Anthony v. Chevron Usa, Inc.

Citation284 F.3d 578
Decision Date01 March 2002
Docket NumberNo. 00-50710.,00-50710.
PartiesJess ANTHONY; Marjorie Anthony; Linda Forbush, Plaintiffs-Appellants, v. CHEVRON USA, INC., Successor in Interest to Gulf Oil Corporation, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

David Wallace Holman, Robert Alan York (argued), Holman & Keeling, James Craig Lewis (argued), Gallagher, Lewis, Downey & Kim, Houston, TX, for Plaintiffs-Appellants.

Steven Carroll Kiser, Andrew Harper Estes, Lynch, Chappell & Alsup, Midland, TX, Peggy Roberts Perser (argued), Chevron USA, Houston, TX, for Defendant-Appellee.

Appeal from the United States District Court for the Western District of Texas.

Before JONES, EMILIO M. GARZA, and STEWART, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Plaintiffs-Appellants Jess Anthony, Marjorie Anthony, and Linda Forbush (collectively, the "Anthony Family") appeal the district court's grant of judgment as a matter of law in favor of Defendant-Appellee Chevron U.S.A., Inc. ("Chevron"). The Anthony Family filed suit in state court against Chevron and several other oil companies, alleging that Chevron had negligently polluted both the water and soil of the Anthony Family's ranch, and also used more of the ranch's surface estate than was reasonably necessary to conduct their operations. After the dismissal of the sole non-diverse defendant, Chevron removed the case to federal court pursuant to 28 U.S.C. § 1446(b).1 The district court subsequently denied the Anthony Family's claims on the merits, holding that they had failed to provide sufficient evidence for a reasonable jury to conclude that Chevron caused the pollution of the ranch's underground aquifer. The trial court also concluded that the Anthony Family had not shown sufficient evidence that Chevron caused the soil pollution on various sites on the ranch. In addition, the court found that the Anthony Family had not presented sufficient evidence to calculate the amount of damages resulting from the alleged water and soil pollution. We agree with the district court, and hold that the Anthony Family has failed to provide sufficient evidence of causation and damages to reach the jury on either the water or soil pollution claims.2

I

The Anthony Family owns the surface estate of the V-6 ranch, which encompasses 7,392 acres south of the City of Monahans in Ward County, Texas. As part of their surface estate, the Anthony Family owns the groundwater underlying the ranch. The ranch's mineral estate is separate from the surface estate and is divided into two sections. The Gulf Oil Corporation ("Gulf") initially leased these two sections from the Hutchings Joint Stock Association ("H.S.A.") and from the trustees of the C.W. Edwards estate in 1925 and 1934, respectively. The leases gave Gulf the exclusive right to conduct oil production operations on each subsection of the ranch. Chevron subsequently acquired these leaseholds over the mineral estate when it acquired Gulf. Chevron continued to operate under the lease agreements until it assigned them to the Pennzoil Company ("Pennzoil") in 1992.

Underlying the V-6 ranch is the Allurosa aquifer. The Allurosa, in reality, consists of two distinct, but interconnected aquifer layers. The uppermost layer, known as the Alluvium, consists primarily of poorly consolidated sand, gravel, and silt. This upper strata extends down roughly one hundred feet below the surface. Beneath the Alluvium is the Santa Rosa aquifer, which extends down a further two hundred fifty feet below the surface, making the total depth of the aquifer approximately three hundred fifty feet. The Santa Rosa, which consists of sandstone, is older and harder than the upper, Alluvium layer. The name "Allurosa" is merely a contraction of the names of these two subterranean aquifers.

The Anthony Family maintains numerous water wells on their ranch, each of which is completed into the Allurosa aquifer. The particular well at issue here, known as the Bentley Windmill water well, extends down only into the upper Alluvium strata to a depth of about fifty-four feet. The Anthony Family uses this well to provide water for their cattle on the ranch. The well produces approximately ten gallons of water per minute, but the portion of the Allurosa beneath the well is capable of producing several hundred gallons per minute if the Bentley Windmill's pumping capacity was increased or additional wells were completed into the aquifer.

Historically, the Bentley Windmill produced water that was suitable for human consumption. Tests run in 1973, 1974, and 1975 showed chloride levels in the Bentley Windmill at about sixty parts per million (p.p.m.) and total dissolved solids of approximately 600 p.p.m., which were far below the recommended maximum state levels for chloride and total dissolved solids in drinking water of 300 p.p.m and 1,000 p.p.m., respectively.

By 1988, the chloride levels in the Bentley Windmill had increased dramatically. Tests revealed chloride levels as high as 980 p.p.m., far in excess of the recommended maximum level of chloride for drinking water. Not surprisingly, the level of total dissolved solids had also increased substantially, also exceeding the recommended maximum amount.

Beneath the Allurosa is the Monahans South Queen Field ("South Queen"), part of the mineral estate, which consists primarily of sand saturated with oil. The South Queen lies at a depth of about 3,000 feet below the surface. Chevron initially began to develop the South Queen in the late 1960s. Beginning in 1971, Chevron sought to increase the oil production from the field by injecting salt water into the formation. For this purpose, Chevron converted several of its oil producing wells into salt water injection wells. The goal of this procedure was to increase the underground pressure, thereby forcing more oil towards the remaining producing wells. Some of these converted wells were in close proximity to the Bentley Windmill. Chevron had plugged and abandoned all of its producing and injection wells in the vicinity of the Bentley Windmill by 1989, three years before it assigned the mineral lease to Pennzoil.

As part of its oil production activities on the V-6, Chevron operated numerous production wells and several pipelines. The Anthony Family alleges that oil spills or leakage are evident at eight locations near wells or pipes that, at least at some point in time, were owned and operated by Chevron. Three of these contaminated sites are located on the west side of the V-6 ranch. Chevron ceased operations on that portion of the ranch in 1992. Subsequently, several different oil companies operated the well and pipe facilities in the area. Chevron, however, continues to produce oil on the east side of the ranch where the remaining five contamination sites are located.

At trial, the Anthony Family claimed that Chevron's negligent operations caused both the elevated chloride levels in their well, as well as the soil contamination on their ranch. They also claimed that Chevron utilized more of the surface estate than reasonably necessary to carry out its oil operations.3 At the close of the Anthony Family's case, Chevron moved for judgment as a matter of law pursuant to Fed.R.Civ.P. 50(a). The district court concluded that the Anthony Family's evidence failed to establish that Chevron caused the contamination on the ranch and was critically short of the proof necessary to establish an amount of damages. Thus, the trial court granted Chevron's Rule 50 motion. On appeal, the Anthony Family argues that the district court erred in granting this motion, contending that they presented sufficient evidence of causation and damages for a jury to consider Chevron's liability for both the water and soil pollution on their ranch.

II

Under the standard articulated in Fed.R.Civ.P. 50(a), a district court properly grants a motion for judgment as a matter of law only when "a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for the party on that issue." Fed.R.Civ.P. 50(a); see Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 149, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). In turn, we review a district court's Rule 50 determination de novo, "applying the same legal standard as the trial court." Cooper Indus., Inc. v. Tarmac Roofing Sys., Inc., 276 F.3d 704, 707 (5th Cir.2002) (quoting Flowers v. So. Reg'l Physician Servs. Inc., 247 F.3d 229, 235 (5th Cir.2001)).

In order to survive a Rule 50 motion and present a question for the jury, the party opposing the motion must at least establish a conflict in substantial evidence on each essential element of their claim. Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969) (en banc) (holding that a mere scintilla of evidence is insufficient to present a question for the jury). In other words, the evidence must be sufficient so that a jury will not ultimately rest its verdict on mere speculation and conjecture. Gulf Coast Real Estate Auction Co. v. Chevron Indus., Inc., 665 F.2d 574, 577 (5th Cir.1982). In determining whether there is a jury question, the court should consider all the evidence presented at trial in the light most favorable to the non-moving party. Mattern v. Eastman Kodak Co., 104 F.3d 702, 705 (5th Cir.1997).

In the present case, the Anthony Family alleges that Chevron's negligent oil operations contaminated the ranch's underground aquifer with salt water. The Anthony Family also claims that Chevron's operations resulted in oil spills or leakage at eight separate sites on the V-6. Chevron, as the holder of an oil and gas lease, has the legal right under Texas law to use as much of the surface estate as is reasonably necessary to comply with the terms of the lease and to carry out its purposes. Oryx Energy Co. v. Shelton, 942 S.W.2d 637, 641 (Tex.App. — Tyler 1996, no writ). Thus, for the Anthony...

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