The opinion of the court was delivered by: BISSELL
This matter comes before the Court on defendant's motion to dismiss the Complaint pursuant to Fed. R. Civ. P. 12(b)(6) and plaintiff's cross-motion for partial summary judgment. Plaintiff, Crossroads Cogeneration Corporation, filed a five-count Complaint in this Court on November 12, 1996, seeking damages from and injunctive relief against defendant, Orange and Rockland Utilities, Inc., for breach of contract, breach of the covenant of good faith and fair dealing, anticipatory repudiation and violations of the federal antitrust laws. The Court has jurisdiction over plaintiff's federal antitrust claims pursuant to 28 U.S.C. § 1337 and over its contract claims pursuant to 28 U.S.C. § 1332.
Plaintiff is a Delaware corporation with its principal place of business in Mahway, New Jersey. It is an independent, non-regulated producer of electric power that owns and operates a cogeneration
facility which meets the applicable operating and efficiency standards and ownership criteria necessary to classify it as a "qualifying facility" under the federal Public Utility Regulatory Policies Act ("PURPA"), Public Law No. 95-717, 92 Stat. 3117 (1978) (codified at 16 U.S.C. § 824a et seq.) and the implementing regulations
promulgated by the Federal Energy Regulatory Commission ("FERC"). (Compl., PP 11-16).
Defendant is a New York corporation with its principal place of business in Rockland County, New York. it is a public utility engaged (along with two corporate affiliates) in the supply and delivery of electricity in Rockland and Orange Counties in New York, Pike County, Pennsylvania and Bergen County, New Jersey. (Id., PP 18-20). Defendant purchases electricity from relatively small (in terms of output capacity), independent generators of energy such as plaintiff. Defendant is virtually the sole provider of electricity at retail cost to residential, commercial and industrial customers in the above-mentioned counties. (Id., P 22).
Pursuant to PURPA, qualifying facilities (or "QF's"), such as plaintiff, are exempt from regulation under the Federal Power Act and from state law or regulation respecting the rates of electric utilities and the financial and organizational regulation of electric utilities. Instead, FERC regulations set forth the principal obligations of public utilities, such as defendant, in dealing with QF's. State administrative agencies such as the New York Public Service Commission ("NYPSC") have promulgated regulations implementing the FERC regulations application to QF's. The FERC regulations require the state administrative agencies to actively supervise the formation and performance of QF contracts. Thus, under the provisions of the New York statute establishing the NYPSC, QF contracts must be submitted to the NYPSC for review and approval. See N.Y. Pub. Serv. Law § 66-c(1).
On October 2, 1987, defendant entered into a contract (the Power Service Agreement, or the "Agreement") with an energy supplier for the purchase of electric energy for a period of 20 years. That supplier assigned the Agreement to plaintiff on July 31, 1990. (Id., PP 24-25; Defendant's Br., Exh. 1). The Agreement provided, inter alia, that it be approved by NYPSC, which approval was eventually obtained on December 2, 1988. (Defendant's Br., Exh. 1 at Article XIX and Exh. 2 at 1-4). The Agreement contains a New York choice of law provision. (Id., Exh. 1 at Article XXI(6)). The dispute giving rise to the instant litigation arose in May 1996, when plaintiff installed a new 5 MW gas turbine at its Bergen County plant and began delivering to defendant electricity generated by the new turbine. (Compl., PP 41, 47-48). Defendant objected to the additional energy being provided, because in its view, the Agreement between the parties, as approved by the NYPSC, only required it to purchase (at the contract price) energy generated by the equipment plaintiff owned at the time of the assignment of the Agreement to it. Plaintiff, on the other hand, argued that the Agreement required defendant to purchase (at the contract price) all the energy plaintiff was capable of generating up to 4MW. (Id., PP 54-56, 74).
On August 12, 1996, prior to plaintiff's filing the Complaint in this action, defendant filed a Petition for a Declaratory Ruling with the NYSPC seeking a declaration that it was not obligated to purchase electricity from plaintiff in excess of that generated by the plant's original generating equipment. (See Defendant's Br., Exh. 2 at 1). Plaintiff filed a Response on August 30, 1996, wherein it conceded the NYPSC's jurisdiction over the approval of the Agreement (which took place in 1988), but challenged the NYPSC's jurisdiction to resolve the contract dispute brought before it by defendant. (See id. at 2-3). On November 6, 1996, the NYPSC issued a ruling in favor of defendant. In its written Opinion dated November 29, 1996, the NYPSC specifically held that (1) it had jurisdiction to interpret and explain its approval of the Agreement, and (2) its December 2, 1988 approval of the Agreement limited defendant's obligation to energy generated by plaintiff's original equipment. (See id. at 3-4).
Six days after the NYPSC announced its decision, plaintiff instituted the instant litigation. Plaintiff states five causes of action in its Complaint. The first four are state law claims. They are as follows: the First Cause of Action seeks damages for breach of contract (specifically, for breach of the Power Sales Agreement (the "Agreement") entered into by the parties on October 2, 1987); the Second Cause of Action states a claim for breach of the implied covenant of good faith and fair dealing; the Third states a claim for anticipatory breach of contract; and the Fourth seeks a declaratory judgment as to the parties' rights and obligations under the Agreement. (See Compl., PP 64-83). The Fifth Cause of Action seeks relief for alleged violations of (1) Section 2 of the Sherman Act, 15 U.S.C. § 2; (2) Section 2 of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. § 13. (See id., PP 84-94).
I. Defendant's Motion to Dismiss the Complaint
A. Standard for Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6)
Fed. R. Civ. P. 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law. Neitzke v. Williams, 490 U.S. 319, 326, 104 L. Ed. 2d 338, 109 S. Ct. 1827 (1989) (citing Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984)). Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957). In disposing of a motion to dismiss, the court operates on the assumption that the factual allegations in the complaint or counterclaim are true. Neitzke, 490 U.S. at 326-27. A motion to dismiss may be granted if the opposing party would not be entitled to relief under any set of facts consistent with the allegations in the complaint or counterclaim. As the Supreme Court stated in Neitzke :
nothing in Rule 12(b)(6) confines its sweep to claims of law which are obviously insupportable. On the contrary, if as a matter of law "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations," Hishon, supra at 73, 104 S. Ct. 2229, a claim must be dismissed, without regard to whether it is based on an outlandish legal theory or on a close but ultimately unavailing one. What Rule 12(b)(6) does not countenance are dismissals based on a judge's disbelief of a complaint's factual allegations.
B. Plaintiff's Fifth Cause of Action (Asserting Federal Antitrust Claims) is Dismissed for Failure to State a Claim Upon Which Relief can be Granted.
(1) Alleged violations of Section 2 of the Sherman Act
In order to state a claim for monopolization, a plaintiff must allege "(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historical accident." Schuylkill Energy Resources, Inc. v. Pennsylvania Power & Light Company, 113 F.3d 405 (3d Cir., 1997) (quoting Fineman v. Armstrong World Indus., Inc., 980 F.2d 171, 197 (3d Cir. 1992), and United States v. Grinnell Corp., 384 U.S. 563, 570-71, 16 L. Ed. 2d 778, 86 S. Ct. 1698 (1966)). To state a claim for attempted monopolization, a plaintiff must allege "(1) that the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize [the relevant market] and (3) a dangerous probability of achieving a monopoly power." Schuylkill at 7 (quoting Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456, 113 S. Ct. 884, 122 L. Ed. 2d 247 (1993)).
Accepting as true all of the allegations in the Complaint, plaintiff nevertheless fails to make out a claim for either the offense of monopolization or attempted monopolization, because (1) it fails to plead a relevant market and (2) it fails to plead that defendant possesses or dangerously threatens to possess monopoly power in such a relevant market. Both of plaintiff's Sherman Act claims require the identification of the relevant market within which the alleged anticompetitive activities can be assessed. See Walker Process Equip., Inc. v. Food Machs. & Chem Corp., 382 U.S. 172, 177, 15 L. Ed. 2d 247, 86 S. Ct. 347 (1965). Plaintiff contends that it has alleged injury to competition in the market "for electricity" (see Plaintiff's Opp. Br. at 23); however, nowhere in the Complaint is such a market alleged. Moreover, even if the Court were to accept plaintiff's argument that the relevant market can be ascertained by reading the Complaint as a whole, the Court would nevertheless be left with only vague statements of the market "for electricity" to which plaintiffs refers. For example, the Court would be forced to guess as to whether plaintiff means to identify as the relevant market "the supply of electric power" or "the purchase of long term wholesale power." (Comp., PP 85, 90).
Further, plaintiff fails, as a matter of law, to sufficiently allege monopoly power. Plaintiff merely states that defendant is the sole provider of electricity to certain customers in the counties it services. (See Compl., P 22; Plaintiff's Opp. Br. at 23-24). Plaintiff fails to allege such necessary facts as defendant's market share in the markets in which plaintiff is a competitor or the barriers that exist which prevent plaintiff's entry into such markets. These deficiencies in the ...