Represented Statoil in a second case following a $410 million judgment (including $290 million in punitives) obtained in 2006 in a class action by land owners in West Virginia against Chesapeake, a large gas producer in Appalachia, alleging fraudulent underpayments of natural gas royalties. Emboldened by the verdict, plaintiffs' counsel filed similar action in Charleston, West Virginia, against other producers including Equitable, also a large producer, and Statoil, from which Equitable purchased the company that operated many leases in West Virginia in the late 1990s.
Taking the position that any royalty underpayment liabilities were transferred to Equitable in the sale, we persuaded plaintiffs' counsel group to voluntarily dismiss the case against Statoil. Unhappy with Statoil's exit from the case, Equitable threatened to drag Statoil back into the case as a third party defendant. Statoil preemptively sued Equitable for declaratory relief in federal court in Alexandria, Virginia.
The case ended without any liability to Statoil when Equitable agreed to pay damages to plaintiffs' class for 2000 gas production and going forward. For all practical purposes, the settlement extinguished any claim that Equitable may have had against Statoil, which operated leases only until 1999. Bearing in mind the specter of a $290 million dollar punitive damages award against Chesapeake in the lead case, Statoil celebrated in relief.