NRG Head Can Be Deposed In La. Suit, Texas Appeals Says

May 2023 // Law360

Law360 (May 11, 2023, 5:27 PM EDT) — A Texas appeals court ruled Thursday that the top executive for NRG Energy Inc. can be deposed in a Louisiana lawsuit over a contract dispute between the power company’s former subsidiary and two Pelican State utilities.

Texas-based NRG CEO Mauricio Gutierrez is not protected from subpoena under the Lone Star State’s apex-deposition rule for high-level corporate officials as he has important, unique information about an environmental enforcement order that prompted a lawsuit over cost sharing in Louisiana, a First District Court of Appeals panel said.

Washington-St. Tammany Electric Cooperative Inc. and Claiborne Electric Cooperative Inc. wanted Gutierrez to answer questions about a 2012 consent decree with the U.S. Environmental Protection Agency that forced then-NRG affiliate LaGen to reduce air pollution from its Big Cajun II coal power plant. NRG sold LaGen in 2019.

As NRG chief operating officer at the time, Gutierrez signed off on the settlement and may know more about the utilities’ allegations that LaGen violated their power contracts by making them pay tens of millions of dollars spent complying with the EPA order, the Texas court panel said, upholding a trial court ruling.

“We conclude that co-ops have shown that Gutierrez arguably has unique or superior personal knowledge about discoverable information,” said Justice Sarah Beth Landau in the unanimous opinion.

The panel rejected NRG’s attempt to get the utilities’ counsel disqualified, ruling the power company hadn’t shown there was a conflict of interest in the case. Although NRG claimed that Ajamie LLP couldn’t represent the utilities because it was local counsel to another law firm that negotiated NRG power contracts and knew about the environmental cost pass-through, nothing in the court record indicated that association, the appeals panel said.

The Louisiana co-ops claim that LaGen improperly allocated to them the costs of retrofitting its power plant to reduce emissions, claiming the improvements were necessary under a mercury and air toxins rule approved by the EPA about a decade ago. In reality, the company’s spending was required to resolve an EPA lawsuit against the company for plant unpermitted modifications that increased its net air pollution, according to the ruling.

Under their contracts, NRG can only pass along costs associated with post-contract changes to environmental law, not to remediate pre-contract conditions or penalties, the utilities alleged. Last year, a Louisiana state court granted their request for a letter rogatory to Harris County Court in Texas to depose Gutierrez in the suit.

More than one LaGen executive deposed in the case said that Gutierrez had a role in approving the payment requests to comply with the EPA’s consent decree for the plant and to meet new air quality standards, according to the ruling. Gutierrez failed to show the utilities could get the information they sought elsewhere or could not get any admissible evidence from his deposition, the court added.

“Gutierrez correctly points out that a chain of command for decision-making about the costs at issue in the Louisiana lawsuit implies that others may have the information the co-ops seek,” Justice Landau said.

“But as the co-ops point out, less intrusive methods have already been taken through 20 depositions, including of these lower-level officials, and information is still waiting as to costs allocations, according to the Louisiana letter rogatory,” the justices added.

Representatives for NRG and the utilities did not immediately respond to requests for comment Thursday.

Justices Sarah Beth Landau, Julie Countiss and Amparo Guerra sat on the panel.

Guttierrez and NRG Energy are represented by Yasser A. Madriz and Jason Huebinger of McGuireWoods LLP.

The co-ops are represented by John S. “Jack” Edwards Jr. of Ajamie LLP.

The case is In re: Mauricio Gutierrez and NRG Energy Inc., case number 01-22-00188-CV, in the Court of Appeals for the First District of Texas.

By Peter McGuire · 

–Editing by Jay Jackson Jr.