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Court: Reinstate Ohio suit alleging Duke kickbacks

CINCINNATI (AP) -- A federal appeals court on Monday ordered reinstatement of a lawsuit that accuses Duke Energy Corp. of paying kickbacks to big Cincinnati-area companies to win their support for a 2004 electricity rate increase.

The 6th U.S. Circuit Court of Appeals in Cincinnati reversed a federal judge's 2009 decision and reinstated the 2008 antitrust lawsuit filed on behalf of some Ohio businesses and people whose bills rose.

The district court judge had concluded that federal courts lacked jurisdiction over the case and that the Ohio Public Utilities Commission, which approved the rate increase, had exclusive jurisdiction over state-law claims.

The three-judge appeals panel, however, said in its unanimous ruling that the lower court was incorrect and that "no circumstances exist here that would deprive the district court of jurisdiction over plaintiffs' state-law claims."

The lawsuit claims that, in 2004, the utility known then as Cinergy Corp. paid off large corporate customers who opposed the rate increase request. The lawsuit alleges that the opposition ended after the companies signed rebate deals with Duke.

Charlotte, N.C.-based Duke, which bought Cinergy in 2006, has denied the allegations, saying that the utility company's contracts with the large companies were the subject of extensive litigation before the Public Utilities Commission. The commission approved Duke's rates after reviewing the agreements.

Duke said in an emailed statement Monday that it was disappointed in the decision by the appeals judges.

"We continue to believe that there is no merit or basis for this lawsuit and will evaluate next legal steps," the statement said. "We will continue to vigorously defend ourselves."

Attorneys who filed the lawsuit said that the appellate ruling was a victory for Ohio consumers and small businesses.

"We are hoping that they can get some relief with this lawsuit," attorney Randy Freking said.

Freking said the lawsuit, which is seeking unspecified damages, seeks to represent all Ohio consumers and businesses affected by the rate hikes. He said that if the lawsuit is approved as a class action, the class could include hundreds of thousands of consumers and thousands of small businesses.

"The fact is that Duke gave special deals to special customers," said Stanley Chesley, another attorney for those who filed the lawsuit. "We believe all rate holders should be treated the same."

Duke had argued that the payments were legitimate business agreements to guarantee that the companies wouldn't switch to competitors.

The utility said in its statement Monday that it stands by the agreements, which have since expired, as "legal binding agreements/contracts that benefited the parties to them."