The opinion
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
KAREN NELSON, et al., )
)
Plaintiffs, )
)
-vs- ) Case No. CIV-19-647-F
)
BEREXCO LLC, et al., )
)
Defendants. )
ORDER
Before the court is Plaintiffs’ Motion for Voluntary Dismissal, filed
October 23, 2019. Doc. no. 73. Defendants1 have responded to plaintiffs’ motion.
Doc. nos. 76, 77, 78, 79, 80 and 81. No reply was permitted. Upon due consideration
of the parties’ submissions, the court makes its determination.
I.
On September 19, 2018, plaintiffs, a total of 100 individuals, commenced this
civil action in the District Court of Oklahoma County, State of Oklahoma. In their
petition, plaintiffs alleged that they suffered damages to property, and other losses,
resulting from two earthquakes caused by defendants’ operation of wastewater
disposal wells. The subject earthquakes occurred on September 3, 2016 near
1 Tarka Energy, LLC, Equal Energy US Inc., Montclair Energy LLC, Petco Petroleum Corp.,
Shields Operating Inc., Berexco LLC, Chesapeake Operating, L.L.C., Mid-Con Energy Operating,
LLC, Orca Operating Company, LLC, Range Production Company, LLC, Territory Resources,
LLC, Special Energy Corporation, Crown Energy Company, Cher Oil Company, LTD, and Marjo
Operating Mid-Continent, LLC.
Pawnee, Oklahoma and on November 6, 2016 near Cushing, Oklahoma. They
asserted claims under Oklahoma law for absolute liability, negligence, gross
negligence, private nuisance, public nuisance and trespass against defendants.2
On July 18, 2019, defendant, Orca Operating Company, LLC, which had
never been served with process nor appeared in the case, removed plaintiffs’ action
to this court, alleging federal subject matter jurisdiction under the Class Action
Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). Under CAFA, district courts have
original jurisdiction over “any civil action in which the amount in controversy
exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class
action in which . . . any member of a class of plaintiffs is a citizen of a State different
from any defendant.” 28 U.S.C. § 1332(d)(2)(A). CAFA deems a “mass action” to
be a “class action” removable under CAFA if it otherwise meets the statutory
provisions. 28 U.S.C. § 1332(d)(11)(A). It defines “mass action” as any civil action
in which “monetary relief claims of 100 or more persons are proposed to be tried
jointly on the ground that the plaintiffs’ claims involve common questions of law or
fact, except that jurisdiction shall exist only over those plaintiffs whose claims in a
mass action satisfy the jurisdictional amount requirements of subsection (a).” 28
U.S.C. § 1332(d)(11)(B)(i). In the Notice of Removal, Orca alleged that plaintiffs’
action constituted a mass action and that at least one plaintiff was a citizen of
Oklahoma, at least two defendants, Berexco, LLC and Range Production Company,
2 The same day plaintiffs’ petition was filed, plaintiffs’ counsel filed six additional lawsuits against
defendants on behalf of other plaintiffs. Subsequently, additional lawsuits were filed against
defendants on behalf of other plaintiffs in different state district courts.
LLC, were citizens of a state other than Oklahoma and the amount in controversy
exceeded $5,000,000, exclusive of interest and costs.3
Plaintiffs filed a motion to remand. They did not challenge Orca’s removal
allegations regarding the existence of subject matter jurisdiction under CAFA.
Instead, they claimed the court should decline to exercise CAFA jurisdiction based
upon the home state exception set forth in 28 U.S.C. § 1332(d)(4)(B). Defendants
opposed the motion, arguing that plaintiffs failed to prove by a preponderance of the
evidence that the home state exception applied. The court agreed with defendants’
arguments. Specifically, the court found that plaintiffs had not presented any
evidence to establish that two-thirds or more of them were citizens of Oklahoma. In
addition, the court determined that plaintiffs’ pleading allegations regarding their
Oklahoma County residency and property ownership were insufficient to
demonstrate that plaintiffs were domiciled in Oklahoma (a requirement for
Oklahoma citizenship). The court further concluded that plaintiffs had not
demonstrated that the “primary” defendants were citizens of Oklahoma. While
plaintiffs had identified five Oklahoma defendants who were allegedly responsible
for approximately two percent or more of the wastewater disposal within ten miles
or less of the earthquake epicenters, the court pointed out that plaintiffs’ petition, as
framed, asserted that that each of the defendants, including non-Oklahomans, were
equally culpable for plaintiffs’ injuries. In the court’s view, there was no rational
basis upon which to conclude that all defendants sued by plaintiffs were not
“primary” defendants in the sense contemplated by CAFA. Because plaintiffs had
not established that two-thirds or more of plaintiffs, and all primary defendants, were
3 Defendant Orca also removed three other cases to this court from Oklahoma County District
Court alleging the existence of subject matter jurisdiction under CAFA based upon similar
allegations. Three cases were not removed and remain currently pending in Oklahoma County
District Court. Those cases involved less than 100 plaintiffs.
citizens of Oklahoma, the court concluded that the home state exception to CAFA
jurisdiction did not apply. Consequently, remand was denied.
At the time of removal, several motions to dismiss were pending in state court.
After denying plaintiffs’ motion to remand, the court, in accordance with the court’s
Local Civil Rules, directed defendants to refile their motions to dismiss in
conformity with the Federal Rules of Civil Procedure and the Local Civil Rules by
October 10, 2019. Defendants complied with the court’s directive and timely filed
their motions to dismiss pursuant to Rule 12(b)(6), Fed. R. Civ. P. In addition,
defendant, Territory Resources, LLC, filed a motion for judgment on the pleadings
under Rule 12(c), Fed. R. Civ. P.
Defendant Orca also filed a motion to dismiss shortly after removal of this
action. Defendant argued that dismissal was appropriate based upon plaintiffs’
failure to timely effect service of process and their failure to state a claim upon which
relief could be granted. Plaintiffs did not respond to the motion. On September 20,
2019, the court entered an order holding the motion in abeyance pending the 90-day
period for service of process pursuant to 28 U.S.C. § 1448 and Rule 4(m), Fed. R.
Civ. P. After the expiration of the 90-day period, the court entered an order directing
plaintiffs to show good cause for their failure to effect service of process upon
defendant and advised that if plaintiffs could not show good cause and the court
declined to permissively extend the time for service, plaintiffs’ petition against
defendant Orca would be dismissed without prejudice under Rule 4(m). Thereafter,
defendant Orca filed a written notice withdrawing its objection to plaintiffs’ lack of
service of process to avoid a dismissal without prejudice under Rule 4(m). In the
notice, defendant Orca advised that it continued to press the remaining arguments in
its motion in support of dismissal under Rule 12(b)(6), Fed. R. Civ. P.
Prior to the date plaintiffs were to respond to all pending motions to dismiss,
plaintiffs filed the instant motion. Plaintiffs now seek dismissal so that they “may
re-file their claims against the non-diverse defendants in state [c]ourt, re-file their
motions to consolidate all cases in state court, and avoid piecemeal litigation which
has resulted from Defendants procedural maneuvers.” Doc. no. 73, p. 2. Defendants
oppose plaintiffs’ motion, urging the court to deny the motion. Some defendants4
alternatively request that the court impose conditions on the requested dismissal,
such as requiring any new lawsuit be filed in this court or that plaintiffs compensate
them for the attorney’s fees and costs incurred upon removal or both. Another
defendant5 alternatively requests that the court impose a condition that none of the
plaintiffs may refile an action in any court on any theory of recovery stemming from
the same facts as alleged in plaintiffs’ petition unless all plaintiffs presently before
the court join in the filing of that action.
II.
Rule 41(a)(2), Fed. R. Civ. P., governs voluntary dismissals after the opposing
party files an answer or motion for summary judgment.6 Under the rule, the court
may dismiss an action without prejudice “on terms that the court considers proper.”
Rule 41(a)(2), Fed. R. Civ. P. “‘The rule is designed primarily to prevent voluntary
dismissals which unfairly affect the other side, and to permit the imposition of
curative conditions.’” Brown v. Baeke, 413 F.3d 1121, 1123 (10th Cir. 2005)
(quoting Phillips USA, Inc. v. Allflex USA, Inc., 77 F.3d 354, 357 (10th Cir. 1996)).
(quotation omitted). A dismissal without prejudice under Rule 41(a)(2) falls within
the court’s discretion. American Nat. Bank and Trust Co. of Sapulpa v. Bic Corp.,
4 Equal Energy US Inc., Montclair Energy LLC, Petco Petroleum Corp., Shields Operating Inc.,
Berexco LLC, Chesapeake Operating L.L.C., Mid-Con Energy Operating, LLC, Orca Operating
Co., LLC, Range Production Company, LLC and Territory Resources, LLC.
5 Special Energy Corporation
6 All moving defendants, except Cher Oil Company, LTD and Marjo Operating Mid-Continent,
LLC, have filed answers to plaintiffs’ petition.
931 F.2d 1411, 1412 (10th Cir. 1991). However, absent “legal prejudice” to the
defendants, the court should normally grant the requested dismissal. Ohlander v.
Larson, 114 F.3d 1531, 1537 (10th Cir. 1997).
In determining whether the defendants would suffer legal prejudice from the
requested dismissal, the court is to consider “the opposing party’s effort and expense
in preparing for trial; excessive delay and lack of diligence on the part of the movant;
insufficient explanation of the need for a dismissal; and the present stage of
litigation.” Ohlander, 114 F.3d at 1537. These factors are “by no means exclusive”
and factors that are “unique to the context of the case” may also be considered. Id.
The court must “consider the equities not only facing the defendant[s], but also those
facing the plaintiff[s].” Id.
Effort and Expense Preparing for Trial
The court finds that the first factor weighs in favor of granting plaintiffs’
requested dismissal. Defendants have not yet expended significant time or money
preparing for trial. The court recognizes that prior to the filing of the instant motion,
defendants had to respond to plaintiffs’ motion to remand and had to refile their
motions to dismiss applying federal pleading standards. While defendants have been
required to expend some resources to defend the action in this forum, the court
opines that that expenditure is not so significant to require denial of plaintiffs’
motion. To be sure, even the preliminary rounds of litigating a complex case can
get expensive, but this case has not gotten far enough down the road for the court to
be concerned about trial preparation expenses uselessly incurred.
Excessive Delay and Lack of Diligence
The court additionally finds that the second factor weighs in favor of granting
plaintiffs’ request for dismissal. The court is sympathetic with defendants regarding
the delay in state court in having their motions to dismiss heard and decided.
However, it was reasonable for the issue of consolidation to be addressed first, and
the court notes that this action and the other three actions were removed shortly
before that issue was to be addressed. Plaintiffs had also responded to the motions
to dismiss prior to filing their consolidation motion. The court also recognizes that
plaintiffs could have sought dismissal of this action shortly after its removal, without
the expense of responding to a remand motion and refiling motions to dismiss under
federal pleading standards. Nonetheless, the court is not convinced that plaintiffs’
conduct constitutes excessive delay and lack of diligence sufficient to warrant denial
of their motion.
Insufficient Explanation of Need for Dismissal
Defendants’ arguments notwithstanding, the court finds that plaintiffs have
provided sufficient explanation for the need for dismissal. Plaintiffs want to refile
their claims in state court to consolidate all cases for pretrial purposes and to avoid
piecemeal litigation. In addition to this action and three actions removed by
defendant Orca, there are three other actions pending in Oklahoma County District
Court. Those actions include over 200 plaintiffs. Similar claims are also asserted in
other state district court cases. Defendants have raised serious issues as to whether
all pending cases can be consolidated. However, it appears that at least the cases
pending in Oklahoma County District Court could be consolidated for pretrial
purposes. Another earthquake case on the docket of the undersigned, West v.
Chaparral Energy, LLC, CIV-16-264-F, included claims involving the Pawnee and
Cushing earthquakes. However, those claims were alleged against defendants who
are in bankruptcy and the claims are stayed. Thus, this court may not be called upon
to address any claims related to those earthquakes and a dismissal of this action and
the other three actions would avoid litigation in two court systems.
Present Stage of Litigation
The court finds that the fourth factor likewise weighs in favor of granting
plaintiffs’ request for dismissal. Although the court recognizes that this action was
originally filed in state court over a year ago, this case nonetheless remains in the
early stages of litigation. Motions to dismiss were pending at the time of removal
and have only recently been refiled in this court. Indeed, the new motions to dismiss
(and the motion for judgment on the pleadings) are not yet at issue. No scheduling
order is in place. No depositions have been taken. Thus, the court concludes that
defendants are not prejudiced by a dismissal without prejudice at this early stage of
the proceedings.
Other factors
Defendants argue that the court should deny plaintiffs’ motion because
plaintiffs are seeking to avoid an adverse decision from the court under Rule 12(b)(6)
or Rule 12(c), Fed. R. Civ. P. Although the court has not studied defendants’
motions at length, a cursory review of those motions does not convince the court that
all of plaintiffs’ claims against all defendants would be subject to dismissal with
prejudice. In the West case, which involved Oklahoma law claims of private
nuisance, ultrahazardous activity, negligence and trespass, the court granted
dismissal of claims against defendants on the issue of causation. Nonetheless, the
court granted plaintiffs leave to file a second amended complaint. That case still
proceeds on a second amended complaint as to some defendants. The court is not
convinced that the pendency of motions to dismiss and for judgment on the pleadings
justify denial of plaintiffs’ motion.
In addition, defendants argue that plaintiffs are forum-shopping and seek to
deny defendants federal jurisdiction which CAFA favors. It is apparent to the court
that plaintiffs want to proceed in state court rather than in federal court. However,
the reason for this, as discussed, is that there are similar actions pending in state
court. The court quite readily finds that that is a plausible (and understandable)
reason to prefer to proceed in state court. Plaintiffs want to consolidate the cases for
pretrial purposes. Although defendants have raised serious issues as to whether
cases pending in all of the state district courts can be consolidated for pretrial
purposes, the court notes that if this action and the other three actions pending in this
court are refiled in state court, there will be seven actions in Oklahoma County
District Court, involving over 600 individuals, which could potentially be
consolidated for pretrial purposes. Moreover, while claims involving the Pawnee
and Cushing earthquakes were asserted in the West case, the only defendants
involved in those claims are in bankruptcy and all claims against those defendants
are stayed. Thus, it makes sense to the court that the claims concerning the Pawnee
and Cushing earthquakes be adjudicated in one court system.
The court acknowledges that the propriety of the removal of this action under
CAFA was never challenged. As recognized by some defendants, “CAFA was
enacted to respond to perceived abusive practices by plaintiffs and their attorneys in
litigating major class actions with interstate features in state courts.” Coffey v.
Freeport McMoran Copper & Gold, 581 F.3d 1240, 1243 (10th Cir. 2009). The court
notes that the “interstate features” of this case involved non-diverse defendants.
However, the non-diverse defendants did not remove this action or the other three
actions to this court. Defendant Orca, which is alleged in the petition to be an
Oklahoma corporation with its principal place of business in Oklahoma, did.
Further, it appears that plaintiffs, as masters of their complaints, did not want to
proceed by way of a class action but fell within the provisions of CAFA because
they erred in allowing the joinder of at least 100 plaintiffs. The other actions pending
in state court have less than 100 plaintiffs. While CAFA favors federal jurisdiction
when its provisions apply, plaintiffs represent that they will frame their refiled action
so that CAFA will not apply. There is nothing intrinsically inappropriate in pleading
a case in a way calculated to invoke the exclusive jurisdiction of a particular court
or court system, even where that is done for crass tactical reasons, as long as
plaintiff’s conduct is not plainly abusive. Statutory limitations on the prerogative of
pleading a case into the exclusive jurisdiction of a preferred court are few and far
between, even though some of those limitations (such as CAFA) are unmistakably
based on specific policy determinations made by the legislative branch in response
to abusive litigation tactics. Given the relationship between this case and numerous
cases now pending in the Oklahoma state court system, these plaintiffs have an
understandable reason–which does not smack of abuse–for which they want this case
to go back to the state court from whence it came.
Conditions
Some defendants have requested the court to impose certain conditions on any
dismissal without prejudice. They request the court to require the plaintiffs to refile
any action in this court or to refile any action joining the same plaintiffs. They also
request attorney’s fees and costs.
For the reasons previously discussed, the court declines to condition a
dismissal without prejudice on the refiling of the action in this court. The court also
declines to require that any refiled action join all the same plaintiffs.
As for attorneys’ fees and costs, the court, in its discretion, declines (with one
exception, discussed below) to shift defendants’ litigation expense to plaintiffs.
Here is the reason: Because of the extraordinarily challenging issues as to causation,
considered in combination with other practical difficulties plaintiffs may face
(unrelated to the merits of any of their individual claims), the task of getting these
Oklahoma citizens with (allegedly) earthquake-damaged property before a court in
which their claims can be adjudicated fairly, reasonably expeditiously and
cost-effectively is not easy or simple. Some tolerance of a certain amount backing
and filling is called for. If plaintiffs have their facts (including the facts as to
causation) right, then they are entitled to fair recompense from the responsible
producers. The court should not lightly impose potentially significant burdens on
their right to get an up or down adjudication.
Here is the exception: Plaintiffs have represented to the court that they do not
intend to proceed against the diverse defendants. The court will hold them to that.
If plaintiffs in this action should refile the claims asserted in this action (or claims
substantially similar thereto) against any of the diverse defendants7 in this case, the
court will, on motion, assess against those plaintiffs the reasonable attorney’s fees
and taxable costs incurred by those defendants in opposing plaintiffs’ motion to
remand, in filing their motions to dismiss or for judgment on the pleadings and in
opposing the instant motion. See, 9 Wright & Miller, Federal Practice & Procedure,
§ 2366 (3d ed.) (district court may require the plaintiff to pay the defendant’s
attorney’s fees as well as other litigation costs and disbursements). As Judge Heaton
did in a somewhat similar (but in some ways different) situation in Cactus Petroleum,
the court will retain jurisdiction of this case, notwithstanding dismissal, for the
limited purpose of determining those fees and expenses and entering an appropriate
judgment in the event of a refiling against a diverse defendant. Any such defendant
may, in that event, file an appropriate motion within ten days of any such refiling.
See, Talkington v. New York Life Insurance & Annuity Corporation, 2017 WL
1322226, *2 (W.D. Okla. April 10, 2017); Cactus Petroleum Corp. v. Continental
Resources, Inc., 2013 WL 5656107, *3 (W.D. Okla. Oct. 16, 2013).
III.
Based upon the foregoing, Plaintiffs’ Motion for Voluntary Dismissal, filed
October 23, 2019 (doc. no. 73), is GRANTED, subject to the condition that if any
of the plaintiffs refile the claims asserted in this action (or claims substantially
similar thereto) against any of the diverse defendants in this case, the court will
entertain a motion for assessment of reasonable attorneys’ fees and expenses as set
7 For this purpose, a diverse defendant is a defendant in this action as to which this court would
have had jurisdiction under 28 U.S.C. § 1332 (a) as of the date this action was filed in state court
and as of the date of removal to this court.
forth above. The court retains jurisdiction for that limited purpose and for the
purpose of entering an appropriate judgment.
IT IS SO ORDERED this 19 day of November, 2019.
STEPHEN P. FRIOT
UNITED STATES DISTRICT JUDGE
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