Last week, the United States Court of Appeals for the Eighth Circuit affirmed a district court’s ruling to decertify a class action filed by landowners for releases from Exxon’s 850-mile Pegasus Pipeline that crosses four states from Texas to Illinois. The case, Webb, et al. v. Exxon Mobil Corp., et al., Dkt. No. 15-2879 (8th Cir., May 11, 2017), was filed by a group of landowners who claimed that Exxon materially breached the terms of their right-of-way easement agreements by allegedly failing to inspect, maintain, repair, and replace the pipeline, which was originally installed in the mid-1940s. At various times since the 1980s, the pipeline had releases in Texas, Arkansas, and Missouri, which the plaintiffs claim resulted in damage to their properties. The plaintiffs sought to rescind their right-of-way easement agreements and force Exxon to remove or replace the entire pipeline, or in the alternative, to be paid damages for breach of contract and diminution in property value.
A prerequisite to any class action is that the class satisfies four elements under Federal Rule of Civil Procedure 23(a): (1) the class is so numerous that joinder of all members is impractical (“numerosity”); (2) questions of law or fact are common to the class (“commonality”); (3) claims or defenses of the representative parties are typical of the claims or defenses of the class (“typicality”); and, (4) the representative parties will fairly and adequately protect the interests of the class (“adequacy”). In addition to these four elements, here, plaintiffs sought class certification under Rule 23(b)(3), which further requires plaintiffs to demonstrate that “questions of law or fact common to class members predominate over any questions affecting only individual members,” the so-called “predominance” test.
Despite initially certifying the class, at the summary judgment stage the district court reversed its decision and decertified the class. The district court determined that the nature of the plaintiffs’ claims against Exxon were “more nuanced” than originally presented, and that plaintiffs’ claims could not satisfy the commonality element because Exxon’s actions on each individual plaintiff’s property would “necessarily devolve into a parcel-by-parcel analysis of whether Exxon breached the individual easement.”
The Eighth Circuit agreed and rejected plaintiffs’ arguments that the commonality element was satisfied because the same right-of-way easement agreements governed the entire length of the pipeline or because Exxon operated the pipeline as “one continuous unit.” Rather, the Court found that determining whether Exxon breached its contractual obligations to each individual plaintiff necessarily would vary based on each property’s location, the location of the pipeline, and the effect of any releases that may have occurred on each property. As the Circuit court noted, “[e]ven if Exxon’s decisions concerning the transportation of contents throughout the 850-mile pipeline can be considered uniform, the effect is not.” The Eighth Circuit also held that the plaintiffs could not meet the predominance requirement of Rule 23(b)(3), because too many individual issues – such as each property’s unique features and condition, the presence of groundwater, and real estate valuation – would predominate over any issues common to the entire class. Finally, certification was rejected because the proposed class asserted claims sounding in contract, property, and tort law, which would require the court to apply and interpret law from four different states – Arkansas, Illinois, Texas, and Missouri – which could lead to potential conflicts among each state’s laws.
Obtaining class certification in an environmental spill or disposal case is difficult under the best of circumstances, with issues of plume delineation and the extent of injuries posing significant hurdles for plaintiffs’ counsel. Thus, the plaintiffs in Webb took an ambitious position from the start, one that was only temporarily successful. The Eighth Circuit’s decision will certainly give counsel in future actions some pause before rushing headlong into seeking certification of a large, diverse, and potentially unwieldy class.