Wednesday, October 2, 2013, 2:13 PM

Judge Jones Certifies Class Action In Southwest Virginia Natural Gas Case

On Tuesday, October 1, 2013, Judge Jones issued a ruling certifying a class action in a series of five lawsuits in the Western District of Virginia (Abington Division).  In so ruling, Judge Jones accepted the report and recommendation of Magistrate Judge Pamela Meade Sargent.  I discussed Judge Sargent's report and recommendation, and the political controversy it provoked, in this blog post.

Natural gas wells are concentrated in seven counties in Southwest Virginia
The case involves $30 million in natural gas royalties that are sitting in an escrow account.  Virginia law allows energy companies to siphon gas from coal seams without the owner's permission, and then place royalties in an escrow account until ownership can be determined later.

According to the Roanoke Times:

The dispute revolves around the fact that Virginia legislators never declared whether the natural gas pulled from coal seams — called coalbed methane — belongs to the person holding the deed to the coal or the person holding the deed to the gas estate.
Ownership, and access to the royalties, must be decided either in deed-by-deed court battles, in out-of-court arbitration, or by an agreement to split the money among the gas and the coal owners.

Attorneys for the proposed class of landowners argued that a class action was necessary because the cost of an individual lawsuit by a landowner could be more than what is held in some escrow accounts.  Attorneys for the energy companies disagreed and argued that the ownership of mineral and real property interests for each individual case could not be decided in the aggregate by a class action.  At least one of the defendants indicated the intent to appeal the class certification ruling to the Fourth Circuit.

Rule 23(f) of the Federal Rules of Civil Procedure provides: "A court of appeals may permit an appeal from an order granting or denying class-action certification under this rule if a petition for permission to appeal is filed with the circuit clerk within 14 days after the order is entered. An appeal does not stay proceedings in the district court unless the district judge or the court of appeals so orders."

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