Pipeline company pushes reversal of class certification in Refugio oil spill case

PASADENA -- A pipeline company responsible for the 2015 Refugio oil spill that saw more than 140,000 gallons of crude oil dumped onto the beach and coastal waters of Santa Barbara County urged the 9th U.S. Circuit Court of Appeals Tuesday to reverse a subclass certification order including rig workers and entities that contracted with the company, arguing the group was too broad to pursue cohesive claims.

"The district court treated two critical liability elements, injury and proximate causation, as damages issues that could be determined individually," Fred A. Rowley Jr., a partner at Munger, Tolles & Olson LLP who represents Plains All American Pipeline LP, told the appellate panel during oral arguments.

"The court went on to reason that the question of whether any individual worker suffered damages could be addressed if necessary at a later date and that was legal error," he continued.

Nearly 1,000 individuals and businesses in the subclass suing Plains All American for negligence say the company's decision to shut down its pipe off the coast of Santa Barbara after the devastating oil spill caused them to lose their jobs and miss out on future revenue.

A broader class of plaintiffs, which includes subclasses of fishermen and property owners, has argued the company should have known its pipes were in disrepair and likely to break.

U.S. District Judge Philip S. Gutierrez had previously denied certification to a proposed oil industry subclass, but reversed course in 2018 after attorneys representing the group suggested a limit based on contractual ties to Plains All American.

Robert J. Nelson, a partner at Lieff Cabraser Heimann & Bernstein LLP who represents the subclass, rejected the notion that the group was too broad and argued Tuesday that certification decisions are owed special deference. He told the 9th Circuit it could reverse Gutierrez's determination only if he had abused his discretion. Andrews v. Plains All American Pipeline, 18-15580 (9th Cir., filed June 1, 2015).

"The reason why it's an abuse of discretion standard is the trial court is entrusted with controlling and managing its docket," Nelson said. "It has to live with its decisions on class certification one way or the other."

Judges Kim McLane Wardlaw and Jay S. Bybee repeatedly expressed skepticism about Nelson's claims, questioning whether the subclass was appropriately tailored.

"If you look at this class, it seems very attenuated," Wardlaw told him, saying the contractual connection offered little in the way of meaningful limitations.

Nelson pushed back, arguing a special relationship existed between class members -- which includes nearly 500 employees -- and the defendant pipeline company.

"The employees and those who contracted to support those employees ... they engaged in whatever it took to make sure the pipeline was utilized," he said. "The pipeline doesn't have a purpose without ... those workers."

Bybee, appearing unconvinced, inquired several times whether phone companies like AT&T Inc. or Verizon Communications Inc. that likely have contractual relationships with Plains All American would be included, noting they were not forced to shutter their businesses after the 2015 spill.

Further complicating the case, Bybee noted, was the specter of a recent California Supreme Court decision foreclosing businesses whose patrons relocated after a massive gas leak from recovering purely economic losses from the responsible utility company. Southern California Gas Leak Cases, 2019 DJDAR 4671 (Cal. May 31, 2019).

"It seems to me that after Southern California Gas, that you're in deep trouble," Bybee told Nelson.

Rowley agreed with Bybee's reading of the new state Supreme Court ruling.

"I do think that that decision has narrowed claims for economic losses as a matter of substantive California law," he said.

Regardless, Nelson countered, the 9th Circuit should leave that issue for the trial court to consider, even if the judges were to limit the scope of the current class.

"Either you're right that SoCalGas nixes these claims, or you're wrong, it doesn't," he said to Bybee, urging the court to rule narrowly in the case. "If you're right, we'll lose as a class below. If you're wrong, we'll win."

Senior Judge Ferdinand F. Fernandez, who sat on the panel considering Tuesday's case, did not ask any questions during the arguments.

The appeal before the 9th Circuit is just one of several legal issues Plains All American has faced since the 2015 disaster.

Late last year, a Santa Barbara County jury found the company criminally liable for its involvement in the spill.