United States District Court, W.D. Oklahoma
LISA WEST, STORMY HOPSON, AUBURN & DOUGLAS CLOYES, DELL LIVSEY, JULIA & DALE WHITE, individually, Plaintiffs,
v.
CHESAPEAKE OPERATING, LLC, EASTOK PIPELINE, LLC, EQUAL ENERGY U.S., INC., FAIRFIELD OIL & GAS CORP., NEW DOMINION, LLC, PHOENIX OIL & GAS, INC., TRANSPRO ENERGY, LLC, AND WHITE STAR PETROLEUM, LLC f/d/b/a AMERICAN ENERGY WOODFORD, LLC, Defendants.
ORDER
STEPHEN P. FRIOT, UNITED STATES DISTRICT JUDGE
Before
the court is Plaintiffs' Motion and Brief for Leave to
File Their Third Amended Complaint, filed April 5, 2019. Doc.
no. 367. Defendants, White Star Petroleum, LLC, Equal Energy
U.S., Inc., and Fairfield Oil & Gas Corp., have responded
in opposition to the motion, [1] and plaintiffs have replied. Upon
due consideration of the parties' submissions, including
Plaintiffs' Supplemental Brief Re. Doc. 367 (doc. no.
369), and the relevant law, the court makes its
determination.
Background
On
February 18, 2016, plaintiffs, Lisa West and Stormy Hopson,
individually and on behalf of a proposed plaintiff class of
Oklahoma property owners, commenced this action in the
District Court of Pottawatomie County, State of Oklahoma. The
action was brought against fifteen defendants and a proposed
defendant class of companies operating wells injecting
wastewater into the Arbuckle formation. The proposed class
area included Pottawatomie County and seven surrounding
counties. Plaintiffs alleged that defendants' injection
of wastewater had induced or triggered earthquakes and would
continue to do so, even if injection of wastewater was
immediately stopped. According to plaintiffs' petition,
three earthquakes of 5.0 to 5.7 magnitude had occurred in and
around Prague, Oklahoma in November of 2011. Plaintiffs asked
for injunctive relief requiring defendants and the defendant
class to reimburse them for earthquake insurance premiums -
both prospectively and retrospectively.
The
action was removed to this court by defendant, Berexco, LLC,
alleging the existence of subject matter jurisdiction under
the Class Action Fairness Act (CAFA), 28 U.S.C. §
1332(d). That defendant and two other defendants were
subsequently dismissed by plaintiffs. Thereafter, plaintiffs
filed a motion to remand. Plaintiffs acknowledged that
defendant Berexco, LLC, had established in its notice of
removal the baseline facts required for removal under CAFA.
However, plaintiffs requested the court to decline to
exercise subject matter jurisdiction under CAFA based upon
the “local controversy exception, ” the
“home state exception, ” or the
“discretionary exception.” The court rejected the
application of the “local controversy exception,
” but it ordered an evidentiary hearing with respect to
the “home state exception” and the
“discretionary exception.” An evidentiary hearing
was held but not completed. After the court set an additional
evidentiary hearing, plaintiffs filed a notice withdrawing
their remand motion. In that notice, plaintiffs advised that
defendants had consented to the filing of an amended
complaint. Upon receipt of the notice, the court struck the
remand motion and the evidentiary hearing. Plaintiffs then
filed their amended complaint.[2] The amended complaint added seven
new defendants, including Chaparral Energy, LLC (Chaparral),
Devon Energy Production Co., LP (Devon), Sandridge
Exploration & Production, LLC (Sandridge) and White Star
Petroleum, LLC, f/d/b/a American Energy Woodford, LLC (White
Star) and expanded the class area to 26 counties in Oklahoma.
In addition to injunctive relief, plaintiffs requested
compensatory and declaratory relief. The pleading asserted
the same tort claims alleged in the original petition -
private nuisance, ultrahazardous activity, negligence and
trespass. As was the case with the original petition, the
named plaintiffs' claims arose out of the Prague
earthquakes which occurred in November 2011.
Defendants
moved to dismiss the amended complaint on various grounds.
The court held a hearing with respect to defendants'
dismissal motions. The court granted defendant
Sandridge's motion, concluding that plaintiffs had failed
to set forth any allegations relating to that defendant after
the effective date of its bankruptcy discharge. The court
granted dismissal of the claims against all other defendants
on the issue of causation. Specifically, the court found that
plaintiffs had not pleaded facts to plausibly establish
causation - that defendants' alleged injection well
activities caused any earthquake that caused damage to the
named plaintiffs. The court also dismissed plaintiffs'
request for injunctive relief.[3] However, the court granted
plaintiffs leave to file a second amended complaint.
As
permitted, plaintiffs filed their second amended complaint.
The pleading dismissed six original defendants and added five
new plaintiffs, Auburn Cloyes, Douglas Cloyes, Del Livsey,
Julie White and Dale White. Plaintiffs alleged that
defendants' injection of wastewater had caused
earthquakes occurring in and around central and western
Oklahoma. They described six separate earthquake swarms,
Prague, [4] Edmond, [5] Crescent, [6]
Fairview/Cherokee, [7] Pawnee[8] and Cushing[9] that one or more of the
named defendants allegedly caused. In describing the
earthquake swarms, plaintiffs listed additional companies,
who were not named as defendants but allegedly caused the
swarms. The same tort theories as alleged in the original
petition and the amended complaint were alleged in the
amended pleading. Plaintiffs proposed certification of a
plaintiff class of “[a]ll persons owning an interest in
real property in the Class Area from 2011 through the time
the Class is certified.” Doc. no. 272, ¶ 112. They
expanded the class area to 28 counties in Oklahoma.
Plaintiffs proposed three subclasses - an insured subclass, a
damage subclass and a nuisance subclass. Plaintiffs also
proposed certification of a defendant class consisting of
“[a]ll persons operating an underground injection well
disposing of wastewater into the Arbuckle formation, or
another formation shown to have caused an earthquake, in the
Class Area from 2011 through time the Class is
certified.” Id. at ¶ 129. According to
plaintiffs, there could be as many as 175 injection well
operators in the proposed defendant class.
Defendants
filed motions to dismiss the second amended complaint. In a
written order dated August 13, 2018, the court granted the
motions to dismiss of defendants, Chaparral, Sandridge,
Devon, Range Production Company, LLC, and Oklahoma Oil and
Gas Management, Inc., in their entirety. The court granted
defendant New Dominion, LLC's motion to dismiss as to
plaintiffs' claims based upon the Edmond earthquake swarm
as well as defendant White Star's motion to dismiss based
upon the Crescent earthquake swarm. The court further granted
the motions to dismiss challenging plaintiffs' request
for reimbursement of insurance premiums and struck the
allegations and requested relief relating to the insured
subclass. Several remaining defendants had also filed motions
to strike the class allegations. By order dated August 16,
2018, the court granted the motions to strike, finding that
the class allegations did not satisfy the commonality and
predominance requirements of Rule 23, Fed.R.Civ.P. The court
struck the class allegations with respect to the remaining
moving and nonmoving defendants. Plaintiffs sought
interlocutory review by the Tenth Circuit of the court's
order striking the class allegations, but that request was
denied.
Answers
were filed to the second amended complaint and the court set
the case for a status and scheduling conference. In the Joint
Status Report and Discovery Plan, plaintiffs stated that
“[i]n view of the Court's Order striking the class
allegations [Doc. 331], [] Plaintiffs claim that CAFA
jurisdiction is no longer proper, and Plaintiffs plan to
contest jurisdiction.” Doc. no. 350, ¶ 2. They
also represented that they “anticipate filing a motion
to remand. If that is unsuccessful, Plaintiffs expect to seek
leave to dismiss their claims without prejudice.”
Id., ¶ 6. The court discussed the remand issue
with the parties at the status and scheduling conference. It
allowed plaintiff to file a motion to remand within two weeks
and declined to put the case on a schedule until the remand
issue was resolved.
Plaintiffs
timely filed their motion to remand. They argued that the
court's order striking the class allegations made clear
that subject matter jurisdiction never existed under CAFA.
According to plaintiffs, the court essentially ruled that the
class allegations were frivolous. In an alternative to
remand, plaintiffs asked the court for leave to add named
plaintiffs who would make claims from one of the earthquake
swarms that continued to be at issue in the case.
The
court held a hearing on plaintiffs' motion. The court
denied remand. The court concluded that CAFA jurisdiction
existed at the time of removal, and in striking the class
allegations, it made no determination that the class
allegations were frivolous. As to the alternative request,
the court determined that plaintiffs had failed to comply
with the court's local civil rules requiring any motion
to amend to attach the proposed amended pleading. However,
the court granted plaintiffs leave to file another motion to
join additional plaintiffs, attaching the proposed amended
pleading. At the hearing, the court stated that it presumed
that the motion to amend would not involve any additional
defendants but nonetheless inquired of plaintiffs'
counsel as to whether the motion would involve any additional
defendants. Counsel responded: “I think that's
right, Your Honor, I think it will be just plaintiffs. And I
suspect it will be - the substantive allegations will be
identical and just be new plaintiffs with particulars about
their situations.” Doc. no. 368, p. 20, ll. 7-10.
In
their motion for leave to file a third amended complaint,
plaintiffs seek to add ten new plaintiffs, Carol Fadaiepour,
Vali Fadaiepour, Julie A. Holbrook-Frias, Carol Jensen, Chris
Leavitt, Teri Newby, Cole Newby, Carl Searcy, Joe Sochor and
Teresa Lynn Sochor. They also seek to add over 40 defendants,
including Devon and Oklahoma Oil and Gas Management, Inc. who
were previously dismissed pursuant to Rule 12(b)(6). In their
proposed third amended complaint, plaintiffs include
allegations based upon newly identified earthquakes occurring
in 2017, 2018 and 2019 and allege claims relating to the
Edmond earthquake swarm and the Crescent earthquake swarm.
Plaintiffs also include class allegations for a proposed
plaintiff class and a defendant class.
According
to plaintiffs, the new defendants are necessary in view of
Rule 19, Fed.R.Civ.P. Plaintiffs claim that the proposed
amended pleading is consistent with the court's order
addressing the second amended complaint and state that they
do not reassert any claims against the bankrupt defendants,
Sandridge and Chaparral, or any claims relating to the
Fairview/Cherokee swarm.[10] They allege in their proposed
pleading that the class allegations are included to provide
notice of their intent to reassert class claims if justified
after the exchange of expert reports.
Defendants,
White Star, Equal Energy, U.S., Inc., and Fairfield Oil &
Gas Corp., oppose the motion. They contend that the newly
named defendants are not necessary parties that must be
joined under Rule 19. They assert that the claims against
these defendants are futile because they are barred by the
statute of limitations. Defendants also argue that the
proposed amended pleading is highly prejudicial to them and
is unduly delayed. At some point, defendants argue, the
pleading cycle must end, to allow discovery to commence and
the merits of the claims alleged against the current
defendants to be addressed.
Discussion
Rule
21, Fed. R. Civ. P., provides that “[o]n motion or its
own, the court may at any time, on just terms, add or drop a
party.” Although Rule 21 - dealing with misjoinder and
nonjoinder of parties - permits the court to add a party at
any time, Rule 15(a), Fed. R. Civ. P., specifically governs
the addition of a party. U.S. ex. rel. Precision Co. v.
Koch Industries, Inc., 31 F.3d 1015, 1018
(10th Cir. 1994). It also governs the amendment of
the pleadings. Because plaintiffs have twice amended their
complaint, Rule 15 instructs that plaintiffs may amend their
pleading “only with the opposing party's written
consent or the court's leave.” It also instructs
that “[t]he court should freely give leave when justice
so requires.” However, whether to grant leave to amend
is within the discretion of the court. Foman v.
Davis, 371 U.S. 178, 182 (1962). The court may deny
leave to amend upon a showing of ...