Fordham Law

Fracking Cos. Face More Costly Fights Sans Lone Pine

Howard Erichson in Law360, September 03, 2013

Media Source

An appeals court decision in Colorado eliminating so-called Lone Pine orders from toxic tort cases has been garnering serious attention from oil and gas companies, which experts say will have to fight lengthy and expensive court battles without a powerful litigation weapon if the ruling is upheld.

A coalition of energy companies urged the Colorado Supreme Court last week to overturn a July decision finding that a Lone Pine order, which requires plaintiffs to present prima facie evidence supporting their claims before discovery begins, is not allowed under Colorado rules of procedure.

Although the case management tool is used infrequently, it can put defendants in a powerful position by requiring plaintiffs to make a causal showing right away rather than delving into several months of discovery. Without that option, companies are more likely to be stuck in extended litigation and will have a tougher time fending off frivolous claims.

With very few cases reaching trial, plaintiffs have much more settlement leverage in a world without Lone Pine orders, according to Fordham University School of Law professor Howard M. Erichson. Defendants miss out on the opportunity for a quick victory that could allow them to avoid any settlement negotiations whatsoever.

“It offers a potentially easy way out for defendants and an easy way out for judges,” Erichson said. “In a complex case, especially if the judge is skeptical about the plaintiffs' claims, one can understand the defendants wanting to give the judge the chance to nip things in the bud.”

The Colorado appeals court decision, however, removes judicial discretion from the equation, finding that Lone Pine orders were not appropriate as a matter of law under the operative rules of civil procedure. Other courts have shot down Lone Pine orders based on the details of the case at hand, but the power always remained with the court to decide whether they should move forward.

Removing that authority makes the litigation process more difficult for energy companies fighting hydraulic fracturing contamination claims, according to Gibson Dunn & Crutcher LLP partner Michael K. Murphy. With Lone Pine as an option, companies could, for example, demand that plaintiffs show what specific chemicals harmed them rather than simply cite the ill-effects of unnamed hazardous substances.

“As a defendant, you want to get to those decision points as early as possible,” Murphy said. “You don't want a ruling that limits a judge from being creative in how he manages a case.”

Judges will lose that gatekeeper role if the Colorado appeals court decision is upheld by the state's highest court. The ruling revived a suit by homeowner William Strudley and his family, who claim that the well-drilling operations of Antero Resources Corp., Calfrac Well Services Corp. and Frontier Drilling LLC polluted their property and made them sick.

The appeals panel overturned a lower court's entry of the Lone Pine order, which originated in a 1986 New Jersey decision and require plaintiffs to show a causal link between a particular chemical and the specific injuries they suffered.

The order granted by the trial court required the Strudleys to submit expert opinions with supporting data and facts that identified the hazardous substances each plaintiff was exposed to from the companies' activities, as well as how long and at what concentrations each plaintiff was exposed to the chemicals.

Instead of simply rolling back the demands of the order, the appeals court found they could never be issued under Colorado law. It was a leap the court didn't need to take if they were simply displeased with the demands foisted upon the Strudleys before discovery, according to Weil Gotshal & Manges LLP partner Theodore E. Tserkerides.

“The court didn't have to make this sweeping pronouncement,” Tserkerides said. “They could have just said it's not the right time.”

Judicial discretion could potentially benefit either side of a case, but in hydraulic fracturing litigation in which families like the Strudleys have to tie their illness to the drilling activities, the advantage clearly goes to the energy companies.

“Fracking would lend itself to Lone Pine orders in an expert context because there is a lot unknown out there right now about well injection and chemicals and sand, and how any of it could have caused harm,” Tserkerides said. “You would need an expert to make that connection.”

The appeals panel found that the Lone Pine order against the Strudleys interfered with the “full truth-seeking purpose of discovery,” and said the state's rules of procedure contain no language granting the court broad discretion for prima facie showings in pretrial proceedings.

The court noted that the state could have easily adopted rules similar to federal standards, but chose not to when making revisions two decades ago.

Although the ruling deals exclusively with Colorado law and would not be controlling in other states and federal courts, it gives plaintiffs more ammunition in their argument against applying a Lone Pine order in any circumstance, according to Murphy.

“In other jurisdictions, defendants will begin to see whenever they are briefing a Lone Pine order that this case will be mentioned by plaintiffs,” Murphy said. “It's another data point for judges across the country to look at when deciding whether or not to issue Lone Pine orders.”

The Colorado decision could end up being substantially influential elsewhere, according to Erichson, as courts consider giving a fresh look to a procedure that can lead to summary judgment as early as the prediscovery phase.

“There is plenty of mass tort litigation out there, but it is uncommon enough that each case matters,” Erichson said. “It's not like there are that many cases analyzing in detail the question of Lone Pine orders. Everyone still cites the old New Jersey Lone Pine case. It seems to me there is room for a court to take this issue and give it a good current analysis.”