On August 1st, the District Court for the Western District of Pennsylvania remanded Rice v. Chesapeake Energy Corporation to the Court of Common Pleas. The Rices signed a natural gas lease with Dale Property Services (Dale), who sold the lease to Chesapeake Energy Corp. (Chesapeake). The Rices filed suit in state court and Defendants removed to Federal Court based on diversity. The Rices filed a motion to remand the case back to the Court of Common Pleas because Dale was a citizen of Pennsylvania. Defendants argued that under Pennsylvania oil and gas law Dale must be disregarded as a party based on fraudulent joinder because the Rices' lease-based claims were against Chesapeake alone. The Rices counter that Dale should be a party, because reassignment of oil and gas leases is treated the same as other leases under Pennsylvania law. The Court was not certain that reassignment of oil and gas leases under Pennsylvania law released Dale as a party. Because of the high threshold the moving party must meet in a fraudulent joinder claim, the court remanded the case back to state court.
Written by Joseph Negaard, Research Assistant
Penn State Law, Agricultural Law Center
Penn State Law, Agricultural Law Center
August 8, 2012
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