Colo. Lone Pine Ruling Ups Ante On Fracking Court Battles by Keith Goldberg, April 29, 2015, Law360
The Colorado Supreme Court’s recent ruling in a fracking contamination suit that state law doesn’t allow for so-called “Lone Pine” orders that require plaintiffs to provide evidence of an injury before discovery will add time and costs to such suits and send oil and gas companies scurrying to the federal courts in search of relief, experts say.
An en banc panel for the high court last week concluded that a trial court violated Colorado’s Rules of Civil Procedure by dismissing William and Beth Strudley’s suit against Antero Resources Corp. after issuing a modified case management order requiring the couple to show evidence to support their allegations that their children suffered burning eyes, bloody noses and headaches due to Antero’s natural gas drilling operations.
While comment on a revised civil procedure rule may encourage courts to try to weed out claims early in litigation, there is simply no explicit authorization for state courts to use Lone Pine and similar case management orders as there is for federal courts, the Colorado Supreme Court said.
“The Colorado Supreme Court really distinguished the state rules from the federal rules,” Paul Enockson of Denver-area Enockson Law LLC said. “They basically said, ‘We’re not going to impose a higher threshold, [plaintiffs] are entitled to their discovery.'”
That means toxic tort defendants in Colorado state court are going to have to go through full-blown discovery in order to get suits alleging harm from contamination dismissed, according to Faegre Baker Daniels litigation partner Colin Deihl. “That’s significantly more expensive and significantly more time-consuming,” Deihl said.
Given the controversy over fracking and the fact that Colorado is a significant oil and gas development state, the ruling could embolden more plaintiffs to launch suits alleging damages from fracking and other drilling activities, experts say. “It makes it much easier to file these cases and much more expensive for the defendant to litigate them,” Deihl said. “In a difficult case or a close case, the expense incurred means defendants are more likely to settle those cases.”
Faced with a potentially lengthy and expensive discovery process, experts say oil and gas companies and other toxic tort defendants will get their cases removed to federal court, where if there isn’t a guarantee that a judge will issue a Lone Pine order, the option is at least on the table.
“If you can find yourself a way to get into federal court in Colorado, you’re going to try and do that, to take advantage of the Lone Pine mechanisms,” Enockson said. “But you would have to have diversity of citizenship or a federal question. In most toxic tort cases, it’s going to be diversity of citizenship; if you have an energy company, that’s usually diversity of citizenship.”
Legally, the Colorado ruling doesn’t have any precedential value beyond its borders, but it could wield some persuasive power over courts in other states that are wrestling with Lone Pine or similar case management issues, Deihl said.
“State supreme courts frequently look to other states when deciding precedential issues,” Deihl said. “To the extent another state, particularly a neighboring state, hasn’t decided whether Lone Pine orders are allowed or not under their rules of civil procedure, it’s certainly possible, and likely probable, that they’ll look to this decision.”
However, the Colorado Supreme Court’s rejection of Lone Pine orders doesn’t necessarily tilt the playing field to plaintiffs in suits against oil and gas companies over drilling activities, experts say.
“Lone Pine orders came about in context of complex, mass tort cases,” BakerHostetler partner Michael Joy said. “In the context of hydraulic fracturing cases, you typically don’t have the massive number of plaintiffs, and you typically do not have such a tenuous nexus to causation. You’ve got a very site-specific activity, limited and identifiable number of possible causes, and the plaintiff should be able to specifically state how they were harmed.”
Essentially, the Colorado Supreme Court is saying there has to be another mechanism to ferret out whether a plaintiff has an injury besides a Lone Pine order, according to Ty Buthod, who heads Baker Botts LLP’s toxic tort litigation practice. “It doesn’t limit a plaintiff’s requirement to have an injury before it can file suit,” Buthod said. That’s what energy companies will be focusing on if they can’t get their suits removed to federal court, Joy said.
“Companies will look at Colorado and look at other states that have had issues with Lone Pine orders and say to themselves, ‘What other procedural methods can we use to get at the same issue before both sides incur unnecessary costs of litigation?'” Joy said.
Colo. High Court Axes ‘Lone Pine’ Orders In Fracking Fight by Joe Van Acker, April 23, 2015, Law360
The Colorado Supreme Court on Monday held that state law doesn’t allow for so-called Lone Pine orders that require plaintiffs to provide evidence of an injury before discovery is completed, siding with a couple claiming that their children were sickened by fracking pollutants.
An en banc panel for the high court sided with an appellate court’s ruling, finding that a trial court violated Colorado’s Rules of Civil Procedure by dismissing William and Beth Strudley’s suit against Antero Resources Corp. after issuing a modified case management order requiring the couple to show evidence to support their allegations that their children suffered burning eyes, bloody noses and headaches due to Antero’s natural gas drilling operations.
“The rule does not provide a trial court with authority to fashion its own summary judgment-like filter and dismiss claims during the early stages of litigation.” the court said.
The Strudleys claimed that they were forced to move about five months after drilling began near their home, and they identified several chemicals that polluted their property without directly linking them to the children’s injuries, according to the opinion.
The trial court issued an order requiring the couple to identify and quantify the contamination of their property from Antero and co-defendants Calfrac Well Services Corp. and Frontier Drilling LLC, but prohibited the Strudleys from conducting discovery.
… After the Strudleys successfully appealed, Antero petitioned the state Supreme Court, arguing that a comment on a revised Rule of Civil Procedure stating that the rule acts in the interest of “early purposeful and reasonably economical management of cases” allows courts to weed out claims early in litigation. But the Supreme Court said that the statement on the rule wasn’t enough to cover the trial court’s order. “This goal in no way substitutes for the kind of explicit authorization the federal rules provide for issuance of Lone Pine orders,” the Supreme Court said.
Marc J. Bern of Napoli Bern Ripka Shkolnik LLP, an attorney for the Strudleys, said that he and his clients feel “vindicated” and said that the Lone Pine dispute was a waste of judicial resources. [Antero’s intent?]
“Antero took a shot and they failed; Colorado does not recognize Lone Pine orders and this case should have been resolved long ago,” Bern said. “But due to Antero’s failure to step up to the plate, after many years we’re finally going to be able to start litigating this case.”
Jack R. Luellen, April 20, 2015,
Fox Rothschild LLP,
Energy Law Today
The court clearly finds Lone Pine orders, and other similar case management techniques, contrary to the Colorado Rules of Civil Procedure:
We hold that Colorado’s Rule of Civil Procedure do not allow a trial court to issue a modified case management order, such as a Lone Pine order, that requires a plaintiff to present prima facie evidence in support of a claim before a plaintiff can exercise its full rights of discovery under the Colorado Rules. Although the comments to C.R.C.P. 16 promote active judicial case management, the rule does not provide a trial court with authority to fashion its own summary judgment-like filter and dismiss claims during the early stages of litigation.
Will the Strudley holding allow plaintiffs with cognizable claims, but without evidentiary support at the outset, the opportunity to buttress their claims with evidence gained through the discovery process? Or will the court’s ruling open the door for fishing expeditions by plaintiffs without any evidentiary foundation for their claims? The answer likely depends on your particular point of view, and only time will tell how much of an impact today’s holding will have on tort claims such as those advanced in Strudley.
The Tricky Case for Causation in Fracking Litigation, Some courts have been more lenient than others in weighing evidence of harm by Theodore E. Tsekerides and Yvette W. Lowney, with contributions by Jed P. Winer, Caroline Toole, and Josie Nusz, April 20, 2015, The National Law Journal
As Chief Judge Richard Posner famously recognized, “[t]he courtroom is not the place for scientific guesswork, even of the inspired sort. Law lags science; it does not lead it.” Rosen v. Ciba-Geigy Corp., 78 F.3d 316, 319 (7th Cir. 1996). This oft-cited maxim is particularly applicable in litigation involving hydraulic fracturing, or “fracking,” and in determining whether these operations pose health risks to people living in communities near well sites.
Scientists and researchers are paying close attention to this issue — indeed, no fewer than 16 studies have been published in the peer-reviewed literature, many in the past year alone. Given the high emotion and evident special interests on all sides of this issue, it is especially important that courts follow Posner’s maxim and hold true to long-established principles of causation when analyzing hydraulic-fracturing cases.
Of the published studies that report on potential human health effects, very few provide original empirical data specifically addressing health outcomes. Many discuss the inherent toxicity of chemicals used in the processes (e.g., Kassotis et al. 2013; Adgate et al. 2014; Stringfellow et al. 2014; Webb et al. 2014; Parker et al. 2014; and Kahrilas et al. 2015) with no linkage to assessment of demonstrated or calculated human exposures or associated health risks.
Other studies estimate exposures (based on area air monitoring data of varying quality) and discuss potential concerns or calculate theoretical risks (e.g., Bunch et al. 2014; McKenzie et al. 2012). Those studies that specifically address health effects in potentially affected populations (e.g., Fryzek et al. 2013; McKenzie et al. 2014; Rabinowitz et al. 2014) are limited to qualitative characterization of exposure, such as comparing “before and after” energy development, or assuming that exposure is related to proximity to hydraulic-fracturing operations.
None of these available studies specifically connect adverse health outcomes with exposure to individual chemicals or mixtures of chemicals. Even those that identify a possible link between proximity to operations and medically documented (McKenzie et al. 2014) or self-reported (Rabinowitz et al. 2014) health effects conclude that their findings indicate a need for further study, and specifically that “additional stud[ies] with stronger exposure metrics are warranted to explore these associations” (McKenzie et al. 2014).
Taken together, the available literature contains no studies that definitively link measurable adverse human health effects with specific exposures from hydraulic-fracturing operations. Several research programs are underway that may add to the scientific data and potentially inform the legal process.
It is against this backdrop of an evolving and unsettled scientific landscape that plaintiffs have filed lawsuits asserting various health-based claims from hydraulic-fracturing operations. Because of the uncertainty in the science regarding exposure levels and any association with adverse health effects and these operations, however, courts have grappled with how to ensure that plaintiffs satisfy their traditional tort law burden of proving proximate cause.
THE ‘LONE PINE’ STANDARD
One procedural tool unique to mass tort and toxic tort cases — and that may be particularly appropriate in the fracking context — is a Lone Pine order requiring plaintiffs to produce evidence of causation before permitting a case to proceed. The procedure arises from a New Jersey case in which the court dismissed plaintiffs’ case for failure to produce certain threshold information. Lore v. Lone Pine Corp., 1986 N.J. Super. Lexis 1626, 3-5, 10 (N.J. Super. Law Div. Nov. 18, 1986).
Several federal courts have since adopted this procedure as consistent with the expansive case-management powers that Federal Rule of Civil Procedure 16 bestows. See, e.g., Russell v. Chesapeake Appalachia, 2015 U.S. Dist. Lexis 24655, 11-12 (M.D. Pa. Mar. 2, 2015) (cataloging cases). Notably, the appropriateness of a Lone Pine order in a fracking case is before the Colorado Supreme Court. Antero Resources Corp. v. William G. Strudley, No. 13 SC 576 (Cert. granted, April 7, 2014).
Even if a Lone Pine order is entered, that is not necessarily the end of the case. See Baker v. Anschutz Exploration Corp., 2013 U.S. Dist. Lexis 90394 (W.D.N.Y. June 25, 2013). In Baker, landowners sued two energy companies alleging that chemicals from the companies’ wells contaminated their drinking water. Nearly two years after the complaint was filed, the court issued a Lone Pine order requiring plaintiffs to produce expert opinions identifying the hazardous substances to which they were exposed, the location of the exposure and “an explanation of causation.” Id. at 11. The plaintiffs thereafter produced two expert reports. Id. at 12. Although the reports were “far from models of clarity,” the court found their general statements about causation sufficient to meet the requirements of the Lone Pine order, and the case proceeded with discovery. Id. at 14.
Not all courts, however, have utilized Lone Pine orders. See, e.g., Russell v. Chesapeake Appalachia, 2015 U.S. Dist. Lexis 24655 (M.D. Pa. Mar. 2, 2015); Roth v. Cabot Oil & Gas, 287 F.R.D. 293 (M.D. Pa. 2012); Kamuck v. Shell Energy Holdings G.P. , 2012 U.S. Dist. Lexis 125566 (M.D. Pa. Sept. 5, 2012); Hagy v. Equitable Prod., 2012 U.S. Dist. Lexis 28439 (S.D. W.Va. March 5, 2012).
The common theme from cases in which Lone Pine requests have been denied appears to be a reticence to adopt what the courts view as an “exacting” or “restrictive” procedure at an early stage of litigation, when the more standard procedures and discretion of the court may be sufficient to balance and protect the interests of all parties. See, e.g., Roth, 287 F.R.D. at 299-300; Hagy, 2012 U.S. Dist. Lexis 28439 at 10. Such courts may be more receptive to entering a Lone Pine order after discovery has been well underway and plaintiffs have not produced substantial evidence of causation. Russell, 2015 U.S. Dist. Lexis 24655 at 14-15 (denying motion for Lone Pine order but indicating that such an order may be appropriate at a later date).
Another approach to consider is entry of a focused case-management order, so that discovery focuses first on causation and allows the critical threshold issue to be addressed sooner rather than later.
Even absent a Lone Pine or targeted case management order, plaintiffs and their experts must rely on more than ipse dixit assertions to establish causation and must account for conflicting studies, as well as limitations in studies. Also, their opinions should be struck as unreliable under either Daubert or Frye if they fail to consider the relevant universe of data in forming their opinions. See, e.g., Baker v. Anschutz Exploration Corp., 2014 U.S. Dist. Lexis 174442, 19-33 (W.D.N.Y. Dec. 17, 2014) (excluding expert’s causation opinion under Daubert when expert had not considered and evaluated conflicting data, and the opinion consisted of a bare assertion without support).
Likewise, a case should not survive summary judgment if the plaintiff is unable to demonstrate more than a mere possibility that the defendant’s activities caused the injuries alleged. See Magers v. Chesapeake Appalachia, 2014 U.S. Dist. Lexis 121838, 20-21, 23-24 (N.D. W.Va. Sept. 2, 2014 (granting summary judgment because plaintiff’s expert’s opinion was insufficient to show “more than a mere possibility of causation”); Hagy, 2012 U.S. Dist. Lexis 91773 at 14 (“At this late point in the proceedings, the plaintiffs have failed to advance a clear theory — let alone provide concrete evidence — connecting this specific defendant to the harm they claim to have suffered”).
Proximate cause will remain a key factor in any fracking case, whether the issues involve alleged health effects, seismic activity or groundwater contamination. It is imperative that courts fulfill their gatekeeping function and avoid a rush to judgment merely because of heightened media scrutiny, emotion or politics.
In addition, courts should not permit any particular study to serve a “one size fits all” purpose; each study is different, addresses unique issues and has its own set of strengths and limitations. Thus, the plaintiff must be required to show specific causation in her particular case, and to rely on appropriate science that “fits” the facts of the case before the court.
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