PHILADELPHIA – The U.S. Court of Appeals for the Third Circuit has reversed the denial of class action certification to a homeowner engaged in litigation with a natural gas company, over its alleged usage of his property to store natural gas without compensating him.
A Jan. 20 ruling from Third Circuit judges Cheryl Ann Krause, L. Felipe Restrepo, and D. Brooks Smith affirmed a prior ruling on the topic from the U.S. District Court for the Western District of Pennsylvania, in a lawsuit pitting plaintiff Domenic Laudato Jr. against EQT Corporation, Equitrans, L.P., EQT Production Company and EQM Midstream Partners, L.P.
Smith authored the Court’s ruling in this matter.
“On July 30, 2018, roughly one hundred Pennsylvania landowners filed a class-action complaint against EQT, alleging that EQT has been storing natural gas in six separate storage fields, thereby utilizing the landowners’ underground pore space without providing them due compensation. In May2020, all landowners except for Domenic Laudato Jr. voluntarily dismissed their claims without prejudice,” Smith.
“And in February 2021, Laudato moved for class certification, seeking approval of a class defined as: ‘All persons and/or entities that own and/or owned real property – and/or natural gas storage rights to real property – located within the certificated boundaries of one or more of the Gas Storage Fields for any period of time not before defendants’ inception of the respective gas storage field, but to whom defendants have and had failed to compensate for natural gas storage rights within the respective field(s) for the entirety of time of real property or natural gas rights ownership.”
The District Court granted the class action certification, albeit with conditions – specifically, “that it rejected Laudato’s proposed class definition, thereby refusing to grant other downstream requests such as appointment as class representative, appointment of class counsel, and certain issues’ certification”, while also directing all parties to meet and confer regarding ‘the establishment of an appropriate class definition.”
The instant interlocutory petition was then filed by the defendants to the Third Circuit, under Federal Rule of Civil Procedure 23(f).
“We agree with EQT that interlocutory review is appropriate. Contrary to Laudato’s assertion, a class-action certification order that leaves unresolved a crucial element – the class definition – is no less likely to exert substantial pressure on a defendant to settle than a standard class-action certification order. In some circumstances, that uncertainty may even create more pressure to settle,” Smith stated.
“Here, beyond that general uncertainty, EQT could reasonably read the District Court’s order as an attempt to nudge them towards settlement, further increasing that pressure. The District Court repeatedly suggested that it knew EQT’s interests better than EQT did and hinted at the consequences of not playing along.”
Smith explained those assertions “culminated in a recommendation that EQT entertain settlement discussions through a mediator rather than continue to litigate its position” and further, “an appeal would present this Court with an opportunity to facilitate development of the law on class certification.”
Smith concluded with an explanation as to why the Third Circuit would indeed grant the defendants’ petition.
“Because of the apparent pressure the purported certification places on EQT to settle and this Court’s opportunity to facilitate development of the law on class certification, review of the District Court’s order is appropriate under Rodriguez v. Nat’l City Bank,” Smith said.
“For the above reasons, the Petition for Permission to Appeal Under Rule 23(f) will be granted. Any such appeal shall be retained by this panel. After docketing the appeal, the Clerk shall issue an order advising the parties that the Court is considering summary action. The parties will be given an opportunity to file arguments in support of or in opposition to summary action.”
U.S. Court of Appeals for the Third Circuit case 21-8047
U.S. District Court for the Western District of Pennsylvania case 2:18-cv-01005
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com