CirclesX Recovery has asked the First Court of Appeals in Houston to give it another chance to bring its lawsuit alleging some of the largest energy companies in the world manipulated the natural gas markets ahead of 2021’s Winter Storm Uri, which killed hundreds and left many Texans without power in below freezing temperatures for days.
In its 55-page opening brief, CirclesX Recovery told the First Court of Appeals that Judge Sylvia Matthews had dismissed its lawsuit “without any analysis or explanation as to how or in what respect Appellant failed to plead its claims.”
“The amended petition alleges that appellees — sophisticated energy market actors with deep knowledge of the natural gas market and electricity markets — knew about such contracts and the provisions therein that required the provision of electricity and natural gas except under narrowly defined circumstances,” CirclesX told the court in its brief. “The amended petition further alleges how each appellee intentionally restricted natural gas supply, including detailed examples, and that appellees knew such restriction would cause natural gas and electricity providers to breach their contracts with assignors and to make those contracts more burdensome and difficult to perform for the providers and for the assignors.”
CirclesX filed its lawsuit in Harris County district court in February 2023, accusing Energy Transfer, Kinder Morgan, BP, ConocoPhillips, Atmos, CenterPoint Energy and a few financial institutions of engaging in an Enron-style scheme to cut off gas production or divert supplies into storage days ahead of freezing temperatures that would eventually cripple the Texas power grid.
In court filings, CirclesX alleges Energy Transfer earned $3.29 billion “from selling natural gas at inflated prices during the storm,” and that Kinder Morgan profited $1 billion from the storm and that Williams Companies earned $77 million.
“While appellees profited from the exorbitant prices of natural gas during the storm, those costs were borne by appellant’s assignors in the form of highly inflated electricity costs during, or securitization charges following, the storm, transferring billions of dollars to appellees’ corporate coffers,” CirclesX argues.
Allowing appellees to retain their ill-gotten gains from their reprehensible misconduct would be unconscionable.”
After the suit was tagged for inclusion in the multidistrict litigation stemming from Winter Storm Uri, CirclesX Recovery challenged the move, arguing that its claims — alleging a multibillion-dollar market manipulation conspiracy — were too different from the personal injury and property damage cases in the MDL and that it should be decided separately.
A five-judge panel that decides which civil suits will be included in statewide MDLs rejected the challenge in December 2023.
“The pretrial judge was aware of and well-positioned to understand the facts and realities of the litigation,” Presiding Judge David Evans wrote for the unanimous panel. “It is clear from the reporter’s records of the two hearings that the pretrial judge considered and assessed both relatedness and convenience, efficiency and justice.”
In November, Judge Sylvia Matthews, who has been appointed to serve as the MDL judge in the case, granted a joint 91a motion to dismiss filed by 41 defendant energy companies. CirclesX filed notice it would be appealing to the First Court of Appeals in Houston the following month.
CirclesX is represented by Allan Kanner, Conlee Whiteley and Cynthia St. Amant of Kanner & Whiteley.
Law firms representing the defendants include Susman Godfrey, Figari + Davenport, Bissinger Oshman Williams & Strasburger, DLA Piper, Donato Brown Pool & Moehlmann, Bracewell, Dykema Gossett, Estes Thorne Ewing & Payne, Gray Reed & McGraw, Haynes Boone, Hicks Thomas, Jackson Walker, King & Spalding, Kirkland & Ellis, Troutman Pepper Locke, McDowell Hetherington, The Norris Firm, Norton Rose Fulbright, Reed Smith, Santoyo Wehmeyer, Scott Douglass & McConnico, Vartabedian Hester & Haynes, Vinson & Elkins, Weil, Gotshal & Manges and Yetter Coleman.
The case number is 01-24-00963-CV.
Mark Curriden contributed to this report.