Federal Energy Regulatory Commission v. Barclays Bank PLC et al

REPLY

E.D. Cal.February 4, 2016

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL THOMAS J. NOLAN (SBN 66992) Thomas.Nolan@skadden.com SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071-3144 Telephone: (213) 687-5000 Facsimile: (213) 687-5600 Please see continuation page for a complete list of the defendants and their counsel. IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA FEDERAL ENERGY REGULATORY COMMISSION, Plaintiff, v. BARCLAYS BANK PLC; DANIEL BRIN; SCOTT CONNELLY; KAREN LEVINE; and RYAN SMITH, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CASE NO.: 2:13-cv-02093-TLN-EFB (TEMP) REPLY IN SUPPORT OF DEFENDANTS’ MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL Date: February 11, 2016 Time: 2:00 p.m. Presiding: Hon. Troy L. Nunley Courtroom: 2 Trial Date: None Set Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 1 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL CONTINUATION SHEET: DEFENDANTS AND THEIR RESPECTIVE COUNSEL STEVEN R. GLASER (Admitted Pro Hac Vice) Steven.Glaser@skadden.com BORIS BERSHTEYN (Admitted Pro Hac Vice) Boris.Bershteyn@skadden.com SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP Four Times Square New York, New York 10036 Telephone: (212) 735-3000 Facsimile: (212) 735-2000 PATRICK FITZGERALD (Admitted Pro Hac Vice) Patrick.Fitzgerald@skadden.com SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 155 North Wacker Drive Chicago, Illinois 60606 Telephone: (312) 407-0700 Facsimile: (312) 407-0411 JOHN N. ESTES III (Admitted Pro Hac Vice) John.Estes@skadden.com DONNA M. BYRNE (Admitted Pro Hac Vice) Donna.Byrne@skadden.com SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 1440 New York Avenue, N.W. Washington, D.C. 20005 Telephone: (202) 371-7000 Facsimile: (202) 393-5760 GREGORY A. MARKEL (Admitted Pro Hac Vice) Greg.Markel@cwt.com CADWALADER, WICKERSHAM & TAFT LLP One World Financial Center New York, New York 10281 Telephone: (212) 504-6000 Facsimile: (212) 504-6666 PAUL J. PANTANO JR. (Admitted Pro Hac Vice) Paul.Pantano@cwt.com JODI L. AVERGUN (Admitted Pro Hac Vice) Jodi.Avergun@cwt.com CADWALADER, WICKERSHAM & TAFT LLP 700 Sixth Street, N.W. Washington, D.C. 20001 Telephone: (202) 862-2410 Facsimile: (202) 862-2400 Attorneys for BARCLAYS BANK PLC Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 2 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL CONTINUATION SHEET: DEFENDANTS AND THEIR RESPECTIVE COUNSEL SETH P. WAXMAN (Admitted Pro Hac Vice) Seth.Waxman@wilmerhale.com DAN M. BERKOVITZ (Admitted Pro Hac Vice) Dan.Berkovitz@wilmerhale.com JONATHAN G. CEDARBAUM (Admitted Pro Hac Vice) Jonathan.Cedarbaum@wilmerhale.com HEATHER M. ZACHARY (Admitted Pro Hac Vice) Heather.Zachary@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 1875 Pennsylvania Avenue, N.W. Washington, D.C. 20006 Telephone: (202) 663-6000 Facsimile: (202) 663-6363 MARK C. KALPIN (Admitted Pro Hac Vice) Mark.Kalpin@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 60 State Street Boston, Massachusetts 02109 Telephone: (617) 526-6000 Facsimile: (617) 526-5000 Attorneys for BARCLAYS BANK PLC LESLIE M. WERLIN (SBN 67994) lwerlin@mcguirewoods.com McGUIREWOODS LLP 1800 Century Park East, 8th Floor Los Angeles, California 90067 Telephone: (310) 315-8200 Facsimile: (310) 315-8210 TODD MULLINS (Admitted Pro Hac Vice) tmullins@mcguirewoods.com McGUIREWOODS LLP 2001 K Street, N.W. Washington, D.C. 20006-1040 Telephone: (202) 857-1752 Facsimile: (202) 828-3320 ALLISON D. CHARNEY (Admitted Pro Hac Vice) acharney@mcguirewoods.com McGUIREWOODS LLP 1345 Avenue of the Americas, 7th Floor New York, New York 10105 Telephone: (212) 548-2166 Facsimile: (212) 715-6279 Attorneys for DANIEL BRIN and SCOTT CONNELLY Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 3 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL CONTINUATION SHEET: DEFENDANTS AND THEIR RESPECTIVE COUNSEL HOLLY A. HOUSE (SBN 136045) hollyhouse@paulhastings.com PAUL HASTINGS LLP 55 Second Street, Twenty-Fourth Floor San Francisco, California 94105 Telephone: (415) 856-7000 Facsimile: (415) 856-7100 MICHAEL L. SPAFFORD (Admitted Pro Hac Vice) michaelspafford@paulhastings.com VICTORIA T. EARLS (Admitted Pro Hac Vice) victoriaearls@paulhastings.com PAUL HASTINGS LLP 875 15th Street, N.W. Washington, D.C. 20005 Telephone: (202) 551-1700 Facsimile: (202) 373-1705 Attorneys for KAREN LEVINE and RYAN SMITH Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 4 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL ARGUMENT Controlling Ninth Circuit precedent demonstrates that the Ninth Circuit has jurisdiction over Defendants’ appeal, that Defendants will suffer irreparable constitutional, reputational, and legal harm absent a stay, and that Defendants have raised a serious legal question. In light of this precedent, this Court should grant Defendants’ request and allow the Ninth Circuit to rule on Defendants’ appeal before conducting further proceedings that may result in a penalty of almost $500 million on the Defendants. The arguments of the Federal Energy Regulatory Commission (“FERC”) to the contrary are directly at odds with both controlling case law and the positions FERC recently has taken in similar pending district court actions. I. The Ninth Circuit Has Jurisdiction Under The Collateral Order Doctrine And Through Mandamus Review A. Collateral Order Doctrine The Scheduling Order conclusively determined that FPA subsection 31(d)(3) allows the Court to summarily affirm FERC’s penalty assessment without discovery, a procedural issue separate from the merits and effectively unreviewable absent an immediate appeal. 1. The Court conclusively determined the procedures to be followed and FERC has cited the Scheduling Order for that very proposition The dispute presented here is not whether Defendants might eventually get discovery. Instead, it is whether Defendants are entitled under FPA section 31(d) to discovery before the Court considers whether to summarily affirm FERC’s penalty assessment. Although FERC maintains (at 6) that the Scheduling Order did not conclusively determine this issue, FERC has said just the opposite in at least three other proceedings in which the exact same issue has been raised. In its brief “regarding review procedures mandated by the Federal Power Act,” filed in FERC v. Powhatan Energy Fund, LLC, No. 3:15-cv-00452 (E.D. Va.), on December 31, 2015, for example, FERC states that the Scheduling Order in this case “address[ed] the question of procedures under FPA § 31(d)(3)” and “adopted” FERC’s position that Defendants are not entitled to discovery before having to respond to FERC’s motion for summary affirmance of its penalty assessment order. Powhatan Br. 8. FERC has characterized the Scheduling Order in the same way in two Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 5 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL other recent submissions. 1 As FERC’s Powhatan brief candidly states, this Court’s Scheduling Order “adopted” FERC’s position and conclusively determined that Defendants have no such entitlement. See Powhatan Br. 8. Alternatively, FERC suggests that the Court has the discretion to enter the equivalent of a summary judgment against Defendants without allowing any discovery. See Opp’n 7. Controlling Ninth Circuit precedent, however, does not permit this procedure. Although district courts have “broad discretion to manage discovery and to control the course of litigation,” Hunt v. Cty. of Orange, 672 F.3d 606, 616 (9th Cir. 2012), courts must allow a “realistic opportunity to pursue discovery” before considering entering judgment, Burlington N. Santa Fe R.R. Co. v. Assiniboine & Sioux Tribes of Fort Peck Reservation, 323 F.3d 767, 773 (9th Cir. 2003). 2 Federal Rule of Civil Procedure 26 allows a district court to limit discovery only “for good cause.” Fed. R. Civ. P. 26(c). And the burden is on the party opposing discovery “to ‘show good cause’ by demonstrating harm or prejudice that will result from the discovery.” Rivera v. NIBCO, Inc., 364 F.3d 1057, 1063 (9th Cir. 2004) (quoting Fed. R. Civ. P. 26(c)). FERC has not attempted to meet that burden. Due process requires courts to “afford the parties a full opportunity to present their respective cases” before ruling on the merits. Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981) (quoting Pughsley v. 3750 Lake Shore Drive Coop. Bldg., 463 F.2d 1055, 1057 (7th Cir. 1972)). Thus, contrary to FERC’s suggestion, the discretion the Federal Rules afford the Court to 1 See Tr. Oral Arg. 26-29, FERC v. Maxim Power Corp., No. 3:15-cv-30113 (D. Mass. Dec. 17, 2015) (FERC counsel describing “Barclays scheduling order” as the model to follow in response to court’s observation of a “fundamental difference [between the parties] that needs to be resolved”); Brief for FERC in Opposition to Motion to Dismiss, FERC v. City Power Mktg., LLC, No. 1:15-cv-1428 (D.D.C. Dec. 22, 2015) (arguing that “[t]he Court [s]hould [f]ollow the [p]ractical, [c]ommonsense [a]pproach [e]mployed by the District Court in the Barclays [c]ase”). 2 Accord Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832, 846 (9th Cir. 2001) (“[T]he Supreme Court has restated [Rule 56(d)] as requiring, rather than merely permitting, discovery ‘where the nonmoving party has not had the opportunity to discover information that is essential to its opposition’” (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n.5 (1986))); Greater Balt. Ctr. for Pregnancy Concerns, Inc. v. Mayor & City Council of Balt., 721 F.3d 264, 281 (4th Cir. 2013) (en banc) (parties must “be afforded a reasonable opportunity for discovery” when motion to dismiss converted to motion for summary judgment under Rule 12(d) (quoting Gay v. Wall, 761 F.2d 175, 177 (4th Cir. 1985))). Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 6 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL manage discovery does not give it the authority to proscribe all (let alone reasonably essential) discovery before Defendants are required to oppose, and the Court issues a ruling on, FERC’s Motion to Affirm. 2. The procedures governing an action under FPA subsection 31(d) are separate from the merits of FERC’s claims FERC offers neither authority nor reasoning to support its contention (at 7) that the Scheduling Order is “not ‘completely separate’” from the merits of the Court’s de novo review. A decision is separate from the merits if it does not “involve[] considerations that are ‘enmeshed in the factual and legal issues comprising the plaintiff’s cause of action.’” Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 (1978). 3 Here, Defendants challenge the Court’s interpretation of the procedures that govern an action under FPA subsection 31(d)(3). That determination is both factually and legally unrelated to the Court’s determination of whether Defendants engaged in market manipulation. 3. The Court’s decision is effectively unreviewable because it inflicts multiple types of irreparable injury on Defendants FERC does not dispute the well-established proposition that a decision is effectively unreviewable on appeal when it will result in irreparable harm. 4 Instead, FERC denies (at 9-13) that the three types of irreparable harm that Defendants would suffer—constitutional, reputational, and legal—warrant a stay. But FERC is wrong. 3 Accord Bradshaw v. Zoological Soc’y of San Diego, 662 F.2d 1301, 1308-09 (9th Cir. 1981) (“preliminary procedural determinations about how the trial … will proceed” are quintessentially “separate from, and collateral to, rights asserted in the action” (quoting Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949))); see also United States v. LKAV, 712 F.3d 436, 439 (9th Cir. 2013); Wharton v. Calderon, 127 F.3d 1201, 1204 (9th Cir. 1997). 4 See United States v. Griffin, 440 F.3d 1138, 1142 (9th Cir. 2006); Abernathy v. Southern Cal. Edison, 885 F.2d 525, 529 (9th Cir. 1989); Bradshaw, 662 F.2d at 1311, 1320. Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 7 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL The Supreme Court and Ninth Circuit have held that constitutional violations often result in irreparable harm. 5 The cases FERC cites are inapposite—the issue here concerns Defendants’ right to conduct discovery and defend themselves before a jury as required by the Constitution and the FPA. Denial of these fundamental procedural rights may lead to an ill-informed judgment against Defendants; a result that cannot be adequately remedied through a postjudgment appeal. The Ninth Circuit has also held that reputational harm and the attendant loss of one’s livelihood are indeed irreparable for the purpose of determining irreparable harms. See Nelson, 530 F.3d at 882 (“Moreover, the loss of one’s job does not carry merely monetary consequences; it carries emotional damages and stress, which cannot be compensated by mere back payment of wages.”). In none of the Second, Sixth, and Tenth Circuit decisions FERC cites (see Opp’n 11-12) was a defendant deprived of his right to a trial governed by the Federal Rules resulting in substantial reputational and professional harm. 6 To support its argument, FERC mischaracterizes the Ninth Circuit’s holding in American Trucking Associations, Inc. v. City of Los Angeles, 559 F.3d 1046 (9th Cir. 2009), and asserts (at 11) that “the injury in that case had nothing to do with reputational harm.” But in American Trucking, the court recognized that “the loss of goodwill and reputation” can result in irreparable harm. See id. at 1057. Because the appellant was threatened with “at the very least a loss of customer goodwill” and possibly the loss of the whole business, id. at 1058, consistent with prior precedent the court held that these professional and reputational injuries constituted irreparable 5 See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 381 (1992); Nelson v. Nat’l Aeronautics & Space Admin., 530 F.3d 865, 882 (9th Cir. 2008), rev’d on other grounds, 562 U.S. 134 (2011); 11A Charles Alan Wright et al., Federal Practice and Procedure § 2948.1 (3d ed.) (“When an alleged deprivation of a constitutional right is involved … most courts hold that no further showing of irreparable injury is necessary.”). 6 See Linde v. Arab Bank, PLC, 706 F.3d 92, 95 (2d Cir. 2013) (appealing sanction); United States v. Dickstein, 971 F.2d 446, 451 (10th Cir. 1992) (appealing order revoking attorney’s pro hac vice status); John Doe Corp. v. United States, 714 F.2d 604, 606 (6th Cir. 1983) (appealing decision not to dismiss criminal indictment). Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 8 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL harm. 7 A stay is necessary to prevent the Court from proceeding under an incorrect interpretation of the FPA, wrongly finding Defendants liable for market manipulation, and imposing an unprecedented monetary fine of almost $500 million, all of which will result in further reputational harm to the individual defendants. 8 Finally, FERC states that the possible preclusive effect of the Court’s decision will not result in irreparable harm because Defendants might succeed in overcoming preclusion. See Opp’n 12. But Defendants need not establish that irreparable harm is a certainty. 9 Just as FERC has relied on the Court’s Scheduling Order for support in other cases, it is probable that current and future civil plaintiffs will attempt to rely on a decision affirming FERC’s penalty assessment. And if they were to prevail, there is little chance that Barclays would recover any such payment after appealing a final judgment in this proceeding. For these reasons, and those discussed in Defendants’ opening brief, a stay will prevent irreparable harm. B. Mandamus Review In addition to the collateral order doctrine, the Ninth Circuit has jurisdiction to address the merits of Defendants’ appeal through its mandamus authority. FERC’s suggestion (at 7 n.4) that Defendants are barred from mandamus relief because of a failure to follow Federal Rule of Appellate Procedure 21 is contrary to abundant Ninth Circuit precedent. The Ninth Circuit has repeatedly explained that it will “treat [a] notice of appeal as a petition for a writ of mandamus.” 7 Accord Rent-A-Center, Inc. v. Canyon Television & Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991); Regents of Univ. of Cal. v. Am. Broad. Cos., 747 F.2d 511, 520 (9th Cir. 1984). 8 The individual Defendants filed declarations with the Court on February 1 that detail the reputational and professional harms that they have and will continue to suffer in the absence of a stay. See Dkts. 146-47, 150-51. 9 See In re Deepwater Horizon, 785 F.3d 1003, 1009 (5th Cir. 2015) (order effectively unreviewable because of “potential[]” distribution of funds); see also Leiva-Perez v. Holder, 640 F.3d 962, 968 (9th Cir. 2011) (requiring only “probable irreparable harm” (emphasis added)). Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 9 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL Miller v. Gammie, 335 F.3d 889, 895 (9th Cir. 2003) (en banc). 10 FERC fails to acknowledge this precedent, and instead incorrectly relies on a single 35-year-old decision, Jones & Guerrero Co. v. Sealift Pac., 650 F.2d 1072, 1074 (9th Cir. 1981) (per curiam), that was abrogated by the later en banc decision in Miller. 11 FERC also contends that mandamus relief is unavailable because Defendants cannot demonstrate that the Court’s decision was clearly erroneous. That question is not relevant in this context, see infra Part II, and is one for the Ninth Circuit to decide. Nevertheless, Defendants respectfully maintain that the Court clearly erred, as the text, structure, and history of FPA subsection 31(d)(3) all require a plenary adjudication of FERC’s penalty assessment under the Federal Rules of Civil Procedure. First, subsection 31(d)(3) requires that FERC institute “an action” in district court that is presumptively governed by the Federal Rules of Civil Procedure. 12 Second, the statute expressly requires the Court to review de novo “the facts involved,” 16 U.S.C. § 823b(d)(3)(B), and not an administrative record as required in other statutory schemes. 13 “[W]here Congress intends review to be confined to the administrative record, it so indicates, either 10 Accord Stanley v. Chappell, 764 F.3d 990, 996 (9th Cir. 2014); Hernandez v. Tanninen, 604 F.3d 1095, 1099 (9th Cir. 2010); Cordoza v. Pac. States Steel Corp., 320 F.3d 989, 998 (9th Cir. 2003). 11 Even if Jones was not abrogated, it still would not be relevant here. In Jones, the appellant attempted to rely on a doctrine that the Ninth Circuit had held could be reviewed only by mandamus. See 650 F.2d at 1074. Here, review of Defendants’ legal arguments is not explicitly limited to mandamus. Defendants’ alternative request for mandamus review is therefore sufficient to provide the Ninth Circuit with jurisdiction. See, e.g., Perry v. Schwarzenegger, 591 F.3d 1147, 1154 (9th Cir. 2009) (granting writ of mandamus where appellants appealed and petitioned for writ of mandamus “in the alternative”). 12 See SEC v. McCarthy, 322 F.3d 650, 656-57 (9th Cir. 2003) (“Absent express statutory authorization stating otherwise, there is no question that the Federal Rules govern all ‘actions’ before the district courts of the United States.”). 13 See, e.g., 5 U.S.C. § 552(a)(4)(A)(vii) (“the court’s [de novo] review of the matter shall be limited to the record before the agency”); 16 U.S.C. § 839f(e)(2) (“The record upon review of such final actions shall be limited to the administrative record[.]”); 21 U.S.C. § 467(c) (“Judicial review of any such order shall be upon the record upon which the determination and order are based.”); 38 U.S.C. § 7462(f)(2) (“the court shall review the record”). Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 10 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL expressly or by use of a term like ‘substantial evidence,’ which has ‘become a term of art to describe the basis on which an administrative record is to be judged by a reviewing court.’” Chandler v. Roudebush, 425 U.S. 840, 862 (1976). Third, other statutes providing for “de novo” determinations require a court to look beyond an administrative record. 14 Indeed, the Ninth Circuit has interpreted 42 U.S.C. § 5851(b)(4), which similarly provides for “de novo review in the appropriate district court,” to authorize a trial de novo. See Tamosaitis v. URS Inc., 781 F.3d 468, 488 (9th Cir. 2015). Fourth, the structure of subsection 31(d)(3) suggests that a plenary adjudication is required. The statute allows accused parties to choose one of two paths for review of a civil penalty order: (1) “an agency hearing pursuant to section 554 of [the Administrative Procedure Act (“APA”)] before an administrative law judge,” 16 U.S.C. § 823b(d)(2)(A), or (2) through “an action [brought by FERC] in the appropriate district court of the United States for an order affirming the assessment of the civil penalty,” id. § 823b(d)(3)(B). It is inconceivable that Congress intended for parties choosing the district court route to receive fewer rights with respect to discovery and adversarial process than if they had elected an administrative proceeding. 15 Fifth, the legislative histories of companion statutes that also provide for “de novo review of the law and the facts involved” reflect Congress’s understanding of that phrase as requiring a de novo trial in district court. The Atomic Energy Act, for example, includes the same two-path approach as FPA subsection 31(d)(3). See 42 U.S.C. § 2282a(c). In characterizing the meaning of “de novo review of the law and the facts involved,” the Senate report explains that penalty respondents “may elect administrative assessment of the penalty … or a trial de novo in the appropriate district court of the United States.” S. Rep. No. 100-70, at 23 (1988), reprinted in 1988 U.S.C.C.A.N. 1425, 1436. 14 See, e.g., Strang v. U.S. Arms Control & Disarmament Agency, 864 F.2d 859, 866 (D.C. Cir. 1989) (de novo review not limited to administrative record; court to “receive evidence from both sides”). 15 Cf. Wilson v. Commissioner, 705 F.3d 980, 990 (9th Cir. 2013) (“usual APA procedures do not apply” where “no formal administrative procedure for a contested case at which the taxpayer may present her case”). Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 11 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL Sixth, FERC itself has repeatedly characterized FPA subsection 31(d) actions as ones in which defendants are entitled to a “trial de novo.” 16 FERC offers no explanation why its prior pronouncements on this fundamental issue are no longer true. Each of these analyses leads to the same conclusion: In a district court action under subsection 31(d)(3), the Federal Rules of Civil Procedure, including the Rules on discovery and jury trial, govern, and the record is not limited to the materials placed before the court by FERC. In the absence of a stay pending appeal, Defendants will suffer irreparable harm as a result of being required to defend themselves based solely on an under-developed record. See supra Part I.A.3. Thus, mandamus review is available to correct the Court’s erroneous interpretation of the statute. II. Defendants Have Raised A Serious Legal Question FERC acknowledges (at 5 n.3) that, to justify a stay, Defendants need only demonstrate that “serious legal questions are raised.” Leiva-Perez, 640 F.3d at 968. That standard is satisfied by an undecided question of statutory interpretation. See Students of Cal. Sch. for the Blind v. Honig, 736 F.2d 538, 544-46 (9th Cir. 1984). Here, this Court decided an issue of first impression when it ruled that it has the authority under FPA subsection 31(d) to forego discovery and enforce FERC’s penalty assessment order—which requires finding that Defendants manipulated the electricity markets—relying solely on a purported “administrative record” provided by FERC. As noted above, the nature of the procedures mandated by subsection 31(d) is currently being contested in at least three other district courts, where FERC has argued that this Court’s Scheduling Order 16 See Energy Transfer Partners, LP, 121 FERC ¶ 61,282, at 62,471 (2007) (through identical “review de novo” language in Natural Gas Policy Act, “Congress created an affirmative right for the person to receive review of [FERC’s] assessment in a trial de novo in district court”); Consumers Power Co., 68 FERC ¶ 61,077, at 61,380 (1994), amended by 70 FERC ¶ 62,074 (1995) (“[FPA section 31(d)] requires … the opportunity for a hearing on the record before an Administrative Law Judge or a trial de novo in federal court”); Burt Dam Power Co., 49 FERC ¶ 61,007, at 61,025 (1989) (describing FPA’s procedural options as choice between “the Commission’s administrative procedures” or “judicial adjudicative procedures”); Procedures for the Assessment of Civil Penalties Under Section 31 of the Federal Power Act, 53 Fed. Reg. 32,035, 32,038 (Aug. 23, 1988) (FERC’s penalty assessment order “merely triggers the process leading to a de novo trial”). Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 12 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL resolved the issue in FERC’s favor and paved the way for those other courts. 17 Whether this Court did so correctly, however, is—at a minimum—an issue of statutory interpretation that the Ninth Circuit has not addressed and therefore raises a serious legal question. CONCLUSION For the foregoing reasons, Defendants respectfully request that the Court grant this motion and issue an order staying the proceedings pending resolution of Defendants’ appeal to the United States Court of Appeals for the Ninth Circuit. DATED: February 4, 2016 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP By: /s/ Thomas J. Nolan Thomas J. Nolan Attorneys for BARCLAYS BANK PLC DATED: February 4, 2016 CADWALADER, WICKERSHAM & TAFT LLP By: /s/ Gregory A. Markel (as authorized on 02/04/2016) Gregory A. Markel Attorneys for BARCLAYS BANK PLC DATED: February 4, 2016 WILMER CUTLER PICKERING HALE AND DORR LLP By: /s/ Seth P. Waxman (as authorized on 02/04/2016) Seth P. Waxman Attorneys for BARCLAYS BANK PLC 17 See FERC v. City Power Mktg., LLC, No. 1:15-cv-1428 (D.D.C. filed Sept. 9, 2015); FERC v. Powhatan Energy Fund, LLC, No. 3:15-cv-00452 (E.D. Va. filed July 31, 2015); FERC v. Maxim Power Corp., No. 3:15-cv-30113 (D. Mass. filed July 1, 2015). Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 13 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 REPLY SUPPORTING MOTION FOR A STAY OF DISTRICT COURT PROCEEDINGS PENDING APPEAL DATED: February 4, 2016 McGUIREWOODS LLP By: /s/ Todd Mullins (as authorized on 02/04/2016) Todd Mullins Attorneys for DANIEL BRIN and SCOTT CONNELLY DATED: February 4, 2016 PAUL HASTINGS LLP By: /s/ Michael L. Spafford (as authorized on 02/04/2016) Michael L. Spafford Attorneys for KAREN LEVINE and RYAN SMITH Case 2:13-cv-02093-TLN-EFB Document 155 Filed 02/04/16 Page 14 of 14