Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Walney v. Swepi LP

United States District Court, W.D. Pennsylvania

January 23, 2017

THOMAS J. WALNEY and RODNEY A. BEDOW, SR., individually and on behalf of all others similarly situated, Plaintiffs,
v.
SWEPI LP and SHELL ENERGY HOLDING GP, LLC, Defendants.

          OPINION

          Joy Flowers Conti Chief United States District Judge

         Presently pending before the court in the above-captioned matter are the following motions: (a) the parties' Joint Contested Motion for Approval of Plan of Class Action Notice (ECF No. 114); (b) the Second Motion to Amend Class Definition (ECF No. 117) filed by plaintiffs Thomas J. Walney and Rodney A. Bedow, Sr. (“plaintiffs”); and (c) plaintiffs' Motion to Expedite Entry of s (ECF No. 127). For the reasons that follow, the parties' Joint Contested Motion for Approval of Plan of Class Action Notice will be granted with directions that the parties incorporate modifications to the class notice forms and class order as set forth in this opinion, plaintiffs' Second Motion to Amend Class Definition will be granted, and plaintiffs' Motion to Expedite Entry of Orders will be denied as moot.

         I. Plaintiffs' Second Motion to Amend Class Definition (ECF No. 117)

         On September 14, 2015, this court entered a memorandum opinion and order certifying this case as a Rule 23(b)(3) class action with respect to Counts I and I(A) of the Second Amended Complaint. In doing so, the court defined the class to include:

Every person who on or after March 14, 2009, signed a Pennsylvania oil and gas lease (labeled “PA Paid Up Lease Rev. 06.09.2011”) and/or memorandum thereof in favor of and recorded by SWEPI, LP and received, in exchange therefore, a draft instrument in the amount of the corresponding lease bonus, which draft was neither paid nor replaced by a subsequently issued draft or check relating to the same (or substantially the same) property.
Notwithstanding the foregoing, there shall be excluded from the Class any person electing in writing to be excluded from the Class.

(Mem. Op. dated Sept. 14, 2015 at 49, ECF No. 90.) Plaintiffs subsequently filed a motion to amend the class definition (ECF No. 93), which was denied on May 13, 2016 (ECF No. 111).

         On June 7, 2016, plaintiffs filed their Second Motion to Amend Class Definition (ECF No. 117). The motion was based on class counsel's discovery that another lease form, i.e., “PA Paid Up Lease Rev. 05.01.2011” (hereafter, “Lease Form 05.01.2011”), had been utilized by SWEPI LP (“SWEPI”) and Shell Energy Holding GP, LLC (“Shell” and, together with SWEPI, “defendants”) during the time frame relevant to this lawsuit. Plaintiffs sought to amend the current class definition to include these additional leaseholders. They suggested that the amendment could easily be accomplished by simply inserting a reference to Lease Form 05.01.2011 into the current class definition.

         After defendants filed their response to the motion and related materials (ECF Nos. 121, 122), the court held a motion hearing on August 11, 2016. As reflected in the transcript of that hearing (ECF No. 131), the court indicated its willingness to amend the class definition in accordance with plaintiffs' suggestion. The court noted, however, that it would add an exception to exclude from the class “any lessor who has filed a separate lawsuit.” (See Tr. of 8/11/16 Mot. Hrg. at 9, ECF No. 131.) The intent of the court was to exclude those landowners who had previously obtained a favorable Rule 56 judgment in the case of Masciantonio v. Swepi LP, Civil Action No. 4:13-cv-797, 2016 WL 3856122 (M.D. Pa. July 15, 2016). The court left it to the parties to craft a proposed order that effectuate the intended amendment. (Hrg. Tr. at 10.)

         Having been unable to reach an agreement on the appropriate language, the parties submitted their respective proposals. Plaintiffs suggest the following (with proposed changes in the class definition underlined):

Every person who on or after March 14, 2009, signed a Pennsylvania oil and gas lease (labeled “PA Paid Up Lease Rev. 06.09.2011” or “PA Paid Up Lease Rev. [05.01.2011]”)[1] and/or memorandum thereof in favor of and recorded by SWEPI, LP and received, in exchange therefore, a draft instrument in the amount of the corresponding lease bonus, which draft was neither paid nor replaced by a subsequently issued draft or check relating to the same (or substantially the same) property.
Exclusions. Notwithstanding the foregoing, there shall be excluded from the Class any Person electing in writing or email to be excluded from the Class, and any Person whose individual claim for payment of the lease bonus has been sustained or denied by a verdict or dispositive order of a court in a separate lawsuit, irrespective of the outcome of any appeal.

(See ECF No. 127-2.) In proposing this language, plaintiffs insist that the key distinction for exclusion from the class, consistent with Masciantonio, should not be whether a separate lawsuit is filed, but whether the individual claim has been adjudicated. They maintain that their proposed language is necessary in order to protect the interests of putative class members - like class counsel's other individual clients - who have prophylactically filed (or may yet file) lawsuits in state court. Their concern is that these putative class members might otherwise be excluded from the class notwithstanding their right to discontinue their separate actions at a time when decertification of this class action is no longer a possibility.

         Defendants counter that plaintiffs' proposed language is unduly confusing and unnecessary. They propose an alternative amendment to the last sentence of the class definition, which (in lieu of the underlined wording) would state: “Any person who has already filed a separate federal court lawsuit related to lease bonuses is excluded from the Class.”[2] Defendants maintain that, by referencing other federal lawsuits, their proposed order will achieve the purpose of keeping the landowners in Masciantonio out of the class while allowing class counsels' state court plaintiffs to remain in the class. Defendants state they are unaware of any other Pennsylvania landowners, other than the Masciantonio plaintiffs, who have filed suit in federal court related to lease bonuses. (See Defs.' Resp. to Pls.' Mot. Expedite Entry of Orders at p. 3, ECF No. 128.) Their concern is that plaintiffs' proposed language would encourage or allow inappropriate “sideline-sitting, ” i.e., a situation where a putative class member might opt out of the class, file a separate lawsuit, then later dismiss the suit and rescind the opt-out after waiting to see the outcome of dispositive motions in the two respective cases.

         Analysis

          The disagreement here centers on how to define the status of leaseholders who have filed, or may yet file, parallel litigation involving claims for signing bonuses. Defendants claim that they know of no other pending cases besides those involving the Masciantonios and class counsel's individual state court clients, but there could theoretically be other lawsuits pending somewhere in the Commonwealth. Plaintiffs would clearly like these putative class members to remain in the class, at least until the point where it becomes clear that there will be no decertification. At least one treatise recognizes a “recurring issue” as to “whether a putative class member's participation in, or initiation of, separate litigation is a sufficient indication of a desire to opt out of the class.” 3 William B. Rubenstein, N C A §9:46 (5th ed. 2013). According to Newberg, “[m]ost courts hold that pending parallel litigation is not sufficient to communicate an opt-out request, . . . though a few courts have found that filing separate litigation based on the same claims may be considered a reasonable indication of the request to opt out.” Id. §9:46 (Supp. Dec. 2013) (emphasis in the original) (citing decisions outside the Third Circuit).

         Assuming, then, that other cases involving putative class members might be pending either now or hereafter, the individual litigants would not necessarily be excluded from the class under the majority rule unless they formally opted out in accordance with the procedures approved by the court. Once class members request exclusion, they should ordinarily not be permitted, without leave of court, to rescind their “opt out” after the court's deadline for rescinding exclusions has passed.[3] See, e.g., Klein v. Robert's Am. Gourmet Food, Inc., 808 N.Y.S.2d 766, 771 (N.Y.App.Div. 2006) (noting, in the context of a class settlement, that “[g]enerally, permission to opt back in must be obtained from the court . . . unless the terms of the settlement provide otherwise”); 3 William B. Rubenstein, Newberg on Class Actions §9:45 (5th ed. 2013) (“‘[T]he state of the class at the end of the opt-out period should be fixed enough to allow parties to conduct their affairs.'”) (quoting Manual for Complex Litigation (Fourth) §21.321 (2004)). This limitation on requesting exclusion and rescinding such requests should prevent the kind of “sideline-sitting” that defendants are concerned about.

         For those class members who may have filed (or will try to file) individual lawsuits while also desiring to remain in the class, complications could potentially arise. The Manual for Complex Litigation recognizes that “[p]ersons who are members of a certified federal court class might pursue their own separate actions in the same court or in other courts even if they have not elected to be excluded from the class.” Manual for Complex Litigation (Fourth) §21.42 (2004). The Manual for Complex Litigation recommends that federal courts in these situations consider coordinating the parallel litigation with other courts, where possible. Id. Alternatively, if informal coordination is unsuccessful, the federal court overseeing the class action may entertain a motion to enjoin individual related cases on the ground that they conflict with, or threaten the integrity of, the federal class action. Id. See 28 U.S.C. §2283 (“A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgment.”)(emphasis supplied); In re Diet Drugs Prods. Liab. Litig., 282 F.3d 220, 235 (3d Cir. 2002) (holding that “a federal court entertaining complex litigation, especially when it involves a substantial class of persons from multiple states, or represents a consolidation of cases from multiple districts, may appropriately enjoin state court proceedings in order to protect its jurisdiction.”) (citing Carlough v. Amchem Prods., Inc., 10 F.3d 189, 202-04 (3d Cir. 1993)); Eberle v. Wilkinson, No. CIVA 2:03-CV-272, 2008 WL 886138, at *2 (S.D. Ohio Mar. 28, 2008) (“Where duplicative federal actions are pending, a federal court may, in the exercise of its discretion, stay one of the actions, permit both actions to proceed, or enjoin parties from proceeding in one of those actions. . . . ‘In weighing these three options, courts often proceed ...under the rule of thumb that the entire action should be decided by the court in which an action was first filed.'”) (citing and quoting Smith v. Sec. and Exchange Comm'n, 129 F.3d 356, 360 (6th Cir. 1997)) (second ellipsis in the original). Ultimately, “[t]he binding effect of a judgment in an individual or class action on other related actions depends on principles of claim and issue preclusion.” Manual for Complex Litigation (Fourth) §21.42 (2004).

         As matters presently stand in this case, there does not appear to be any present danger of overlapping lawsuits or conflicting adjudications. The Masciantonio plaintiffs' lease claims were already successfully resolved and, in any event, their lease was found to be materially distinguishable from the ones at issue in this case, in part because of a particular provision in their lease addendum. See Masciantonio v. SWEPI LP, No. 4:13-CV-797, 2016 WL 3856122, at *6 n. 4 (M.D. Pa. July 15, 2016). Class counsel's individual clients have reportedly stayed their state court litigation pending further developments in this case. They apparently intend to dismiss those lawsuits at such time as the risk of decertification no longer exists or the merits of this case are adjudicated. Defendants are in the best position to know whether any additional claims for lease bonus payments are pending in this Commonwealth, and they represent that, to the best of their knowledge, no additional individual lawsuits are currently pending.

         To the extent other individual lawsuits may present themselves, plaintiffs' proposed order seems preferable to that of defendants. Unlike defendants' proposal, plaintiffs' language does not artificially differentiate between lawsuits filed in state court and those filed in federal court. Plaintiffs' language recognizes that, in either situation, the claimants in these cases are presumptively members of this class unless they opt out. The concern expressed by defendants about “sideline sitting” will be eliminated by this court's establishment of a firm deadline for opting out of the class and for rescinding prior exclusion requests. (The latter point is discussed infra.) In the somewhat unlikely event that additional, individual claimants present themselves and do not want to opt out of this litigation, the court can adequately address these contingencies on a case-by-case basis. Specifically,

• the court can evaluate in the first instance whether the individual case has been or will be stayed pending developments in this case; and
• if the individual case is not stayed, this court can consider coordinating pretrial proceedings with the other court or, if appropriate, entertain a motion to enjoin the individual action based on considerations of judicial economy, comity, and issue and claim preclusion.

         Based upon the foregoing considerations, the court approves plaintiffs' proposed changes to the class definition, with the clarification that the new class definition shall refer to Lease Form “05.01.11” rather than “05.11.11.” (See n.1, supra.)

         II. The Parties' Joint Contested Motion for Approval of Plan of Class Action Notice (ECF No. 114)

         A. Reference in the Class Notice Order Regarding a Deadline for Opt-Outs or Rescissions of Opt-Outs From the Class

         A dispute remains concerning the Class Notice Order with respect to the applicable timeframe for opting out of the class or rescinding exclusionary requests. Plaintiffs' proposed form of order (ECF No. 127-3 at 3-4, ¶¶ 5-7) states the following:

5. The Exclusionary Period. The expiration date of the exclusionary (opt-out) period described in each Mail and Publication Notice shall be set by Class Counsel to be such date as is not less than 60 days following the first mailing of the Mail Notices.
6. Additional Class Members. If as the result of the publication of notice or otherwise, any person who has not received a Mail Notice communicates to Class Counsel what he determines to be a creditable claim of membership in the class, Class Counsel shall immediately: (1) notify Defendants' Counsel of the claim of such person; and (2) transmit a Mail Notice by U.S. First Class Mail to such person, who shall, to the extent any then remaining unexpired portion of the exclusionary period does not accommodate same, be accorded not less than twelve days from the date of such mailing within which to elect exclusion. Notwithstanding the foregoing no person not listed in Exhibit 3 shall be added to the putative class who does not first contact class counsel prior to such date as is the earlier of 30 days prior to the date of the commencement of trial and 90 days following the filing of a dispositive motion by any party.
7. Class Counsel's Certifications. Within 20 days following expiration of the date of the exclusionary period, Class Counsel shall cause to be filed declarations as follows:
(a) certifying that the Mail Notices shall have been mailed in accordance with this Order, with specificity as to the name and address of each addressee and the date of mailing to such addressee;
(b) certifying that the Publication Notices shall have been published in accordance with this Order, with specificity as to the date on and newspaper in which each shall have been published; and
(c) certifying the identity of each person who has timely elected (and not thereafter rescinded) exclusion from the class, and shall thereafter file such supplemental certifications as may be necessary to update same by ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.