A federal judge has ruled in favor of one of West Virginia’s largest natural gas producers looking to block gas leaseholders from going after the company in Ritchie County Circuit Court.
U.S. District Judge John Preston Bailey sided with Pittsburgh-based EQT Corp. after it asked the U.S. District Court for the Northern District of West Virginia to block gas leaseholders from proceeding with their circuit court litigation against EQT.
EQT had argued that a 2019 $53.5 million class-action settlement agreement to resolve a lawsuit that alleged the company was shorting thousands of state residents and businesses on gas royalty payments prohibited further action against the company for royalty claims.
In the litigation, the plaintiffs are residents Philip Williams, Timothy Williams, Diana Weiss and Mahlon Harris, who own mineral interests on 500 acres in the Clay district of Ritchie County. They sued EQT in circuit court seeking compensatory damages for alleged breach of contract and money they say was unlawfully deducted by EQT from their royalties.
The plaintiffs said they were not notified about the class-action lawsuit and never had an opportunity to opt out of the settlement.
Before filing the lawsuit, the plaintiffs’ counsel contacted a claims administrator who said that, at the deadline to include claimants, EQT dumped partial information for about 400 potential claimants who did not include adequate information for the claims administrator to provide notice or claims forms, according to court filings.
But Bailey ruled Sept. 14 that due process “only requires that notice be reasonably calculated to reach” members of a class, “not that it actually succeeds in reaching every individual class member.”
The judge found the effort to notify the plaintiffs of the agreement was sufficient.
“[I]t is a shame that these folks won’t be able to have their day in court on the egregious actions of EQT and the way that they’ve been cheated by a large out-of-state oil and gas corporation,” said Scott Windom, a Harrisville-based attorney representing the plaintiffs.
Lauren Varnado, a Houston-based attorney from the law firm McKool Smith representing EQT, declined comment.
Bailey noted that the plaintiffs’ claims against EQT in Ritchie County Circuit Court alleging the company refused to pay royalties based on revenue received from natural gas liquids can move forward.
Under the 2019 agreement, EQT agreed to pay $53.5 million into a settlement fund and to stop deducting post-production costs from royalty payments to end the federal class-action lawsuit brought on behalf of about 9,000 people.
The plaintiffs at the time said EQT was improperly deducting processing and transporting costs from their royalty payments, a claim the company denied.