Court Opinion

ID: 6105301
Source: CourtListenerOpinion
Date Created: 2022-01-20 18:00:52.242884+00
Date Added: 2024-06-11T08:53:47.765391
License: Public Domain

PRECEDENTIAL

       UNITED STATES COURT OF APPEALS
            FOR THE THIRD CIRCUIT

              _______________________

                    No. 21-8047
              _______________________

             DOMENIC LAUDATO, JR.

                           v.

   EQT CORPORATION; EQUITRANS, L.P.; EQT
  PRODUCTION COMPANY; EQM MIDSTREAM
             PARTNERS, L.P.,
                Petitioners
              _______________________

     On Appeal from the United States District Court
        for the Western District of Pennsylvania
            District Court No. 2-18-cv-01005
        District Judge: Honorable Cathy Bissoon
             __________________________

              Submitted November 3, 2021

Before: KRAUSE, RESTREPO, and SMITH, Circuit Judges
                  (Filed: January 20, 2022)

Lucas Liben
Devin M. Misour
Nicolle R. Snyder Bagnell
Colin E. Wrabley
Reed Smith
225 Fifth Avenue
Suite 1200
Pittsburgh, PA 15222
           Counsel for Petitioners

Jordan H. Walker
Sever Storey
881 Third Avenue, Southwest
Suite 101
Carmel, IN 46032
          Counsel for Respondent

              __________________________

                OPINION OF THE COURT
              __________________________

SMITH, Circuit Judge.

       Before the Court is the Petition to Appeal Under Rule
23(f) filed by EQT Corp., Equitrans, L.P., EQT Production
                                     2
Co., and EQM Midstream Partners, L.P. (collectively, “EQT”).
For the reasons set forth below, the Court will GRANT the
Petition.

                           I.

        On July 30, 2018, roughly one hundred Pennsylvania
landowners filed a class-action complaint against EQT alleging
that EQT has been storing natural gas in six separate storage
fields, thereby utilizing the landowners’ underground pore
space1 without providing them due compensation. In May
2020, all landowners except for Domenic Laudato Jr.
voluntarily dismissed their claims without prejudice. And in
February 2021, Laudato moved for class certification, seeking
approval of a class defined as:

      All persons and/or entities that own and/or
      owned real property—and/or natural gas storage
      rights to real property—located within the
      certificated boundaries of one or more of the Gas
      Storage Fields for any period of time not before
      Defendants’ inception of the respective gas

1
   The complaint alleged that EQT injects natural gas into
“naturally occurring geologic formation[s] consisting of
porous and permeable rock” on plaintiffs’ properties when
demand is low and withdraws it when demand is high.
Complaint ¶¶ 113–14, 131, Asbury v. EQT Corp., No. 2:18-cv-
01005-CB (W.D. Pa. July 30, 2018) (Doc. No. 1); see also
Joseph A. Schremmer, Pore Space Property, 2021 UTAH L.
REV. 1, 7–8 (2021) (discussing what underground pore space
is and why it is used for natural gas storage).
                                  3
       storage field, but to whom Defendants have and
       had failed to compensate for natural gas storage
       rights within the respective field(s) for the
       entirety of time of real property or natural gas
       rights ownership.

       The District Court agreed with Laudato that “it would
seem in everyone’s best interests to resolve this case on a class
basis,”2 and declared that “class certification will be granted,
with instructions.” Order at 1, Asbury v. EQT Corp., No. 2:18-
cv-01005-CB (W.D. Pa. Sept. 29, 2021) (Doc. No. 109)
(emphasis in original). But it rejected Laudato’s proposed
class definition, thereby refusing to grant other downstream
requests such as appointment as class representative,

2
   This Court has recognized that “global peace”—using the
class vehicle for resolving all parties’ claims stemming from
certain conduct—is a “valid, and valuable, incentive” for
defendants. Sullivan v. DB Investments, Inc., 667 F.3d 273,
310–11 (3d Cir. 2011) (en banc). But EQT has made clear that
it does not view class treatment as useful here. See Pet. at 28–
29 (“The court believed that a reformulation of the class
definition might overcome these individualized issues and cure
the reasons why certification is improper here, but that is both
wrong and insufficient to support certification. The putative
class members’ claims inherently turn on individualized
questions of property ownership and valuation, the class
members’ knowledge of their rights, and Defendants’ specific
conduct as to each tract and parcel of the class members’
property. No redefinition of the class can change this.”).
Regardless, whether pursuing global peace is in a defendant’s
“best interests” is not for the District Court to decide.
                                    4
appointment of class counsel, and certain issues’ certification.
The District Court then directed the parties to meet and confer
“regarding the establishment of an appropriate class
definition.” Id. at 4.

       This Petition followed.

                            II.

        The District Court exercised federal-question
jurisdiction over claims under the Natural Gas Act, as codified
at 15 U.S.C. §§ 717–17z, and supplemental jurisdiction over
other, related claims. 28 U.S.C. §§ 1331 & 1367.

       The District Court’s order is not a final order, so any
exercise by this Court of jurisdiction over an appeal would be
founded in 28 U.S.C. § 1292(e),3 through the invocation of
Federal Rule of Civil Procedure 23(f). See In re NFL Players
Concussion Inj. Litig., 775 F.3d 570, 575–77 (3d Cir. 2014)
(explaining the Court’s jurisdiction over various interlocutory
appeals, including class-action certification decisions). Rule
23(f) permits appeals “from an order granting or denying class-
action certification under this rule, but not from an order under
Rule 23(e)(1).”       If the District Court’s order is not

3
  Section 1292(e) provides that the “Supreme Court may
prescribe rules” allowing for an interlocutory appeal not
otherwise included in that section.
                                    5
countenanced by Rule 23(f) nor by any other rule, this Court
would lack interlocutory jurisdiction.

       Laudato argues that the Petition should be denied
because this Court would not have jurisdiction to hear an
appeal of the District Court’s order, which—he argues—is not
a Rule 23 grant or denial of class-action certification.
According to Laudato, “a plain text reading of the district
court’s order in this matter reveals that it falls well short of an
appealable ‘certification order’ under Rule 23(f).” But if the
order granted class-action certification, we will not shield it
from review just because it “falls well short of” the
requirements of such an order. Here, the order clearly stated a
grant of class certification.

        For example, Laudato focuses on the “preliminary”
nature of the District Court’s order and places significant
weight on such language: it will grant certification; an ultimate
class-certification order is forthcoming; etc. Despite the
forward-looking language, however, the District Court plainly
contemplated that any subsequent certification order would be
limited to merely redefining the class. See Order at 4 & n.4,
Asbury v. EQT Corp., No. 2:18-cv-01005-CB (W.D. Pa. Sept.
29, 2021) (Doc. No. 109). And to the extent Laudato tries to
reframe the order as simple case management—directing the
parties to meet and confer—the District Court also made clear
that the order contained its final word on certification itself,
leaving only the action of summarily adopting whatever
reasonable proposal might arise from the parties’ conference.
Id. at 5 (“[T]he Court summarily will adopt the side’s proposals
that are most reasonable and consistent with the law.”). In sum,
we conclude that the District Court granted class certification
                                     6
despite refusing to, inter alia, define the class. See id. at 2 (“In
sum, the Court is convinced, and therefore holds, that class
treatment is appropriate.”). Accordingly, the order clearly
implicates Rule 23(f) and this Court can properly exercise our
jurisdiction.4

                              III.

       Next, we turn to the standard for permitting a Rule 23(f)
appeal. Rule 23(f) states only that “[a] court of appeals may
permit an appeal from an order granting or denying class-
action certification under [Federal Rule of Civil Procedure 23],
but not from an order under Rule 23(e)(1).” The Committee
Notes from Rule 23’s 1998 amendment describe this
permission as granting something “akin to the discretion
exercised by the Supreme Court in acting on a petition for

4
  Laudato also argues that In re NFL Players Concussion Injury
Litigation makes plain that “preliminary” certification orders
are not subject to appeal under Rule 23(f). That case, however,
dealt with the appealability of what would now be a Rule 23(e)
settlement order, not a Rule 23(c) certification order. See 775
F.3d at 584. This Court’s refusal to assume jurisdiction over
settlement proposals that postpone class certification is
inapposite. And if our precedents did not make that distinction
clear, the Rules Committee’s subsequent decision to amend
Rule 23 to that end accomplished that objective. Neither our
precedents nor the 2018 amendments to Rule 23 stand for the
proposition that so-called “preliminary” grants of class-action
certification are unappealable.
                                     7
certiorari” and as giving courts of appeals “unfettered
discretion.” FED. R. CIV. P. 23(f) comm. notes.

        Despite the Committee’s descriptions of the breadth of
discretion accorded by Rule 23(f), Laudato argues that the
permission must be construed narrowly as an exception to the
final-judgment rule, citing our opinion in Liberty Lincoln-
Mercury, Inc. v. Ford Motor Co., 562 F.3d 553 (3d Cir. 2009).
But Liberty Lincoln concerned an attempted end-around the
final judgment rule through exercise of pendant jurisdiction
over a partial summary judgment order alongside a preliminary
injunction, not class-action certification. Regardless, Laudato
would have this Court limit its discretion to only those “rare”
cases that justify taking jurisdiction in interlocutory appeals.
See Chamberlan v. Ford Motor Co., 402 F.3d 952, 955 (9th
Cir. 2005); Sumitoto Copper Litig. v. Credit Lyonnais Rouse,
Ltd., 262 F.3d 134 (2d Cir. 2001).5 But that is hardly the

5
  While recognizing that they could embrace wide discretion,
the Second and Ninth Circuits made clear that they disfavored
Rule 23(f) appeals and set forth restrictive standards of review
that “will rarely be met.” Sumitoto, 262 F.3d at 140. The
Second Circuit requires that “petitioners seeking leave to
appeal pursuant to Rule 23(f) must demonstrate either (1) that
the certification order will effectively terminate the litigation
and there has been a substantial showing that the district
court’s decision is questionable, or (2) that the certification
order implicates a legal question about which there is a
compelling need for immediate resolution.” Id. at 139. And
the Ninth Circuit requires that “(1) there is a death-knell
situation for either the plaintiff or defendant that is independent
of the merits of the underlying claims, coupled with a class
                                     8
“unfettered” discretion to permit appeals envisioned by the
Committee Notes. FED. R. CIV. P. 23(f) comm. notes (“The
courts of appeals will develop standards for granting review
that reflect the changing areas of uncertainty in class
litigation.”).

        Contrary to the more limited approaches some other
circuits utilize, this Court exercises our “very broad discretion”
using a more liberal standard. Rodriguez v. Nat’l City Bank,
726 F.3d 372, 376–77 (3d Cir. 2013). We have “identified
several circumstances in which appellate review is
appropriate,” including: “when denial of certification
effectively terminates the litigation because the value of each
plaintiff’s claim is outweighed by the costs of stand-alone
litigation”; “when class certification risks placing inordinate
. . . pressure on defendants to settle”; “when an appeal
implicates novel or unsettled questions of law”; “when the
district court’s class certification determination was
erroneous”; and “when the appeal might facilitate development
of the law on class certification.” Id. (quoting Newton v.

certification decision by the district court that is questionable;
(2) the certification decision presents an unsettled and
fundamental issue of law relating to class actions, important
both to the specific litigation and generally, that is likely to
evade end-of-the-case review; or (3) the district court’s class
certification decision is manifestly erroneous.” Chamberlan,
402 F.3d at 959.
                                    9
Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154,
164–65 (3d Cir. 2001) (internal quotations omitted)).6

        EQT argues that we should allow the appeal for three
reasons. First, “[r]eview is necessary to correct the district
court’s manifest and fundamental errors at this pivotal moment
in this putative class action.” Pet. at 13 (internal quotation
omitted). Second, “review will enable the Court to . . . re-
emphasize the need for a rigorous analysis of all of the Rule 23
requirements based on the legal elements of the claims and the
parties’ evidence, and clarify that conditional certification of
an undefined class pending the parties’ joint formulation of a
satisfactory class definition is improper.” Id. And third, “the
usual pressure to settle inherent in a grant of class certification
is magnified here by the court’s avowed effort to leverage
certification to drive Defendants to settle.” Id.

       Laudato argues that we should not allow the appeal for
three reasons: the litigation was not effectively terminated by
a denial of class certification because class certification was
preliminarily granted; “[t]he Order did not, and could not,
place ‘inordinate or hydraulic’ pressure on EQT to settle
because, without a class definition, it would be impossible for
either party to even understand what the parameters of, or
parties to, such a resolution would be”; and “[t]he Order did
not implicate or otherwise adjudicate any unsettled questions

6
  Laudato cites Newton for the proposition that there are only
three general justifications for interlocutory class-certification
review. In doing so, he ignores Rodriguez’s broader
characterization of Newton.
                                     10
of law because it simply determined that this matter should
proceed as a class action lawsuit.” Response at 16–17.

        We agree with EQT that interlocutory review is
appropriate. Contrary to Laudato’s assertion, a class-action-
certification order that leaves unresolved a crucial element—
the class definition—is no less likely to exert substantial
pressure on a defendant to settle than a standard class-action-
certification order. In some circumstances, that uncertainty
may even create more pressure to settle. Here, beyond that
general uncertainty, EQT could reasonably read the District
Court’s order as an attempt to nudge them towards settlement,
further increasing that pressure. The District Court repeatedly
suggested that it knew EQT’s interests better than EQT did and
hinted at the consequences of not playing along. See Order at
1, Asbury v. EQT Corp., No. 2:18-cv-01005-CB (W.D. Pa.
Sept. 29, 2021) (Doc. No. 109) (“In sum, it would seem in
everyone’s best interests to resolve this case on a class basis,
Defendants for the purpose of manageably resolving their land-
use rights and liabilities, and for the putative plaintiffs, to
receive just compensation.” (emphasis in original)); id. at 4
(“Assuming Defendants are, true to their words, desirous of
resolving the potential liabilities flowing from their use of the
FERC-sanctioned gas fields, it would appear in their interests
to agree upon a crafted, rational class-definition, for the
purposes of finality and for obtaining, to a reasonable degree
of certainty, preclusive effect.”). And those assertions
culminated in a recommendation that EQT entertain settlement
discussions through a mediator rather than continue to litigate
its position. Id. at 5 & n.5 (“In light of the rulings and
parameters established above, the Court believes that this case
would benefit from another round of mediation.”). Further, an
                                    11
appeal would present this Court with an opportunity to
facilitate development of the law on class certification. See
Rodriguez, 726 F.3d at 376–77.

        Because of the apparent pressure the purported
certification places on EQT to settle and this Court’s
opportunity to facilitate development of the law on class
certification, review of the District Court’s order is appropriate
under Rodriguez.

                               IV.

       For the above reasons, the Petition for Permission to
Appeal Under Rule 23(f) will be GRANTED. Any such
appeal shall be retained by this panel. After docketing the
appeal, the Clerk shall issue an order advising the parties that
the Court is considering summary action. See 3d Cir. I.O.P.
10.6. The parties will be given an opportunity to file arguments
in support of or in opposition to summary action.

                                     12