Legal assessment of the federal court route.
-----Original Message-----
From: Ed Duncan [mailto:EDuncan2@ArterHadden.com]
Sent: Saturday, September 08, 2001 8:12 AM
To: Mara, Susan
Cc: douglass@energyattorney.com
Subject: Re: E-Mails


Thank you for the addresses.
 
The Petition currently assumes that a foreign energy service provider will be the Petitioner.  Because of the political rhetoric, it would help if there was also a California energy service provider.
 
You indicated yesterday that there may also be some customers willing to act as Petitioners.  Since that would improve the posture of the case, please use your best efforts to locate such a party.  In anticipation of such a development, we shall prepare an alternate Petition so it is available if there is a customer Petitioner.
 
Following yesterday's conversation, we examined the availability of going into the federal court system, rather than the California court system, following action by the Commission.  There is access to federal courts because the case will involve federal constitutional rights.  But going directly to federal court has its pitfalls.  First, the 11th amendment prevents naming the State (and presumably its subdivisions) as defendants.  This limitation can be circumvented by naming individuals as the defendants (such as the Attorney General who is the chief law enforcement officer) using Ex Parte Young, 209 U.S. 123.  Second, the federal court will have wide discretion to abstain (this is known as a Pullman Abstention) from hearing the case in order to allow the California courts to decide the California constitutional issues.  Third, the federal courts may conclude this is really a dispute over rate making and require that state remedies be exhausted (28 USC 1342).  There may be other pitfalls.
 
In our estimation, the federal courts would seek to abstain because the case involves such important California legal and policy issues that the Legislature decided it was necessary to confer original and priority jurisdiction in the California Supreme Court.  This presents a tactical dilemma because of the risk of alienating the Supreme Court by first going to District Court which then decides to abstain.  Also, it could create timing problems because relief must be sought from the Supreme Court no later than 30 days after a rehearing application is denied by the Commission.  The District Court would probably take more than 30 days to decide whether to abstain, thus opening a new argument of timeliness when the state action is initiated.
 
This suggests the possibility of filing simultaneously in both courts.  Such a strategy should use separate claimants and separate attorneys to avoid the claim of forum shopping.  Even if the cases involved different claimants and different attorneys, such a strategy would probably have little likelihood of success because it would make it even easier for the federal court to abstain since there would already be an existing state court proceeding.  By way of example, I was involved in a proceeding in the 9th Circuit concerned with Indian gaming which was deferred because of the proceeding that was in the California Supreme Court involving the constitutionality of Proposition 5 and then Proposition 1A.  Because the California Supreme Court upheld Proposition 1A, the 9th Circuit never acted.  Since the instant case implicates state law and policy, the likelihood of abstention, even if two separate cases are brought, is very high .
 
The foregoing analysis assumes that the Commission seeks to retroactively suspend existing contracts.  We have not yet considered whether the pending bill, if enacted by the Legislature, would change the analysis.
 
We shall keep you advised.  EWD


>>> "Mara, Susan" <Susan.J.Mara@ENRON.com> 09/07/01 04:34PM >>>
Here are the:

jbennett@gmssr.com
rwillia2@enron.com
paul.kaufman@enron.com
jdasovic@enron.com
jsteffe@    enron.com
rshapiro@enron.com


**********************************************************************
This e-mail is the property of Enron Corp. and/or its relevant affiliate and may contain confidential and privileged material for the sole use of the intended recipient (s). Any review, use, distribution or disclosure by others is strictly prohibited. If you are not the intended recipient (or authorized to receive for the recipient), please contact the sender or reply to Enron Corp. at enron.messaging.administration@enron.com and delete all copies of the message. This e-mail (and any attachments hereto) are not intended to be an offer (or an acceptance) and do not create or evidence a binding and enforceable contract between Enron Corp. (or any of its affiliates) and the intended recipient or any other party, and may not be relied on by anyone as the basis of a contract by estoppel or otherwise. Thank you. 
**********************************************************************