Nicholas Malfitano Jun. 8, 2016, 8:53am


HARRISBURG – A lease misrepresentation lawsuit filed in state court by the Commonwealth of Pennsylvania against natural gas drillers was recently removed to a Pennsylvania federal court and temporarily stayed, pending the resolution of an anticipated remand motion from the plaintiff.

Per federal judge Christopher C. Conner’s June 3 order, the deadline to respond to the complaint is temporarily stayed until 15 days following the Court’s order on the Commonwealth’s anticipated motion to remand. "(A)ll pretrial activities, discovery and deadlines, as well as the period for initial disclosures” are stayed, pending the Court’s final determination of the same motion to remand.

Also, the case management conference scheduled for July 26, 2016, was cancelled.

In December, the Commonwealth sued Chesapeake Energy Corporation and its affiliates in the Bradford County Court of Common Pleas, and accused them of pledging to pay landowners a set amount in royalties, before subtracting costs for the cost of mining natural gas underneath their properties.

At the time of the suit's filing, state Attorney General Kathleen Kane labeled this alleged tactic as a “bait-and-switch” and claimed the defendants had engaged in similar criminal conduct in other states.

Defendant Anadarko Petroleum Corp. was later added to an amended version of the lawsuit in February, labeled as participating in the alleged conduct along with Chesapeake as it relates to properties in certain Northern Pennsylvania counties, such as Bradford, Centre, Clinton, Lycoming, Potter, Sullivan, Tioga and Wyoming.

The Commonwealth believed Chesapeake and Anadarko’s cooperative conduct served to violate common law antitrust regulations – a point the defense later cited in its preliminary objections, as Pennsylvania is the lone state in the U.S. without a state antitrust law.

Last month, the Commonwealth again amended its lawsuit – this time, claiming the defendants’ market allocation agreement violated not just Pennsylvania antitrust regulations, but the state’s Unfair Trade Practices and Consumer Protection Law (UTPCPL) and the Sherman Act, a federal antitrust law.

Attorneys for the defendants argue that introducing the Sherman Act opened the door for the case to be removed to federal court, which it was on May 27.

The case is now being heard in the U.S. District Court for the Middle District of Pennsylvania – though the Commonwealth is preparing a motion to remand the case to the Bradford County Court of Common Pleas, based on precedent of its filing of antitrust claims in state court.

The Commonwealth is seeking the defendants’ actions to be found in violation of federal and state antitrust laws, as well as the UTPCPL, permanent enjoinment of further such conduct on the part of the defendants, restitution due to Pennsylvania landowners affected by the market allocation agreement in question, thousands of dollars in civil penalties for each alleged violation of the UTPCPL in the instant suit, attorney’s fees and other relief as appropriate.

The plaintiff is represented by Senior Deputy Attorney General Joseph Betsko, Deputy Attorney General Norman Marden and Chief Deputy Attorney General Tracy Wertz of the Pennsylvania Office of the Attorney General, in Harrisburg.

The defendants are represented by Jared Bayer, George Bibikos, Ann-Marie Luciano and Milton Marquis of Cozen O’Connor in Philadelphia and Washington, D.C., Daniel T. Brier of Myers Brier & Kelly in Scranton, Ronald A. Sarachan of Drinker Biddle & Reath in Philadelphia and Daniel T. Donovan of Kirkland Ellis, in Washington, D.C.

U.S. District Court for the Middle District of Pennsylvania case 1:16-cv-01012

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nickpennrecord@gmail.com

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