Rescigno v. Statoil USA Onshore Properties INC

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF PENNSYLVANIA

ANGELO R. RESCIGNO, SR., :

AS EXECUTOR OF THE ESTATE

OF CHERYL B. CANFIELD, :

Plaintiff, : CIVIL ACTION NO. 3:16-85

v. : (JUDGE MANNION)

STATOIL USA ONSHORE

PROPERTIES INC., et al.,

Defendants.

MEMORANDUM

Presently before the court is the objectors’ motion for reconsideration,

(Doc. 237). The objectors filed a brief in support, (Doc. 238), on January 1,

2023. The plaintiff filed a brief in opposition, (Doc. 239), on February 2, 2023.

The objectors then filed a reply brief, (Doc. 240), on February 8, 2023. The

matter is now ripe for disposition.

l. Standard of Review

“The purpose of a motion for reconsideration is to correct manifest

errors of law or fact or to present newly discovered evidence.” Harsco v.

Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985). “Accordingly, a judgment may be

altered or amended if the party seeking reconsideration shows at least one

of the following grounds: (1) an intervening change in the controlling law; (2)

the availability of new evidence that was not available when the court granted

the motion for summary judgment; or (3) the need to correct a clear error of

law or fact or to prevent manifest injustice.” Howard Hess Dental Labs. Inc.

v. Dentsply Intern., Inc., 602 F.3d 237, 251 (3d Cir. 2010) (quoting Max's

Seafood Café ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir.

1999)); Chesapeake Appalachia, LLC v. Scott Petroleum, LLC, 73 F. Supp.

3d 488, 491 (M.D. Pa. 2014) (Generally, reconsideration motions should be

granted sparingly). “The standard for granting a motion for reconsideration

is a stringent one ... [A] mere disagreement with the court does not translate

into a clear error of law.” Chesapeake Appalachia, LLC, 73 F.Supp. 3d at

491 (quoting Mpala v. Smith, 2007 WL 136750, at *2 (M.D. Pa. Jan. 16,

2007), aff'd, 241 Fed.Appx. 3 (3d Cir. 2007)) (alteration in original).

The burden for reconsideration is on the moving party.

ll. Discussion

Objectors have filed the present motion arguing the need to correct a

clear error of law or to prevent manifest injustice in light of the Supreme

“Pic

Court's decision in TransUnion LLC v. Ramirez, 141 S.Ct. 2190 (2021).' In

TransUnion, the Supreme Court had to address whether a portion of class

members suffered an injury without a “potential match” report being sent to

a third-party entity. TransUnion created a service for businesses where a

program would determine if an individual’s name was a “potential match” to

a list maintained by the United States Treasury Department's Office of

Foreign Assets Control (OFAC) of terrorists, drug traffickers, and other

serious criminals. The class contained individuals whose names were similar

to those on the OFAC list and TransUnion had listed these individuals as

“potential matches” to the list through their service. There were two groups

within the class: individuals whose names were sent to third-party

businesses and individuals whose names were marked as a “potential

match,” but not sent to a third-party business. A question arose as to whether

the portion of the class whose name was not sent outside of TransUnion ever

suffered an injury to therefore have standing. The court held that the portion

of the class who did not have their name sent outside of TransUnion did not

' While objectors claim TransUnion establishes a clear error of law or

to prevent manifest injustice, they knew of the pending case in December of

2020. The decision by the Supreme Court was issued in June of 2021. Since

then, objectors did not file any update with the court indicating the case’s

impact. The court ruled on the motion for final approval of the settlement and

attorneys’ fees well after TransUnion was decided. (Doc. 234 & 235).

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| suffer a concrete injury. Without suffering a concrete injury, there can be no

standing.

Objectors now file a motion for reconsideration to claim some sort of

“injustice.” Objectors’ motion is nothing more than an ill-fated effort to

challenge the results of the court’s prior order. Objectors claim one

paragraph of the settlement proves faulty to the entire agreement. The

settlement agreement defines the class as:

Royalty Owners in Northern Pennsylvania who have

entered into oil and gas leases, regardless of the type of lease,

that provide that the Royalty Owner is to be paid Royalties and

to whom Statoil [SOP] has (or had) an obligation to pay Royalties

on production attributable to Statoil [SOP]’s working interest.

(Doc. 137, p.5). Additionally, objectors claim that the class notice includes

“nbeople whom EOP ‘potentially’ will pay royalties.” (Doc. 238, p.2).?

Objectors seize upon the phrase “Royalty Owner is fo be paid Royalties” in

order to craft the argument that there is some futuristic nature to the defined

class. In isolating one paragraph of the settlement agreement, objectors

attempt to compare the defined class to the portion of the class in

2 Objectors’ argument related to the notice including the word

“potential” lacks any basis. Courts have routinely approved settlement

notices with “potential” because the purpose of a notice is to identify potential

class members. In re Cendant Corp. Litig., 264 F.3d 201, 226 (3d Cir. 2001)

(“[T]he court approved the form of the notice of the class action to be sent to

potential class members.”)

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TransUnion that was deemed to not have suffered an injury. As commonly

arises when one reads one paragraph of an agreement without reading it in

context of the full agreement, issues can arise.

Within the definition of the class, the phrase “to be paid” is used to

clarify the type of lease agreement. While objectors misconstrue the phrase

to craft some more grandiose argument about potential harm, the full phrase

describes the type of lease the Settlement covers. As read in context, “oil

and gas leases ... that provide that the Royalty Owner is to be paid

Royalties[.]” (Doc. 137, p.5). The objectors improperly seize upon three

words within the definition that merely serve to clarify the leases to which the

settlement refers.

Several other definitions provided within the Settlement must be stated

to understand the full context of the agreement. A class member is defined

as:

[A] member of the Class, and any of their respective past,

present, or future officers, directors, stockholders, agents,

employees, legal or other representatives, partners, associates,

trustees, subsidiaries, divisions, affiliates, heirs, executors,

administrators, purchasers, predecessors, successors, and

assigns, who does not submit a valid Request for Exclusion

pursuant to the Notice or is otherwise excluded pursuant to 41.2.

(Doc. 137, 91.4). Royalty is defined as "the amount owed to a lessor by

Statoil pursuant to an oil and gas lease (including any fractional interest

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therein) or an overriding royalty derived from the lessor’s interest in such an

oil and gas lease." (Doc. 137, 91.33). Royalty Owner is defined as “any

person who owns a Royalty interest in the Relevant Leases and is entitled to

receive payment on such Royalty from Statoil.” (Doc. 137, J]1.33, 1.34).

Northern Pennsylvania is defined as:

[T]he area of Pennsylvania in which Statoil owns working

interests in oil and gas leases and from which it produces and

sells Natural Gas production for delivery into Rome, Liberty,

Allen, Meadow, Warrensville, Seely, Canoe Run, Tombs Run,

and PVR Wyoming gathering systems and includes oil and gas

leases owned in whole or part by Statoil in the following counties:

Bradford, Lycoming, Sullivan, Susquehanna, and Wyoming.

(Doc. 137, 1.19). The definitions in the Settlement read together, as class

counsel explains in their brief, means the Class contains those currently

holding a lease (“who have entered into oil and gas leases”) entitling them to

royalty payments owed by SOP (“that provide the Royalty Owner is to be

paid royalties”) in the relevant area (“Northern Pennsylvania”), as well as

their predecessors, successors, agents, and other representatives. (Doc.

239, p.6-7).

Turning to the objectors’ arguments, objectors remain in the

hypothetical realm arguing that the class definition may contain an individual

that holds or held a lease agreement with Statoil but was never paid a royalty.

Working against the objectors' argument are the definitions within the

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Settlement. Royalty is defined as "the amount owed to a lessor by Statoil

pursuant to an oil and gas lease (including any fractional interest therein) or

an overriding royalty derived from the lessor’s interest in such an oil and gas

lease." (Doc. 137, 91.33). The definition of Royalty does not include an

amount yet to be paid, but rather, is defined as "the amount owed." (Doc.

137, ]1.33) (emphasis added). Therefore, no current leaseholder can argue

they will be owed a royalty payment and therefore can qualify. The

Settlement's definition of Royalty requires an amount already owed based

on a previously formed contract. Objectors could contend that an amount

owed but not yet paid would constitute a future harm. However, the

circumstances would still generate a concrete harm based upon the amount

owed and never paid was required by the lease. Furthermore, the objectors

do not identify a single party in the settlement that would fall into this realm

of a yet to be injured plaintiff. They remain purely in the hypothetical alone.

Additionally, a royalty is only generated when gas is taken. It is the very

act of gas being removed that creates the obligation to pay a royalty. This is

why royalty is defined in the past tense as amount owed. While it may be

true that the amount to be paid on the gas is determined at a later point once

the gas is sold to another party, the obligation to pay a royalty immediately

arises once the gas is removed. The argument that you can have a lease,

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but not suffer an injury yet again attempts to create a hypothetical situation

lacking an understanding grounded in the reality of the process. Thus, when

the class is defined as has or had an obligation to pay royalties, this means

gas has already been removed and an obligation to pay a royalty

simultaneously emerged with the gas removal. There is no “future” harm that

has yet to arise as objectors contend.

Even comparing the objectors’ argument with TransUnion displays the

clear differences between the cases. In TransUnion, some of the class

members never had their “potential match” sent out to a third party. The

status remained within TransUnion and did not create any sort of harm. It

was only a potential unrealized harm. Here, class members entered into

lease agreements with SOP. As the settlement explained, the class

members were to be paid royalties.* As the Settlement defined royalties as

an amount owed, the term described a previous obligation that arrose in the

past, not the future. The royalty obligation arose simultaneous with the

removal of gas from the property. While TransUnion described a yet to be

realized hairm, the harm here occurred when SOP violated the obligation to

pay the royalties according to the lease.

3 The “to be paid” language describing the nature of the agreements.

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The objectors claim one final point about the full range of leases not

being contained within the record. The argument critiques the class definition

since it is not tied to specific lease language, which objectors state could lead

to uninjured persons being granted relief. Objectors fail to cite any case law

or statutory requirement that the full range of leases must be submitted on

the record. Yet again, objectors hyper fixate on one definition without reading

the Settlement in its full context. The Settlement defines “Relevant Leases”

as “each and every oil and gas lease in Northern Pennsylvania owned in

whole or part by Statoil from which Statoil produces and sells Natural Gas

and pays a Royalty to Royalty Owners.” (Doc. 137, 91.30). Northern

Pennsylvania is defined as:

[T]he area of Pennsylvania in which Statoil owns working

interests in oil and gas leases and from which it produces and

sells Natural Gas production for delivery into Rome, Liberty,

Allen, Meadow, Warrensville, Seely, Canoe Run, Tombs Run,

and PVR Wyoming gathering systems and includes oil and gas

leases owned in whole or part by Statoil in the following counties:

Bradford, Lycoming, Sullivan, Susquehanna, and Wyoming.

(Doc. 137, 91.19). Additionally, the Settlement even further refines the lease

agreements into two groups: L-29 Group and the other lease group. The two

groups are based off the strength of the language contained within the lease

agreements. This is a thinly veiled attempt by objectors to again litigate the

differences between the two groups. While the court held that the index

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pricing method did not breach the royalty terms of plaintiff's “at the well”

lease, the court allowed a claim pertaining to the duty to market to proceed,

which is a basis for relief in the Settlement. Objectors’ own argument serves

as evidence that there is a difference between the L-29 Group and the Other

Lease Group pertaining to the language contained within each agreement.

Objectors only argument pertains to the royalty pricing methodology and

ignores the other claims that survived the motion to dismiss.

Objectors clearly do not demonstrate that any of the three grounds

exist in this case, which are required for the court to grant reconsideration.

Further, since this court's Memorandum and Order, (Doc. 234 & 235), which

are the subject of the objectors’ instant motion, gave thorough explanations,

the court will not repeat this discussion. Also, simply because objectors are

unhappy with the results of the court’s Order, “is an insufficient basis to grant

[them] relief.” Kropa v. Cabot Oil & Gas Corp., 716 F.Supp.2d 375, 378 (M.D.

Pa. 2010) (citation omitted).

MALACHY. MANNION

United States District Judge

DATE: February 13, 2023

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