Dale Stroud v. Southwestern Energy Company
858 F.3d 481
| 8th Cir. | 2017Background
- Southwestern Energy (SWE) injected ~7.6 million barrels of fracking waste into the Campbell injection well located ~180 feet from the Strouds’ property line in the Barton B. Sands reservoir, which underlies the Stroud land.
- The leased surface area could not physically hold the injected volume; experts agreed the injected volume exceeded the leased reservoir space.
- The Strouds refused SWE’s lease offer; a SWE landman allegedly told Mr. Stroud SWE would "fill up the empty gas space under [the Strouds'] property since it was all connected."
- No surface contamination was found on the Strouds’ property; the Strouds did not drill or run seismic models (deemed prohibitively expensive) and instead relied on an expert (Dowdle) who used a simplified radial-flow model to estimate subsurface migration.
- The district court limited initial discovery, excluded Dowdle’s expert report as unreliable (chiefly for assuming radial flow and lacking geologic detail), and granted SWE summary judgment for lack of sufficient proof of migration.
- The Eighth Circuit reversed: it held the district court abused its discretion by excluding Dowdle’s report and that, viewing the record favorably to the Strouds, there existed a genuine issue of material fact precluding summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of expert (Dowdle) | Dowdle is a qualified petroleum engineer; his radial-flow model (with stated assumptions) reasonably estimates spread and is admissible for the jury | Model is unreliable: assumes radial flow, ignores heterogeneities, lacks geologist input, and uses an untested equation | Court reversed exclusion: methodology was within range of reasonable expert disagreement and should have been admitted |
| Scope of Phase I discovery limits | Limits prevented access to potentially relevant materials (emails, seismic data, depositions) needed to show migration | Limits were justified to manage proprietary information and focus discovery; further discovery could be allowed if needed | Court found discovery limits were within district court discretion; no gross abuse shown |
| Sufficiency of evidence to survive summary judgment | Circumstantial evidence (excess volume, proximity, landman statement, isopach map) allows reasonable inference of migration | No direct subsurface sampling; possible sealing formations (clay drapes, silica) could have prevented migration — thus speculation | Court held the Strouds presented enough evidence (even without Dowdle) to create a genuine issue of material fact; summary judgment improper |
| Standard for excluding expert testimony | Daubert/Kumho require gatekeeping but favor admissibility when methods are scientifically valid and disagreement goes to weight | District court applied gatekeeping and excluded testimony as unreliable and insufficiently tied to specific geologic facts | Court: exclusion was abuse of discretion; admissibility questions better resolved by jury and adversary process |
Key Cases Cited
- Torgerson v. City of Rochester, 643 F.3d 1031 (8th Cir. 2011) (summary-judgment review requires viewing facts in light most favorable to nonmoving party)
- United States ex rel. Kraxberger v. Kansas City Power & Light Co., 756 F.3d 1075 (8th Cir. 2014) (discovery rulings reviewed for abuse of discretion)
- Johnson v. Mead Johnson & Co., LLC, 754 F.3d 557 (8th Cir. 2014) (standards for admissibility of expert testimony and liberality in admission)
- Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993) (trial court gatekeeping role for expert testimony)
- MKB Mgmt. Corp. v. Stenehjem, 795 F.3d 768 (8th Cir. 2015) (district courts may limit discovery scope to central issues)
- Admiral Theatre Corp. v. Douglas Theatre Co., 585 F.2d 877 (8th Cir. 1978) (district court discretion to limit discovery and proof at trial)
- Ackelson v. Brown, 264 F.2d 543 (8th Cir. 1959) (admission/rejection of expert evidence largely within trial court discretion)
- Smith v. BMW N. Am., Inc., 308 F.3d 913 (8th Cir. 2002) (expert may offer opinion within his field even if not expert in every related discipline)
- SEC v. Das, 723 F.3d 943 (8th Cir. 2013) (mere disagreement with assumptions does not warrant exclusion)
- Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999) (Daubert gatekeeping applies to all expert testimony)
- Solomon v. Petray, 795 F.3d 777 (8th Cir. 2015) (nonmoving party survives summary judgment if facts allow reasonable inference for jury)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (summary-judgment standards regarding inferences and speculation)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (moving party’s initial burden on summary judgment)