David Pollock v. Energy Corporation of America, 665 F. App'x 212

Background

ECA (Energy Corporation of America) leased mineral rights from a certified class of Pennsylvania landowners who were to receive 1/8 of the net proceeds from gas sales (royalty).
From 2006–2012, ECA sold produced gas exclusively to its affiliate EMCO; EMCO marketed and sold to third-party buyers.
Buyers’ payments flowed into an ECA-controlled concentration account; EMCO placed sales on its books and paid ECA net proceeds, which ECA used to pay royalties.
Plaintiffs alleged ECA improperly withheld post‑production costs (interstate transportation and marketing fees) from royalties.
The jury found for Plaintiffs and awarded damages; the District Court entered judgment for $1,148,018.44 including prejudgment interest.
ECA moved for judgment as a matter of law and alternatively for a new trial (challenging sufficiency of evidence and admissibility of Plaintiffs’ expert). The District Court denied relief; this appeal followed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether there was sufficient evidence that ECA deducted post‑production costs from royalties	ECA’s own accounting witness admitted post‑production costs were "reflected" on royalty statements and Plaintiffs bore 1/8 share; third‑party buyers paid transportation surcharges; EMCO, not ECA, incurred marketing costs	No evidence ECA took deductions from proceeds it received; royalties matched ECA’s net proceeds to EMCO so Plaintiffs got their bargained 1/8 share; any costs were part of ECA‑EMCO price, not improper deductions	Affirmed: record supplied more than the minimum evidence for a jury to find improper deductions.
Whether transportation costs were improperly deducted	Transportation was paid by third‑party buyers (surcharges); thus ECA could not properly allocate those costs against royalties it paid	Those costs were reflected in the intercompany pricing and not deducted by ECA from the sums it received	Affirmed: reasonable jury could find transportation fees were not incurred by ECA and thus improperly charged to royalty owners.
Whether marketing fees were improperly deducted	EMCO alone marketed to third parties; no marketing costs arose in the ECA→EMCO sale, so marketing fees tied to the second transaction cannot be charged against royalties from the first	EMCO’s role and intercompany pricing reflected market realities; Plaintiffs received 1/8 of ECA’s net proceeds	Affirmed: evidence permitted a finding that marketing costs related to the EMCO→third‑party sale were improperly reflected in royalties.
Whether the court abused discretion by allowing Plaintiffs’ expert to testify (and thus whether a new trial was warranted)	Expert testimony on where title passed and industry practice was admissible and circumscribed; any weaknesses could be addressed on cross‑examination	ECA argued Bodamer lacked foundation to testify about passage of title and that admission prejudiced ECA	Affirmed: District Court did not abuse discretion in denying reconsideration/new trial; expert was sufficiently qualified and the issue had been litigated pretrial.

Key Cases Cited

Kilmer v. Elexco Land Servs., Inc., 990 A.2d 1147 (Pa. 2010) (Pennsylvania decision approving the netback method and holding post‑production costs incurred after sale are not deductible from royalties)
Foster v. Nat’l Fuel Gas Co., 316 F.3d 424 (3d Cir.) (standard of review for denial of judgment as a matter of law)
In re Lemington Home for the Aged, 777 F.3d 620 (3d Cir.) (defining minimum evidence required to deny judgment as a matter of law)
Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir.) (jury verdicts must be viewed in the light most favorable to nonmovant; court may not reweigh evidence)
Max’s Seafood Café ex rel. Lou‑Ann, Inc. v. Quinteros, 176 F.3d 669 (3d Cir.) (standards for Rule 59(e) motions and reconsideration)