NEW ORLEANS PUBLIC SERVICE, INC., V. UNITED GAS PIPE LINE COMPANY
732 F.2d 452 (1984)
NATURE OF THE CASE: Intervenors (P1) appealed a judgment, which denied their request for
intervention under Fed. R. Civ. P. 24(a), in Public's (P) suit against United (D) over a
contract for the purchase of natural gas.
FACTS: P provides natural gas and electricity to residential, business, industrial and
other end use consumers. D, a Delaware corporation headquartered in Texas, owns and operates
an interstate natural gas transmission system. P purchases gas from D. P and D had a long
term contract but it expired. They entered into an interim agreement that gave D a
unilateral right to change the price of fuel on an annual basis. D could, at any time or
times after June 1, 1976, unilaterally 'institute a redetermined rate,' to remain in effect
not less than one year, by giving P sixty days' notice of the specified new rate. If P did
not within thirty days notify D that it agreed to that rate, then P would 'cease taking gas
on the date such rejected redetermined rate was to be instituted.' On March 3, 1981 D sent
notice of a considerable price increase. P executed an agreement acceding to the new rate
but reserving its rights in the matter. P sued D in federal court. P claims it agreed to the
redetermined rate 'under the duress' of d's 'threat' by its April 27, 1981 letter to charge
'fair market value' for the Power Plant Gas and D's subsequent oral statement 'that it would
contend that a fair market value for Power Plant Gas on and after May 3, 1981 would be $6.00
to $8.00 per Mcf,' which would be more than double what P paid for gas in 1980. P also
alleged the agreement was invalid under Louisiana law. P1 (The Mayor of New Orleans, the
City of New Orleans, and certain other individuals and entities) under Rule 24(a), sought to
intervene in the lawsuit. The petitions and amended petitions recites that P1 and P
electricity customers, and are thus paying the most significant portion of the increased
cost of power plant gas. The amended petition expressly adopts the allegations of P's
complaint, and does not allege any substantive claim or ground for relief. It seeks
precisely the same relief as sought in P's complaint, with the sole exception of requesting
that the refunds be paid 'to P and the [rate payer] Class jointly' [instead of just to P].
P1 claimed the right to intervene because the contract between P and D was a stipulation pour
autrui, or third-party beneficiary contract, in their favor. Eventually, the court refused
intervention as a right and on the court's discretion. P1 appealed. Eventually the case was
reheard in banc.
ISSUE:
RULE OF LAW:
HOLDING AND DECISION:
LEGAL ANALYSIS:
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