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Lone Pine Orders: Forcing Plaintiffs in Fracking and Other Suits to Show Their Cards Before Discovery

In recent years, a trend has developed in toxic tort and other personal injury-based complex litigation in which defendants ask the court to enter a case management order requiring the plaintiff to produce evidence of a prima facie case before being allowed to proceed with discovery – a so-called Lone Pine order. Last month, in a lawsuit brought by a family alleging physical and property injuries sustained from nearby natural gas drilling operations, the Colorado Supreme Court ruled that trial courts in Colorado lack the authority under state law to enter Lone Pine orders. Specifically, the Court had been asked to decide “whether a district court is barred as a matter of law from entering a modified case management order requiring plaintiffs to produce evidence essential to their claims after initial disclosures but before further discovery.” The Colorado Supreme Court concluded that district courts were, indeed, barred from entering such orders.

In Antero Resources Corp. v. Strudley, the plaintiffs alleged that drilling operations near their home caused physical and property damages, including the assertion that exposure to pollutants from the drill site caused them a variety of physical injuries. After the parties exchanged initial disclosures, Antero Resources asked the district court to enter a Lone Pine Order requiring the Strudleys to present prima facie evidence of their claims before the parties engaged in further discovery. The district court granted the request and precluded the Strudleys from pursuing any discovery until they satisfied this evidentiary requirement.

The Strudleys submitted evidence relating to the pollutants released and a medical affidavit that asserted further investigation of their physical ailments was warranted, but offered no evidence of actual causation. Antero Resources moved to dismiss the case, arguing, in part, that the plaintiffs failed to demonstrate a prima facie case of causation. The district court agreed, dismissing the lawsuit. On appeal, the appellate court reversed and reinstated the plaintiffs’ claims. Antero Resources then appealed to the Colorado Supreme Court.

In its review, the Colorado Supreme Court first observed that Lone Pine orders developed from an unpublished opinion of the Superior Court of New Jersey in Lore v. Lone Pine Corp. Such orders, typically used in toxic tort cases, generally require plaintiffs to proffer evidence establishing a prima facie case of injury, exposure and causation before conducting any discovery. In this way, courts have used Lone Pine orders to minimize burdens on defendants by erecting a preliminary evidentiary requirement for plaintiffs to satisfy.

Rather than wading into a policy discussion of the costs and benefits of Lone Pine orders, the Colorado Supreme Court concluded that existing Colorado law and procedures do not authorize state courts to adopt Lone Pine orders.

Although this opinion is limited to an interpretation of Colorado state law, it presents useful guidance to parties in other states, including Texas, involved in fracking, oil and gas, and other toxic tort litigation matters.

Antero Resources Corp. v. Strudley, No. 13SC576 (Colo. Apr. 20, 2015).

Litigation Strategy, Be Careful What You Ask For … You May Get It. Just ask BP.

Confronted with claims by thousands of plaintiffs across the Gulf Coast seeking billions of dollars in damages, on the eve of the MDL trial in New Orleans on liability for the Deepwater Horizon oil spill in the Gulf of Mexico, BP settled with two classes of plaintiffs. BP estimated the value of that settlement at $9.2 billion.

Thereafter, with settlement and other costs mounting, BP reversed course, arguing that the settlement agreement was fatally flawed in allowing people who were not injured by the spill to collect payments. In particular, BP argued, the agreement’s settlement class violates Article III of the Constitution and Federal Rule of Civil Procedure 23 by including members who have not suffered an injury caused by the defendant. This despite the fact that (i) BP touted the agreed-upon standard of assumed causation when it originally sought the district court’s approval of the deal and (ii) others, like Halliburton, voiced this very concern with causation at the time.

In response to BP’s challenge, the plaintiffs suggested, among other things, that BP was merely suffering from buyer’s remorse from a deal to which it freely agreed. According to the plaintiffs, BP agreed to the deal, pushed for the district court to approve the deal, and never timely appealed any issue regarding the lack of a causation requirement.

On Monday, the US Supreme Court denied BP’s bid to overturn the deal it struck with the plaintiffs in 2012. It would seem BP is stuck with what it asked for, even though the pricetag turned out to be more than the $9.2 billion it predicted.

BP Exploration & Production, Inc. v. Lake Eugenie Land & Development, Inc. (Case No. 14-123)

BP, a Victim of its Own Trial Strategy, Fails to Curtail Liability

Yesterday, the federal judge in New Orleans who is handling the BP oil spill MDL litigation rejected BP’s effort to set aside its liability finding. BP has already stated its intent to appeal to the 5th Circuit. In the meantime, however, it still faces as much as $18 billion in Clean Water Act penalties.

On September 4, 2014, Judge Barbier issued his liability determination. At that time, he determined that BP was grossly negligent and apportioned 67% of the responsibility for the oil spill to BP. On October 2, 2014, BP filed a motion to set aside the finding or grant a new trial, contending that the liability finding improperly relied on excluded evidence of a casing breach theory proffered by Halliburton and its expert, Dr. Gene Beck. Both Halliburton and the Department of Justice responded to BP’s motion, arguing that BP actually solicited the evidence on cross-examination of Dr. Beck, thereby opening the door.

On November 13, 2014, Judge Barbier denied BP’s motion to amend the findings, alter or amend the judgment or for new trial. In doing so, he agreed with Halliburton and the DOJ that the testimony at issue was, at least in part, elicited by BP’s own cross-examination, as well as Halliburton’s re-direct examination after BP opened the door. According to the ruling, “BP was not, as it claims, a ‘victim of surprise.’ . . . Rather, it seems BP was a ‘victim’ of its own trial strategy.” The ruling also observed that the casing-breach theory at issue was corroborated by multiple pieces of other evidence.

In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, 2010, Case No. 2:10-md-02179 (E.D. LA)

Billions of dollars in liability potentially at issue in oil spill evidence dispute.

On September 4, 2014, U.S. District Judge Carl J. Barbier rendered his ruling on liability for the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. In that ruling, Judge Barbier found BP grossly negligent and apportioned 67% of the fault for the oil spill to BP (leaving 30% for Transocean and 3% to Halliburton). Separate and apart from any other civil liability it may face, if the ruling stands, BP may confront as much as $18 billion in Clean Water Act penalties.

In response, on October 2, 2014, BP asked the Court to set aside its finding or grant a new trial, arguing that the ruling improperly relied on evidence that was excluded. In particular, BP contended that because it was not included in the expert report, the judge could not rely on certain testimony from Halliburton’s expert about BP subjecting the production casing to 140,000 pounds of compressive force, which the Court found led to a breach in the production casing below the float collar and caused the cement to be improperly placed.

Last Thursday, both Halliburton and the U.S. Department of Justice responded to BP’s motion, basically arguing that BP waived its objection to the evidence and opened the door to its consideration by exploring the bases for the expert’s opinion on cross-examination. They suggest that BP re-introduced the evidence on cross-examination, permitting Halliburton then to follow up on re-direct examination and entitling the Court to rely on the expert’s trial testimony.

While the ultimate outcome remains uncertain, the ongoing dispute emphasizes the potentially significant impact of evidentiary determinations and trial strategy on a company’s bottom line.

In re: Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, 2010, Case No. 2:10-md-02179 (E.D. LA)