CA Lt. Gov. Drops McGraw-Hill from Lawsuit; 1st Amendment Cited

Spokespeople for both sides confirmed that a lawsuit brought by California's lieutenant governor in a state Superior Court in Los Angeles quietly late last month dropped McGraw-Hill and its two industry publications from the legal action against trading companies that alleges widespread wholesale natural gas market manipulation.

Subsequently a San Diego-based class action attorney, Michael Aguirre, confirmed the publishers were dropped because of First Amendment and other considerations.

The court dismissed without prejudice the suit against the publishing company at the request of attorneys for Lt. Gov. Cruz Bustamante, who filed suit last year as a private citizen. Spokespersons for the lieutenant governor and McGraw-Hill's gas price index publisher, Platts, confirmed the latest court action in the pending lawsuit.

Bustamante had alleged in his November 2002 lawsuit that price index employees at Gas Daily and Inside FERC -- both produced by Platts -- conspired with generation and trading companies to publish false natural gas prices to inflate energy prices in California during the 2000-2001 western wholesale energy market crisis. Platts has strongly contested the allegations, maintaining that it has detailed processes for preventing its pricing indices from being corrupted by sources it uses regularly to monitor wholesale energy prices.

The original lawsuit also named 38 generating and trading companies and their subsidiaries, including all of the major energy suppliers and traders nationally. Bustamante filed it on behalf of all California taxpayers against what he alleged were firms trying to inflate natural gas prices.

Federal law enforcement officials and regulators have conducted widespread investigations once it became public last year that some traders provided intentionally false pricing information to the published price indexes.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.