Marbaker v. Statoil U.S. Onshore Props., Inc., 3:17-CV-001528

CourtUnited States District Courts. 3th Circuit. United States District Court of Middle District of Pennsylvania
Writing for the CourtJUDGE CAPUTO
Docket NumberNo. 3:17-CV-001528,3:17-CV-001528
Decision Date12 September 2018


No. 3:17-CV-001528


September 12, 2018



Presently before this Court is a Motion to Dismiss (Doc. 32) filed by Defendant Statoil USA Onshore Properties, Inc. ("Statoil"). Because Plaintiffs Alan Marbaker, Carol Marbaker, Jerry L. Cavalier, and Frank Holdren ("Plaintiffs") request declaratory relief for a hypothetical scenario that calls upon the court to render an advisory opinion, Count I of their Amended Complaint is not ripe and will be dismissed without prejudice for lack of jurisdiction. Count II of the Amended Complaint fails to state a claim that a declaration that Plaintiffs' Oil and Gas leases with Statoil permit class arbitration is proper and will be dismissed with prejudice. Defendant's Motion to Dismiss will be granted on both counts.

I. Background

The facts as alleged in the Amended Complaint are as follows:

Each of the Plaintiffs entered into Paid-Up Oil and Gas Leases with companies in which Statoil acquired a thirty-two and a half percent (32.5%) interest some time before November 2008. Am. Compl. ¶ ¶ 22-26, ECF No. 31. Such leases were held by many individuals in the region. An SEC filing by Statoil ASA, for which Statoil was a subsidiary at the time, shows that as of November 2008, Statoil had an interest in at least 32,000 oil and gas leases in Pennsylvania, West Virginia, New York, and

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Ohio. Id. ¶ 26. Several lessors, including Plaintiffs, have alleged Statoil breached their leases by underpaying royalties. The factual circumstances surrounding this action ("Marbaker action") are related to a similar action brought against Statoil by separate plaintiffs in a separate proceeding ("Canfield action"), as discussed below.

A. The Marbaker Action:

On April 2, 2015, Plaintiffs filed a class arbitration demand against Statoil, alleging Statoil systematically underpaid oil and gas royalties in violation of its Lease agreements. Id. ¶ 27. Plaintiffs sought to represent "[A]ll other lessors who entered into a lease in the Marcellus Region in which Statoil has acquired an interest that, by its terms, requires royalties to be calculated based on 'revenue realized' or 'gross proceeds' and who, within the past six years, have received royalty payments from Respondent."1 Id. ¶ 29. Concurrently with the arbitration action, Plaintiffs filed a declaratory action in this Court to determine whether their Lease agreements permitted class action arbitration. See Marbaker v. Statoil USA Onshore Properties, Inc., No. 15-700 (M.D. Pa. Apr. 9, 2015).

By June 2015, Plaintiffs executed a mediation protocol with Statoil and agreed to dismiss their declaratory action, which was subsequently dismissed without prejudice on June 5, 2015. Id. ¶¶ 29, 39. Plaintiffs allege mediation lasted approximately two years and required considerable effort analyzing the claims and damages—at least two thousand hours—by Plaintiffs' counsel and expert. Id. ¶¶ 41, 45. Plaintiffs allege the parties met in-person three times and engaged in "significant exchanges" with Statoil's counsel before, between, and after each mediation session.

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Id. ¶¶ 42-44. At some point after filing their motion to dismiss in the Canfield action, Statoil "abandoned" settlement discussions with Plaintiffs. Id. ¶ 49.

On August 25, 2017, Plaintiffs re-filed their federal declaratory action. Shortly thereafter, in late September 2017, Statoil demanded that Plaintiffs destroy information they received during the mediation process. Id. ¶ 54.

B. The Canfield Action:

In January 2016, a set of leaseholders ("Canfield Plaintiffs") brought a class action lawsuit against Statoil that raised almost identical claims as those in the Marbaker arbitration. Canfield v. Statoil USA Onshore Properties, Inc., No. 16-85 (M.D. Pa. Mar. 22, 2017). The Canfield Plaintiffs, unlike the Marbaker Plaintiffs, were able to proceed in federal court because their leases did not contain an arbitration clause.

Statoil moved to dismiss the Canfield action. Id. Judge Mannion, presiding over the case, dismissed the majority of the claims alleged. However, the Canfield Plaintiffs were left with at least one viable claim. Id. This triggered settlement discussions between Statoil and the Canfield Plaintiffs. On July 19, 2017, counsel for the Marbaker Plaintiffs reached out to counsel for the Canfield Plaintiffs and offered to coordinate settlement discussions, but counsel for the Canfield Plaintiffs rejected this offer. Am. Compl. ¶ 53.

By October 2017, the Canfield Plaintiffs reached an agreement in principle to settle the case. On March 27, 2018,2 the Canfield Plaintiffs moved for preliminary approval of their negotiated class-wide settlement. Id. ¶ 59. The Marbaker Plaintiffs have filed objections to the proposed settlement. Objrs.' Mem. in Opp. to Mot. for Prelim. Approval of Proposed Settlement, Canfield, No. 16-85 (Apr. 10, 2018).

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C. Procedural History

On August 25, 2017, the Marbaker Plaintiffs, as stated above, filed a new Complaint renewing its request for a declaration that they may proceed as a class in arbitration. Am. Compl. ¶ 1. Thereafter, on October 6, 2017, Statoil filed a Motion to Stay the proceeding until the case, Chesapeake Appalachia, L.L.C. v. Scout Petroleum LLC, which involved a dispute over whether similar language in an arbitration clause for an oil and gas lease allowed for class arbitration, was decided by the Third Circuit. No. 17-2037, slip op. 749 (3d Cir. Mar. 13, 2018) ("Scout II"); see also Def.'s Mot. to Stay, ECF No. 11. This Motion was granted on November 21, 2017. Mem. Order, ECF No. 16. On March 30, 2018, the Marbaker Plaintiffs filed a Motion to Consolidate the Marbaker and Canfield actions which was subsequently denied on June 14, 2018. Doc. 18, ¶ ¶ 18, 43.

Shortly after the Third Circuit decided Scout II, Statoil filed a Motion to Dismiss the Complaint, which was later terminated after the Marbaker Plaintiffs filed an Amended Complaint on May 1, 2018. The Amended Complaint requested declaratory relief on two counts: (1) that Statoil waived its right to enforce the arbitration clauses in their leases by "invoking judicial machinery" and (2) that class arbitration is available under their Leases. See Am. Compl., generally. Statoil filed a new Motion to Dismiss on May 15, 2018. See Doc. 32, generally. This Motion has been fully briefed and is ripe for review.

II. Legal Standards

A. Motion to Dismiss: Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. See FED. R. CIV. P. 12(b)(6). When considering a Rule 12(b)(6) motion, the Court's role is limited to determining if a plaintiff is entitled to offer evidence in

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support of their claims. See Semerenko v. Cendant Corp., 223 F.3d 165, 173 (3d Cir. 2000). The Court does not consider whether a plaintiff will ultimately prevail. Id. A defendant bears the burden of establishing that a plaintiff's complaint fails to state a claim. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).

"A pleading that states a claim for relief must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a). The statement required by Rule 8(a)(2) must give the defendant fair notice of what the . . . claim is and the grounds upon which it rests. Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Detailed factual allegations are not required. Twombly, 550 U.S. at 555. However, mere conclusory statements will not do; "a complaint must do more than allege the plaintiff's entitlement to relief." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). Instead, a complaint must "show" this entitlement by alleging sufficient facts. Id. "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1950 (2009). As such, "[t]he touchstone of the pleading standard is plausability." Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012).

Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint, a plaintiff has not pleaded "enough facts to state a claim to relief that is plausible on its face," Twombly, 550 U.S. at 570, meaning enough factual allegations "'to raise a reasonable expectation that discovery will reveal evidence of'" each necessary element. Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678. "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 679.

In deciding a motion to dismiss, the Court should consider the allegations in the

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complaint. In addition to the allegations found in the complaint, the court may examine "exhibits attached to the complaint, matters of public record," and "legal arguments presented in memorandums or briefs and arguments of counsel." Mayer, 605 F.3d at 230; Pryor, 288 F.3d at 560. Additionally, the Court may consider a "document integral or explicitly relied upon in the complaint." In Re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (Alito, J.).

III. Discussion

A. Justiciability

The United States Constitution limits federal court jurisdiction to "cases" and "controversies." U.S. CONST. ART. III, § 2. See also Presbytery of New Jersey v. Florio,...

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