The 8th Circuit held on Monday, May 22, 2017, that the Arkansas district court abused its discretion when it granted summary judgment for the defendants in a subsurface trespass case. The appellate court instead held that the plaintiffs’ “crude and imperfect” expert report was not flawed to the point of exclusion and also held that, even without the report, the plaintiffs had raised a fact issue for the jury.
In 2009, Southwestern Energy approached the Stroud family seeking to use a plugged well on their property as a waste water injection site. The Strouds declined and Southwestern began injecting water on an adjacent property through a well located just 180 feet from the Strouds’ property line. All told, Southwestern injected 7.6 million barrels of waste water.
The Strouds sued Southwestern for trespass and unjust enrichment arguing that the waste water had migrated across the property line. The trial court ordered phased discovery, focusing first on the issue of “whether the waste fluid has migrated to the subsurface strata of the [Strouds’] real property.” At conclusion of that discovery, the trial court found the Stroud’s expert report too circular to support a jury finding and granted summary judgment for Southwestern.
The 8th Circuit held that the discovery order was not an abuse of discretion and affirmed the principle that “a district court must be allowed the discretion to limit the scope of discovery to what the court [perceived are] the central issues.”
But, on de novo review of the summary judgment ruling, the 8th Circuit disagreed with the trial court, holding that fact issues prevented summary judgment.
The factual question is whether the injected waste water crossed the Strouds’ property line. The Strouds’ expert concluded that waste water had crossed the line based on the assumption that the water migrated radially from the injection well. The trial court disregarded this approach because it “assumes the answer to the fighting issue.” In other, whether the waste water migrated radially was a key issue in the case, not something an expert could reasonably assume for purposes of other subsurface modeling.
Not only did the appellate court hold that the expert’s opinion—despite its apparent flaws—met the minimum standard for admissibility, it held that the Strouds presented a fact issue even without the expert’s opinion. The court based this holding largely on two facts. First, the fact that a landman initially approached the Stroud’s suggests a belief by Southwestern that the formation under the Stroud’s property is connected to that of the actual injection well. Second, the fact that the injection site property could hold just 1.1 million barrels—whereas Southwestern injected 7 times that amount—allows a jury to draw a reasonable inference that some of the waste water crossed the property line.
The 8th Circuit was critical of the plaintiffs’ evidence, at times describing it as “thin,” “crude,” and “rough.” It remains to be seen whether that evidence will develop through further phases of discovery and how the parties will approach a potential trial.
The style is Dale Stroud et al. v. Southwestern Energy Co. et al. It is case number 15-3458 in the US Court of Appeals for the Eighth Circuit.