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Federal Judge Certifies Three of Five Virginia Royalty Cases as Class Action

A federal judge in Virginia agreed to certify three separate complaints against subsidiaries of EQT Corp. and Consol Energy Inc. as class action lawsuits but denied the status to two other cases that also allege the companies cheated Southwest Virginia landowners out of millions in royalties.

In U.S. District Court for the Western District of Virginia, Abingdon Division, on Wednesday, Judge James P. Jones ruled that the case Hale v. CNX Gas Co. et al [No. 1:10CV00059] could proceed as a class action over the issues of alleged excessive deductions, royalties based on alleged improper low prices, the deduction of severance taxes, and a request for an accounting.

Jones ruled that a second case, Adair v. EQT Corp. et al [No. 1:10CV00037], should have class action status for the plaintiffs to pursue royalties based on alleged improper low prices, the deduction of severance taxes and a request for an accounting. In the third case, Adkins v. EQT Production Co.et al [No. 1:10CV00041], class action was granted for the alleged improper deduction of marketability costs and royalties based on alleged improper low prices.

Potential damages were to be addressed in later proceedings.

But Jones declined to certify any issues in the cases Addison v. CNX Gas Co. LLC et al [No. 1:10CV00065] and Kiser v. EQT Production Co. et al [No. 1:11CV00031].

"I found that these plaintiffs were unable to fulfill the commonality and/or predominance requirements for all but one of their claims," Jones said in explanation for part of his ruling. "Absent those prerequisites, I cannot certify those classes as to those claims. It is therefore unnecessary for me to consider whether they have satisfied the superiority requirement."

The cases involve mostly small landowners who reside in Virginia's Buchanan, Dickenson and surrounding counties in the Utica and Devonian shale plays. At issue is how the landowners can access nearly $30 million in gas royalties that have been deposited into an escrow account controlled by the Virginia Oil and Gas Board.

The landowners had sold their coal interests years ago, but not their coalbed methane (CBM) interests. The landowners allege that the companies violated Virginia's Gas and Oil Act of 1990.

"These cases have a long history -- unusually long, at least for this court," Jones said at the beginning of his 116-page opinion. The Adair case was filed in June 2010. Since then, numerous hearings, orders and opinions have been entered by Jones and U.S. Magistrate Judge Pamela Meade Sargent.

In November 2010, Sargent denied a motion by the companies to have the cases dismissed. She then recommended Jones award class action status to four of the five cases in June 2013. Jones certified all five cases that September. According to court records, the defendants then sought interlocutory appeals of the certifications. An appeals court granted the appeals and remanded the cases back to district court in August 2014.

EQT and CNX had argued that the lawsuits lacked merit. The cases could potentially draw thousands of plaintiffs because, as of 2010, approximately 6,000 wells were drilled in the seven-county gas region of Southwest Virginia.

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