H&T Fair Hills, Ltd. v. Alliance Pipeline L.P., No. 22-1817 (8th Cir. 2023)Annotate this Case
Alliance Pipeline L.P. (“Alliance”) entered into contracts with four states (“State Agreements”) as well as contracts with individual landowners in order to build a natural gas pipeline. The contracts with landowners provide easements for the pipeline right-of-way. In 2018, some landowners on the pipeline right-of-way filed a class-action lawsuit against Alliance. After the class was certified, Alliance moved to compel arbitration for the approximately 73 percent of plaintiffs whose easements contain arbitration provisions. Alliance appealed, arguing the district court erred by not sending all issues to arbitration for the plaintiffs whose easements contain arbitration provisions.
The Eighth Circuit affirmed in part and reversed in part. The court explained that the district court that the damages issues are subject to arbitration for the plaintiffs whose easements contain an arbitration provision. Plaintiffs make two arguments against sending any issues to arbitration: (1) Plaintiffs’ claims cannot be within the scope of the arbitration provisions because the claims allege lack of compensation for “ongoing yield losses,” not “damages to crops” and (2) Plaintiffs’ claims arise under the State Agreements, which do not have arbitration provisions. The court found the arbitration agreements to be enforceable and to cover all issues. The court held that as to the arbitration class members, the claims should be dismissed without prejudice. As to the members of the class without arbitration provisions, the court saw no reason why these class members cannot proceed with the lawsuit in the normal course at the district court.
Court Description: [Melloy, Author, with Loken and Kobes, Circuit Judges] Civil case - Arbitration. Plaintiffs, landowners on a pipeline right-of-way, filed this class action alleging defendant had violated their contractual rights by failing to pay for crop damages; defendant moved to compel arbitration for the 73% of landowners with arbitration clauses in their easements; the district court found these landowners had agreed to arbitrate some, but not all, of the relevant issues in the dispute. Defendant appeals, arguing the district court erred by not sending all issues to arbitration for those plaintiffs whose easements contained arbitration provisions. Held: the district court properly ordered arbitration of damage issues but erred in carving out three other issues from arbitration; the issue of whether defendant is required to continue a crop loss program in inextricably intertwined with the damage issue, as is the second question - whether plaintiffs must show damages to crops were caused by defendant; the arbitration provisions also cover the final issue of declaratory relief; essentially, the district court must dismiss from the class those members subject to the arbitration agreements, and their claims should be dismissed without prejudice; the law suit can proceed with respect to the class member without arbitration agreements.