Com. v. Chesapeake Energy (Anadarko, Aplt.)

CourtSupreme Court of Pennsylvania
DecidedMarch 24, 2021
Docket81 MAP 2019
StatusPublished

This text of Com. v. Chesapeake Energy (Anadarko, Aplt.) (Com. v. Chesapeake Energy (Anadarko, Aplt.)) is published on Counsel Stack Legal Research, covering Supreme Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Com. v. Chesapeake Energy (Anadarko, Aplt.), (Pa. 2021).

Opinion

[J-52A-2020] IN THE SUPREME COURT OF PENNSYLVANIA MIDDLE DISTRICT

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

COMMONWEALTH OF PENNSYLVANIA : No. 81 MAP 2019 : : Appeal from the Order of the v. : Commonwealth Court at No. 58 CD : 2018 dated March 15, 2019 : Affirming in Part and Reversing in CHESAPEAKE ENERGY CORPORATION; : Part the Order of the Bradford CHESAPEAKE APPALACHIA, L.L.C.; : County Court of Common Pleas, CHESAPEAKE OPERATING, L.L.C.; : Civil Division, at No. 2015IR0069 CHESAPEAKE ENERGY MARKETING, : dated December 15, 2017 and L.L.C.; ANADARKO PETROLEUM : Remanding. CORPORATION; AND ANADARKO E&P : ONSHORE, L.L.C. : ARGUED: May 27, 2020 : : APPEAL OF: ANADARKO PETROLEUM : CORPORATION; AND ANADARKO E&P : ONSHORE, L.L.C. :

OPINION

JUSTICE MUNDY DECIDED: March 24, 2021 In this appeal by allowance, we consider whether the Commonwealth, by the Office

of Attorney General (OAG), may bring claims under the Pennsylvania Unfair Trade

Practices and Consumer Protection Law (UTPCPL), 73 P.S. §§ 201-1—201-9.3, on

behalf of private landowners against a natural gas exploration and production company

for its alleged deceptive, misleading, and unfair practices in obtaining natural gas leases

from the landowners. We also consider whether the OAG may pursue antitrust remedies

against a natural gas extractor under the UTPCPL. Because we conclude neither of the OAG’s theories are cognizable under the UTPCPL, we affirm in part and reverse in part

the order of the Commonwealth Court.

I. PENNSYLVANIA’S UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAW Enacted in 1968, the UTPCPL is Pennsylvania’s consumer protection law.1 “The

UTPCPL was created to even the bargaining power between consumers and sellers in

commercial transactions, and to promote that objective, it aims to protect the consumers

of the Commonwealth against fraud and unfair or deceptive business practices.”

Commonwealth by Shapiro v. Golden Gate Nat’l Senior Care LLC, 194 A.3d 1010, 1023

(Pa. 2018); see also Commonwealth, by Creamer v. Monumental Props., Inc., 329 A.2d

812, 816-18 (Pa. 1974) (noting the UTPCPL’s “underlying foundation is fraud prevention,”

and it was based on the Federal Trade Commission Act, 15 U.S.C. §§ 41-58, and the

Lanham Trademark Act, 15 U.S.C. §§ 1051-1127). As a remedial statute, “the UTPCPL

is to be liberally construed to effectuate its objective of protecting the consumers of this

Commonwealth from fraud and unfair or deceptive business practices.” Ash v. Cont’l Ins.

Co., 932 A.2d 877, 881 (Pa. 2007).

Turning to the UTPCPL’s language and structure, Section 3 declares unlawful

“unfair methods of competition and unfair or deceptive acts or practices in the conduct of

any trade or commerce as defined by [Section 2(4)(i)-(xxi)] and regulations promulgated

[by the Attorney General] under section 3.1[.]” 73 P.S. § 201-3. As alluded to in Section

3, Section 2(4) defines “‘unfair methods of competition’ and ‘unfair or deceptive acts or

practices’” by providing a list of 20 specific actions that sellers are prohibited from

engaging in, “which might be analogized to passing off, misappropriation, trademark

infringement, disparagement, false advertising, fraud, breach of contract, and breach of

1 Act of December 17, 1968, P.L. 1224, No. 387, (as amended 73 P.S. §§ 201-1—201- 9.3).

[J-52A-2020] - 2 warranty.” Gabriel v. O’Hara, 534 A.2d 488, 494 (Pa. Super. 1987) (footnotes omitted);

73 P.S. § 201-2(4)(i)-(xx). In addition to these 20 specific actions, Section 2(4)(xxi)

contains a “catch-all” provision against “[e]ngaging in any other fraudulent or deceptive

conduct which creates a likelihood of confusion or of misunderstanding.” 73 P.S. § 201-

2(4)(xxi).

Section 3 prohibits those “unfair methods of competition and unfair or deceptive

acts or practices” in “trade or commerce.” 73 P.S. § 201-3. In this case, we focus on

Section 2(3), which defines the terms “‘trade’ and ‘commerce’” as “the advertising, offering

for sale, sale or distribution of any services and any property, tangible or intangible, real,

personal or mixed, and any other article, commodity, or thing of value wherever situate,

and includes any trade or commerce directly or indirectly affecting the people of this

Commonwealth.” 73 P.S. § 201-2(3).

To enforce Section 3, the UTPCPL provides,

Whenever the Attorney General or a District Attorney has reason to believe that any person is using or is about to use any method, act or practice declared by [Section 3] to be unlawful, and that proceedings would be in the public interest, he [or she] may bring an action in the name of the Commonwealth against such person to restrain by temporary or permanent injunction the use of such method, act or practice. 73 P.S. § 201-4. Additionally, the UTPCPL authorizes “any person who purchases or

leases goods or services,” and who is a victim of “a method, act or practice declared

unlawful by section 3” to “bring a private action, to recover actual damages or one hundred

dollars ($100), whichever is greater.” 73 P.S. § 201-9.2. In such private actions, a court

has the discretion to impose treble damages, costs, and attorney fees. Id.

[J-52A-2020] - 3 II. FACTUAL AND PROCEDURAL HISTORY

Anadarko Petroleum Corporation and Anadarko E&P Onshore, L.L.C. (Anadarko)

conducted natural gas exploration and production in the Marcellus Shale formation in the

northeastern Pennsylvania counties of Bradford, Centre, Clinton, Lycoming, Potter,

Sullivan, Tioga, and Wyoming. Second Amended Complaint, 5/3/16, at ¶¶ 261-262.2 To

acquire oil and gas interests, Anadarko employed or contracted with “landmen,” who in

turn negotiated and entered into leases with Pennsylvania landowners to obtain their

properties’ mineral estates. Id. at ¶¶ 72, 269. In a typical oil and gas lease, a landowner

conveys the mineral estate for a term of years to an exploration and production company

in exchange for signing bonus payments, royalties from the sale of oil and gas extracted

from the land, and, at times, protections of surface rights. Id. at ¶¶ 28-30, 72, 74. Further,

the landmen had the ability to alter the standard pre-printed lease form to address a

landowner’s demands through various addenda or even by editing the lease document

on a laptop word processing program. Id. at ¶¶ 80-104; see also, e.g., id. at 100 (“[t]he

exploration and production companies gave such permission depending on the value of

the land owned by the hard-bargaining landowner”). Although these agreements were

referred to as “leases,” the landowner conveyed a fee simple to the mineral estate for a

term of years, which severed the ownership of certain minerals from ownership of the

property’s surface. Id. ¶¶ 77-78; Snyder Bros., Inc. v. Peoples Nat. Gas Co., 676 A.2d

1226, 1230 (Pa. Super. 1996) (“the interest granted to lessee is a fee simple

determinable; the lessor retains a reversionary interest.”); see also Shedden v. Anadarko

E. & P. Co., L.P., 136 A.3d 485

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