TXU Energy Retail Co. had extracted settlements from 13 of the 14 companies it sued over claims it owed money for natural gas consumer during California’s energy crisis.

But one company – Leprino Foods Co., a Denver-based cheese company with three large factories in California – refused to pay.  Mark Fogelman, Leprino’s attorney, said it was a matter of principle.  Company officials did not believe they owed anything, and they took their case to trial.

Fogelman first represented Leprino Foods in the case while working at Steefel Levitt & Weiss in San Francisco, then continued doing so after he moved to Reed Smith in 2006.

TXU sued for breach of contract and for the reasonable value of goods and services, asking for $1.3 million in damages. After a three- to four-week trial, the case ended in December when a San Jose federal jury concluded that Leprino had not breached its contract and owed nothing to the Texas energy company.

The jury also found that TXU breached its duty to Leprino Foods by refusing to allow its natural gas purchasing agent to engage in futures transactions in an effort to get a better price.  TXU Energy Retail Co. v. Leprino Foods Co. Inc. C01-20289 (N.D. Cal. December 2006).

“What we showed was an after-the-fact effort to get more money from the customers,” Fogelman said.

U.S. District Judge Ronald Whyte of San Jose presided over the trial.

TXU was represented by Susan van Kuelen, a San Jose-based partner with Thelen Reid Brown Raysman & Steiner, and Richard Adams, a partner with Hunton & Williams in Dallas, Texas.
The energy company’s settlements with the other companies have not been made public.

Fogelman, who was assisted by Steefel Levitt & Weiss attorneys Arthur J. Friedman and Shirley Jackson, credits his client for the favorable outcome.

“They were not going to be intimidated by a Fortune 500 adversary,” he said.

Copyright 2007 Daily Journal Corp.

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