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Ely v. Cabot Oil & Gas Corp.

United States District Court, M.D. Pennsylvania

April 23, 2014

NOLEN SCOTT ELY, et al., Plaintiffs,
v.
CABOT OIL & GAS CORPORATION, et al., Defendants

Ordered Filed: January 9, 2014

For Jennifer Walsh Clark, also known as Jennifer J. Walsh, Special Master: Jennifer J. Walsh, McNees Wallace & Nurick LLC, Scranton, PA USA.

For Ray Hubert, Nolen Scott Ely, Plaintiffs: Samuel C. Stretton, The Law Office of Samuel C. Stretton, West Chester, PA USA.

For Victoria Hubert, Monica Laura Marta-Ely, Jessica Ely, Justin Ely, Nolen Scott Ely, Plaintiffs: Kevin J Lawner, Napoli, Bern, Ripka, Shkolnik, LLP, New York, N.Y. USA; Samuel C. Stretton, The Law Office of Samuel C. Stretton, West Chester, PA USA.

For Todd Carter, Jeannette Carter, Plaintiffs: Jose A. Almanzar, Napoli Bern Ripka Shrolnik & Associates, LLP, New York, N.Y. USA; Kevin J Lawner, Napoli, Bern, Ripka, Shkolnik, LLP, New York, N.Y. USA; Marc J Bern, Napoli Bern Ripka, LLP, New York, N.Y. USA; Tate J. Kunkle, Napoli Bern Ripka & Associates LLP, New York, N.Y. USA; William S. Berman, Napoli Bern Ripka, LLP, Marlton, N.J. USA.

Michael Johnson, Movant, Pro se, Tampa, FL USA.

Suzanne Johnson, Movant, Pro se, Tampa, FL USA.

For Deborah L. Maye, Movant: Amy L. Barrette, Fulbright & Jaworski LLP, Canonsburg, PA USA.

For Dan Smales, Movant: Amy L. Barrette, Fulbright & Jaworski LLP, Canonsburg, PA USA; Tate J. Kunkle, Napoli Bern Ripka & Associates LLP, New York, N.Y. USA.

For Cabot Oil & Gas Corporation, Gas Search Drilling Services Corporation, Defendants: Amy L. Barrette, Jeremy A. Mercer, LEAD ATTORNEYS, Fulbright & Jaworski LLP, Canonsburg, PA USA; Richard J. Wilson, Stephen C. Dillard, William D. Wood, Fulbright & Jaworski, LLP, Houston, TX USA.

Hon. John E. Jones III, United States District Judge. Hon. Martin C. Carlson.

ORDER

John E. Jones III, United States District Judge

AND NOW, upon consideration of the Report and Recommendation of Chief

Page 519

United States Magistrate Judge Martin C. Carlson (Doc. 489), recommending that the Defendants' Motion for Summary Judgment on the Plaintiffs' claims for strict liability (Doc. 386) be granted, and, after an independent review of the record, and noting that Plaintiffs filed objections[1] (Docs. 490 and 491) to the report on January 23, 2014 to which the Defendants responded (Doc. 492), and the Court finding Judge Carlson's analysis to be extremely thorough, well-reasoned, and fully supported by the record, and the Court further finding Plaintiffs' objections to be without merit and squarely addressed by the Magistrate Judge within his report,[2] IT IS HEREBY ORDERED THAT:

1. The Report and Recommendation of Magistrate Judge Carlson (Doc. 489) is ADOPTED in its entirety.
2. Defendants' Motion for Summary Judgment on Plaintiffs' strict liability claims (Doc. 386) is GRANTED and judgment is granted in favor of the Defendants on those claims as asserted by Plaintiffs.

REPORT AND RECOMMENDATION

Martin C. Carlson, United States Magistrate Judge

I. INTRODUCTION

In this case we are invited to take a step which no court in the United States has chosen to take, and declare hydraulic fracturing to be an ultra-hazardous activity that gives rise to strict tort liability. This lawsuit was initiated on November 19, 2009, by a group of 44 plaintiffs who collectively filed suit to recover damages for injuries and property damage allegedly suffered as the result of the defendants' natural gas drilling operations in Dimock Township, Susquehanna County, Pennsylvania. Subsequent to this case being filed, a number of the plaintiffs reached settlement agreements with the defendants, and at this juncture only 12 plaintiffs remain in the case. Among those plaintiffs are Nolen Scott Ely and Monica L. Marty-Ely, individually, and as parents and natural guardians of their three minor children (the " Elys" ); Nolen Scott Ely, as Executor for the Estate of Kenneth R. Ely (" Estate" ); and Ray and Victoria Hubert, individually, and as the parents and natural guardians of one minor child, and a child who has since reached the age of majority, Angel Hubert (" Huberts" ) (collectively, " Plaintiffs" ).

The claims of the Plaintiffs are now subject to multiple pending dispositive motions filed by defendants Cabot Oil & Gas Corporation (" Cabot" ) and GasSearch Drilling Services Corporation (" GDS" )

Page 520

(collectively, " Defendants" ). In the motion currently before the Court, the Defendants have moved for summary judgment on the Plaintiffs' claims that natural gas drilling operations and hydraulic fracturing, commonly referred to as " fracking" , constitute abnormally dangerous activities under Pennsylvania law, and therefore should be subject to strict liability. (Doc. 386.) The motion has been fully briefed and is ripe for disposition.

Although questions regarding fracking's safety appear with some regularity in the public arena, and while debate on this area of natural resource development may continue to roil in the public forum for some time, the Plaintiffs have failed to substantiate their contention that the natural gas drilling activities, including hydraulic fracturing at issue in this case, are so inherently dangerous that they should be deemed ultrahazardous activities subject to strict liability. Moreover, review of the law in this field shows that for decades, courts have uniformly refused to find that oil and natural gas drilling and related activities are ultra hazardous or abnormally dangerous, and thus have found that such activities are not subject to strict liability under tort law. Instead, courts consistently have found that claims for property damage and personal injury allegedly resulting from natural gas drilling operations are governed by the more traditional negligence principles.

Accordingly, for the reasons that follow, it is recommended that the Court decline the Plaintiffs' invitation to become the first court in this or any other jurisdiction to conclude that such natural gas drilling operations constitute abnormally dangerous activities, should find as a matter of law that natural gas drilling operations and hydraulic fracturing are not abnormally hazardous activities on the basis of the record developed in this case, and grant summary judgment in the defendants' favor on this specific claim. Plaintiffs' claims regarding the alleged damage to their property and injuries that they claim to have experienced as a result of the Defendants' natural gas activities should continue to be limited to, and considered against, the standards governing negligence under Pennsylvania law, principles which historically do not extend strict liability to these activities.[1]

II. BACKGROUND

On September 12, 2006, Kenneth R. Ely granted an Oil and Gas Lease to Cabot, as lessee (" Estate Lease" ), " for the purpose of exploring by geophysical and other methods, drilling, and operating for and producing oil, gas," and other minerals on his property, as more fully defined in paragraph 1 of the Estate Lease. (Doc. 387, Def. Statement of Undisputed Facts, ¶ 9 (hereafter " Def SMF ¶ " ); Decl. of Jeffrey Keim, Doc 389, Appendix (" App." ) A & Ex. A thereto, at ¶ 1.) On May 20, 2009, Kenneth Ely died and his son, Nolen Scott Ely, was appointed as executor of the Estate, as provided for in Kenneth Ely's will. (Second Am. Compl., ¶ 13.) Nolen Scott Ely does not reside on the property, and instead the only resident on the Estate Property is Kenneth Ely's widow, Emmagene Samoy-Ely, who has reached her own settlement with the Defendants. (Doc. 387, Def. SMF ¶ ¶ 11-12.)

The Estate has brought a claim against Defendants for alleged " ground contamination" caused by the Defendants operations at well sites located on the Estate Property, which are unrelated to hydraulic fracturing.

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(Id. ¶ 13.) The Estate has not made any claim for water contamination on the Estate Property caused by hydraulic fracturing or other drilling operations. (Id. ¶ 14; Deposition of Nolen Scott Ely as Executor of the Estate of Kenneth Ely (" Estate Depo" ), App. Ex. F at 7:11-14, 85:18-19, 136:14-21.)

Similar to his father, on June 4, 2007, Nolen Scott Ely entered into an Oil and Gas Lease (" Ely Lease" ) with Cabot, as lessee, " for the purpose of exploring by geophysical and other methods, drilling, and operating for and producing oil, gas," and other minerals on his property, as defined in paragraph 1 of the lease (" Ely Property" ). (Def. SMF ¶ 18; Keim Decl., App. Ex. A, Ex. B thereto at ¶ 1.) The record reveals that the Defendants have not conducted drilling operations on or under the Ely Property, but the Elys allege that their water supply is within 1000 feet of natural gas wells owned and operated by Cabot, namely the Gesford 3 and Gesford 9 gas wells. (Doc. 387, App. Ex. C, Depo. of Nolen Scott Ely (" Ely Dep." ), at 111:5-14; Declaration of John Papso (" Papso Decl." ), App. Ex. B at ¶ 18.) The Elys have retained the services of a hydrology expert, who has opined that the Elys water supply has been affected by Cabot's drilling operations in the area, and that the water supply " continues to detect levels of chemicals caused by Cabot natural gas drilling activity . . ." (Def. SMF ¶ 21, App. Ex. L, Report of Paul Rubin dated August 28, 2012 (" Rubin Report" ).) Rubin opines that unidentified " problems" with wells in Dimock " likely" led to the contamination of the [Elys'] water supply, and that consumption of the water " poses a threat to human health and the Plaintiffs should not be subjected to drinking such water." (Rubin Report, App. Ex. L, at 3-4.) The Elys claim that their water supply was affected by the Defendants' drilling operations in or around September 2008, and claim that they have experienced headaches, upset stomachs, and rashes beginning around this time. (Def. SMF ¶ ¶ 25-27.) However, the Elys have not produced evidence to show how the Defendants drilling operations allegedly affected their water supply, and they have not provided medical expert testimony to support their claim that their alleged medical symptoms were related to constituents in their water supply. (Id. at 28.) Likewise, the Elys have not come forward with evidence to show that the have suffered or currently suffer from any personal injuries, or that they may in the future be expected to suffer personal injuries, related to Defendants' drilling operations. (Id. ¶ ¶ 28-30.)

On June 8, 2007, Ray and Victoria Hubert granted an Oil and Gas Lease (" Hubert Lease" ) to Cabot, as lessee, " for the purpose of exploring by geophysical and other methods, drilling, and operating for and producing oil, gas," and other minerals on their property, defined in paragraph 1 of the Hubert Lease. (Keim Decl., App. Ex. A, Ex. C thereto at ¶ 1.) As with the Ely Lease, Cabot has not conducted drilling operations on or under the Hubert's property. (Def. SMF ¶ 32, Deposition of Ray Hubert (" Ray Hubert Dep." , App. Ex. G at 55:5-8; Papso Decl., App. Ex. B, at ¶ 19.) In addition, the Huberts do not reside on the Hubert Property, and have not lived there for more than 22 years. (Ray Hubert Dep., App. Ex. G at 15:4-24; Deposition of Victoria Hubert (" Victoria Hubert Dep." ), App. Ex. H at 16:3-13.) There is no water well located on the Hubert Property. (Victoria Hubert Dep., App. Ex. H, at 132:19-21.)

The Huberts live in a trailer on the Ely Property, and have done so for more than twenty years. (Ray Hubert Dep., App. Ex. G at 17:7-10.) Angel Hubert has not lived in the trailer since September 2009,

Page 522

and did not live there when this civil action was initiated. The Hubert's minor child has lived in the trailer since she was born. (Ray Hubert Dep., App. Ex. G at 20:17-22.) The Huberts' water supply is a water well, located next to the trailer. (Ray Hubert Dep., App. Ex. G at 39:20-33; Victoria Hubert Dep., App. Ex. H, at 22:19-23:6.) The Huberts have alleged that their water supply is within 1000 feet of the Gesford 3 and Gesford 9 gas wells. (Second Am. Compl. ¶ 43(d).)

The Huberts allege that their water supply was adversely affected by the Defendants' drilling operations as early as 2007. (Ray Hubert Dep., App. Ex. G, at 118:21-119:3.) Although Huberts alleged that some family members suffered from rashes while suffering, the Huberts have not asserted claims for personal injuries, and further waived their claims for medical monitoring. (Def. SMF ¶ ¶ 42-43.)

Cabot began drilling the Gesford 3 gas well on or about September 25, 2008. (Papso Decl., App. Ex. B at ¶ 3.) The Gesford 3 gas well was temporarily plugged on or about October 9, 2008. (Id. ¶ 4.) Notably, the Gesford 3 well was never hydraulically fractured. (Id. ¶ 5.) On or about October 13, 2008, the rig that was used to drill the Gesford 3 wellbore was moved, or " skidded," to another location on the same well pad. (Id. ¶ 6.) On that same day, Cabot commenced drilling a second gas well, called the Gesford 3S. (Id. ¶ 7.) Cabot completed the drilling on the Gesford 3S gas well on or about December 17, 2008. (Id. ¶ 8.) The Gesford 3S gas well was hydraulically fractured in two stages, on or about March 20, 2009. (Id. ¶ 9.) In or about August 2009, the original Gesford 3 gas well was re-permitted and renamed as the Gesford 9 gas well. (Id. ¶ 10.) At that time, Cabot began drilling the Gesford 9 gas well in the location of the original Gesford 3 gas well. (Id. ¶ 11.) The Gesford 9 well was not drilled into the Marcellus Shale. (Id. ¶ 12.) Instead, it was drilled for production from a Devonian shale formation that is shallower than the Marcellus Shale formation. (Id. ¶ 13.) The total depth of the Gesford 9 well was 1911 feet. (Id. ¶ 14.) The Gesford 9 well was never hydraulically fractured, and was plugged and abandoned on or about May 23, 2010. (Id. ¶ ¶ 15-16.) The Gesford 3S gas well was also plugged and abandoned on or about May 23, 2010. (Id. ¶ 17.)

In the second amended complaint, which is the operative pleading in this action, the Plaintiffs allege, inter alia, that " hazardous chemicals and combustible gases used, processed, and stored by Defendants are of a toxic and hazardous nature capable of causing severe personal injuries and damages to persons and property coming in contact with them, and therefore are ultra hazardous and abnormally dangerous" and " the use, processing, storage, and activity of hydro-fracturing at Defendants' Gas Wells, adjacent to or on residential properties, was and continues to be an abnormally dangerous and ultra hazardous activity, subjecting persons coming into contact with the hazardous chemicals and combustible gases with severe personal injuries regardless of the degree of caution Defendants might have exercised." (Second Am. Compl., ¶ ¶ 85-86.)

In addition to these allegations regarding the allegedly exceptionally dangerous nature of these drilling operations, the Plaintiffs have claimed that they were personally injured as a result of the activities. Thus, the Plaintiffs have alleged that Defendants " caused the releases, spills, and discharges of combustible gases, hazardous chemicals, and industrial wastes from its various oil and gas drilling ...


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