Entergy Corporation, Entergy Services, Inc., Entergy Power, Inc., Entergy Power Marketing Corporation, Entergy Arkansas, Inc., and Entergy Texas, Inc. v. David Jenkins, George W. Strong, Francis N. Gans and Gary M. Gans, Individually and on Behalf of All Persons Similarly Situated ( 2014 )

ACCEPTED
01-12-00470-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
12/24/2014 2:54:58 PM
CHRISTOPHER PRINE
CLERK
NO. 01-12-00470-CV
FILED IN
IN THE COURT OF APPEALS 1st COURT OF APPEALS
HOUSTON, TEXAS
FOR THE FIRST DISTRICT OF TEXAS
12/29/2014 8:00:00 AM
AT HOUSTON, TEXAS
CHRISTOPHER A. PRINE
Clerk
ENTERGY CORPORATION, et al.,
Appellants
v.
DAVID JENKINS, et al.,
Appellees
APPELLEES’ REPLY TO RESPONSE TO
MOTION FOR EN BANC RECONSIDERATION
Joseph D. Jamail Fred Hagans
State Bar No. 10536000 State Bar No. 08685500
denise@jamail-kolius.com fhagans@hagans-law.com
Frank M. Staggs, Jr. Jennifer Rustay
Jamail & Kolius Hagans Burdine Montgomery & Rustay
500 Dallas, Suite 3434 3200 Travis, Fourth Floor
Houston, Texas 77002-4793 Houston, Texas 77006
Telephone: (713) 651-3000 Telephone: (713) 222-2700
Telecopier: (713) 651-1957 Telecopier: (713) 547-4950
E.R. Norwood John H. Conway
The Norwood Law Firm Brickfield Burchette Ritts & Stone
340 Main Street 1025 Thomas Jefferson Street, N.W.
Liberty, Texas 77575 Washington, D.C. 20007
Telephone: (936) 336-3700 Telephone: (202) 342-0800
Telecopier: (936) 336-7634 Telecopier: (202) 342-0807
Michael D. Sydow Joe F. Sandlin
The Sydow Firm Box 656
1980 Post Oak Blvd., Suite 2100 Anahuac, Texas 77514
Houston, Texas 77056 Telephone: (409) 267-3793
Telephone: (713) 622-9700 Telecopier: (409) 267-3792
Telecopier: (713) 552-1949
ATTORNEYS FOR APPELLEES
TABLE OF CONTENTS
Page
INDEX OF AUTHORITIES..................................................................................... ii
SUMMARY OF THE ARGUMENT ........................................................................ 1
ARGUMENT ............................................................................................................. 1
I. A Court Of Appeals Cannot Disregard A Prior Appellate
Ruling Unless A Recognized Exception To The Law Of The
Case Doctrine Applies. .......................................................................... 1
II. Entergy Misconstrues Entergy Louisiana ............................................. 6
PRAYER .................................................................................................................. 10
CERTIFICATE OF COMPLIANCE ....................................................................... 12
CERTIFICATE OF SERVICE ................................................................................ 12
-i-
INDEX OF AUTHORITIES
Page(s)
Cases
Appalachian Power Co. v. Public Serv. Comm’n of West Virginia,
812 F.2d 898 (4th Cir. 1987) ........................................................................... 9
Briscoe v. Goodmark Corp.,
102 S.W.3d 714 (Tex. 2003) ........................................................................... 3
Caplinger v. Allstate Ins. Co.,
140 S.W.3d 927 (Tex. App.—Dallas 2004, pet. denied) ................................ 4
City of Houston v. Harris,
192 S.W.3d 167 (Tex. App.—Houston [14th Dist.] 2006, no pet.) ............. 2, 3
Entergy Louisiana, Inc. v. Louisiana Public Service Comm’n,
539 U.S. 39 (2003)...................................................................................1, 6, 7
Ford Motor Co. v. Garcia,
363 S.W.3d 573 (Tex. 2012) ........................................................................... 2
Gotham Ins. Co. v. Warren E&P, Inc.,
No. 12-0452, 2014 WL 1190049 (Tex. Mar. 21, 2014) .................................. 4
Lawrence v. City of Wichita Falls,
122 S.W.3d 322 (Tex. App.—Fort Worth 2003, pet. denied) ......................... 2
Nat’l Union Fire Ins. Co. v. Ninth Court of Appeals,
864 S.W.2d 58 (Tex. 1993) ............................................................................. 2
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SUMMARY OF THE ARGUMENT
Entergy’s attempts to justify the majority’s decision to revisit the
jurisdictional issue that it fully litigated and lost on a prior appeal are deeply
flawed. First, Entergy is wrong to claim that a court of appeals had unbounded
discretion whether to treat a prior ruling as the law of the case. Second, Entergy
again misconstrues the scope of FERC’s exclusive jurisdiction by adopting a
reading of Entergy Louisiana, Inc. v. Louisiana Public Service Comm’n, 539 U.S.
39 (2003) that is divorced from the actual facts and circumstances of that case.
Neither argument supports the majority’s opinion.
ARGUMENT
I. A Court Of Appeals Cannot Disregard A Prior Appellate Ruling Unless
A Recognized Exception To The Law Of The Case Doctrine Applies.
Entergy has no legal basis for trying to relegate the law of the case doctrine
into a principle that can be ignored on a whim. But Entergy’s motives for diluting
the doctrine are obvious. Having lost the jurisdictional argument in Jenkins I,
Entergy’s only escape from being held accountable for theft was to convince this
Court to reverse Jenkins I, even though both the Texas Supreme Court and United
States Supreme Court had refused to review it. This Court should correct its
dilution of the law of the case doctrine.
First, Entergy mistakes the “discretionary” nature of the law of the case
doctrine with the notion that the doctrine may be disregarded at will. See Response
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at 8-9. There is no such thing as unbridled discretion, whether for law of the case
or any other discretionary ruling. Indeed, courts routinely scrutinize discretionary
rulings and reverse them when they are arbitrary, unreasonable, or made without
regard to guiding legal principles. See Ford Motor Co. v. Garcia, 363 S.W.3d 573,
578 (Tex. 2012); see also Nat’l Union Fire Ins. Co. v. Ninth Court of Appeals, 864
S.W.2d 58, 59-60 (Tex. 1993) (court of appeals abused its discretion by applying
an “erroneous legal standard”). And here, the operative legal principles require
adherence to a prior ruling on the same issue because no recognized exception
applies.
Entergy asserts that jurisdictional rulings can always be revisited, but it cites
no Texas cases holding that questions of jurisdiction are categorically exempt from
being treated as law of the case. To the contrary, Jenkins pointed out instances
where courts have not hesitated to give preclusive effect to jurisdictional rulings.
See, e.g., Lawrence v. City of Wichita Falls, 122 S.W.3d 322, 326-27 (Tex. App.—
Fort Worth 2003, pet. denied) (governmental immunity).
Instead, Entergy cites City of Houston v. Harris, 192 S.W.3d 167, 171 (Tex.
App.—Houston [14th Dist.] 2006, no pet.), which dealt with a very different
situation. The Harris court considered jurisdiction on the basis of the facts after an
earlier appeal had looked at jurisdiction solely from the sufficiency of the
pleadings. The Harris case did not reverse the earlier holding, but rather
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considered jurisdiction based on factual sufficiency, an issue not before the earlier
panel. See id. (previous opinion “solely addresses a challenge to the sufficiency of
the pleadings,” whereas second appeal examines sufficiency of proof submitted on
the jurisdictional issue). No comparable differences exist that could conceivably
justify revisiting Jenkins I.
Entergy similarly misleads with its cite to Briscoe v. Goodmark Corp., 102
S.W.3d 714, 716-17 (Tex. 2003). The Briscoe Court does not suggest that a court
of appeals has carte blanche to disregard a prior appellate ruling on jurisdiction
just because it disagreed with the result. As Jenkins explained, Briscoe dealt with
a unique set of facts where the parties and an incomplete record had misled the
court of appeals into dismissing the first appeal for lack of appellate jurisdiction.
Id.; see also id. at 719 (Jefferson, C.J., concurring). Under those circumstances,
the Court concluded that revisiting the “clearly erroneous” prior decision was
appropriate. Nothing remotely like Briscoe exists in this case because the
jurisdictional issue was fully and accurately developed in Jenkins I. Tellingly,
Entergy fails to address these obvious distinctions that make Briscoe inapposite,
even though Jenkins pointed them out.
Moreover, Entergy cannot avoid opinions of other Texas courts holding that
an exception to law of the case for “clearly erroneous” decisions does not apply to
rulings like Jenkins I that the Texas Supreme Court declined to review. See
-3-
Caplinger v. Allstate Ins. Co., 140 S.W.3d 927, 930 (Tex. App.—Dallas 2004, pet.
denied). Entergy quibbles with the reasoning in Caplinger, but Entergy cites no
opinions supporting its view.
Instead, Entergy overreaches by misstating the holding in Gotham Ins. Co. v.
Warren E&P, Inc., No. 12-0452, 2014 WL 1190049, at *3 n.8 (Tex. Mar. 21,
2014). In Gotham, the Texas Supreme Court noted that the court of appeals had
declined to treat a prior ruling as law of the case. Id. The Texas Supreme Court
did not address the propriety of that decision, finding that the Court itself was not
bound to a prior ruling that it previously declined to review. Id. At most, Gotham
stands for the principle that the Texas Supreme Court can choose to review an
issue that it decided to forgo on an earlier appeal. Gotham does not endorse
Entergy’s notion that this Court may bypass the appellate process by reviewing a
decision of another court of appeals with which it disagrees.
Second, Entergy advances a single-sentence argument that changed
circumstances provide a basis for avoiding the law of the case doctrine. Without
record or legal citation, Entergy asserts the procedural posture of the case is
different because FERC has exercised jurisdiction over Entergy’s purchasing
practices, and discovery has shown that the damages claimed rests on the ESA.
Response at 11. That claim, however, is wrong. (1.CR.12-17, 42-44; 16.CR.2350-
55, 2380-82).
-4-
Entergy’s inability to identify any new developments pertinent to
jurisdiction is telling. Because Entergy’s arguments are purely legal, they are
identical to those Entergy raised in Jenkins I and are not affected by any facts
developed in discovery. In Jenkins I, Entergy made the same argument that FERC
has exclusive jurisdiction over Jenkins’s challenge to Entergy’s wholesale power-
purchasing decisions. Entergy then made the same argument to the Texas Supreme
Court and then to the United States Supreme Court, but was unable to convince
either Court that review was warranted. When the case returned to the trial court,
Entergy made the same arguments again, and the issue was again briefed by the
parties. (See 5.CR.516-764; 16.CR.2330-2616). The trial court properly followed
Jenkins I and rejected Entergy’s attempts to relitigate the issue.1 (17.CR.2653-56;
18.CR.2764-2825). Indeed, the only difference between this appeal and Jenkins I
is Jenkins’s additional showing that class certification is appropriate. That is not a
type of changed circumstance that justifies revising Jenkins I.
Additionally, FERC has not exercised jurisdiction over the purchasing
practices at issue in this case, despite the fact that this case has been part of the
public record since 2003, when the suit was filed, nor has Entergy requested it to
1
Entergy tries to dismiss the trial court’s extensive Findings of Fact and
Conclusions of Law as nothing but Jenkins’s briefing. Response at 2 n.1. In
reality, both sides submitted proposed Findings and Conclusions and fully briefed
the issues. The trial court then ruled in Jenkins’s favor by adopting his proposed
findings.
-5-
do so. Indeed, FERC has specifically declined to examine past purchasing
practices. The purchasing practices at issue in this case were the subject of
litigation, in a class action suit filed in Louisiana. See Delaney v. Entergy La., Inc.,
4.CR.514, Ex. M (Order Certifying Settlement Class). Yet in Delaney, the case
was not dismissed based upon a claim of FERC exclusive jurisdiction. Rather than
claiming that only FERC had jurisdiction, Entergy sought and obtained court
approval of a settlement, thereby invoking judicial jurisdiction.
In sum, the only way to sustain the majority’s effective overruling of
Jenkins I is by creating a new exception to the law of the case doctrine, or by
relegating the doctrine into a meaningless principle that courts can disregard
whenever they choose. Neither approach comports with Texas law or sound
judicial policy.
II. Entergy Misconstrues Entergy Louisiana
Ignoring the ruling in Jenkins I, Entergy tries to expand the scope of FERC’s
exclusive jurisdiction by misinterpreting the decision in Entergy Louisiana, Inc. v.
Louisiana Public Service Comm’n, 539 U.S. 39 (2003). Unlike this suit, which
challenges Entergy’s wholesale purchasing decisions, Entergy Louisiana dealt with
cost allocations among the members of the Entergy System Agreement. The
holding hinged on facts and provisions of the System Agreement materially
different from this case.
-6-
The dispute in Entergy Louisiana started in 1993, when FERC initiated a
proceeding to determine whether Entergy had violated the System Agreement by
classifying certain “mothballed” units as “available” for cost equalization. Id. at
44. FERC determined that Entergy had, in fact, violated the System Agreement.
Id. However, FERC then approved an amendment to the System Agreement that
explicitly establishes when a “mothballed” unit can be considered available. Id. at
44-45. Section 10.02 was amended, to read as follows:
A unit is considered available to the extent the capability can be
demonstrated and (1) is under the control of the System Operator, or (2) is
down for maintenance or nuclear refueling, or (3) is in extended reserve
shutdown (ERS) with the intent of returning the unit to service at a future
date in order to meet Entergy System requirements. The Operating
Committee’s decision to consider an ERS unit to be available to meet future
System requirements shall be evidenced in the minutes of the Operating
Committee and shall be based on consideration of current and future
resource needs, the projected length of time the unit would be in ERS status,
the projected cost of maintaining such unit, and the projected cost of
returning the unit to service.
Id. at 44 n.3 (emphasis added). By this language, the Supreme Court recognized
that the System Agreement now “dictates how and by whom” the classification of
units “should be made.” Id. at 50. As a result, the Louisiana PUC’s later attempt
to challenge decisions dictated by the tariff were preempted by FERC. Id.
Unlike the amended portion of the System Agreement at issue in Entergy
Louisiana, the System Agreement does not “dictate how and by whom” decisions
will be made about the amounts of wholesale energy to be purchased. Nothing in
-7-
the System Agreement, including the items listed in Entergy’s response, dictates
how Entergy must make its decisions regarding the amounts of wholesale energy it
purchases.
Entergy points to sections that generally indicate how the System Capability
will be operated and/or controlled (MSS-3 Section 30.02, ESA Sections 4.08 and
6.01). Only one of the sections identified by Entergy even deals with “buying and
selling” wholesale energy—Section 6.02(d). That section is written in very general
language: “Services . . . shall: . . . (d) Determine the availability of energy for
purchase from or sale to outside systems on an economical basis under effective
contracts and arrange for and schedule such transactions.” This language does not
require any specific type of decision making, contained within designated minutes
or documents, nor is there anything that requires Entergy to consider present and
future needs, or how to evaluate costs between generated energy versus energy
available for purchase. In particular, there is nothing in the System Agreement that
requires (or even permits) Entergy to use a false, artificially low hypothetical cost
of generated energy to avoid purchasing lower cost wholesale energy.
Interestingly Entergy points to Sections 30.08, 30.09, and 30.10 of the
System Agreement concerning “after-the-fact” allocations among the various
Operating Companies, including “specified adders.” None of this, however, is
included in the purchasing decisions. In fact, the evidence is that Entergy actually
-8-
ignores the “specified adders” that must be included in the cost allocations when
creating a hypothetical cost of generated energy to use in its comparisons with the
actual cost of available wholesale energy for purchase. Because the System
Agreement does not prescribe or dictate the parameters for Entergy’s wholesale
purchasing decisions, Jenkins’s challenge to those decisions is not preempted by
FERC.
Entergy Louisiana is further distinguishable because it did not involve
purchasing decisions regarding wholesale power. That is an important—and
dispositive—distinction. Entergy ignores the fact that FERC has clearly expressed
that it treats “purchasing decisions” differently, a point that Jenkins I correctly
noted. Entergy tries to sidestep this hurdle by overstating the holding in cases,
such as AEP Generating Co., 36 FERC ¶ 61,226 (1986). That case, however, deals
with cost allocations among integrated system participants, not the purchasing
decisions at issue in this case. The same is true of Appalachian Power Co. v.
Public Serv. Comm’n of West Virginia, 812 F.2d 898, 900, 903 (4th Cir. 1987),
which dealt with FERC’s exclusive jurisdiction over an agreement authorizing
cost-allocations among members of system, pursuant to its power to scrutinize
“rates or charges” for the transmission and sale of energy in commerce. Entergy’s
purchasing decisions do not trigger FERC’s exclusive jurisdiction, and this Court
was wrong to hold otherwise.
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PRAYER
For these reasons, Appellees pray for the relief requested in their Motion.
Appellees also pray for such further relief to which they may be entitled.
Respectfully submitted,
JAMAIL & KOLIUS
/s/ Joseph D. Jamail
Joseph D. Jamail
State Bar No. 10536000
Frank Staggs
State Bar No. 19003700
500 Dallas Street, Suite 3434
Houston, Texas 77002
Telephone: (713) 651-3000
Telecopier: (713) 651-1957
THE NORWOOD LAW FIRM
E.R. Norwood
State Bar No. 15113500
340 Main Street
Liberty, Texas 77575
Telephone: (936) 336-3700
Telecopier: (936) 336-7634
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THE SYDOW FIRM
Michael D. Sydow, Esq.
State Bar No. 19592000
1980 Post Oak Blvd., Suite 2100
Houston, Texas 77056
Telephone: (713) 622-9700
Telecopier: (713) 552-1949
HAGANS BURDINE MONTGOMERY
& RUSTAY, P.C.
Fred Hagans
State Bar No. 08685500
Jennifer Rustay
State Bar No. 24002124
3200 Travis, 4th Floor
Houston, Texas 77006
Telephone: (713) 222-2700
Telecopier: (713) 547-4950
OF COUNSEL:
John H. Conway
Admitted Pro Hac Vice
Brickfield Burchette Ritts & Stone
1025 Thomas Jefferson Street, N.W.
Eighth Floor, West Tower
Washington, D.C. 20007
Telephone: (202) 342-0800
Telecopier: (202) 342-0807
Joe F. Sandlin
State Bar No. 17621000
Box 656
Anahuac, Texas 77514
Telephone: (409) 267-3793
Telecopier: (409) 267-3792
COUNSEL FOR APPELLEES
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CERTIFICATE OF COMPLIANCE
This motion complies with the length limitations of TEX. R. APP. P. 9.4
because this motion consists of 2,189 words, excluding the parts of the motion
exempted by TEX. R. APP. P. 9.4(i)(1).
/s/ Joseph D. Jamail
Joseph D. Jamail
CERTIFICATE OF SERVICE
I certify that a copy of this motion was served on counsel of record as
follows via eFile and/or electronic mail and/or Certified Mail–RRR on the 24th
day of December, 2014.
Mr. Larry L. Germer Mr. Paul A. Scheurich
Mr. David L. Tolin ENTERGY SERVICES, INC.
Ms. Kelli B. Smith 350 Pine Street
GERMER GERTZ, L.L.P. P.O. Box 2951
P.O. Box 4915 (77704) Beaumont, Texas 77704
550 Fannin, Suite 400
Beaumont, Texas 77701
Mr. David C. Duggins Mr. Richard G. Baker
Mr. Mark Strain BAKER & ZBRANEK, PC
DUGGINS WREN MANN & ROMERO, LLP 1935 Trinity Street
P.O. Box 1149 Liberty, Texas 77575
Austin, Texas 78767
/s/ Joseph D. Jamail
Joseph D. Jamail
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