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Pollock v. Energy Corporation of America

United States District Court, W.D. Pennsylvania

June 18, 2015

DAVID F. POLLOCK, as executor of the estate of Margaret F. Pollock, JOHN T. DIBIASE, JR., JOHN S. FRAYTE, STUART W. WHIPKEY, PATRICIA L. CHRISTOPHER, LOUIS A. VECCHIO and BESSIE P. VECCHIO, BARBARA A. MORRIS; GENE M. VIRGILI and ERIN R. VIRGILI, and LLOYD R. SHAFFER, III, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
ENERGY CORPORATION OF AMERICA, Defendant.

MEMORANDUM OPINION[1]

ROBERT C. MITCHELL, Magistrate Judge.

I. INTRODUCTION

Presently before the Court is Defendant Energy Corporation of America's ("ECA") motion for judgment as a matter of law or alternatively for a new trial pursuant to Federal Rules of Civil Procedure 50 and 59 [ECF No. 240]. Plaintiff class members responded thereto opposing the motion [ECF No. 260]. ECA filed a reply [ECF No. 267] and Plaintiffs filed a sur-reply [ECF No. 268-2]. Therefore, the motion is ripe for disposition. For the reasons that follow, ECA's motions are denied.

II. BACKGROUND

Because the Court writes primarily for the parties, and the factual background of this case has been extensively discussed in prior opinions issued by the Court, see Pollock v. Energy Corp. of America, 2013 WL 5338009 (W.D.Pa. Sept. 16, 2013) adopted by 2013 WL 5491736 (W.D.Pa. Sept. 30, 2013) (decision on class certification); Pollock v. Energy Corp. of America, 2012 WL 6929174 (W.D.Pa. Oct. 24, 2012) adopted by 2013 WL 275327 (W.D.Pa. Jan. 24, 2013) (decision on motion for summary judgment); Pollock v. Energy Corp. of America, 2011 WL 3667289 (W.D.Pa. June 27, 2011) adopted by 2011 WL 3667385 (W.D.Pa. Aug. 22, 2011) (decision on motion to dismiss), only the facts necessary for the disposition of the present motions will be recounted.

Plaintiffs consist of a class of Pennsylvania landowners who entered into oil and gas leases with ECA. Plaintiffs brought this breach of contract action against ECA claiming that ECA improperly deducted interstate transportation charges and marketing fees from Plaintiffs' royalties during the applicable class period. The Court certified two subclasses with respect to the Plaintiffs' claims:

All lessors on an oil and gas lease with Energy Corporation of America or Eastern American Energy Corporation that conveys oil and gas rights to real property in Pennsylvania, and
(1) the lessee deducted charges for interstate pipeline services between November 22, 2006 and March 26, 2012 (subclass one) and/or
(2) the lessee deducted marketing fees from the royalties between November 22, 2006 and March 26, 2012 (subclass two).

9/30/2013 Order [ECF No. 145]. While the Plaintiffs' lease provisions are not identical, the leases all generally provide that the Plaintiffs are entitled to a royalty of one-eighth of the net proceeds received from the sale of gas. It was also determined that the leases contemplate calculation of royalties by the net-back method which allows ECA to compute royalties as "one-eighth of the sale price of the gas minus one-eighth of the post-production costs of getting the gas to market." Rep. and Rec. [ECF No. 22] at 14, 10 adopted by Memo. Op. and Order [ECF No. 27].

The Court has previously granted Plaintiffs' summary judgment on liability for interstate transportation charge deductions that were incurred after ECA transferred title of the gas to third party purchasers at the five points where the gas is received into the interstate pipeline system. Rep. and Rec. [ECF No. 92] at 29, adopted by Memo. Order [ECF No. 103].[2] The Court found:

[T]he proper inquiry is the point at which the gas is sold, and not... whether ECA actually incurred the interstate pipeline transportation costs. On this point, it is undisputed EMCO buys the gas from ECA. It is also undisputed that, under the terms of the Gas Purchase/Sales Contract, ECA retains title to the gas until it passes to third party purchasers at the five points where the gas is received into the interstate system. Thus the gas is "sold" at these points and ECA cannot recover costs incurred thereafter.

Ibid. In further explaining its finding regarding interstate transportation charges, the Court found:

[T]he significant event concerning the ownership of the gas is the point at which title passes. At that point, ECA legally does not own the gas. The Report and Recommendation identified the points at which title passes based upon the facts presented at the time - those five locations identified by Plaintiffs and admitted to by ECA. If, at trial, ECA can demonstrate that title to Plaintiffs' gas passed from it to third party purchasers at points other than those previously identified during the lawsuit's timeframe, it will have the opportunity to prove the same.... Again, if ECA demonstrates that it incurred interstate transportation costs ...

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