WHEELING – A federal judge has issued a pair of rulings that set the stage for a trial in a nearly 10-year-old class action accusing natural gas giant Antero Resources of shortchanging royalty owners on payments owed under their oil and gas leases.
Kleeh
Chief U.S. District Judge Thomas S. Kleeh handed down the two memorandum opinions and orders March 31 in Romeo v. Antero Resources Corporation. The orders resolved dueling summary judgment motions filed by the certified class. The class eliminated the vast majority of Antero’s affirmative defenses but failed to win summary judgment on either its breach of contract claim or the company’s remaining defenses tied to prior settlements.
The lawsuit dates to May 2017 when Jacklin Romeo, Susan S. Rine and Debra Snyder Miller filed the case against Antero. The plaintiffs say Antero, which holding more than 485,000 acres in West Virginia’s Marcellus Shale region, breached lease agreements by improperly deducting post-production costs – including processing, fractionation and transportation expenses – from royalty payments on natural gas and natural gas liquids.
The class was certified in March 2020 and encompasses persons and entities who have received royalties from Antero on gas produced from West Virginia wells since January 1, 2009, under leases containing specific royalty provisions that do not expressly permit such deductions.
In June of last year, the state Supreme Court answered certified questions that moved the federal case along. The justices reaffirmed West Virginia is a “point of sale” state and held that lessees such as Antero may not deduct post-production costs from royalties absent express lease language permitting it. The ruling extended those protections to natural gas liquids as well.
In one opinion, Kleeh granted summary judgment on Antero’s defense that challenged the propriety of class certification, noting he already had rejected those arguments in certifying the class and that the U.S. Fourth Circuit Court of Appeals had denied Antero’s petition to appeal.
Antero had moved to voluntarily withdraw 14 other of its 18 defense, but Kleeh agreed with the plaintiffs that summary judgment was appropriate given the timing.
Of the other three defenses, Kleeh denied summary judgment regarding payment and release, accord and satisfaction as well as res judicata.
Antero also noted a prior class settlement in Cather v. Seneca-Upshur Petroleum, Inc., which is a separate royalty underpayment case in which Antero is a successor to the original defendant. Antero said at least five Romeo class members released claims against Seneca-Upshur and its successors through that settlement. Antero also cited a confidential settlement with class member Kimberly Smith in a separate Harrison County case. Kleeh said those issues presented genuine disputes of material fact that must be resolved at trial.
In the other ruling, Kleeh denied the class’s motion for summary judgment on the underlying breach of contract claim on procedural grounds rather than the merits.
The filing says the plaintiffs relied on a supplemental report from damages expert Don Phend, who calculated royalty underpayments from December 2009 through February 2021 by comparing what Antero should have paid based on point-of-sale prices against what it actually paid.
Antero objected, saying it had not seen Phend's report until it was filed alongside the motion itself. Antero’s expert, Kris Terry, submitted a declaration stating the company had no opportunity to cross-examine Phend or investigate the report’s methodology.
Kleeh agreed, saying summary judgment would be premature given the lack of opportunity for Antero to respond to Phend’s analysis. Because the liability motion was denied, a companion motion seeking partial summary judgment on the principal amount of damages was also denied.
“Given Antero’s representations about the lack of opportunity to cross-examine Phend about the Fifth Supplemental Report or investigate the report prior to the motion’s filing, the court finds that granting summary judgment would be inappropriate,” Kleeh wrote. “The court, at this stage, cannot find that there is no genuine issue of material fact with respect to the existence of damages.
“Accordingly, Plaintiffs’ summary judgment motion with respect to their breach of contract claim is denied.”
The rulings clear the field for trial.
Of Antero’s 18 affirmative defenses, only three survive. They all relate to whether prior settlements in other cases released certain class members’ claims. The breach of contract claim itself remains unresolved, with the core dispute over damages heading to trial once Antero has the opportunity to respond to the plaintiffs’ expert evidence.
The case is one of several royalty underpayment federal court class actions pending against Antero in West Virginia.
The company recently agreed to a $2.8 billion acquisition of upstream Marcellus Shale assets from HG Energy II and separately reached a settlement with the U.S. Department of Justice in February over Clean Air Act violations at its West Virginia and Ohio facilities.
U.S. District Court for the Northern District of West Virginia case number 1:17-cv-88
