Class action claims stemming from underground fracking may be poised to explode on a nationwide basis as lower federal courts continue to ignore and erode the Supreme Court’s holding in Comcast and “no injury” and single issue class actions continue to be sanctioned.
Fracking involves drilling and the injection of water or other liquid into the ground at a high pressure in order to fracture shale rocks to release natural gas and oil. It is practiced in more than 32 states and has become the source of jobs and lower gas energy costs. It has been both hailed as the solution to America’s energy problems and damned as posing a potential environmental disaster. Indeed, several places have banned the practice outright.
Of late, there have been growing claims that fracking may cause minor and perhaps major earthquakes capable of damaging homes and businesses. The frequency of earthquakes in areas where there is significant fracking activity is striking. Last year, for example, there were some 567 quakes of at least 3.0 magnitude in Oklahoma, a state that is a hotbed of fracking. In fact, since 2009, over 3600 earthquakes have struck Oklahoma, some 300 times that of previous decades. The same is true in other states.
And recently, more and more scientists have come to believe that the deep water wastewater disposal injection used in fracking can be linked to the frequency of these earthquakes. Both U.S. Geological Survey (USGS) and Oklahoma Geological Survey have recently confirmed that they believe that there is just such a link between oil and gas fracking and the uptick in seismic activity in Texas, Colorado, Arkansas and Ohio as well as numerous other states.
Thus far, only a smattering of class action lawsuits have been filed related to these earthquakes and many of these have been dismissed or settled. (The dismissal of one such claim is on appeal to the Oklahoma Supreme Court). These cases have generally included claims for property damage, diminution in property value and even personal injury.
Under the Supreme Court’s ruling in 2013 in Comcast Corp v. Behrend 133 S. Ct. 1426 (2013) 133 S. Ct. 1426 (2013), certification of these claims should be problematic. In Comcast, the Supreme Court reiterated the requirements it spelled out in Walmart Stores, Inc v. Dukes, 131 S. Ct. 2541 (2011) and went so far as to suggest that the use of class certification was not appropriate without the careful and rigorous analysis of whether individual issues such as damages would overwhelm any common issues. According to the Court, the damages model offered by plaintiff must attribute the wrongful conduct to the damage suffered and the damages must be ascertainable.
Thus, the differences in property damages and value diminutions potentially caused by an earthquake should result in a reluctance to certify fracking cases based on the Comcast view that a hard look be taken at whether damage calculations predominate over the common issues of liablitiy. In addition, any effort to include in a class home and business owners who have not yet suffered damage should likewise be rejected both under Comcast and under the Supreme Court decision in Clapper v. Amnesty Intern. USA, 133 S.Ct. 1138 (2013) since absent a showing of imminent harm, such property owners would lack standing.
However, as previously reported, the proliferation of the certification of no injury classes and classes that include both injured and non injured putative plaintiffs creates a real danger.
As we noted several months ago, the Supreme Court’s refusal to police itsComcast opinion and hear the washing machine cases (see In re Whirlpool Corp. Front-Loading Washer Products Liab. Litig., 722 F.3d 838 (6th Cir. 2013), cert denied, 134 S.Ct. 1277 (U.S. 2014) ("Whirlpool"; Butler v. Sears, 702 F.3d 359 (7th Cir. 2012),cert. granted, judgment vacated, 133 S.Ct. 2768 (U.S. 2013) and judgment reinstated,727 F.3d 796 (7th Cir.2013) cert. denied, 134 S.Ct. 1277 (U.S. 2014)) will lead to increased certification of “one issue” class actions. These certification decisions generally ignore differences in damages among class members or even the lack of damages of class members. In the washing machine cases, the certified classes included both damaged and non damaged plaintiffs; in both cases the Circuit appellate Court squared the certification with Comcast. According to the 7th Circuit, “Unlike the situation in Comcast, there is no possibility in this case that damages could be attributed to acts of the defendants that are not challenged on a class‐wide basis; all members of the mold class attribute their damages to mold and all members of the control‐unit class to a defect in the control unit.
The 2nd,9th, and 6th Circuits have also joined the bandwagon: see Roach v. T.L. Cannon Corp., 2015 WL 528125 (2d Cir. Feb. 10, 2015) (individualized damages determinations alone cannot preclude class certification under Rule 23(b)(3)),Lambert v Hartman 517 F3d 433 (6th Cir. 2007); Krotther v Starbucks, 628 F.3d 1139 (9th Cir. 2010); In re IKO Roofing Shingle Products Liability Litigation, 14-1532, 2014 WL 2958615 (7th Cir. July 2, 2014). See also comScore v. Dunstan, No. 13-cv-8007 (7th Cir. Jun. 11, 2013). And as noted in this blog, a recent decision by a federal district court judge in Kansas gives further evidence of such a trend. See Lowell v. Summer Bay Management L.C., et al., 13-cv-229, 2014 WL 1092187 (E.D. Tenn. March 17, 2014) (“Lowell”). More recently, a federal district court in Kansas certified a class in Nieberding v. Barrette Outdoor Living, Inc. and Home Depot USA Inc. No.12-CV-2353, 2014 WL 4408928, (D. Kansas, 2014).
And more recently in the Target litigation, Judge Magnuson ruled the plaintiffs did have sufficient injuries for standing purposes because they suffered costs “including unlawful charges, restricted or blocked access to bank accounts, inability to pay other bills and late payment charges or new card fees” even though Target argued vehemently that plaintiffs failed to plead that charges to some of the plaintiffs were not reimbursed (ruling that Klapper, set a “too high a standard”).
Thus individualized issues of injury and causation that have long protected defendants and guarded against certification are being eroded. The notion that a simple, single issue is sufficient for certification irrespective of individual damage and causation has now gained traction. Indeed, just as the lower courts sought to do in Dukes and Comcast, the unbundling of causes of action practically deprives a defendant of the fundamental right to present and litigate its individual defenses.
This can only mean that fracking earthquake claims may have traction. A class action filed in the 6th (which includes Ohio, a state with significant fracking), 9th ( which includes California where significant fracking occurs) or 7th ( which includes Illinois where significant fracking occurs), Circuits seeking a certified class of individuals who have suffered property damage, diminution in value or who may suffer such damages and who seek monitoring in the future is clearly not farfetched and could have legs.