RICHMOND, Virginia – Two West Virginia trade groups want to have their say in a high-profile gas royalties case before a federal appeals court.
On September 10, the West Virginia Manufacturers Association and the Gas and Oil Association of West Virginia, or GO-WV) filed motions to file amicus curiae, or friend of the court briefs, in EQT’s request for the U.S. Fourth Circuit Court of Appeals to rehear two class certification issues.
Earlier this month, EQT filed a petition to have the court rehear the case en banc, meaning it is asking all the judges of the Fourth Circuit hear the case rather than a three-judge panel. That filing came after a three-judge panel of the appeals court reversed a lower court class certification order, saying the class certification of the plaintiffs’ breach of contract claim was valid. But the panel agreed with EQT that the lower court improperly certified a class based on the plaintiffs’ fraudulent concealment claim.
The Fourth Circuit heard that case because EQT has asked it to reverse U.S. District Judge John Preston Bailey’s order based on four fundamental class certification requirements.
“This petition for rehearing en banc presents two class certification issues – concerning ascertainability and predominance – on which the panel majority departed from circuit precedent in affirming the certification of a breach-of-contract class,” EQT’s September 3 rehearing petition states.
The class includes former and current owners of more than 3,800 gas leases in West Virginia that, according to EQT, fall into at least 70 different categories “even when grouped in the most general terms.”
In its September 10 motion, GO-WV says it “has an interest in this oil and gas lease class action,” adding that it is comprised of about 500 oil and gas producers, fully integrated energy companies, companies providing service and supply activities and consulting companies.
“GO-WV is invested in ensuring that the negotiated terms of its members’ leases are honored and given due consideration to promote the consistency and reliability of operations pursuant to those leases,” the motion states. “”Likewise, GO-WV has an interest in ensuring courts apply the appropriate scrutiny when evaluating West Virginia lease class actions … to protect its members from a flood of improper class actions.”
The group called the “rubberstamping” of such class actions dangerous.
“Allowing these suits to proceed without rigorous analysis is of special interest to GO-WV, as its members experience unwarranted ‘death knell’ or bet-the-company situations when faced with class action litigation, even when they feel strongly about their defenses on the merits and would prefer to pursue them,” the motion states.
In the WVMA motion, it says it also has a “unique and important” interest in the case. It is a nonprofit trade organization that represents and advocates for its members in the manufacturing industry and ancillary organizations.
“The WVMA exists to help its members by fostering a legal climate that supports industry in the State of West Virginia,” the motion states. “The WVMA will present arguments to the court that the underlying panel’s decision represents a grave threat to its member companies and their ability to conduct business in the State of West Virginia in a legal climate that is predictable and free from the threat of expanded litigation related to greatly expanded criteria for class action treatment in West Virginia courts. …
“The panel’s relaxed standards for class action certification will expose not only oil and gas interests to greater litigation, but will endanger the WVMA’s member industrial companies to ever-widening litigation and potential liability.
“In short, the panel’s expansion of class action treatment threatens all West Virginia businesses, not just those engaged in the oil and gas exploration and production industry.”
The WVMA also included its amicus curiae brief in its filing. In it, the group says the panel’s majority opinion ignored the “complicated and individualized facts that affect EQT Production’s rights and obligations under several thousand oil and gas leases.”
“That same ill treatment, if extended to the businesses and activities of the WVMA’s members, will have untold negative economic consequences on WVMA members and represents a fundamental misunderstanding of class action practice,” the brief states. “This apparent change in law in this Circuit, on its own, creates an entirely new burden on the WVMA’s membership: the threat that an enterprising plaintiff may simply file suit, plead a class action, and then ask the court to require the defendant to somehow divine, from the defendant’s own records and experience, what the identity of the putative class members may be.
“Not only that, but defendants in this new form of class action featuring unascertained members will be forced to spend millions of dollars to identify its own legal adversaries from among its own customers or consumers. This development flies in the face of traditional class action law and cannot be countenanced by this court.”
The WVMA says the panel’s ruling “makes the work of industry nearly impossible.”
“It creates a business climate in which manufacturers and other industrial concerns are rendered unable to make reliable predictions for planning purposes,” the brief states. “It enables an environment in which a manufacturer cannot with any confidence anticipate its future costs. …
“Businesses such as those represented by the WVMA cannot simply ‘eat’ those costs and are, instead, forced to pass those costs along to West Virginians through higher prices, lower wages and lost jobs if manufacturers and industrial concerns choose to do business in West Virginia in the first place.
“This is a poor result both for business and for consumers and is one that this circuit should not tolerate.”
U.S. Fourth Circuit Court of Appeals case number 23-256 (U.S. District Court for the Northern District of West Virginia case number 5:19-cv-223)
