U.S. judge dismisses power market manipulation case against JPMorganReprints
(Reuters) — A federal judge in California has dismissed a class action lawsuit that accused JPMorgan Chase & Co. of racketeering and manipulation of the state’s electricity market.
The ruling on Monday said that California ratepayers could not sue JPMorgan, the largest U.S. bank by assets, because the Federal Energy Regulatory Commission has exclusive authority to address violations of the Federal Power Act.
Three ratepayers sued in March seeking damages on behalf of retail power consumers in the state, arguing that JPMorgan had ran afoul of the Racketeer Influenced and Corrupt Organizations Act when it sold power from several gas plants in California between 2010 and 2012.
The ratepayers said the bank used market manipulation to turn inefficient power plants into “cash cows” and residents paid more for electricity as a result.
U.S. District Judge William Hayes said the RICO claim was not valid because it was “wholly dependent on the alleged violations” of the Federal Power Act.
“Courts have held that noncompliance with a regulatory statute affording administrative remedies cannot form the basis for a civil RICO claim,” Judge Hayes said in his order.
Joseph Siprut, a lawyer for the ratepayers, said they would appeal the ruling.
FERC reached a settlement with JPMorgan over allegations similar to those in the class action lawsuit in 2013. The company agreed to pay a $285 million civil penalty and to pay back $124 million to California power consumers.
Allowing the class action case to proceed would have required the court to second guess rates that were approved by FERC and to consider the adequacy of the settlement that the agency has already entered with JPMorgan, Judge Hayes said.
JPMorgan declined to comment on the court’s decision.
In their complaint, the ratepayers had argued that the damages suffered by California power consumers were substantially higher than the amount recouped by FERC.