Sempra Energy fails in last attempt to dismiss $24 billion class action lawsuit

SAN DIEGO, Dec. 27, 2004 (BUSINESS WIRE) — A final attempt by Sempra Energy to stop a major $24 billion antitrust class action lawsuit from going to trial has failed, following the denial of a writ of mandate last week by the California Court of Appeal, Fourth Appellate District, it was announced by plaintiffs’ attorneys today. As a result, Sempra will now face a jury next year relating to charges of conspiracy and market manipulation that precipitated California’s energy crisis in 2000 and 2001. The civil action seeks treble damages of approximately $24 billion.

The emergency appeal was filed October 15, 2004 by Sempra in response to the denial by San Diego Superior Court Judge J. Richard Haden of the company’s attempts to obtain summary judgment and to escape all liability. The trial judge rejected Sempra’s argument that there was insufficient evidence of a conspiracy to proceed to trial. Sempra, a Fortune 500 company, has unsuccessfully pursued various avenues to halt the legal action which, in the words of its own counsel, was “life threatening” with the potential to “put San Diego’s largest company out of business.” Sempra’s net worth was $3.8 billion at December 31, 2003.

The lawsuit claims that Sempra and two owned companies, Southern California Gas Company (SoCalGas) and San Diego Gas & Electric (SDG&E), conspired with El Paso Natural Gas Corp (EPNG) to prevent competition for cheaper and more plentiful Canadian natural gas and to protect their respective market dominance over the supply and transportation of natural gas both into and within California, reaping enormous profits at the expense of California consumers and businesses.

Economists have estimated that plaintiffs in the case have suffered $9 billion in damages due to these excessive energy costs in 2000 and 2001. This amount, under California antitrust law, is automatically trebled after credits for payments by other defendants.

“Sempra has now burned the last of its available bridges in a desperate ploy to make this case disappear and hide its outrageous conduct,” stated Thomas V. Girardi, of Girardi & Keese in Los Angeles, one of the lead plaintiffs’ counsel. “The company’s delaying tactics over the past four years have only served to bolster the case we are eager to bring before a San Diego jury — reflecting a conscious, cartel-like arrangement in which these Sempra entities colluded to both restrict the supply of natural gas and gouge the people of California through unnecessarily higher prices.”

The evidence against Sempra presented by the plaintiffs includes details of a clandestine meeting at a Phoenix, Arizona Embassy Suites hotel involving 11 senior executives from SoCalGas, SDG&E and El Paso in September 1996. Plaintiffs will offer evidence that, without any legal counsel present, the executives unlawfully agreed they would cooperate rather than compete with each other in supplying and delivering natural gas — resulting in an artificially constrained supply of natural gas and escalating prices to Californians of gas and ultimately electricity produced from natural gas.

The trial date, anticipated for next summer, is expected to be set early next month. El Paso, the largest natural gas pipeline company in the U.S., previously settled the antitrust conspiracy charges against it in December 2003, agreeing to pay $1.7 billion for the benefit of 13 million Californians.

Plaintiffs in the class action include the People of the State of California; the City and County of Los Angeles; San Bernardino County; the cities of Long Beach, Burbank, Glendale, Culver City, Vernon and Upland; Continental Forge Company; and numerous other companies and individuals. The case also includes a class of more than 13 million California consumers who paid excessive gas and electric bills.

Plaintiffs’ counsels, in addition to Girardi, include lead counsel Pierce O’Donnell of O’Donnell & Shaeffer LLP in Los Angeles; Walter Lack of Engstrom, Lipscomb & Lack; Lance Astrella of Astrella & Rice P.C.; Brad Baker of Baker, Burton & Lundy, P.C.; M. Brian McMahon; Michael J. Ponce; Douglas A. Stacey; J. Tynan Kelly; Maxwell Blecher of Blecher & Collins, P.C.; Los Angeles City Attorney Rockard Delgadillo; Long Beach City Attorney Robert F. Shannon; and Los Angeles County Counsel Lloyd W. Pellman.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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