H & T Fair Hills, Ltd. v. Alliance Pipeline L.P.

Background

Agricultural landowners brought claims against Alliance Pipeline L.P., also known as Alliance USA, alleging that Alliance failed to compensate them for crop losses caused by its pipeline. Before construction, Alliance agreed to compensate landowners and tenants for pipeline-related crop losses through easements and Agricultural Impact Mitigation Agreements. Alliance operated a crop-loss program that measured yields on and off the pipeline right of way, but it ended the program in 2015. The plaintiffs sued in 2019. The court had previously dismissed the fraudulent-inducement claim and some contract and nuisance claims as untimely.

The plaintiffs sought certification of this class for their breach-of-contract claim under Federal Rule of Civil Procedure 23(b)(3) and their declaratory-judgment claim under Rule 23(b)(2):

All persons or entities who held or hold a land interest on Defendant’s Pipeline Right of Way and who, since 2014, were or are eligible for crop loss compensation pursuant to Easements or Agricultural Impact Mitigation Agreements.

Motion to Strike

Alliance moved to strike portions of the plaintiffs’ reply brief and supporting affidavits. The court denied that motion. The court stated that it would assume, without deciding, that it could not consider the allegedly new material for purposes of the class-certification motion because the plaintiffs could meet their burden without it. The court did not decide whether the evidence could be used for other purposes in the litigation.

Class-Certification Analysis

The court concluded that the proposed class was ascertainable, meaning that members could be identified through objective criteria. Those criteria included the easements, land titles, and other property records. The court recognized possible difficulties in determining current ownership and tenancy, including oral leases, but found that those difficulties did not make the class impossible to identify.

The proposed class also met the requirements of Rule 23(a). Alliance did not dispute numerosity, and the court found that the thousands of easements along the pipeline satisfied that requirement. Commonality existed because the class presented common questions, including whether the easements and mitigation agreements required Alliance to compensate for crop losses and whether Alliance breached those obligations by ending its crop-loss program. The court found the named plaintiffs’ claims typical because they arose from the same alleged termination of payments and the same legal theory, even though damages could differ.

The court also found adequate representation by the plaintiffs generally, concluding that landowners and tenants shared an interest in obtaining compensation for alleged crop losses. It rejected Alliance’s arguments concerning alleged evidence destruction, uncertain damages calculations, and limited knowledge of farming operations for most proposed representatives. However, the court declined to certify Debra Hein, Donna Zimmerman, Valerie Wherry, Larry Ruebel, or Mary Ruebel as class representatives because they did not appear to have sufficient knowledge of the agricultural operations and would need to rely on family members to prosecute the case.

For the Rule 23(b)(3) breach-of-contract class, the court found that common questions predominated over individual questions and that a class action was the superior method of resolving the dispute. It concluded that ownership changes, competing claims between landowners and tenants, causation, contract differences, arbitration provisions, damages, and defenses such as failure to mitigate or releases did not prevent certification at this stage. The court stated that the causation standard and method of proving pipeline-related losses were merits issues that could be resolved uniformly because the relevant contracts contained similar language. It did not decide those merits issues.

For the Rule 23(b)(2) declaratory-judgment class, the court found that the plaintiffs’ request was sufficiently cohesive because a declaration about Alliance’s contractual obligations and the effect of the 2015 termination letter could apply to the class as a whole. The court noted that it had already dismissed the request for an injunction restoring the crop-loss program, but found that a declaration could clarify whether Alliance continued to owe compensation for crop losses.

Order

Judge Joan N. Ericksen ordered that:

The court certified the stated class for the breach-of-contract claim under Rule 23(b)(3) and for the declaratory-judgment claim under Rule 23(b)(2). It appointed Nicholas Hein, Mark Hein, Robert Ruebel, Steven Wherry, and Norman Zimmerman as class representatives, and Hellmuth & Johnson, PLLC and Ball & McCann, P.C. as class counsel.