Cardinale, L. v. R.E. Gas, Appeal of: Hugney, I., 154 A.3d 1275

Background

In 2011 plaintiffs Cardinale and Hugney (and later Billotte; consolidated cases) sued R.E. Gas Development, LLC and Rex Energy alleging standardized 2008 paid-up oil & gas leases promised bonus payments that defendants failed to pay after the contractual payment windows expired.
The leases and attached Orders for Payment required defendants to pay bonuses within a fixed period (commonly 60 days) “subject to its inspection, approval of the surface, geology and title.” The Orders also stated they could expire or be terminated by lessee.
The trial court originally dismissed Cardinale and Hugney, but this Court (Cardinale) held the form documents manifested an intent to contract and that the “subject to” language related to performance, not contract formation.
Plaintiffs moved to certify a class of roughly 112 lessors whose 2008 R.E. Gas leases went unpaid; plaintiffs presented evidence that defendants rejected most leases after the contractual deadlines (in calendar and banking days) and argued defendants’ untimely rejections made the payment obligation absolute.
The trial court denied class certification, finding individual fact inquiries (whether defendants timely invoked inspection/approval rights for surface, geology, title) predominated over common questions; plaintiffs appealed and this Court vacated and remanded, holding the trial court abused its discretion by basing denial solely on the predominance reasoning.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether common questions predominate for class certification	Most class members had untimely rejections, so payment obligations became absolute and class-wide proof will resolve liability	Individual inquiries predominate because whether defendants timely invoked inspection/approval and the basis for rejection differ by lease	Vacated trial court denial: predominance question cannot be decided solely on defendant's asserted individualized defenses given plaintiffs’ prima facie showing; remand for proper Rule 1708 analysis
Whether the “subject to inspection/approval” language prevented contract formation	Cardinale precedent: subject-to language governs performance, not formation; contracts existed	R.E. Gas: Order for Payment created condition precedent and gave unilateral termination/discretion, so no binding bonus obligation	Court relied on prior Cardinale decision that the form documents manifested intent to be bound and the subject-to clause addressed performance, not formation
Whether defendants’ post-hoc business reasons (budget cuts) preclude class treatment	If defendants rejected leases for business reasons after deadlines, those defenses are irrelevant for most class members and class adjudication is efficient	Defendants contend evidence shows individualized, substantive reasons (title, surface, geology) for rejections requiring parcel-by-parcel inquiry	Court held plaintiffs produced evidence creating class-wide issues (formation, timing, whether obligation became absolute) making predominance at least plausible; remand required to evaluate scope and class definition
Whether partial certification (subset of leases with no timely rejections) was required	Plaintiffs argued certification at least for the large subset where defendants produced no timely rejection evidence (e.g., 89–97 leases)	Defendants argued class definition is overbroad and individual issues remain	Court remanded for trial court to consider whether class (or narrower subclasses) should be certified and to enter required findings under Rule 1710

Key Cases Cited

Cardinale v. R.E. Gas Dev., LLC, 74 A.3d 136 (Pa. Super. 2013) (form lease documents manifested intent to contract; "subject to" clause addresses performance, not formation)
Samuel-Bassett v. Kia Motors Am., Inc., 34 A.3d 1 (Pa. 2011) (standards for commonality and predominance under Pennsylvania Rule of Civil Procedure governing class certification)
Bell v. Beneficial Consumer Discount Co., 348 A.2d 734 (Pa. 1975) (class members are parties upon filing of a class action complaint)
Kern v. Lehigh Valley Hosp., Inc., 108 A.3d 1281 (Pa. Super. 2015) (order refusing class certification is an appealable collateral order)
McGrogan v. First Commonwealth Bank, 74 A.3d 1063 (Pa. Super. 2013) (denial of class certification often reviewable as a collateral order)