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February 2020: QE Defeats $2 Billion Suit by Mississippi Attorney General Against Entergy Mississippi

March 2020

Quinn Emanuel recently obtained summary judgment for Entergy Mississippi and its affiliates in a long-standing case in which the Mississippi Attorney General (AG) sought more than $2 billion in damages.

            Entergy Mississippi is an electric utility that provides electricity to homes, businesses and governments in the western part of Mississippi.  Entergy Mississippi and its affiliates in Arkansas, Louisiana, and Texas form the Entergy System, which is able to take advantage of certain economies of scale in serving their customers in these states.  Because the Entergy System involved sales of energy and transmission in the wholesale interstate market across state lines, it is subject to the oversight of the Federal Energy Regulatory Commission (“FERC”).  At the same time, the rates charged by the Entergy affiliates to their in-state customers were regulated by the respective states’ public utility commissions.

            In a complaint filed in 2008, the Mississippi AG alleged that Entergy Mississippi and its affiliates relied too much on supposedly expensive electricity from their own power plants, and purchased too little allegedly cheaper electricity from independent power producers.  The AG alleged causes of action for fraud, violation of the Mississippi Consumer Protection Act, and the Mississippi Antitrust Act.  With interest, the AG sought to recover more than $2 billion in damages.

            In 2017, after the case had been pending for nearly a decade, Entergy hired Quinn Emanuel.  Quinn Emanuel filed a motion for summary judgment arguing that the AG’s case was within the exclusive jurisdiction of FERC.  At the same time, Quinn Emanuel developed the factual record showing that the AG was wrong on the merits because while third-party energy may appear cheaper on an average hourly basis, it was typically not offered or sold on a flexible basis that would allow for the second-by-second adjustments in quantity needed to keep demand and supply in balance, which is necessary to avoid massive outages in the region.  The district court found that the issues implicated in the summary judgment briefing required a complete airing of the dispute at trial, and set the matter for a bench trial.  Then, just three days into trial, the district judge found that the federal court lacked subject matter jurisdiction (despite that fact that the prior federal judge assigned to the case had found the federal court did have subject matter jurisdiction) and remanded the case back to Mississippi Chancery Court where it had initially been filed.

            Back in Chancery Court, Quinn Emanuel renewed its motion for summary judgment based on federal preemption.  In particular, we focused on the similarity between Entergy Mississippi’s case and a case that Entergy Texas had won.  The Entergy Texas case had also been originally filed in state court, removed to federal court, and remanded.  And on remand in the Entergy Texas case, the state court held that the case was within FERC’s exclusive jurisdiction.  We argued that the same result was warranted for Entergy Mississippi, and the Mississippi chancery judge agreed.  The court granted our motion for summary judgment in full, finding that the AG’s claims were preempted by federal law, and ended more than a decade of litigation.