No New Discovery in Coalbed Methane Case

In plaintiffs’ long-running suit seeking royalties from defendant coalbed methane producers, remanded by the 4^th Circuit for redetermination of class certification, the Abingdon U.S. District Court denies plaintiffs’ requests for additional discovery; plaintiffs’ request discovery that would be cumulative of discovery already produced and would not address issues identified by the appellate court for determination on remand.

In these related cases, the court of appeals vacated this court’s earlier class certifications and remanded for redetermination of whether the class certification requirements have been satisfied.

The five cases involve two coalbed methane producers, EQT Production Company and CNX Gas Company LLC. I certified classes in all of the cases on Sept. 30, 2013. The court of appeals designated numerous specific issues requiring more rigorous analysis, including: ascertainability, commonality, predominance and superiority.

Plaintiffs filed a submission concerning additional pre-certification discovery. Plaintiffs requested the following discovery from defendants CNX and EQT: 1) the underlying severance or other deeds used to prepare the title opinions for pooling order applications that determined that the class members should be listed as conflicting claimants to the CBM with coal owners or others; 2) production of a corporate designee to speak for each defendant concerning the review, categorization and use of severance and other deeds to prepare pooling order applications and internal suspense accounts for voluntary leases; and 3) production of a corporate witness to describe each of defendant’s practices for updating addresses and ownership status for individuals whose royalties are being held in escrow or in internal suspense accounts.

Plaintiffs also requested that CNX correct a number of alleged document production deficiencies identified in earlier discovery, and requested that the coal owner intervenors produce documents concerning the terms of royalty payment agreements with CNX, any deeds not yet produced regarding the coal owners’ claimed entitlement to gas royalties, and any internal communications regarding the owners’ claims in this case. Plaintiffs contend this discovery is necessary in order to address ascertainability questions, variances in severance deed terms, predominance issues and questions of bad faith.

Defendants object to further discovery as burdensome and unjustifiable given the expense CNX already had incurred to comply with plaintiffs’ discovery requests.

I find further discovery in this case would be inappropriate prior to an evidentiary hearing on class certification. Plaintiffs have not sufficiently explained how their proposed discovery would advance the case in light of the court of appeals’ opinion and the considerable discovery already conducted, and defendants have advanced compelling arguments that the burden and expense of further discovery would not be justifiable.

Much of the requested discovery is duplicative and cumulative of discovery already received. For example, plaintiffs have not explained why defendants should have the burden of producing publicly available deeds. The benefit of the proposed discovery is questionable, given that the requested documents and depositions would do little to address the obstacles to class certification identified in the court of appeals’ opinion. Foremost, the proposed discovery would not address issues pertaining to the ascertainability of the class, which are central to the litigation.

Given that plaintiffs have already received voluminous discovery over the course of years, and that the potential benefits of such discovery are tenuous, I must conclude the burden and expense of any further discovery outweighs its likely benefits.

While the court of appeals expressed its sympathy for the plight of the numerous CBM owners in Virginia who haven’t received a penny of CBM royalties and others who may have gotten less than their due, the fact is that plaintiff’s cases are more problematical now in light of that court’s decision.

The court grants defendants’ motion for a protective order; no further discovery is permitted pending determination of class certification.

Adair v. EQT Production Co. (Jones) No. 1:10cv37, Feb. 6, 2015; USDC at Abingdon, Va.; David S. Stellings for plaintiffs; Wade W. Massie, Jonathan T. Blank, Kathy L. Wright, Blair M. Gardner for defendants. VLW 015-3-072, 17 pp.