Case 2:16-cv RCM Document 9-1 Filed 06/23/16 Page 1 of 9 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

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1 Case 2:16-cv RCM Document 9-1 Filed 06/23/16 Page 1 of 9 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA RAYANNE REGMUND, GLORIA JENSSEN MICHAEL NEWBERRY AND CAROL NEWBERRY, individually and on behalf of all others similarly situated, Plaintiffs, v. TALISMAN ENERGY USA INC. Defendant. CIVIL ACTION NO. 2:16-cv MAGISTRATE JUDGE: RCM MEMORANDUM IN SUPPORT OF MOTION OF TALISMAN ENERGY USA INC. TO TRANSFER VENUE PURSUANT TO 28 U.S.C MAY IT PLEASE THE COURT: Defendant Talisman Energy USA Inc. ( Talisman ) submits this Memorandum in Support of its Motion to Transfer Venue to the Southern District of Texas in the interest of justice and for the convenience of the parties and witnesses pursuant to 28 U.S.C. 1404(a). I. FACTUAL BACKGROUND This class action complaint is brought by Texas residents alleging that Talisman, a company operating in Texas, underpaid royalties on Texas oil and gas leases by underreporting production volumes, in contrast to the actions of its co-operator, Statoil Texas Onshore Properties (a Texas company), and in purported violation of the regulations and reporting requirements of Texas regulatory agencies. All of the relevant properties, the actual named parties, most of the impacted class members and involved third-parties, and the the expected witnesses and necessary documents can be found in Texas. -1-

2 Case 2:16-cv RCM Document 9-1 Filed 06/23/16 Page 2 of 9 A. Location of the Properties The Complaint specifically challenges Talisman s handling of production and royalty accounting for its oil and gas leases in the Eagle Ford shale production area, an area of oil and gas production that extends across South Texas: Source: Texas Railroad Commission. The Eagle Ford area, as a whole, covers counties located in the judicial districts of both the U.S. Southern District of Texas and the Western District of Texas. Talisman s leases are in the counties of Bee, DeWitt, Karnes, LaSalle, Live Oak and McMullen County all of which except one, Karnes are located in the U.S. Southern District of Texas. Affidavit of Scott Smith at

3 Case 2:16-cv RCM Document 9-1 Filed 06/23/16 Page 3 of 9 B. Location of the Parties, Witnesses and Records The parties, the expected witnesses, and most of the proposed class members canbe found in Texas. The four class representatives are alleged to be citizens of Texas and reside in towns of Kenedy and Runge Texas, about 150 miles from Houston Texas. Defendant Talisman has its Eagle Ford office in The Woodlands, Texas, a suburb of Houston, in the U.S. Southern District of Texas. Affidavit of Scott Smith at 3. It is at this location where key land, accounting, engineering, and operational employees are located. Id. 4 Talisman s records and documents relating to its Eagle Ford operations are also located here. Id. 5. A number of support services for Talisman are also carried out in this same office by affiliates of Respsol, S.A., Talisman s ultimate corporate parent. Id. 3. The Complaint also alleges the close involvement of Talisman s Joint Development participant, Statoil Texas Onshore Properties LLC ( Statoil ), which co-operated (and now exclusively operates) the properties co-owned with Talisman in the Eagle Ford. See Complaint [Doc. No. 1] at pp The Complaint alleges that Talisman did not properly report and calculate the same volumes that Statoil measured and reported as operator. Id. Statoil s Eagle Ford operations are managed out of its Texas offices, located in Houston Texas. Affidavit of Scott Smith at 7. Additionally, Talisman s former Eagle Ford field office (which manages the on-the-ground operations of the leases, and which was recently transferred to Statoil s control), is located in the town of Three Rivers, in Live Oak County Texas (also located intheu.s. Southern District of Texas). To the extent that Statoil s personnel and field operation documents will needed in this matter, such personnel and documents would be located in the Southern District of Texas. Most of the purported class members are residents of Texas. Talisman s records indicate that 87% of its Eagle Ford royalty owners have addresses in Texas. Affidavit of Scott Smith at -3-

4 Case 2:16-cv RCM Document 9-1 Filed 06/23/16 Page 4 of That would leave less than 13% spread out over the rest of the United States and elsewhere. Plaintiffs propose no class representative (nor identify any interested class member) who resides in the Western District of Pennsylvania. Finally, the Complaint alleges that Talisman improperly measured and reported oil and gas volumes to the relevant Texas regulatory authorities. Reporting is required to the Texas Comptroller of Accounts. See Complaint [Doc. No. 1] at p. 8. Additionally, a large of amount of operation and production data must be filed regularly and reported to the Texas Railroad Commission by the operators of oil and gas wells, including production and volume information relevant to these claims. See Tex. Nat. Resources Code ch. 81 et. seq. (jurisdiction of Texas Railroad Commission over oil and gas wells and operations). 1 In contrast, Pennsylvania s connection to the dispute is tenuous and essentially nil. The only connection Pennsylvania has to this matter is that Talisman can also be found in this district. The Complaint does not, however, allege any wrongful conduct in this district. It is not expected that any witnesses will be in Pennsylvania. If any class members can be found in this district, it is simply a coincidence and not likely to be more than a couple of individuals. II. ARGUMENT A. Applicable Law 28 U.S.C. 1404(a) provides For the convenience of parties and witnesses, inthe interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented. The purpose of transfer under this section is to prevent the waste of time, energy 1 The title of Railroad Commission is an historic artifact of the Commission s history it is the main Texas regulatory agency over oil and gas matters, and has no oversight over railroads today. -4-

5 Case 2:16-cv RCM Document 9-1 Filed 06/23/16 Page 5 of 9 and money and to protect litigants, witnesses and the public against unnecessary inconvenience and expense. Van Dusen v. Barrack, 376 U.S. 612, 616, 84 S.Ct. 945, 11 L.Ed.2d 945 (1964). The party moving to transfer an action under section 1404(a) has the burden to establish that the balance of convenience of the parties and the interests of justice weighs in favor of transfer. Bolton v. Tesoro Petroleum Corp., 549 F. Supp. 1312, 1313 (E.D.Pa. 1982). The decision to transfer rests within the sound discretion of the district court. Solomon v. Continental American Life Insurance Co., 472 F.2d 1043 (3d Cir. 1973). Courts employ a three-step process to determine if transfer is appropriate. First, courts must determine whether the plaintiff could have filed the case in the district to which transfer is sought. Job Hines Home for the Aged v Young, 936 F. Supp. 223 (D.N.J. 1996). Courts then review the conveniences of individual parties and witnesses by weighing private factors. Id. Finally, courts examine public factors to evaluate the interests of justice. Id. B. Venue is Proper in the Southern District of Texas, Houston Division. Venue is proper in the Southern District of Texas for two reasons. First, defendant Talisman is a resident of The Woodlands, a city in Montgomery County, outside of Houston and within the Southern District of Texas, Houston Division. 28 U.S.C. 1391(b)(1); see also 28 U.S.C. 1391(c)(2) (residency of corporate entity is judicial district in which it is amenable to personal jurisdiction). Second, venue is proper in the Southern District of Texas because a substantial part of the events or omissions allegedly giving rise to the claims occurred there. 28 U.S.C. 1391(b). The employees are located and their decisions concerning the accountings and royalty calculations at issue were made in the Southern District of Texas. Most of the oil and gas leases at issue are in the Southern District of Texas. The actual operations of Talisman and the co-operator, Statoil, all took place in the Southern District of Texas. Thus, the Southern District of Texas is a proper venue for this lawsuit. -5-

6 Case 2:16-cv RCM Document 9-1 Filed 06/23/16 Page 6 of 9 C. Because this is a Class Action, Plaintiffs Preference of Forum Should Be Given Little Weight As an initial matter, although the Plaintiffs choice of venue is usually given some deference, the weight accorded to the plaintiff s choice of forum is considerably reduced in a class and derivative action. Bolton, 549 F.Supp. at See also Donnelly v. Klosters Rederi A/S, 515 F. Supp. 5, 6 (E.D. Pa. 1981) (in class action, plaintiffs choice of venue should be given little weight ). Much more important, in a class action, is where most of the class members are located. See Firmani v. Clarke, 325 F. Supp. 689, 691 (D. Del. 1971) (class action should be transferred to where most of the class members are located, so they can participate as may be desired); Donnelly, 515 F.Supp. at 6. Consequently, this Court should give no deference to Plaintiffs choice of Pennsylvania as a forum, and focus more on the forum that coincides best with the interests of the proposed class members. D. The Private Factors Compel Transfer of Venue Courts have enumerated specific private and public factors to consider when deciding transfer motions. Job Hines Home for the Aged, 936 F. Supp. at 227 (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed (1947)). The private factors include: the location of parties, witnesses and documents, the availability of the compulsory process for unwilling witnesses; the cost to obtain the testimony of willing witnesses; and the disruption of the business or affairs of parties and witnesses. Id.; Bolton, 549 F. Supp. at 1314; Firmani, 325 F. Supp. at 692. All of these factors support transfer. As noted above, all of the pertinent and expected witnesses both party witnesses and third parties can be found in the Southern District of Texas and none have been identified in Pennsylvania a compelling reason alone to transfer Bolton v. Tesoro Petroleum Corp., 549 F. Supp. at 1315 ( the availability and convenience of witnesses and parties is an important -6-

7 Case 2:16-cv RCM Document 9-1 Filed 06/23/16 Page 7 of 9 consideration, perhaps the paramount consideration, in determining the desirability or necessity of a transfer ). Importantly, it is likely that access to third party witnesses and documents, such as those of Statoil the current operator will be needed. None of the third-party witnesses, however, would be subject to compulsory process in Pennsylvania, but they should be subject to compulsory process in the Southern District of Texas. On a motion to transfer, the court should consider whether having most of the witnesses out of state would result in a trial by deposition, rather than live witnesses, which is preferred. Blender v. Sibley, 396 F. Supp. 300, 303 (E.D. Pa. 1975). Of particular importance here is the convenience and due process rights of the absent class members. Any who desire to participant personally, attend hearings, or observe proceedings would be greatly inconvenienced by having to travel to Western Pennsylvania, when most live within the State of Texas, and the city of Houston is a convenient location for most. Because the Southern District of Texas is home to the witnesses, the parties, the documents, the properties at issue, and most of the facts and acts in dispute, it is clearly the center of gravity of this dispute, which, in the end, is the ultimate determinate of where venue is most proper. See Firmani, 325 F. Supp. at 692 (holding that the location of the defendant s office, pertinent documents and records, and where 45% of the class resided andthehomeof most of the employees who have knowledge of the subject matter is the center of gravity for the claims). E. The Public Factors Compel Transfer of Venue On a motion to transfer, the court should consider the public factors, including the community s interest is resolving its own controversies; the burden of jury duty on a community with no interest in the lawsuit; and the preference of having the relevant state law decided in the forum familiar with the law. Job Hines Home for the Aged, 936 F. Supp. at 227 (citing Gulf Oil -7-

8 Case 2:16-cv RCM Document 9-1 Filed 06/23/16 Page 8 of 9 Corp.v.Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed (1947). All of the public factors, likewise, support the transfer of venue. Cases should be tried in the forum with the greatest interest in the underlying dispute. See Firmani, 325 F. Supp. at 692. That forum is clearly the Southern District of Texas and not the Western District of Pennsylvania. The burden of jury duty ought not be imposed upon people of a community which has no relation to the litigation. Job Hines Home for the Aged, 936 F. Supp. at 233. The citizens (and courts) of Pennsylvania simply have no interestin adjudging Talisman s actions in handling its Texas oil and gas leases and whether it complied with Texas oil and gas regulations. Similarly, the court should transfer this matter to the forum most familiar with the laws of Texas that will govern the Plaintiffs claims. See Jumara v. State Farm Ins. Co., 55 F.3d 873, (3d Cir. 1995). Although this court is competent to research the case books and rule upon Texas law, it is obviously a more efficient use of judicial resources to call upon courts that deal in Texas law daily, especially since this case will involve technical issues of Texas oil and gas administrative regulations. III. CONCLUSION Nearly all of the parties and third-party witnesses are residents of Texas. The relevant documents necessary to resolve this dispute are located in the Southern District of Texas. Likewise, the activities that are alleged to have given rise to Plaintiffs claims occurred in the Southern District of Texas. The center of gravity for this dispute is clearly the Southern District of Texas. For the foregoing reasons and authorities, Talisman hereby moves the Court to transfer this Action to the Southern District of Texas, Houston Division, in the interest of justice and for the convenience of the parties and witnesses pursuant to 28 U.S.C. 1404(a). -8-

9 Case 2:16-cv RCM Document 9-1 Filed 06/23/16 Page 9 of 9 Respectfully Submitted, /s/ Robert L. Theriot Robert L. Theriot (pro hac vice TX ) Wade T. Howard (TX ) LISKOW & LEWIS 1001 Fannin Street, Suite 1800 Houston, Texas Telephone: (713) Facsimile: (713) rltheriot@liskow.com wthoward@liskow.com Attorneys for Talisman Energy USA Inc. CERTIFICATE OF SERVICE I HEREBY CERTIFY that a copy of the above and foregoing pleading has been served upon all counsel of record by electronic mail by the Clerk of the Court via the CM/ECFsystem this 23rd day of June s/robert L. Theriot Robert L. Theriot -9-