IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF ARKANSAS WESTERN DIVISION. RUDY F. WEBB, et al. PLAINTIFFS

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1 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 1 of 12 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF ARKANSAS WESTERN DIVISION RUDY F. WEBB, et al. PLAINTIFFS v. CASE NO. 4:13CV00232 BSM EXXON MOBIL CORPORATION, et al. DEFENDANTS ORDER Plaintiffs motion for class certification [Doc. No. 53] is granted in part, with Arnez and Charletha Harper serving as named class representatives. I. BACKGROUND Beginning in the 1940 s, the Magnolia Pipe Line Company entered into a series of easement contracts with landowners in Texas, Arkansas, Missouri, and Illinois, in order to allow Magnolia to place an oil pipeline on the landowners property. The pipeline, which spans approximately 650 miles, was originally intended to transport crude oil in a northward direction. Magnolia is the corporate predecessor of defendants Exxon Mobil Corporation ( Exxon ), and Exxon is responsible for the continuing maintenance of the pipeline today. In constructing the pipeline, Magnolia used a type of pipe created by a process known as Low Frequency Electric Resistance Welding ( LFERW pipe ). The use of LFERW pipe was widely abandoned in the 1970 s because the seams of LFERW pipe are not as strong as pipe manufactured by modern means, and LFERW pipe is more prone to cracking and leaking. To date, Exxon has replaced approximately two-hundred miles of the original LFERW pipe. In 2006, Exxon decided to reverse the flow of the pipeline so that it flowed

2 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 2 of 12 from north to south. Additionally, Exxon elected to use the pipeline to transport tar sands, which were much heavier than the crude oil it was previously pumping. On March 29, 2013, a portion of the pipeline ruptured in Mayflower, Arkansas, spilling oil into the community. The four proposed named plaintiffs are two married couples: Rudy and Betty Webb, and Arnez and Charletha Harper. Both the Webbs and the Harpers own land subject to Exxon s easement, but neither property suffered any damage related to the oil spill. Instead, the Webbs and Harpers seek to represent all persons who owned property subject to Exxon s easement as of March 29, They seek either (1) rescission of the easements and removal of the pipeline from their property, or (2) specific performance of the easement contract, requiring Exxon to replace the pipeline. Plaintiffs contend that certification is appropriate under either Rule 23(b)(2) or Rule 23(b)(3). II. LEGAL STANDARD District courts have broad discretion in determining whether to certify a class. Gilbert v. City of Little Rock, 722 F.2d 1390, 1399 (8th Cir. 1983). To obtain class certification, plaintiffs must show that the class meets the requirements of Federal Rule of Civil Procedure 23. Coleman v. Watt, 40 F.3d 255, 258 (8th Cir. 1994). To obtain class certification under Rule 23(a), plaintiffs must show that: (1) the class is so numerous that joinder of all members is impracticable ( numerosity ); (2) there are questions of law or fact common to the class ( commonality ); (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class ( typicality ); and (4) the representative parties will fairly and adequately protect the interests of the class ( adequate representation ). Fed. R. Civ. P. 2

3 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 3 of 12 23(a); Paxton v. Union Nat l Bank, 688 F.2d 552, 559 (8th Cir. 1982). In addition to meeting these requirements, the proposed class must fall into one of three categories provided in subsection (b). The first type of class action is one in which the prosecution of individual actions would result in inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class. Fed. R. Civ. P. 23(b)(1). The second type of class action is appropriate when the defendants have acted or refused to act on grounds generally applicable to the whole class, making declaratory relief appropriate with respect to the class as a whole. Id., 23(b)(2). The third type of class action is preferred if questions of law or fact common to the members of the class predominate over individualized consideration, and the class action is the superior method for adjudication. Id., 23(b)(3). If a class meets the prerequisites of Rule 23(a) and fits into one of the three types of actions enumerated in Rule 23(b), then Rule 23(c)(4) permits an action to be maintained with respect to particular issues. III. DISCUSSION The motion for class certification is granted, with Arnez and Charletha Harper as named representatives, because the Harpers satisfy the requirements of Rule 23. Rudy and Betty Webb are not proper class representatives because they lack standing to represent the proposed class. A. Plaintiffs Claims Are Not Preempted Exxon renews its arguments from its motion to dismiss, contending that a class action 3

4 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 4 of 12 cannot be certified because, as a predicate matter, the plaintiffs claims are preempted by the Pipeline Safety Act ( PSA ). The PSA allows citizens to seek injunctive relief without restricting their right to other remedies provided by common law, but expressly preempts states from regulating in the area of safety in connection with interstate hazardous liquid pipelines. See 49 U.S.C (d); Kinley Corp. v. Iowa Utilities Bd., 999 F.2d 354, 358 (8th Cir. 1993). The PSA, however, is silent as to rights-of-way and easements. Columbia Gas Transmission Corp. v. Drain, 191 F.3d 552 (4th Cir. 1999). A mere request to comply with a private agreement does not automatically make a party a state actor with respect to the PSA. SFPP, L.P. v. Union Pacific R.R. Co., 274 Fed. Appx. 549, 550 (9th Cir. 2008). In a similar case, a lessee of mineral rights sued an interstate pipeline operator, seeking to enforce its property rights and to compel the operator to develop a mitigation plan addressing the possibility of subsidence due to mining. American Energy Corp. v. Texas Eastern Transmission, LP, 701 F.Supp.2d 921, 925 (S.D. Ohio 2010). The operator moved to dismiss, contending that the lessee s attempt to force the operator to develop a mitigation plan was preempted by the PSA. Id. at 927. The court rejected this argument, acknowledging that while state laws regarding pipeline safety are preempted, other state laws not dealing with pipelines, such as property and tort law, are not preempted. Id. at 929, 931; see also Abramson v. Florida Gas Transmission Co., 909 F.Supp. 410, (E.D. La. 1995) (noting that neither the PSA nor the Natural Gas Act preempts state contract, tort, or property law). Here, Exxon correctly notes that plaintiffs are not bringing a claim pursuant to the 4

5 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 5 of 12 PSA. Nonetheless, Exxon claims that the plaintiffs suit to remove or replace the pipeline is an attempt to usurp the exclusive authority of the federal government to regulate interstate pipelines. Def. s Resp., Doc. No. 61, at 9. All plaintiffs are attempting to do, however, is enforce their easement contracts via a common law breach of contract claim, which speaks to the larger issue of whether the easement itself can continue to exist. While their pleadings do characterize the pipeline as unsafe, plaintiffs make no reference to any state law standards regarding safety that would raise questions of PSA preemption. Thus, plaintiffs claims are not preempted. B. The Harpers Have Standing to Bring Suit A class must be defined in such a way that anyone within it would have standing ; however, it is not required that each member of a class submit evidence of personal standing. Avritt v. Reliastar Life Ins. Co., 615 F.3d 1023, 1034 (8th Cir. 2010). Exxon challenges the standing of the Webbs and the Harpers specifically, as well as the standing of the proposed class generally. First, Exxon contends that the class definition of property owners as of March 29, 2013, is over-broad, as it would include persons who have sold their property subsequent to that date. Second, Exxon contends that certain individuals, such as the Webbs, own property that is subject to an easement, but is unencumbered by the physical pipeline. Third, Exxon notes that the pipe has already been repaired or replaced in certain locations, thus persons who own such land have not suffered any injury that can be redressed. As a threshold matter, a court is not bound by the class definition proposed in the complaint and should not dismiss the action simply because the complaint seeks to define the 5

6 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 6 of 12 class too broadly. Robidoux v. Celani, 987 F.2d 931, 937 (2d. Cir. 1993). Thus, district courts are permitted to modify class definitions in order to achieve the necessary precision. In re Monumental Life Ins. Co., 365 F.3d 408, 414 (5th Cir. 2004). Such an action can be taken sua sponte, prior to the granting of class certification. See Robinson v. Gillespie, 219 F.R.D. 179, 185 (D. Kn. 2003). Exxon is correct in its first assertion that defining a class of property holders who owned property subject to the easement on March 29, 2013, could include potential class members who have since sold their property, and would therefore lack an injury that could be redressed by rescinding the easement or replacing the pipeline. Exxon is also correct that certain putative members of the proposed class, such as the Webbs, have property that is subject to an easement, but is untouched by any pipeline. For that reason, the Webbs cannot be named class representatives, as they do not have standing to represent persons who seek to have the pipeline replaced or removed. Finally, while Exxon notes that portions of the pipe have already been replaced, such an argument is more proper as a defense to be raised later in litigation, and it would be inappropriate to deny certification because that would require a determination of the ultimate issue: that by replacing portions of the pipe, Exxon is complying with the terms of its easement contract. The key question, therefore, is whether it is appropriate to narrow the class definition sua sponte so that those with legitimate claims can proceed as a class. As discussed below, narrowing the class definition is warranted because class treatment is preferable to the 6

7 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 7 of 12 potential of hundreds of separate suits being filed against Exxon. Taking into account the concerns raised by Exxon, the more appropriate definition of the class is as follows: all persons and entities who currently own real property subject to an easement for the Pegasus Pipeline and who have pipeline physically crossing their property, from Patoka, Illinois to Corsicana, Texas. The Harpers have standing because they own property that is subject to an easement and the pipeline. C. Class Certification is Appropriate As the pipeline stretches 650 miles across four states, numerosity of plaintiffs is not at issue, as joinder of all members of the class would be impracticable. Thus, the remaining issues concern the commonality, typicality, and adequacy elements, as well as the requirements of Rule 23(b). 1. Commonality Plaintiffs satisfy the commonality requirement because questions of law or fact common to the proposed class exist. A common contention must be of such a nature that it is capable of classwide resolution which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke. Bennett v. Nucor Corp., 656 F.3d 802, 814 (8th Cir. 2011). Here, plaintiffs set forth several issues common to the class, most notably whether Exxon has failed to properly operate and maintain the pipeline, and whether such failure constitutes breach of their easement contracts. The answers to these questions are central to the validity of all class members claims, and will provide class-wide resolution. Thus, plaintiffs have shown commonality. 7

8 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 8 of Typicality The Harpers satisfy the typicality requirement because their claims are the same as those of the other class members. The requirement of typicality is satisfied when the claims or defenses of the representatives and the members of the class stem from a single event or are based on the same legal or remedial theory. Paxton, 688 F.2d at Here, both the Harpers and the remainder of the proposed class members base their claim on Exxon s operation of the pipeline, and all seek the same relief. Thus, the plaintiffs have shown typicality. 3. Adequacy The party moving for class certification bears the burden of proving that it will adequately protect the interests of the class. Rattray v. Woodbury Cnty., IA, 614 F.3d 831, 835 (8th Cir. 2010). Thus, plaintiffs must show that the class representatives have common interests with all class members, and that the representatives will vigorously prosecute those interests via qualified counsel. Paxton, 688 F.2d at Exxon contends that plaintiffs have not proven adequacy due to the atypicality of their claims. Def. s Resp. at 31. As discussed above, however, the Harpers claims are typical of those of the entire class, and a review of the submitted résumés of class counsel indicates that counsel are qualified to handle this case. Thus, the plaintiffs have shown adequacy. 4. Rule 23(b)(2) Certification is not appropriate under Rule 23(b)(2) because plaintiffs are not seeking injunctive relief. In order to certify a class pursuant to Rule 23(b)(2), there must exist a 8

9 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 9 of 12 single injunction or declaratory judgment that could provide relief to all class members. Wal- Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2557 (2011). The Rule does not speak of equitable remedies generally but of injunctions and declaratory judgments. Id. at As Exxon correctly notes, rescission of a contract is an equitable remedy. See Wheeler Motor Co. v. Roth, 867 S.W.2d 446, 449 (Ark. 1993). Plaintiffs sole claim is breach of contract, for which they seek either rescission of the easement contract, or specific performance. Neither of those remedies is tantamount to the injunctive relief that must be asserted in order to certify a Rule 23(b)(2) class action. 5. Rule 23(b)(3) Certification is appropriate pursuant to Rule 23(b)(3) because plaintiffs can establish both predominance and superiority. To determine whether common questions predominate, a court must conduct a limited preliminary inquiry, looking behind the pleadings. Blades v. Monsanto Co., 400 F.3d 562, 566 (8th Cir. 2005). Such an inquiry can be satisfied if the plaintiff produces common evidence to show that common issues predominate on a systematic, class-wide basis. Id. at 566, 569. Thus, the proposed class must be sufficiently cohesive to warrant adjudication by representation. Amchem Prods. v. Windsor, 531 U.S. 591, 623 (1997). Additionally, the plaintiffs must prove that a class action is the superior method of adjudication. Rule 23(b)(3) provides four factors to assess both predominance and superiority: (A) the class members interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the 9

10 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 10 of 12 controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action. Fed. R. Civ. P. 23(b)(3)(A) (D). Throughout its pleadings, Exxon s refrain is that class treatment is inappropriate because of the individualized nature of the easements. Exxon contends that [s]ome of the easements grant a right of way over small parcels of land while others grant rights of way over much larger parcels of land. Def. s Resp. at 15. Exxon argues that some of the larger parcels have since been subdivided, and that the original easement holders may no longer be the actual owners. Thus, Exxon claims that a class action would necessarily involve countless inquiries into chain of title, with the potential for thousands of individual trials to determine whether [Exxon] breached any provisions of the easements at issue.... Id. at 37. Exxon s argument has been raised before in similar cases concerning easements. In 2013, several thousand Missouri landowners sued a defendant electric cooperative which held easements over the individual parcels of land in order to transmit electric power. See Barfield v. Sho-Me Power Electric Coop., Case No. 11-cv NKL, 2013 WL at *1 (W.D. Mo. July 25, 2013). The landowners sought a class action, claiming that the cooperative had exceeded the scope of the easements. Id. In response, the electrical cooperative cited a number of cases which it argued supported denial of class certification on the ground that there were too many fact-specific property ownership issues. Id. at *6 7. In rejecting the cooperative s argument, the district court noted that the cases cited by the cooperative mainly concerned railroad rights-of-way which necessarily implicate more 10

11 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 11 of 12 complex issues than those involved in easements between private landowners and [the cooperative]. Id. at *7. Here, Exxon mostly cites cases concerning railroads or cases where there were no valid easement contracts. Like the Barfield plaintiffs, however, the proposed class members all are subject to Exxon s easement, and their claims depend on the rights as specified in their easement contracts. See id. at *8. Thus, Exxon s argument that the class should not be certified on that basis is unpersuasive. Moreover, now that the class has been narrowed to only include those individuals with both an easement and the pipeline on their property, it should be much simpler to ascertain who is actually affected. Plaintiffs have shown that common issues predominate; all issues arise out of the plaintiffs easements and concern common questions of Exxon s operation and maintenance of the pipeline. Likewise, plaintiffs have shown superiority. While Exxon argues that the claims are too individualized, as discussed above, that argument is unpersuasive. Granting class certification is preferable to the potential of each of the landowners attempting to bring suit individually, as it will reduce both costs and the use of judicial resources. Accordingly, plaintiffs have satisfied the requirements of Rule 23(b)(3). IV. CONCLUSION For the reasons set forth above, plaintiffs motion for class certification [Doc. No. 53] is granted in part. Pursuant to Rule 23(c), the following class is certified: All persons and entities who currently own real property subject to an easement for the Pegasus Pipeline and who have pipeline physically crossing their property, from Patoka, Illinois to Corsicana, 11

12 Case 4:13-cv BSM Document 67 Filed 08/12/14 Page 12 of 12 Texas. Arnez and Charletha Harper are named as class representatives, and the lawyers representing the plaintiffs are appointed as class counsel. See Fed. R. Civ. P. 23(g). Additionally, plaintiffs must submit a proposed notice plan within thirty days of this order. IT IS SO ORDERED this 12th day of August UNITED STATES DISTRICT JUDGE 12