Originally published by The PIOGA Press
On November 15, 2010, the federal court in Fiorentino v. Cabot Oil and Gas Corporation (09-CV-2284) decided that landowner/lessor plaintiffs could proceed with the next steps in the litigation of their toxic tort and related claims against defendants Cabot Oil and Gas Corporation and Gas Search Drilling Services Corporation.
This case could have important consequences for gas well operators, including:
- whether they will be required to defend themselves against private suits, claiming violations of environmental laws, even though they are already defending themselves against such claims from the Department of Environmental Protection;
- the extent of disclosure they will be required to make in private litigation concerning the exact constituents of fracking fluids;
- whether gas well drilling will be deemed "abnormally dangerous" or "ultra hazardous" as a matter of law, subjecting gas well operators generally, not just the gas well operators in this case, to strict liability (without proof of fault) for harm caused by their operations; and
- the standard that plaintiffs will have to meet and that gas well operators will have to overcome to defend themselves against awards of punitive damages for injury caused by their operations.
This case also demonstrates how difficult it may be for gas well operators to defend themselves against toxic tort plaintiffs' claims for the establishment of a medical monitoring trust, the recovery of damages for the infliction of emotional distress and fear of future illness, at least at the preliminary stages of the litigation.
Background. Plaintiffs filed their complaint seeking recovery of damages arising out of Cabot's operations on properties they themselves had leased to Cabot, and stating various toxic tort and related claims, including a claim under the Hazardous Sites Cleanup Act (35 P.S. §6020.101-6020.1305) (HSCA), a strict liability claim, a claim for establishment of a Medical Monitoring Trust Fund and a gross negligence claim.
The gas well defendants moved to dismiss those claims. Defendants also moved to strike from the complaint various other related claims, including claims for punitive damages, and damages for causing fear of future illness and emotional distress.
Before plaintiffs filed their complaint, Cabot entered into a consent order and agreement (COA) with the PA DEP requiring corrective action on the part of Cabot to address some of the same alleged environmental violations which form the basis of plaintiffs' HSCA claim, including alleged violations by Cabot concerning the construction of gas well casings and the alleged contamination of private water supplies (including the water supplies of many of the plaintiffs) with methane gas. Cabot entered into a modification of the COA with PA DEP thereafter.
Motion to dismiss. With respect to plaintiffs' HSCA claim, the court concluded that the gas well operator defendants would have to defend themselves against private suits, claiming environmental law violations and seeking recovery of response costs, even though they were being diligently prosecuted and in fact had entered into a COA with PA DEP requiring corrective action on the part of Cabot concerning the same alleged violations.
With respect to plaintiffs' strict liability claim, the federal court decided that in the absence of a Pennsylvania case, specifically deciding that gas well development and operation were not "ultra hazardous" and/or "abnormally dangerous," the court would deny defendants' motion to dismiss. As a result, plaintiffs are free to proceed with proof of the legal elements that must be proved to establish that an activity is "ultra hazardous" or "abnormally dangerous," including that the risk associated with the activity cannot be eliminated through the exercise of reasonable care, that the activity is inappropriate to the place where it is carried on, and that the dangerous attributes of the activity outweigh its value to the community. If plaintiffs are successful, the court could decide that natural gas well drilling and related operations are "ultra hazardous" or "abnormally dangerous" as a matter of law, subjecting gas well drillers generally, not just the gas well drillers in this case, to strict liability for harm caused by their operations, notwithstanding the exercise of the utmost care to prevent such harm.
With respect to plaintiffs' claim for the establishment of a Medical Monitoring Trust Fund, the court decided that plaintiffs would not have a very heavy burden to meet to move beyond the preliminary stages of litigation. Specifically, the court concluded over defendants' objections that specific facts supporting the legal elements of the claim, including exposure to greater than normal background levels of a proven hazardous substance caused by defendants' negligence were not necessary. Given that plaintiffs may now proceed with the next steps of litigation and the requirement that they must prove exposure to a proven hazardous substance, gas well operator defendants in this case and in future cases can expect extensive inquiry from plaintiffs into the exact constituents of fracking fluid.
Motion to strike. With respect to claims of the complaint seeking damages for causing emotional distress and fear of future illness, the court decided to allow plaintiffs to keep those claims in their complaint, even though the complaint did not state which individual plaintiffs suffered what injury, but contained only general claims of unspecified injury and illness suffered by unspecified plaintiffs. Again, the court's decision sets the bar very low for plaintiffs seeking such damages from gas well operators, at least at the preliminary stages of the litigation.
With respect to plaintiffs' claim for punitive damages, the court decided that the claim could stay in the complaint over defendants' objections, even though plaintiffs did not state that the gas driller's conduct was outrageous or indifferent to the rights of others due to malicious or evil intent, as defendants argued was required by law. The court had permitted the plaintiffs' allegations of gross negligence to remain in the complaint at plaintiffs' request, to support plaintiffs' claim for punitive damages, even though plaintiffs' agreed to withdraw their claim for such gross negligence.
The court also denied defendants' motion to strike plaintiffs' demand for attorneys' fees and allegations pertaining to negligence per se.
Summary and Conclusions
As stated, this case confirms that gas well operators will be required to defend themselves against private suits alleging violations of environmental laws and seeking recovery of response costs, even though they are being diligently prosecuted for such violations by PA DEP and, as was the situation in this case, even though they had entered into an agreement with PA DEP requiring corrective action to address those alleged violations to PA DEP's satisfaction. Although plaintiffs' burden of proof will be difficult, the court in this case could decide that natural gas drilling and operation are "abnormally dangerous" and "ultra hazardous" activities as a matter of law, subjecting gas well operators generally, not just the gas well operators in this case, to strict liability. As also stated, this decision sets the bar very low for toxic tort plaintiffs, while making it more difficult for gas well operators to defend themselves against claims for the award of punitive damages, the establishment of a medical monitoring trust fund, and damages for the infliction of emotional distress and fear of future illness, at least at the preliminary stages of the litigation.
Obviously, this decision warrants close scrutiny and monitoring by the gas industry.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.