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Federal Energy Regulatory Commission v. City Power Marketing, LLC

United States District Court, District of Columbia

January 30, 2017

FEDERAL ENERGY REGULATORY COMMISSION, Plaintiff,
v.
CITY POWER MARKETING, LLC, and K. STEPHEN TSINGAS, Defendants.

          MEMORANDUM OPINION & ORDER

          JOHN D. BATES United States District Judge

         Before the Court is [36] defendant City Power Marketing's Rule 56(d) motion for discovery. For the following reasons, City Power's motion for discovery is granted in part and denied in part.

         I. BACKGROUND

         The Court's August 10, 2016 memorandum opinion discusses at length the complex background of this case, including the workings of the energy markets at issue and the alleged manipulative trades made by City Power Marketing. See Aug. 10, 2016 Mem. Op. [ECF No. 25] at 1-16. Rather than repeat that discussion here, the Court will largely assume readers' familiarity with this case and refer them to the Court's previous opinion if a more detailed discussion about the facts and regulatory background is needed. See id. But to sum up this case, the Federal Energy Regulatory Commission (“FERC”) brought an administrative action against City Power and its founder Stephen Tsingas (collectively, “City Power”), a virtual trader[1] in the wholesale electricity market, for conducting allegedly manipulative trades in violation of the Commission's Anti-Manipulation Rule, 18 C.F.R. § 1c.2. FERC ultimately found that City Power had violated the Anti-Manipulation Rule by conducting trades disguised as arbitrage transactions, that were in fact conducted only to collect marginal surplus loss allocation (MLSA) payments.[2] City Power Mktg., LLC, 152 FERC ¶ 61, 012 (“Penalty Assessment Order”) at ¶ 6.[3] FERC also found that City Power violated Market Behavior Rule 3, 18 C.F.R. § 35.41(b), which requires truthful communications with the Commission, because City Power failed to reveal the existence of certain archived instant messages during the course of FERC's investigations into the alleged manipulative trades. Id. at ¶ 9. FERC assessed a $15 million penalty against City Power, [4] id. at ¶ 1, 257, and when City Power did not pay, FERC filed this action seeking an order affirming the penalty. See Compl. [ECF No. 1].

         After this Court denied City Power's motion to dismiss this action in its previous opinion, FERC filed a motion for summary judgment [ECF No. 30]. In response, City Power filed a motion under Federal Rule of Civil Procedure 56(d), seeking discovery before the summary judgment motion is adjudicated. See Rule 56(d) Mot. [ECF No. 36]. City Power argues that summary judgment is premature because it has not yet had the opportunity to conduct discovery; FERC counters, essentially, that City Power already had the opportunity to present evidence during the administrative proceeding before the Commission, and that no discovery is necessary because FERC has sufficiently proven its case.

         II. DISCUSSION

         Federal Rule of Civil Procedure 56(d) provides:

         If a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition [to a motion for summary judgment], the court may:

(1) defer considering the motion or deny it;
(2) allow time to obtain affidavits or declarations or to take discovery; or
(3) issue any other appropriate order.

Fed. R. Civ. P. 56(d). Thus, Rule 56(d) “establishes a mechanism for nonmovants who lack the facts they need to seek an opportunity to gather more information before responding to a motion for summary judgment.” Grimes v. Dist. of Columbia, 794 F.3d 83, 92 (D.C. Cir. 2015). The decision whether to grant or deny a motion under Rule 56(d) lies within the district court's discretion. Pardo-Kronemann v. Donovan, 601 F.3d 599, 611-12 (D.C. Cir. 2010). Typically, however, “summary judgment is premature unless all parties have had a full opportunity to conduct discovery.” Convertino v. U.S. Dep't of Justice, 684 F.3d 93, 99 (D.C. Cir. 2012) (internal quotation marks omitted). Accordingly, “[a Rule 56(d)] motion requesting additional time for discovery should be granted almost as a matter of course unless the non-moving party has not diligently pursued discovery of the evidence.” Id. (internal quotation marks omitted).

         That being said, the party seeking relief, in this case City Power, still bears the burden of making the appropriate showing that discovery is needed. U.S. ex rel. Folliard v. Gov't Acquisitions, Inc., 764 F.3d 19, 26-27 (D.C. Cir. 2014). In order to obtain relief under Rule 56(d), a party must submit an affidavit or declaration that satisfies three criteria. The declaration must: (1) “outline the particular facts [the party] intends to discover and why those facts are necessary to the litigation”; (2) explain why the party has not been able to produce those facts; and (3) demonstrate that the information sought is, in fact, discoverable. Convertino, 684 F.3d at 99-100. Boilerplate language or vague assertions will not satisfy this standard. See Folliard, 764 F.3d at 29; Jeffries v. Lynch, -F.Supp.3d-, 2016 WL 6783196, at *8 (D.D.C. Nov. 15, 2016).

         Here, there is no dispute that no discovery has taken place since FERC filed this suit. In order to properly contest FERC's motion for summary judgment, City Power claims that it needs discovery with respect to both the market manipulation claim and the market behavior claim, as well as regarding FERC's jurisdiction over City Power's trades. FERC argues, however, that discovery is unnecessary because City Power was allowed to present evidence during the administrative proceeding that resulted in the penalty assessment, and because FERC itself conducted ...


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