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Webb v. Exxon Mobil Corporation

United States Court of Appeals, Eighth Circuit

May 11, 2017

Rudy F. Webb; Betty Webb; Arnez Harper; Charletha Harper, on behalf of themselves and all others similarly situated Plaintiffs - Appellants
Exxon Mobil Corporation; ExxonMobil Pipeline Company; ExxonMobil Pipeline Company, L.P.; Mobil Pipe Line Company Defendants-Appellees

          Submitted: October 19, 2016

         Appeal from United States District Court for the Eastern District of Arkansas - Little Rock

          Before RILEY, [1] Chief Judge, WOLLMAN and BENTON, Circuit Judges.

          RILEY, Chief Judge.

          Approximately seventy years ago, a pipeline company entered into a series of easement contracts with landowners in Texas, Arkansas, Illinois, and Missouri for the purpose of constructing a pipeline that would transport oil from Texas to Illinois. Decades later, the successors-in-interest of those easement contracts brought this suit against the pipeline's current owners and operators, alleging the defendants have breached their easement contracts by failing to reasonably operate, maintain, and repair the pipeline. This lawsuit seeks rescission of their easements and the pipeline's removal or replacement-or in the alternative, damages. After initially certifying the lawsuit as a class action, the district court[2] reversed its decision and granted summary judgment to the defendants. Because we conclude the class was correctly decertified and the claims properly dismissed, we affirm the judgment of the district court.

         I. BACKGROUND

         The relevant portion of the Pegasus Pipeline (pipeline), as it has come to be known, was constructed between 1947 and 1948 and originally stretched approximately 650 miles between Corsicana, Texas, and Pakota, Illinois. Today, the 20-inch pipe, containing both seam and seamless welded steel, covers roughly 850 miles, traveling northeast from Nederland, Texas, through Arkansas and Missouri to Pakota, Illinois. In 2006, the flow of the pipeline was reversed in order to transport oil from Illinois to Texas, and in 2009, an expansion project increased the pipeline's daily capacity by 30, 000 barrels of oil. Currently the pipeline can carry up to 95, 000 barrels per day.

         In April 2013, a group of plaintiffs, who are successors-in-interest to the easement contracts, filed this class action lawsuit against the pipeline's current owners and operators: Exxon Mobil Corporation, ExxonMobil Pipeline Company, and Mobil Pipe Line Company (collectively, Exxon).[3] See Fed.R.Civ.P. 23. As relevant to the allegations brought forth here, the plaintiffs claim Exxon's operation of the pipeline is unreasonable and unsafe. Exxon admits the pipeline has suffered "releases" over the years: in 1987 near Corsicana and in 1990 near Bragg, Texas, and-due to a third party, according to Exxon-in 1995 in Hot Springs, Arkansas, and in 2013 near Doniphan, Missouri. On March 29, 2013, a release of "Wabasca Heavy crude oil" occurred near Mayflower, Arkansas, forcing residents living near the release site to evacuate their homes. The plaintiffs claim Exxon has materially breached the terms of their easement contracts by failing to inspect, maintain, repair, and replace the pipeline, resulting in hazardous conditions and damages to the plaintiffs' servient estates.

         The "right of way" easements include generally similar terms and provisions stating each landowner:

hereby grant[s] and convey[s] to MAGNOLIA PIPE LINE COMPANY . . . its successors and assigns, the rights of way, easements and privileges to lay, repair, maintain, operate and remove pipe lines and replace existing lines with other lines, for the transportation of oil and gas and the products thereof . . . over, across and through Grantor's lands . . . .
TO HAVE AND TO HOLD unto said Magnolia Pipe Line Company, its successors and assigns for the purposes aforesaid. The said Grantors shall have the right fully to use and enjoy the said premises except for the purposes hereinbefore granted to said Magnolia Pipe Line Company, its successors and assigns, which hereby agrees to pay any damages that may arise to crops, timber or fences from the use of said premises for such purposes; said damages if not mutually agreed upon to be ascertained and determined by three disinterested persons . . . . Should more than one pipe line be laid under this grant at any time, fifty cents per rod shall be paid for each additional line so laid, besides the damage above provided for. It is further agreed that said pipes shall be buried to a sufficient depth so as not to interfere with the cultivation of soil.

         In light of the alleged breach, the plaintiffs assert they are entitled to rescind their easements and force Exxon to remove the pipeline or replace it; or, alternatively, to recover damages resulting from the breach of contract and diminished value of their properties.

         The amended complaint identified Rudy and Betty Webb of Mayflower, Arkansas, and Arnez and Charletha Harper of Conway, Arkansas, as the named plaintiffs for the proposed class. See Fed.R.Civ.P. 23. Opposing the plaintiffs' motion for class certification, Exxon argued the plaintiffs' claims are preempted by the Pipeline Safety Act (PSA), 49 U.S.C. §§ 60101, et seq., and the class was not ascertainable because identification of its members would require individual title searches of thousands of parcels of land. The district court granted class certification, but narrowed the class definition from all easement owners to individuals "who currently own real property subject to an easement for the Pegasus Pipeline and who have pipeline physically crossing their property." (Emphasis added). The district court determined the Webbs lacked standing to be class representatives, because although their property is subject to an easement, it has no pipeline crossing it. The district court also determined the lawsuit was not preempted by the PSA because the claims sought to enforce a private easement agreement.

         In August and September 2014, respectively, Exxon moved for reconsideration of the district court's certification decision and for summary judgment. Moving for summary judgment, Exxon argued the plaintiffs could not prove breach of the easement contracts because no affirmative duty of maintenance or repair exists ...

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