ROCK ENERGY COOPERATIVE v. VILLAGE OF ROCKTON (AUGUST 10, 2010)

Rock Energy Cooperative, a Wisconsin-based utility, and the Village of Rockton, Illinois were both interested when Alliant Energy announced its desire to sell certain power transmission assets. Rock Energy submitted a bid. Rockton voters approved a referendum authorizing the Village’s purchase of the assets. Rock Energy and the Village entered into an agreement that addresses a possible sale of the assets by Rock Energy to the Village. Rock Energy then purchased the assets from Alliant. On several occasions between 2007 and 2009, the Village repeated its desire to obtain the assets and even threatened to use the power of eminent domain. Rock Energy brought suit, seeking a declaratory judgment that Rockton violated state law in its referendum process and was not entitled to purchase the assets. Rockton, for its part, brought suit in state court seeking specific performance of the contract. The state court dismissed the suit with prejudice, concluding that the lack of a price term or formula in the agreement precluded an order of specific performance. Judge Kapala (W.D. Ill.) dismissed the suit, holding that Rock Energy lacked standing to challenge the referendum process. He also concluded that a forum selection clause in the agreement made venue improper for any claim Rock Energy was asserting under the agreement. Rock Energy appeals.

In their opinion, Judges Flaum, Rovner, and Wood affirmed. The Supreme Court has held that Article III of the Constitution, particularly in the declaratory judgment context, requires a substantial controversy "of sufficient immediacy and reality" to warrant declaratory relief. The Court applied that principle to both threats to Rock Energy -- eminent domain and the contract. With respect to eminent domain, the Court concluded that the record contained no evidence that such a proceeding was imminent. In fact, to the contrary, the only actions the Village has taken in years are a few letters indicating their interest in condemnation. The Court also noted that the lack of any hardship to Rock Energy would stand in the way of its pre-enforcement challenge. The Court also concluded that the contract claim could not meet the Supreme Court's test. A state court has found the contract unenforceable, it contains a facially valid choice of forum clause, and Rockton has disclaimed its desire to rely on the contract. The case is not appropriate for declaratory relief under either theory.