A Tale (or Two) of Two (or More) Forums: “It was the Best of Times; it was the Worst of Times.”
The chance to prove the client’s case in two courts; the chance to lose in each. The opportunity to employ the rules in one court to the client’s advantage in another; the risk that a loss in the first is preclusive in the second. The prospect of a quick decision in one court; the purgatory of endless litigation in another.
A. Two Cases, Many Forums
The Electricity Cases.
Our client, Wah Chang, is in the service territory of PacifiCorp, an electric utility. Wah Chang uses a tremendous amount of electricity in its manufacturing processes, all of which it must buy from PacifiCorp at the standard industrial rate, or tariff. Seeking to lower costs, Wah Chang entered into a five year contract with PacifiCorp to purchase its power at wholesale market rates, rather than the standard industrial tariff. Such wholesale market rates had been consistently below the standard industrial tariff, and Wah Chang and PacifiCorp chose a market price index — the Dow Jones California Oregon Border Index (Dow COB) — that would establish the monthly price Wah Chang would pay for the electricity it would buy from PacifiCorp. But just as the price indexed contract went into effect, the California energy crisis erupted. Prices in Western wholesale energy markets skyrocketed — and so did market price indexes like the Dow COB. Wah Chang’s monthly power bill skyrocketed too — from about $300,000 a month to as much as $6 million a month.
This article first appeared in Oregon State Bar’s Litigation Journal.