Court Opinion

ID: 9653974
Source: CourtListenerOpinion
Date Created: 2023-08-23 18:00:35.796762+00
Date Added: 2024-06-11T09:17:23.141411
License: Public Domain

PRECEDENTIAL

  UNITED STATES COURT OF APPEALS
       FOR THE THIRD CIRCUIT
            _____________

            Nos. 22-1280, 22-1376

               _____________

       EPSILON ENERGY USA, INC.,
                     Appellant in 22-1280
                  v.

    CHESAPEAKE APPALACHIA, LLC
           _____________

       EPSILON ENERGY USA, INC.

                      v.

    CHESAPEAKE APPALACHIA, LLC,
                    Appellant in 22-1376
           _____________

On Appeal from the United States District Court
    for the Middle District of Pennsylvania
           (D.C. No. 1-21-cv-00658)
 District Judge: Honorable Jennifer P. Wilson
                _____________

                   Argued
               January 25, 2023
                       _____________

   Before: HARDIMAN, KRAUSE, and MATEY, Circuit
                      Judges.

                 (Filed: August 23, 2023)
                      _____________

Matthew A. Fitzgerald [ARGUED]
McGuireWoods
800 E Canal Street
Gateway Plaza
Richmond, VA 23219

Gregory J. Krock
McGuireWoods
260 Forbes Avenue
Suite 1800
Pittsburgh, PA 15222

Elizabeth M. Thomas
McGuireWoods
201 N Tryon Street
Suite 3000
Charlotte, NC 28202
       Counsel for Epsilon Energy USA, Inc.

Richard L. Armezzani
Daniel T. Brier
John B. Dempsey [ARGUED]
Nicholas F. Kravitz
Myers Brier & Kelly
425 Biden Street

                             2
Suite 200
Scranton, PA 18503
       Counsel for Chesapeake Appalachia, LLC
                       ___________

                OPINION OF THE COURT
                     ____________

MATEY, Circuit Judge.

       “Law, in its most general and comprehensive sense,
signifies a rule of action.” 1 William Blackstone,
Commentaries *38 (George Sharswood ed., 1893) (1765). The
Federal Rules of Civil Procedure are rules of action designed
to secure the just and efficient determination of civil
proceedings. And their joinder provisions promote the ancient
balance among efficiency, fairness, and finality. These
concerns compete in a dispute between Epsilon Energy USA,
Inc. (“Epsilon”) and Chesapeake Appalachia, LLC
(“Chesapeake”) about the terms of contracts for developing
and operating natural gas projects. They disagree about the
proper parties and whether missing members of the
development deal leave the lawsuit incomplete and improper
for decision.

       Drawing on their classical roots, the Federal Rules
direct courts to determine which parties are really needed,
offering broad statements of principle that must be
conscientiously construed, not rotely recited.1 And while we

      1
        See Fed. R. Civ. P. 1 (The rules “should be construed,
administered, and employed by the court and the parties to

                              3
agree with the District Court that the other contracting parties
are required, deciding whether to proceed without those that
cannot be joined involves further findings better performed by
the trial judge. So we will vacate and remand for further
consideration.

                               I.

       Epsilon, an Ohio corporation with a principal place of
business in Texas, entered into several Joint Operating
Agreements (“JOAs”) with oil and gas companies, including
Chesapeake, a limited liability company whose sole member is
an Oklahoma citizen, to develop natural gas in Pennsylvania.2
The JOAs designate Chesapeake as the “Operator,” requiring
Chesapeake to “conduct and direct and have full control of all
operations on the Contract Area.” App. 390. Chesapeake can
be removed as Operator only for good cause by an affirmative
vote of the other JOA parties.

secure the just, speedy, and inexpensive determination of every
action.”); see also 1 William Blackstone, Commentaries *61
(“[S]ince in laws all cases cannot be foreseen or expressed, it
is necessary that, when the general decrees of the law come to
be applied to particular cases, there should be somewhere a
power vested of defining those circumstances, which (had they
been foreseen) the legislator himself would have expressed.”).
       2
         The other parties to the JOAs include Equinor USA
Onshore Properties, Inc. f/k/a Statoil USA Onshore Properties,
Inc. (“Equinor”); Jamestown Resources, LLC; Chief
Exploration & Development, LLC; Enerplus Resources (USA)
Corporation; Radler 2000 Limited Partnership; Tug Hill
Marcellus, LLC; and Unconventionals Natural Gas, LLC.

                               4
        The JOAs allow the “Non-Operator parties” to propose
new well sites for development. App. 392. Everyone else then
has thirty days to decide whether they want to participate. If a
proposal receives less than unanimous support, Article VI.2(a)
of the JOAs says the “party or parties giving the notice and
such other parties as shall elect to participate in the operation
shall, no later than ninety (90) days after the expiration of the
notice period[,] . . . actually commence the proposed operation
and complete it with due diligence.” App. 393. The work is
ordinarily performed by Chesapeake as the Operator on behalf
of the participants known as the “Consenting Parties.” App.
393. But if Chesapeake is not on board with the project,
Chesapeake becomes a “Non-Consenting Party,” and the
Consenting Parties “designate one of the Consenting Parties as
Operator to perform such work.” App. 393.

       The plan on paper ran into problems in practice when
Chesapeake opposed wells proposed by Epsilon. See Epsilon
Energy USA, Inc. v. Chesapeake Appalachia, LLC, No. 3:18-
cv-01852 (M.D. Pa. Sept. 20, 2018). The parties settled their
dispute and agreed that Epsilon could recommend new wells
under the JOAs “in accordance with the terms of the JOAs.”
App. 447. And if Chesapeake did not consent to a proposal and
did not agree to act as the Operator, then Chesapeake would
“cooperate with the party designated, to the extent permitted
under the JOA, as [O]perator” and would “not unreasonably
withhold cooperation.” App. 447.

       The new plan worked as well as the old one, and another
quarrel arose when Epsilon proposed wells on a site known as
the Craige Well Pad. Chesapeake opposed the idea and refused
to participate or serve as Operator. And Chesapeake also
blocked Epsilon from operating the proposed project, arguing

                               5
Epsilon could not unilaterally operate a new well. Chesapeake
then proposed a different project (the Koromlan Well), which
directly conflicted with Epsilon’s Craige concept. So Epsilon
sued, seeking, among other relief, a declaration to drill the
Craige Wells without Chesapeake’s participation. See Epsilon
Energy USA, Inc. v. Chesapeake Appalachia, LLC, No. 1:21-
cv-00658 (M.D. Pa. Apr. 9, 2021).

       Chesapeake moved to dismiss the suit for failure to join
the other co-signatories to the JOAs (“Absent JOA Parties”)
under Federal Rule of Civil Procedure 12(b)(7). The District
Court denied that motion, but then granted Chesapeake’s
motion to dismiss for failure to state a claim. Epsilon moved
for partial reconsideration of its declaratory judgment claim,
which was denied. Both parties now appeal.3

      3
           As pled, the District Court had subject-matter
jurisdiction under 28 U.S.C. § 1332(a) because Epsilon is an
Ohio corporation with its principal place of business in Texas,
and Chesapeake is a limited liability company whose sole
member is an Oklahoma citizen. But at least one of the Absent
JOA Parties, Equinor, is a citizen of Texas, a fact that may
impact the District Court’s decisions on remand. We have
jurisdiction under 28 U.S.C. § 1291 and review the
determination of necessary parties under Rule 19 for an abuse
of discretion. Gardiner v. V.I. Water & Power Auth., 145 F.3d
635, 640 (3d Cir. 1998).

                              6
                              II.

      The text of Rule 19 governs joinder, but solving its
puzzles requires consulting history, context, and the reason
behind the Rule.4

                              A.

       Federal Rule of Civil Procedure 19(a) describes
“Persons Required to Be Joined if Feasible.” It then defines a
“Required Party” in terms of jurisdictional prerequisites
followed by prudential considerations. For starters, a required
party may only be “[a] person who is subject to service of
process and whose joinder will not deprive the court of subject-
matter jurisdiction.” Fed. R. Civ. P. 19(a)(1). Then the Rule
adds a layer of requirements. Assuming jurisdiction, an absent
person becomes a required party only when: 1) “the court
cannot accord complete relief” without him, id. at 19(a)(1)(A);

       4
         See 1 Blackstone, Commentaries *60 (“[T]he most
universal and effectual way of discovering the true meaning of
a law, when the words are dubious, is by considering the
reason and spirit of it; or the cause which moved the legislator
to enact it.”). A process dating to the Founding when all legal
interpretation was viewed “as a process of discovery” to find
the law’s reason, drawing on a “bundle of interpretive
principles” like Blackstone’s that informed the American legal
tradition. Robert Lowry Clinton, The Supreme Court Before
John Marshall, 27 J. Sup. Ct. Hist. 222, 228–29 (2002); see
also Adrian Vermeule, Common Good Constitutionalism 9–11
(2022) (This “need for determination arises when principles of
justice are general and thus do not specifically dictate
particular legal rules.”).

                               7
or 2) “that person claims an interest relating to the subject of
the action and is so situated that disposing of the action in the
person’s absence may . . . as a practical matter impair or
impede the person’s ability to protect the interest; or . . . leave
an existing party subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent obligations because
of the interest,” id. at 19(a)(1)(B).

        Translated, there are some persons, real or corporate,
not a party to a suit who, for prudential reasons, should be
joined in an action. Perhaps their absence prevents a court from
awarding full relief to the existing parties. Or they claim to
have an interest in the dispute that will be harmed by a
judgment. Or a bit of both scenarios, meaning a judgment in
their absence will create inconsistent obligations and still more
litigation. If a federal court has power over these persons—that
is, if they meet the jurisdictional prerequisite—they are
“required” missing parties and must be joined. So far, so good.

       But what about persons who satisfy the prudential
considerations in Rule 19(a)(1)(A) or (B) but not the
jurisdictional prerequisite in 19(a)(1)? Their absence harms
them or the existing parties, but they cannot be joined. See Fed.
R. Civ. P. 82. That leaves the trial court with an action half-
full—the sort of case or controversy Rule 19 seeks to avoid.
Should the rest of the matter continue without the missing
members?

       Rule 19(b), under the heading “When Joinder Is Not
Feasible,” says “[i]f a person who is required to be joined if
feasible cannot be joined, the court must determine whether, in
equity and good conscience, the action should proceed among
the existing parties or should be dismissed.” Fed. R. Civ. P.

                                8
19(b). But who exactly is “a person who is required to be joined
if feasible”? The language appears to direct the reader back to
Rule 19(a), given its heading “Persons Required to Be Joined
if Feasible.” But reading Rule 19(b) to apply only to persons
who satisfy all of Rule 19(a)’s jurisdictional and prudential
components makes little sense since they already “must be
joined as a party,” Fed. R. Civ. P. 19(a)(1), leaving Rule 19(b)
with nothing to do.5

        So courts have gravitated toward a second reading, one
where Rule 19(b) applies to persons who would satisfy the
prudential considerations in (a)(1)(A) and (B) setting aside any
jurisdictional problems. A sensible approach that, alas,
requires some imaginative redlining. Such as: “If a person who
[would be provisionally] required to be joined [under Rule
19(a)(1)(A) or (B)] if feasible but cannot be joined [because
the person is not subject to service of process or his joinder
would deprive the court of subject-matter jurisdiction], the
court must determine whether, in equity and good conscience,
the action should proceed among the existing parties or should
be dismissed.” Fed. R. Civ. P. 19(b).

       5
         Scholars have pointed out the awkward wording and
structure of Rule 19. See, e.g., Richard D. Freer, Rethinking
Compulsory Joinder: A Proposal to Restructure Federal Rule
19, 60 N.Y.U.L. Rev. 1061, 1076–77 & n.76 (1985) (“The rule
is poorly drafted. The first step in resolving any compulsory
joinder issue is the identification of absentees to be joined.
Rule 19, however, appears to indicate that the first step is
ascertaining whether joinder is feasible.”); W. Md. Ry. Co. v.
Harbor Ins. Co., 910 F.2d 960, 962 n.5 (D.C. Cir. 1990) (citing
and quoting Freer).

                               9
       Faced with two possible readings—one inside the text
but useless in practice, the other practical but outside the text—
we turn to the historical roots of joinder for clarity. The goal of
our inquiry, as always, is to give effect to the rule maker’s aim.6
See Brown v. Barry, 3 U.S. (3 Dall.) 365, 367 (1797). A task
aided by determining “how a reasonable person, conversant
with the relevant social and linguistic conventions, would read
the text in context.” Madrid-Mancia v. Att’y Gen., 72 F.4th
508, 518 (3d Cir. 2023) (citation omitted).

                                B.

        Words in a Rule, like words in a statute, may be
“obviously transplanted from another legal source, whether the
common law or other legislation.” Felix Frankfurter, Some
Reflections on the Reading of Statutes, 47 Colum. L. Rev. 527,
537 (1947). That “old soil” provides necessary background that
informs the meaning of the new law. Id.; see also Sir Edward
Coke, 2 Institutes of the Laws of England 307 (1797 ed.)
(1642) (“To know what the common law was before the
making of any statute (whereby it may be known whether the
act be introductory of a new law, or affirmatory of the old) is
the very lock and key to set open the windows of the
statute . . . .”). Rule 19(b) carries an obvious transplant: the
instruction that courts resolve joinder questions “in equity and
good conscience.” Fed. R. Civ. P. 19(b). Indeed, the whole of
Rule 19 boasts a long provenance.

       6
        We interpret the Federal Rules of Civil Procedure like
any posited law. See Elliott v. Archdiocese of New York, 682
F.3d 213, 225 (3d Cir. 2012).

                                10
       The notion that some parties should be added to an
action traces to Lord Nottingham, “the Father of Modern
Equity.” 6 William Holdsworth, A History of English Law 548
(1924). He solidified the idea “that all persons having an
interest in the controversy ought to be parties,” a determination
he tied to “practical considerations of fairness and
expediency.”7 Geoffrey C. Hazard, Jr., Indispensable Party:
The Historical Origin of a Procedural Phantom, 61 Colum. L.
Rev. 1254, 1257 (1961).8 Just as Rule 19(b) acknowledges that
a case should proceed without the desired party in some cases,
the court customarily excused joinder when it was “impossible,
inconvenient, or unduly burdensome.” Id. at 1260–61.

        Then a new principle emerged in the late eighteenth
century: that a court of equity “should do ‘complete’ justice or
none at all.” Id. at 1271. This idea found form in Fell v. Brown,
29 Eng. Rep. 151 (Ch. 1787), a decision that quickly “became
the leading case on indispensability.” Hazard, supra, at 1274.
In that case, the Chancellor deemed it “impossible” to proceed

       7
           These considerations included “avoidance of a
multiplicity of actions, assurance of adequate presentation of
the issues and relevant evidence, efficient use of judicial effort,
and avoidance of inconsistent adjudication between different
parties to the transaction.” Geoffrey C. Hazard, Jr.,
Indispensable Party: The Historical Origin of a Procedural
Phantom, 61 Colum. L. Rev. 1254, 1257–58 (1961). And they
bear a striking similarity to the factors contained in today’s
version of Rule 19(b). See Fed. R. Civ. P. 19(b).
        8
          The Advisory Committee to Rule 19 cited Hazard’s
Indispensable Party when discussing defects in the original
Rule and the “older equity practice.” See Fed. R. Civ. P. 19
advisory committee’s note to 1966 amendments.

                                11
without joining parties because their absence precluded the
court’s ability to issue a “perfected” decree. Fell, 29 Eng. Rep.
at 153. But the action was not dismissed; it was stayed on the
suggestion that the interested party was expected to be
available. Id. Even so, this dictum did its damage: the
indispensable party rule became known as “a rule of long
standing.” Palk v. Clinton, 33 Eng. Rep. 19, 23 (Rolls 1805).

        Fell’s dictum became doctrine in America.9 The
indispensable party rule found special solace in federal practice
because many state courts lacked equity jurisdiction at the
beginning of the nineteenth century. See Hazard, supra, at
1277. But sometimes the rule ran headlong into the diversity
requirement, leaving litigants stranded without any forum—a
result tough to square with the pragmatic, flexible origins of
the indispensable party rule. Then the Supreme Court added to
the muddle by crafting two categories of absent parties: those
who are “necessary” and, as a subset, those who are
“indispensable.” See Shields v. Barrow, 58 U.S. (17 How.)
130, 139 (1854). But Shields’s new “necessary” and
“indispensable” categories came without instructions. See John
W. Reed, Compulsory Joinder of Parties in Civil Actions, 55
Mich. L. Rev. 327, 355 (1957) (calling Shields’s guidance

       9
         See Joseph Story, Commentaries on Equity Pleadings
§ 77, at 78 (2d ed. 1840) (“[I]f complete justice between the
parties before the Court cannot be done without other parties
being made, whose rights or interests will be prejudiced by a
decree; then the Court will altogether stay its proceedings, even
though those other parties cannot be brought before the
Court . . . .”); Joy v. Wirtz, 13 F. Cas. 1172, 1173 (C.C.D. Pa.
1806) (No. 7554) (Washington, J.) (adopting Fell’s “rule” that
certain parties “cannot be dispensed with”).

                               12
“shoddy and unimaginative”). And the classical equitable
analysis devolved into rigid conceptions of the separability of
parties’ rights and interests. 7 Charles Alan Wright & Arthur
R. Miller, Federal Practice and Procedure § 1601 (3d ed. 2023).
No help arrived in the 1938 adoption of Rule 19 which codified
the terminology and fueled the “unfortunate” view that the
absence of an indispensable party divested the court of
jurisdiction.10 See Benjamin Kaplan, Continuing Work of the
Civil Committee: 1966 Amendments of the Federal Rules of
Civil Procedure (I), 81 Harv. L. Rev. 356, 363–64 (1967).

       As has often occurred, “[e]quity provided motivation
for fresh enactments in the law.”11 And after much criticism,
the Advisory Committee overhauled Rule 19, conceding that
the 1938 version “was defective in its phrasing and did not
point clearly to the proper basis of decision.” Fed. R. Civ. P.
19 advisory committee’s note to 1966 amendment. By
codifying specific considerations that courts should examine in
each case, the Committee hoped to shift the focus onto “the
pragmatic considerations which should be controlling,” and
away from the “technical or abstract character of the rights or
obligations of the persons whose joinder was in question.” Id.

      10
          Our Court stuck with the jurisdictional theory of
mandatory joinder even after commentary to the 1966
amendments expressly disavowed the practice. See Provident
Tradesmens Bank & Tr. Co. v. Lumbermens Mut. Cas. Co., 365
F.2d 802, 811–14 (3d Cir. 1966). The Supreme Court quickly
corrected that course. See Provident Tradesmens Bank & Tr.
Co. v. Patterson, 390 U.S. 102, 119–21 (1968).
       11
          R.H. Helmholz, Natural Law in Court: A History of
Legal Theory in Practice 37 (2015) (citing Dig. 6.2.17
(Neratius, Membranae 3)).

                              13
        A year after the amendment, the Supreme Court
confirmed that Rule 19(b)’s factors “emphasize[] the
pragmatic consideration of the effects of the alternatives of
proceeding or dismissing, [whereas] the older version tended
to emphasize classification of parties.” See Provident
Tradesmens Bank & Tr. Co. v. Patterson, 390 U.S. 102, 116
n.12 (1968). Disavowing the rigid, mechanical formula that
characterized joinder before the 1966 amendments, it
announced that the revised version of Rule 19(b) applies only
“in the context of particular litigation” without using any
“prescribed formula.” Id. at 118 & n.14 (citation omitted). And
it instructed courts to base their dismissal decisions on “factors
varying with the different cases, some such factors being
substantive, some procedural, some compelling by themselves,
and some subject to balancing against opposing interests.” Id.
at 119. A directive that endures. See Republic of Philippines v.
Pimentel, 553 U.S. 851, 862–63 (2008) (“The design of the
Rule, then, indicates that the determination whether to proceed
will turn upon factors that are case specific, which is consistent
with a Rule based on equitable considerations.”). And so, with
the Rule’s amendment and the Supreme Court’s gloss, the
joinder inquiry again functions much like it did in equity.

                               III.

       With this context, the best reading of Rule 19 settles into
three steps: 1) Considering the qualifications under Rule
19(a)(1)(A) and (a)(1)(B), should the absent party be joined?;
2) If so, is joinder feasible—that is, can the party be joined
without depriving the court of the ability to hear the case?; 3) If
joining the party is not feasible, should the action continue in
the party’s absence or be dismissed? See Gen. Refractories Co.

                                14
v. First State Ins. Co., 500 F.3d 306, 312 (3d Cir. 2007);
Provident Tradesmens, 390 U.S. at 108–09.12

       Step One: Should the Absent JOA Parties be joined?

       Chesapeake confined its argument to Rule
19(a)(1)(B)(i): whether the party “claims an interest relating to
the subject of the action and is so situated that disposing of the
action in the person’s absence may . . . as a practical matter
impair or impede the person’s ability to protect the interest.”
We do not have before us a non-party that “claims an interest,”
as the Absent JOA Parties have never offered a position.
“When necessary, however, a court of appeals should, on its
own initiative, take steps to protect the absent party, who of
course had no opportunity to plead and prove his interest
below.” Provident Tradesmens, 390 U.S. at 111.13

       12
           Although our precedents have sometimes collapsed
the second question into the first or third, other courts have
persuasively noted the three distinct inquiries. See, e.g.,
E.E.O.C. v. Peabody W. Coal Co., 400 F.3d 774, 779 (9th Cir.
2005); Glancy v. Taubman Ctrs., Inc., 373 F.3d 656, 666 (6th
Cir. 2004); Citizen Potawatomi Nation v. Norton, 248 F.3d
993, 997 (10th Cir. 2001). As then-Judge Thomas succinctly
put it, “[w]hen a party to a federal lawsuit moves to join a
nonparty resisting joinder, the district court must answer three
questions: Should the absentee be joined? If the absentee
should be joined, can the absentee be joined? If the absentee
cannot be joined, should the lawsuit proceed without her
nonetheless?” W. Md. Ry., 910 F.2d at 961.
        13
           We also note that district courts possess power to
protect the interests of absent parties. See United States v.

                               15
        As the District Court explained, parties owning rights
under disputed contracts, like the Absent JOA Parties,
generally have a legally protected interest under Rule
19(a)(1)(B)(i). See, e.g., E.E.O.C. v. Peabody W. Coal Co., 610
F.3d 1070, 1082 (9th Cir. 2010) (explaining the “underlying
principle” that signatories to a contract have an interest in a
lawsuit to set aside that contract); Nat’l Union Fire Ins. Co. of
Pittsburgh v. Rite Aid of S.C., Inc., 210 F.3d 246, 251 (4th Cir.
2000) (“As the contracting party,” the absent party “has a direct
interest in the district court’s determination” of its contractual
rights and obligations.); Story, Commentaries § 159, at 151
(“[I]n cases of joint interests, joint obligations and contracts,
and joint claims, duties, and liabilities . . . the general rule is,
that all the joint owners, joint contractors, and other persons,
having a community of interests in duties, claims or liabilities,
who may be affected by the decree, should be made parties.”).
Allowing Epsilon to drill the Craige Wells affects those
interests. Some might earn a profit even without giving
consent. Others might shoulder the losses of a wasted asset.
And although the Absent JOA Parties are Non-Consenting
Parties here, they could consent to a future proposal. A
declaratory judgment interpreting the JOAs to authorize a
single Consenting Party to propose the drilling of a new well
would affect their interests. All making the Absent JOA Parties
“necessary” under Rule 19(a).

Shaknitz, 2023 WL 4921841 (3d Cir. 2023); Fed. R. Civ. P. 1.
So when it is “desirable to advise a person who has not been
joined of the fact that the action is pending,” a “court in its
discretion may itself convey this information by directing a
letter or other informal notice to the absentee.” Fed. R. Civ. P.
19 advisory committee’s note to 1966 amendment.

                                16
       Step Two: Is joinder of the Absent JOA Parties
feasible?

       The complete diversity of the parties takes center stage
here. Some Absent JOA Parties, as the District Court noted, do
not defeat complete diversity. And any necessary party for
whom joinder is feasible must be joined, see Fed. R. Civ. P.
19(a)(1), a step required on remand for all Absent JOA Parties
who can be feasibly joined. But other Absent JOA Parties are
citizens of Texas who cannot be feasibly joined without
defeating diversity and destroying subject matter jurisdiction.
Bringing us to the final step of Rule 19.

      Step Three: Does equity and good conscience require
dismissal?

       The terms “equity and good conscience” are part of the
equitable tradition that has “a high density of moral terms.”
Aditya Bamzai & Samuel L. Bray, Debs and the Federal
Equity Jurisdiction, 98 Notre Dame L. Rev. 699, 707 (2022).
While the words might appear to grant judges limitless power,
they are merely, as then-Chief Judge Cardozo wrote,
“signposts for the traveler” that have always guided judicial
discretion.14 Evangelical Lutheran Church of the Ascension v.

       14
          See, e.g., United States v. Burr, 25 F. Cas. 30, 35
(C.C.D. Va. 1807) (Marshall, C.J.) (“[A] motion to [a court’s]
discretion is a motion, not to its inclination, but to its judgment;
and its judgment is to be guided by sound legal principles.”).
And these inherent limits necessarily follow from the original
understanding that, as Chief Justice Marshall wrote, “[j]udicial
power is never exercised for the purpose of giving effect to the

                                17
Sahlem, 172 N.E. 455, 457 (N.Y. 1930). In the antebellum
Republic, courts used the terms “equity and good conscience”
as guides for judging the priority of liens, Brent v. Bank of
Washington, 35 U.S. (10 Pet.) 596, 615 (1836), the correctness
of an arbitrator’s special award, Kleine v. Catara, 14 F. Cas.
732, 735 (C.C.D. Mass. 1814) (Story, J.), and, as relevant here,
whether a case should proceed without certain persons,
Shields, 58 U.S. at 139.

        Acknowledging this traditional discretion, the Rules
Committee adopted “equity and good conscience” as signposts
for determining whether an action “should proceed among the
existing parties or should be dismissed.” Fed. R. Civ. P. 19(b).
That is, the Rule “is not content with a mechanical subsuming
of particular instances under the general norm but allows
equity to play its part.” Heinrich A. Rommen, The Natural
Law: A Study in Legal and Social History and Philosophy 188
(Thomas R. Hanley trans., 1998) (1936). Our analysis does not
disturb that framework, and our discussion of the Rule 19(b)
inquiry does not replace case-by-case consideration with a
checklist. But, finding the District Court’s explanation of the
first two 19(b) factors wanting, we flag specific areas for
reconsideration on remand.15

will of the Judge; always for the purpose of giving effect to the
will of the Legislature; or, in other words, to the will of the
law.” Osborn v. Bank of U.S., 22 U.S. (9 Wheat.) 738, 866
(1824).
        15
           We note we are dealing with contracting parties, who
have been described as “the paradigm of an indispensable
party.” Gunvor SA v. Kayablian, 948 F.3d 214, 221 (4th Cir.
2020) (quoting Nat’l Union Fire Ins., 210 F.3d at 252). And

                               18
        The first factor of Rule 19(b) weighs “the extent to
which a judgment rendered in the person’s absence might
prejudice that person or the existing parties.” Fed. R. Civ. P.
19(b)(1). As the District Court acknowledged, while this factor
“overlaps considerably with the Rule 19(a) analysis,” Gardiner
v. V.I. Water & Power Auth., 145 F.3d 635, 641 n.4 (3d Cir.
1998), a court must still evaluate how the absent parties will be
affected by a judgment. Here, drilling the disputed wells could
provide a windfall to the Absent JOA Parties or could waste
their common assets. And an interpretation of the rights of both
Consenting and Non-Consenting Parties under the JOAs could
affect their and their business partners’ behavior come the next
drilling proposal. Though not insurmountable, these factors tip
toward dismissal and must be considered.

the Absent JOA Parties are entitled under the JOAs to certain
rights as Non-Operator, Non-Consenting Parties—making
them, in important respects, contract obligees, who normally
are indispensable. See Janney Montgomery Scott, Inc. v.
Shepard Niles, Inc., 11 F.3d 399, 408 (3d Cir. 1993); 7 Wright
& Miller, supra, § 1613 (“Joint obligees . . . usually have been
required to be joined under Rule 19(b) and their nonjoinder has
led to a dismissal of the action.”).
        While relevant, the nature of the absent parties does not
control the analysis: we evaluate parties under Rule 19(b) only
after they are found necessary, and the 19(b) analysis hinges
on “the pragmatic consideration of the effects of the
alternatives of proceeding or dismissing” rather than the
“classification of parties.” Provident Tradesmens, 390 U.S. at
116 n.12. Courts must always decide whether to proceed in the
party’s absence case-by-case. See Pimentel, 553 U.S. at 862–
63.

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        The District Court did not meaningfully consider these
questions, concluding instead that positions of the Absent JOA
Parties will be advanced by either Epsilon or Chesapeake.
Perhaps, but if that alone were enough to satisfy Rule 19(b),
many multi-party actions would automatically proceed despite
the careful inquiry created in the Rule. Although the positions
of the present parties are not irrelevant, more specific factual
findings are necessary to determine if the absent parties have
been “harmed by the judgment.” Provident Tradesmens, 390
U.S. at 114. For instance, the District Court must address its
earlier finding that the Absent JOA Parties have “taken
divergent positions on whether to consent to the Craige Wells
or the Koromlan Well.” Dist. Ct. Dkt. No. 35 at 18. So too the
limits of Epsilon’s and Chesapeake’s interpretations of the
relevant contract provisions which are not exhaustive and
could easily spill into other disputes. All reasons why, “without
a perfect identi[t]y of interests, a court must be very cautious
in concluding that a litigant will serve as a proxy for an absent
party.” Tell v. Trs. of Dartmouth Coll., 145 F.3d 417, 419 (1st
Cir. 1998) (citation omitted); Nat’l Union Fire Ins., 210 F.3d
at 251.

       The second factor considers “the extent to which any
prejudice could be lessened or avoided by: (A) protective
provisions in the judgment; (B) shaping the relief; or (C) other
measures.” Fed. R. Civ. P. 19(b)(2). Epsilon seeks declaratory
and injunctive relief, remedies impacting the rights and
obligations of the Absent JOA Parties. The District Court noted
that “a court granting such equitable remedies has wide
discretion in determining the nature and scope of that relief.”
Dist. Ct. Dkt. No. 35 at 20. True enough, but the District Court
did not describe how such discretion could be used to shape the

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remedies to avoid or lessen prejudice here. Rule 19(b) requires
more specificity. The District Court must do so on remand.

        The District Court reasonably considered the last two
factors, but we recount them here for further guidance. The
third factor turns on “whether a judgment rendered in the
person’s absence would be adequate.” Fed. R. Civ. P. 19(b)(3).
In Provident Tradesmens, the Supreme Court read this factor
as referring to the public stake in settling whole disputes, but it
also considered whether a judgment would be adequate to the
plaintiff, defendant, and nonparties. See 390 U.S. at 111–13.
For this factor, a court must practically consider the likelihood
of other suits. Dismissal is less appropriate where there is
reason to believe multiple suits are unlikely or a consolidated
suit would not settle all disputes.

       Finally, the fourth factor weighs the prejudice to the
existing plaintiff, asking “whether the plaintiff would have an
adequate remedy if the action were dismissed for nonjoinder.”
Fed. R. Civ. P. 19(b)(4). Here, the most relevant question is
whether the Pennsylvania Commonwealth courts remain
available to resolve Epsilon’s claims.

                               IV.

        Having set forth more instruction on Rule 19, we will
remand for the District Court to join the Absent JOA Parties
over which there is jurisdiction and to reconsider whether to
proceed in the absence of those who cannot be joined. We
therefore do not reach the appeal of the motion to dismiss for
failure to state a claim or the motion for reconsideration of the
request for declaratory judgment.

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