from the United States District Court for the District of
Colorado (D.C. No. 1:12-CV-01618-RPM)
L. Wilcox, Wilcox Law Firm, LLC, Denver, Colorado, for
Leggette (Mark S. Barron with him on the briefs), Baker &
Hostetler LLP, Denver, Colorado, for Defendants-Appellees SG
Interests I, Ltd. and SG Interests VII, Ltd.
Timothy R. Beyer (Peter J. Korneffel, Jr., with him on the
brief), Bryan Cave LLP, Denver, Colorado, for
Defendant-Appellee Gunnison Energy Corporation.
PHILLIPS, McHUGH, and MORITZ, Circuit Judges.
McHUGH, Circuit Judge.
antitrust case arises from a series of interactions among one
incipient and two established natural gas producers in a
portion of western Colorado known, at least in this
litigation, as the Ragged Mountain Area. Buccaneer Energy
(USA) Inc. ("Buccaneer") sued SG Interests I, Ltd.,
SG Interests VII, Ltd. (together, "SG"), and
Gunnison Energy Corporation ("GEC") (collectively,
"Defendants") after unsuccessfully seeking an
agreement to transport natural gas on Defendants' jointly
owned pipeline system at a price Buccaneer considered
reasonable. Specifically, Buccaneer alleged that by refusing
to provide reasonable access to the system, Defendants had
conspired in restraint of trade and conspired to monopolize
in violation of § 1 and § 2 of the Sherman Act,
respectively. See 15 U.S.C. §§ 1-2.
district court granted summary judgment to Defendants,
concluding that Buccaneer could not establish either of its
antitrust claims and that, in any event, Buccaneer lacked
antitrust standing. We agree that Buccaneer failed to present
sufficient evidence to create a genuine issue of fact on one
or more elements of each of its claims, and we therefore
affirm on that dispositive basis alone.
Ragged Mountain Area ("RM Area") is a section of
oil- and gas-producing land located in Delta and Gunnison
Counties, Colorado. The precise boundaries of the RM Area are
unclear. At all times relevant to this case, natural gas
produced in the RM Area was collected and transported to
market through a gas-gathering system, processing facility,
and six-inch diameter pipeline collectively referred to here
as the Ragged Mountain Gathering System ("RM
System"). The RM System carried this gas 20 miles to an
interconnection on the Rocky Mountain Natural Gas Pipeline
("Rocky Mountain Pipeline"), a larger intrastate
pipeline owned and operated by a regulated gas utility called
or 2001, Defendants separately began acquiring mineral leases
in the RM Area and competed with each other in doing so. They
drilled wells on their lease properties and began producing
gas. Before and during this time, Riviera Drilling and
Exploration Company ("Riviera") also owned mineral
leases in the RM Area, and gas produced from Riviera's
wells was transported on the RM System. Riviera had eleven
wells on its substantial leasehold acreage: eight that were
producing and three that were considered proved but not
producing. Two other entities-Petrox Resources, Inc.
("Petrox") and WillSource Enterprise, LLC
("WillSource")-also held mineral leases in the RM
2005, Defendants entered into an Area of Mutual Interest
Agreement, granting each other an option to purchase a 50
percent interest in any leases or other mineral interests
acquired by either party within an "Area of Mutual
Interest" that encompassed certain "lands located
in Delta, Mesa and Gunnison counties, Colorado."
Defendants also granted each other the option to participate
equally "in the planning, permitting, construction,
operation and ownership" of any pipeline project
initiated by the other party, including the Bull Mountain
Pipeline, which SG had begun in 2003. The Bull Mountain
Pipeline would be a 20-inch diameter pipeline that would
travel 25.5 miles from the RM Area to an interconnection with
the Questar interstate pipeline, rather than the intrastate
Rocky Mountain Pipeline. GEC eventually exercised its option
under the Area of Mutual Interest Agreement to participate
equally with SG in constructing, operating, and owning the
Bull Mountain Pipeline.
June 2005, Defendants jointly acquired the RM System, plus
some nearby mineral leases, from the RM System's former
owner. Defendants entered into a Pipeline Operating
Agreement, designating GEC as the operator of the RM System
but giving ultimate control over pipeline operations to GEC
and SG equally. As the operator, GEC was authorized to
negotiate transportation agreements with third parties,
subject to SG's approval.
September 2005, GEC entered into a gas purchase agreement
with Riviera, whereby GEC purchased gas from Riviera's
wells at a price GEC received for reselling it, less $0.785
per MMBtu for transporting the gas through the RM System (in
other words, Riviera paid the transportation rate only).
Beginning in early 2006 and continuing into 2007, Defendants
expressed and sporadically discussed a mutual interest in
buying Riviera's holdings. On September 17, 2007, GEC
informed Riviera that GEC was increasing the transportation
rate in their purchase agreement from $0.785 per MMBtu to
$1.52 per MMBtu and that it would be adjusting the rate
quarterly through 2008. If Riviera did not agree to the new
rate by October 1, 2007, Riviera's wells would be shut in
on October 6, 2007. Riviera decided the new rate made its
operation "uneconomic" and therefore did not agree
to GEC's new terms. Its wells were then shut in.
was incorporated in February 2008 for the purpose of
acquiring Riviera's leases in the RM Area. Tony Gale, a
petroleum engineer and former vice president of oil and gas
development at GEC, was appointed Buccaneer's president.
In March 2008, Buccaneer and Riviera entered into a Lease and
Purchase Agreement ("LPA"), whereby Buccaneer
agreed to (1) pay $45, 000 per month for 24 months in
exchange for the right to operate and produce gas from
Riviera's leases; (2) drill four new gas wells,
contingent on its securing a reasonable transportation
agreement for gas from the new wells; and (3) use diligent
efforts to obtain the transportation agreement, acquire
rights of way, and lay pipeline to connect three wells to the
RM System. The LPA also gave Buccaneer an option to purchase
Riviera's leases, wells, and related assets within the
24-month period for $32 million.
immediately began pursuing a means for transporting its
expected gas production. On March 3, 2008, Mr. Gale sent GEC
a formal request for a transportation agreement on the RM
System. Mr. Gale followed up on the request several times. He
also contacted SG to express Buccaneer's interest in
buying into, or securing a transportation agreement on, the
Bull Mountain Pipeline, which was expected to be finished in
30, 2008, GEC sent Buccaneer a draft transportation agreement
that provided for a transportation rate of $1.52 per MMBtu
for interruptible service. On July 12, 2008, Buccaneer
returned a revised draft that kept GEC's rate but altered
the interruptible-service provision such that GEC could
interrupt service only if it could not gather Buccaneer's
gas using commercially reasonable efforts, rather than at its
sole discretion. Buccaneer also added language requiring GEC
to comply with the common-carrier obligations of its pipeline
operating permit and the Mineral Leasing Act of 1920. GEC
responded with another draft on August 5, 2008, this time
raising the transportation rate to $3.92 per MMBtu,
reinserting the discretionary interruptible-service
provision, and removing the common carrier provision.
Buccaneer did not counteroffer again.
September 2008, Buccaneer sent SG an offer to pay for 15
percent of the cost of constructing the Bull Mountain
Pipeline in exchange for a 10 percent ownership interest. SG
sent a counteroffer, indicating it would sell a 10 percent
interest for 20 percent of the cost, but Buccaneer did not
March to October 2008, Buccaneer used much of its
investors' capital contributions and loans-which totaled
$558, 000-to make its monthly $45, 000 lease payments to
Riviera. All told, Buccaneer incurred over $1.2 million in
start-up costs. Buccaneer's investors pulled out in
late-fall 2008. At the time, Buccaneer had failed to secure a
transportation agreement, the country was in the midst of an
economic collapse, and natural gas prices had fallen
dramatically in recent months. Buccaneer failed to make its
November payment to Riviera, and on December 1, 2008, Riviera
terminated the LPA. Buccaneer never produced gas from
filed its own lawsuit against Defendants on November 14,
2008, alleging antitrust and other claims. See Riviera
Drilling & Expl. Co. v. Gunnison Energy Corp., No.
08-cv-02486-REB-CBS, 2010 WL 582159, at *1 (D. Colo. Feb. 12,
2010) (unpublished). Buccaneer was not a party to that case.
In February 2010, Riviera filed for Chapter 11 bankruptcy,
and shortly thereafter, its lawsuit against Defendants was
dismissed with prejudice for failure to prosecute.
Id. at *3-4. As part of an April 2014 settlement
agreement resolving an adversary proceeding connected to
Riviera's bankruptcy, GEC obtained all of Riviera's
leasehold interests in the RM Area.
2014, following years of post-construction disputes and
delays, the Bull Mountain Pipeline became fully operational.
The RM System was decommissioned soon thereafter.
filed this case on June 21, 2012. Buccaneer asserted that the
RM System "was essential to effective competition for
production rights and the sale of natural gas from the Ragged
Mountain Area" and claimed that, by refusing to provide
Buccaneer access to the RM System on reasonable terms,
Defendants had engaged in a conspiracy in restraint of trade
and a conspiracy to monopolize in violation of § 1 and
§ 2 of the Sherman Act, respectively.
separately moved for summary judgment before discovery was
complete, but the district court denied their motions. After
discovery concluded, Defendants again separately moved for
summary judgment. Each argued, among other things, that
Buccaneer (1) lacked antitrust standing and (2) had not
presented sufficient evidence of a conspiracy or of harm to
competition in a relevant antitrust market and thus could not
establish its antitrust claims.
Buccaneer filed separate responses in opposition to
Defendants' motions and submitted with them several
expert reports, including the joint report of Drs. Mark Dwyer
and Michael Harris. This joint report corroborated
Buccaneer's claims of concerted anticompetitive conduct
and alleged two distinct harms to competition flowing from
that conduct: harm to the market for upstream production
rights and harm to the market for downstream sales of natural
gas. Dr. Dwyer addressed the former, Dr. Harris the latter.
Based on the contents of this report, Buccaneer maintained
that it had, at the very least, demonstrated genuine issues
of fact on both of its antitrust claims and thus was entitled
to a trial. Buccaneer also argued it had antitrust standing,
focusing principally on the question of its preparedness to
begin gas production operations at the time it allegedly was
excluded from the RM System.
holding a hearing on the motions, the district court issued a
written order granting summary judgment for Defendants on
each of Buccaneer's antitrust claims. The district court
first found that reasonable jurors could conclude Defendants
conspired to deny Buccaneer reasonable access to the RM
System and "intentionally blocked Buccaneer from
entering into competition with them as producers of gas in
the Ragged Mountain Area." Nonetheless, the court
concluded Defendants were entitled to judgment "because
Buccaneer lacks evidence showing that the defendants caused
or were capable of causing injury to competition in a defined
market, as opposed to simply harm to Buccaneer, and because
Buccaneer has not established antitrust standing." The
district court's latter conclusion was based primarily on
its finding that Buccaneer, as a nascent competitor, had not
carried its burden of demonstrating preparedness to enter the
market. Buccaneer timely appealed. Exercising jurisdiction
under 28 U.S.C. § 1291, we affirm.
challenges both of the district court's alternative bases
for granting summary judgment in Defendants' favor.
First, Buccaneer argues the district court erred in
concluding Buccaneer presented insufficient evidence of harm
to competition in a relevant market, and for that reason,
failed to establish its claims under § 1 and § 2 of
the Sherman Act. To the contrary, Buccaneer asserts it did
show harm to competition in a relevant market and that, with
respect to its § 2 conspiracy claim, it was not required
to make that showing. Second, Buccaneer argues the district
court erred in concluding Buccaneer was not prepared to enter
the market from which it allegedly was excluded and therefore
lacked antitrust standing under § 4 of the Clayton Act.
See 15 U.S.C. § 15.
Buccaneer (and the district court), we begin with the
ultimate issue of whether Buccaneer can survive summary
judgment on its antitrust claims. We review the district
court's grant of summary judgment on these claims de
novo. Ben Ezra, Weinstein, & Co. v. Am. Online
Inc., 206 F.3d 980, 984 (10th Cir. 2000). Addressing
each of Buccaneer's claims in turn, we conclude Buccaneer
failed to present sufficient evidence to survive summary
judgment on either one of them, and we therefore affirm the
district court's judgment on that basis.
A. Buccaneer's § 1 Claim
1 of the Sherman Act prohibits "[e]very contract,
combination in the form of trust or otherwise, or conspiracy,
in restraint of trade or commerce among the several
States." 15 U.S.C. § 1. Despite its semantic
breadth, § 1 has long been construed to outlaw only
concerted conduct by two or more separate entities that
unreasonably restrains trade. See Nw. Wholesale
Stationers, Inc. v. Pac. Stationery & Printing Co.,
472 U.S. 284, 289 (1985) (citing Chicago Bd. of Trade v.
United States, 246 U.S. 231, 238 (1918)) (only
unreasonable restraints); Copperweld Corp. v. Indep. Tube
Corp., 467 U.S. 752, 767-68 (1984) (only multilateral
conduct). Thus, a plaintiff asserting a claim under § 1
must prove not only the existence of an agreement or
conspiracy between two or more competitors to restrain trade,
but also that the restraint is unreasonable. See
Systemcare, Inc. v. Wang Labs. Corp., 117 F.3d 1137,
1139 (10th Cir. 1997). Our focus here is limited to this
are "two main analytical approaches for determining
whether a defendant's conduct unreasonably restrains
trade: the per se rule and the rule of reason."
Gregory v. Fort Bridger Rendezvous Ass'n, 448
F.3d 1195, 1203 (10th Cir. 2006) (internal quotation marks
omitted). The rule of reason is the default approach, and
there is a presumption in favor of its application.
Id. Under rule-of-reason analysis, courts seek to
ascertain the extent to which challenged conduct harms
competition and to then determine whether any such harm is
nonetheless justified by countervailing procompetitive
benefits. See SCFC ILC, Inc. v. Visa USA, Inc., 36
F.3d 958, 963 (10th Cir. 1994). The per se rule, on the other
hand, is reserved for "agreements or practices which
because of their pernicious effect on competition and lack of
any redeeming virtue are conclusively presumed to be
unreasonable and therefore illegal without elaborate inquiry
as to the precise harm they have caused or the business
excuse for their use." Nw. Wholesale, 472 U.S.
at 289 (internal quotation marks omitted). Per se treatment
"is appropriate only in 'relat[ion] to conduct that
is manifestly ...