Oneok, Inc. v. Learjet, Inc.

Historically, regulation of the natural-gas industry was divided into areas of state and federal authority. The Federal Energy Regulatory Commission (FERC) had authority to regulate the interstate transportation and sale of natural gas under the federal Natural Gas Act. With FERC Order No. 636, the commission had the power to permit interstate pipelines to charge market-based rates for natural gas if FERC first determined that the interstate pipelines did not have market power (i.e., monopoly power) or the ability to unfairly influence prices. As a result, many interstate pipelines began selling gas to customers for direct consumption as opposed to resale. Under the market-based system, issues arose because customers had to rely on privately published natural-gas-price indices to evaluate potential contracts, but such prices were unregulated, inaccurate, and subject to price manipulation and fraud. In turn, FERC issued a code of conduct, which included rules to prevent the manipulation of natural-gas prices through the reporting of sales. Learjet, Incorporated and a group of other buyers of natural gas (plaintiffs) that bought natural gas directly from interstate pipelines filed multiple state-law antitrust claims against Oneok, Incorporated and other interstate pipelines (defendants) for manipulation of natural-gas-price indices. The cases were consolidated and sent to the United States District Court for the District of Nevada. The pipelines moved for summary judgment, arguing that the federal Natural Gas Act preempted the field of natural-gas regulation and, accordingly, also preempted state jurisdiction over antitrust claims against federally regulated interstate pipelines. The district court granted summary judgment in favor of the pipelines. The court of appeals reversed. The United States Supreme Court granted certiorari.