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West v. Chesapeake Operating, LLC

United States District Court, W.D. Oklahoma

June 3, 2019

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 ...


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