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Rainbow Gun Club, Inc. v. Denbury Onshore, L.L.C.

United States Court of Appeals for the Fifth Circuit

July 23, 2014, Filed

No. 14-30514

Opinion

 [*407]  E. GRADY JOLLY, Circuit Judge:

A group of 167 individuals, trusts, and associations (collectively, "the Plaintiffs") entered into oil, gas, and mineral leases with Denbury Onshore, Specter Exploration, and SKH Energy (collectively, "Denbury"). The Plaintiffs later became unhappy with the outcome of their arrangement causing them to bring this suit in Louisiana state court, which alleged that Denbury breached its duty to act as a reasonable and prudent operator of the  [**2] well that was drilled under these leases. Denbury removed the case to federal court asserting federal jurisdiction as a mass action under the Class Action Fairness Act ("CAFA"). CAFA, however, excludes federal jurisdiction over a state case that is primarily local and arises from "an event or occurrence." Holding that this was such a case, the district court remanded the case upon motion of the Plaintiffs. Denbury petitioned this court for permission to appeal that determination, which we granted. The sole issue presented is whether the Plaintiffs' claims arise from a single event or occurrence. We hold that they do, and we AFFIRM.

In the early 2000s, the Plaintiffs entered into leases with Denbury allowing Denbury to explore for oil, gas, and hydrocarbons. In February 2003, Denbury began drilling Rainbow Gun Club Well No. 1 ("the Well"). The Well began producing hydrocarbons in July 2004 and was plugged and abandoned in July 2008.

In February 2013, the Plaintiffs brought this suit in Louisiana state court alleging that Denbury had breached its duty as a lessee under Louisiana law to act as a reasonable and prudent operator of the Well. Specifically, the Plaintiffs allege that Denbury  [**3] acted imprudently in allowing extraneous water to enter the gas reservoir, greatly reducing the productivity of the Well. The Plaintiffs allege that this occurred because Denbury was negligent in several respects: (1) failing to heed methods of operation intended to avoid getting the drill pipe stuck; (2) failing to isolate the reservoir by properly cementing the well; (3) failing to properly cement the casing in a sidetrack well; (4) failing to heed increased differential pressures in the drilling of the original well; and (5) failing to correct the defective cement job.

Denbury filed a notice of removal, asserting that the case was a "mass action" under CAFA, see 28 U.S.C. § 1332(d)(11)(A)—(B), and that the district court thus had jurisdiction. The Plaintiffs filed a motion to remand, arguing that two exclusions to the definition of "mass action" applied to this case: (1) the local single event exclusion, and (2) the $75,000 jurisdictional amount exclusion. See id. § 1332(d)(11)(B)(i),(ii)(I). Based on these exclusions, the Plaintiffs argued that the case should either be remanded completely, or that at least those claims that do not  [*408]  satisfy the $75,000 amount-in-controversy requirement  [**4] should be remanded.

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760 F.3d 405 *; 2014 U.S. App. LEXIS 14076 **; 2014 WL 3632589

RAINBOW GUN CLUB, INCORPORATED; LAKESIDE DEVELOPMENT COMPANY, INCORPORATED; DELLA MILLER BROUSSARD; REED JOSEPH MILLER; URSIN MILLER; ET AL, Plaintiffs — Appellees v. DENBURY ONSHORE, L.L.C.; SPECTER EXPLORATION, INCORPORATED; SKH ENERGY PARTNERS, L.P., Defendants — Appellants

Prior History:  [**1] Appeals from the United States District Court for the Western District of Louisiana.

Rainbow Gun Club, Inc. v. Denbury Res., Inc., 2014 U.S. Dist. LEXIS 29132 (W.D. La., Mar. 5, 2014)

CORE TERMS

occurrence, single event, Plaintiffs', legislative history, district court, cases, environmental, parties, spill, terms, magistrate judge, negligent act, mass action, state court, Dictionary, discrete, drilled, argues, words

Civil Procedure, Removal, Postremoval Remands, Appellate Review, Appeals, Standards of Review, De Novo Review, Special Proceedings, Class Actions, Class Action Fairness Act, Governments, Legislation, Interpretation