Widening the Power Gap: The Eighth Circuit's Stringent Requirements for Class Actions in Environmental Contamination Cases.

Author:Holtzman, Emily
 
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  1. INTRODUCTION

    Pipeline construction is booming in the United States, yet it remains a polarizing topic for many because of environmental concerns. On the one hand, pipelines bring increased energy independence for the United States and are one of the safest ways to transport oil and gas. (1) At the same time, fears of environmental damage have led to a growing and fierce opposition to pipeline construction. (2) After the massive offshore rig spill in the Gulf of Mexico in 2010, resistance to new projects like the Keystone Pipeline has received widespread media coverage. The protests of the Dakota Access Pipeline on the Standing Rock Reservation, in particular, portrayed how high tensions have risen over pipeline construction. (3) As quieter protests continue across the country against various new and old pipeline constructions and spills, questions about liability and accountability of the oil industry in the future of environmental degradation have largely been left unanswered. (4)

    In 2013, a portion of the Pegasus Pipeline (5) (the "Pipeline") ruptured near Mayflower, Arkansas, spilling about 134,000 gallons of heavy crude oil and forcing nearby residents to evacuate their homes. (6) The Environmental Protection Agency ("EPA") classified the leak as a "major spill." (7) Twenty-two homes were evacuated, and nearby wildlife was majorly affected for years following the spill. (8) Property owners with land subject to the easement contracts with Exxon ("Plaintiffs") brought a class action lawsuit against Exxon Mobil Corporation, ExxonMobil Pipeline Company, and Mobil Pipe Line Company (collectively, "Exxon") for breach of contract, alleging Exxon operated the Pipeline in an unsafe and defective condition. (9) In 2014, the U.S. District Court for the Eastern District of Arkansas certified the class action; however, on reconsideration in 2015, the court decertified the class. (10) The U.S. Court of Appeals for the Eighth Circuit affirmed this decision in 2017. (11)

    This Note argues this class should have been able to proceed to adjudicate its claims under either Rule 23(b)(2) or Rule 23(b)(3) of the Federal Rules of Civil Procedure. The Eighth Circuit's decision to decertify the class in Webb v. Exxon Mobil Corp. will deprive property owners of control and agency over their land when faced with environmental contamination or disaster resulting from the conduct of a large and powerful corporation. In light of the massively uneven power dynamic that exists between pipeline operators and individual property owners across the country, removing class adjudication as a possibility to hold these operators liable for potential mistakes further widens this power gap. Landowners, towns, municipalities, and residents should be aware of the repercussions of this decision in making future agreements with pipeline owners and operators, as well as any industries or facilities that carry major risks of environmental contamination.

    Part II of this Note provides the facts and holding of Webb. Part III discusses the requirements of class action lawsuits under Rule 23(a) and Rule 23(b) in light of Wal-Mart v. Dukes and other class action suits involving environmental contamination claims. Part IV reviews the instant decision of the Eighth Circuit in Webb. Part V explains why the Eighth Circuit adopted a standard for certifying classes that is too stringent, even after Dukes, and further explains why the court erred in decertifying the class in Webb. Part VI concludes this Note by explaining the impact this case will have on landowners and casement holders in the future.

  2. FACTS AND HOLDING

    The Pipeline was constructed in 1947 and spans more than 650 miles through Texas, Arkansas, Missouri, and Illinois. (12) Magnolia, the corporate predecessor of Exxon Mobil and the first owner of the Pipeline, entered into easement contracts with property owners in these four states to build the Pipeline alongside or across their properties. (13) Magnolia used a low frequency electric resistance welding process to construct the Pipeline. (14) This process of welding was replaced industry wide with a high-frequency welding process in the 1970s after finding the low resistance construction was more susceptible to corrosion, cracks, and bonding issues. (15) At the time of the spill in Mayflower, Exxon had upgraded approximately 200 miles of the original pipe with a stronger welding process. (16)

    The Pipeline was originally intended to transport crude oil from Texas up through Illinois, traveling south to north, but in 2009, Exxon reversed the flow of the oil while simultaneously increasing the amount of oil transported by the Pipeline by fifty percent, totaling 95,000 barrels per day. (17) Exxon reversed the flow in order to transport tar sands, as opposed to the heavy crude it had transported for the past fifty years. (18) Reversing the flow and transporting a much heavier oil through the aging Pipeline led many to question if this was the direct cause of the 2013 spill in Mayflower. (19)

    In April of 2013, Plaintiffs brought a class action suit against Exxon, claiming that Exxon breached the easement contracts by failing to maintain and repair the Pipeline. (20) Plaintiffs asked for relief in the form of "either (1) rescission of the easement contracts and removal of the [P]ipeline from the[] propert[ies], or (2) specific performance of the easement contract[s]," which would have required Exxon to replace the entirety of the Pipeline. (21) Alternately, Plaintiffs asked for compensatory damages for each class member if the first two types of relief failed. (22)

    Plaintiffs sought class certification under either Rule 23(b)(2) or Rule 23(b)(3). (23) Two couples represented the class: Rudy F. and Betty Webb and Arnez and Charletha Harper. (24) Both couples owned real property subject to the casement contracts--the Webbs in Mayflower, Arkansas, and the Harpers in Conway, Arkansas. (25) Plaintiffs estimated the size of the class to be in the thousands and included "all persons and entities who owned real property as of March 29, 2013, with an easement for the... Pipeline on their real property from Patoka[,] Illinois[,] to Corsicana, Texas." (26)

    Plaintiffs claimed Exxon materially breached the terms of the easements under a "common course of corporate policy, pattern, practice and wrongful conduct" by "failing to inspect, maintain, repair, and replace the [P]ipeline, resulting in hazardous conditions and damages to the... servient estates." (27) Plaintiffs cited language in the form easement contracts stating that Magnolia "hereby agree[d] to pay any damages that may arise to crops, timber, or fences from the use of said premises for such purposes." (28) Plaintiffs also asserted that Exxon, as the holder of the easement, had an affirmative duty to maintain the property but breached this duty by operating the Pipeline in an "unsafe, defective, and unreasonably dangerous condition." (29) By breaching this duty, Plaintiffs ultimately alleged Exxon's breach of the easement contracts "create[d] an immediate zone of danger to the[m]... and class members who have the Pipeline on their property pursuant to an easement." (30)

    1. Plaintiffs' Motion for Class Certification

      In 2014, The U.S. District Court for the Eastern District of Arkansas certified the class under Rule 23(b)(3), finding Plaintiffs established the predominance requirement and that granting class certification was the superior method for litigating these claims to reduce "costs and the use of judicial resources." (31) The court found certification under Rule 23(b)(2) improper, reasoning that neither of the remedies that Plaintiffs' sought for their sole breach of contract claim--"rescission of the easement contract or specific performance"--were "tantamount to the injunctive relief that must be asserted in order to certify a Rule 23(b)(2) class action." (32) In light of this reasoning, the court denied certification under Rule 23(b)(2), instead finding certification under Rule 23(b)(3) proper for the claims Plaintiffs brought. (33)

      The Eastern District found Plaintiffs met the numerosity requirement under Rule 23(a)(1) because the Pipeline spanned 650 miles, making joinder of all Plaintiffs impracticable. (34) The Eastern District further concluded Plaintiffs satisfied commonality under Rule 23(a)(2) because their claims presented common questions of law or fact--specifically whether Exxon failed to operate and maintain the Pipeline properly and whether this breached the easement contracts. (35) The court also found Plaintiffs satisfied typicality under Rule 23(a)(3) because their claims stemmed from "Exxon's operation of the [P]ipeline." (36) To properly satisfy the requirement of adequacy under Rule 23(a)(4), the court removed the Webbs as class representatives because even though their property was subject to an casement, the Pipeline did not actually touch the Webbs' property. (37)

      Exxon contended, in part, the definition of the class was too broad because it could include property owners who sold their property prior to the spill of 2013. (38) In response to this, the Eastern District, sua sponte, narrowed the class definition to include "all persons and entities who currently own real property subject to an easement for the... Pipeline and who have pipeline physically crossing their property from Patoka, Illinois to Corsicana, Texas." (39) The court determined Exxon's other arguments in support of its motion to dismiss were better suited as defenses to present in the course of litigation and not as proper grounds for dismissal or for decertifying the class. (40)

    2. Exxon's Motion for Reconsideration and Summary Judgment

      After the Eastern District granted class certification in 2014, Exxon motioned for reconsideration and summary judgment. (41) At this reconsideration hearing, the court granted both motions. (42) In determining Plaintiffs did not actually meet the requirement for...

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