive, e.g., predatory pric-
ing, means that they cannot make a tying claim against
ProLiance that can withstand a motion to dismiss, since
“the antitrust laws do not require the courts to protect
small businesses from the loss of profits due to contin-
ued competition, but only against the loss of profits from
practices forbidden by the antitrust laws.” Cargill, 479
U.S. at 116; see also Atl. Richfield, 495 U.S. at 340-41;
Jefferson Parish, 466 U.S. at 14.
D. Monopoly Maintenance and Attempted Monopolization
The plaintiffs’ § 2 claims describe IG and ProLiance (and
IES, as ProLiance’s predecessor) as maintaining, or in
the alternative, attempting to acquire, a monopoly in the
distribution of natural gas and its transportation to
transport-eligible customers in IG’s service area. These
claims take two forms: first, that IG and ProLiance used
IG’s monopoly over local distribution to leverage increased
sales of natural gas and transportation to customers in
the relevant market, and second, that IG has denied the
plaintiffs access to an essential facility, i.e., an inter-
connect with IG’s distribution system. These claims are
brought, in a belt-and-suspenders approach, as both ac-
No. 01-2727 15
tual and attempted monopolization claims. It is not neces-
sary to determine whether the monopolies the plain-
tiffs complain of are actual or not, since either way their
amended complaint fails to adequately make out the claims.
The plaintiffs’ monopoly leveraging claim is essentially
their tying claim with a different label. This is prob-
lematic because a § 2 claim can only accuse one firm of
being a monopolist, but the plaintiffs’ monopoly main-
tenance claim involves both IG’s monopoly over the sale
of gas and its distribution within its territory via Pro-
Liance. Because IG ceded its gas marketing functions to
ProLiance as part of the joint venture, the plaintiffs
claim that IG has monopoly control over something in
which it is not a market participant. The plaintiffs claim
that ProLiance is functionally under the control of IG,
but as we explained when discussing the plaintiffs’ § 1
claims concerning ProLiance’s formation, ProLiance is
an entity separate and distinct from IG, so the plaintiffs’
leveraging claims should be considered under § 1 of the
Sherman Act, not § 2. In any event, as we concluded
regarding plaintiffs’ tying claims, this claim fails because
the plaintiffs are unable to establish that they have suf-
fered an antitrust injury, so the district court properly
dismissed this claim.
The essential facilities claim centers on the proposed
interconnect between Storage’s field and the IG distribu-
tion network, which the plaintiffs describe as necessary
for the storage field to service clients within IG’s territory.
An essential facilities claim requires that the plaintiff
allege: (1) that Indiana Gas is a monopolist and controls
an essential facility; (2) that the facility could have been
provided to Storage by Indiana Gas; (3) that Indiana Gas
denied access to the essential facility; and (4) that a dupli-
cate facility could not reasonably be provided. See MCI
Communications Corp. v. Am. Tel. & Tel. Co., 708 F.2d
1081, 1133 (7th Cir. 1983). The plaintiffs describe the in-
16 No. 01-2727
terconnect between the storage field and the IG distribu-
tion network as the facility at issue, but “[t]o be an essen-
tial facility, . . . a facility must be essential,” and the
interconnect is not. Blue Cross & Blue Shield United
of Wisc. v. Marshfield Clinic, 65 F.3d 1406, 1413 (7th Cir.
1995). According to the amended complaint, the storage
field is already connected to interstate gas pipelines, in-
cluding those of PEPL, TGT and a third company called
ANR. Just as gas can be routed into the storage field
via these three pipelines, so can gas be routed out of
the field via these pipelines, and from there to IG’s dis-
tribution network through the pipeline’s own interconnect.
Though the plaintiffs say, probably correctly, that “[a]
direct interconnect to the Indiana Gas pipeline from Stor-
age’s field would have been the most economical way to
do this,” the most economical route is not an essential
facility when other routes are available. See Endsley v.
City of Chicago, 230 F.3d 276, 283 (7th Cir. 2000) (control
of the Chicago Skyway does not give its owner a monop-
oly over road transport between Chicago and Indiana
when other freeway and surface street routes are avail-
able). Therefore, the § 2 claims in the amended complaint
were properly dismissed by the district court.
The plaintiffs also allege in the amended complaint that
PEPL and IG conspired to prevent Storage from being
able to serve as an alternative route or shortcut be-
tween pipeline systems by frustrating Storage’s attempt
to have the field designated as a secondary delivery point
on PEPL’s pipeline. This is not a § 2 claim, and is ad-
dressed above in our discussion of the plaintiffs’ § 1 con-
spiracy claim.
E. State Law Claims
The plaintiffs allege, pursuant to Indiana state law, that
the defendants committed the tort of interference with
No. 01-2727 17
prospective economic advantage and violated the Indiana
Antitrust Act, Ind. Code §§ 24-1-2-1, et seq. As the district
court and both sides recognize, the Indiana Antitrust Act
follows the same standards as the Sherman Act. See
Photovest Corp. v. Fotomat Corp., 606 F.2d 704, 725 n.31
(7th Cir. 1979); Citizens Nat’l Bank of Grant Cty. v. First
Nat’l Bank in Marion, 331 N.E.2d 471, 478 n.5 (Ind. Ct.
App. 1975). Based on our conclusions regarding the plain-
tiffs’ federal antitrust claims, we find that the district
court improperly dismissed those state antitrust claims
which relate to the federal claims that we have found were
adequately pleaded, i.e, Storage’s § 1 conspiracy claim.
The plaintiffs’ other state law claim is for tortious inter-
ference with a prospective economic advantage. Under Indi-
ana law, this claim requires: (1) the existence of a busi-
ness relationship, (2) the defendant’s knowledge of the
existence of that relationship, (3) the defendant’s inten-
tional interference in that relationship, (4) the absence
of any justification, and (5) damages. See Wright v. Associ-
ated Ins. Cos. Inc., 29 F.3d 1244, 1252 (7th Cir. 1994); see
also Flintridge Station Assocs. v. Am. Fletcher Mortg.
Co.,761 F.2d 434, 441 (7th Cir. 1985); Butts v. Oce-USA,
Inc., 9 F. Supp. 2d 1007, 1012 (S.D. Ind. 1998); Furno v.
Citizens Ins. Co. of Am., 590 N.E.2d 1137, 1140 (Ind. Ct.
App. 1992).
The district court, in its January 8, 2001, entry on Indi-
ana Gas’s Motion to Correct Errors in Judgment, found
that IG was a party to the business relationship that
was disrupted and dismissed the claim. However, when
judging the sufficiency of a complaint on a motion to
dismiss, a claim should be dismissed only “if it appears
beyond doubt that the plaintiff cannot prove any set of
facts that would entitle it to relief.” Tobin for Governor v.
Ill. State Bd. of Elections, 268 F.3d 517, 522 (7th Cir. 2001);
see also Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
18 No. 01-2727
It is just as plausible that the business relationship al-
legedly disrupted was Services’s relationship with its end-
use customers located in IG’s service area. Services was
required to notify IG that it had established a gas sup-
ply contract with the end users. According to the amended
complaint, IG then contacted those customers itself and
informed them of ProLiance’s services. If these contacts
resulted in customers backing out of their relationships
with Services and working instead with ProLiance, that
would establish a claim of interference with prospective
economic advantage sufficient to survive a motion to dis-
miss. Since the set of facts described above is consistent
with the allegations in the complaint and would entitle
Services to relief if true, we find that the district court
improperly dismissed this claim regarding Services. See
Lanigan v. Village of East Hazel Crest, Ill., 110 F.3d 467,
479 (7th Cir. 1997).
III. CONCLUSION
For the foregoing reasons, we AFFIRM the decision of the
district court in part, REVERSE in part, and REMAND for
proceedings consistent with this opinion.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—1-22-03