Case No. IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT IN RE SFPP RIGHT-OF-WAY CLAIMS

Transcription

1 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 1 of 65 (1 of 66) IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT IN RE SFPP RIGHT-OF-WAY CLAIMS MARTIN WELLS and SUSAN WELLS AS TRUSTEES OF THE MARTIN AND SUSAN WELLS REVOCABLE TRUST; and SANDRA L. HINSHAW AS TRUSTEE OF THE SANDRA L. HINSHAW LIVING TRUST, on behalf of themselves and all others similarly situated, Plaintiffs-Petitioners, v. UNION PACIFIC RAILROAD COMPANY, successor to SOUTHERN PACIFIC TRANSPORTATION COMPANY; SFPP, L.P. (formerly known as SANTA FE PACIFIC PIPELINES, INC., formerly known as SOUTHERN PACIFIC PIPELINES, INC.); KINDER MORGAN OPERATING L.P. D ; and KINDER MORGAN G.P., INC., Defendants-Respondents. On Appeal from the United States District Court for the Central District of California 8:15-cv JVS-DFMx PETITION FOR PERMISSION TO APPEAL UNDER RULE 23(f) Dated: June 6, 2017 Thomas S. Stewart STEWART, WALD & MCCULLEY, LLC 2100 Central, Suite 22 Kansas City, Missouri Telephone: (816) Norman E. Siegel STUEVE SIEGEL HANSON LLP 460 Nichols Road, Suite 200 Kansas City, Missouri Telephone: (816) Counsel for Petitioners and Plaintiffs Interim Co-Lead Class Counsel

2 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 2 of 65 (2 of 66) TABLE OF CONTENTS I. INTRODUCTION AND SUMMARY OF ARGUMENT... 1 II. FACTS NECESSARY TO UNDERSTAND THE QUESTION PRESENTED... 5 A. SUMMARY OF THE ALLEGATIONS AND PROCEDURAL HISTORY... 5 B. THE CLASS-CERTIFICATION ORDER... 7 III. QUESTIONS PRESENTED... 9 IV. RELIEF SOUGHT V. REASONS APPEAL SHOULD BE ALLOWED A. THIS COURT HAS WIDE DISCRETION TO PERMIT APPEAL B. THE DISTRICT COURT S ORDER PRESENTS AN IMPORTANT UNSETTLED QUESTION OF LAW IMPLICATING THE PROPER STANDARD FOR ISSUE CLASS CERTIFICATION UNDER RULE 23(C)(4) C. THE DISTRICT COURT S DECISION IS QUESTIONABLE AND IS A DEATH KNELL TO THE CLASS CLAIMS VI. CONCLUSION i

3 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 3 of 65 (3 of 66) TABLE OF AUTHORITIES Cases Avilez v. Pinkerton Gov t Servs., Inc., 596 Fed. Appx. 579 (9th Cir. 2015) Blair v. Equifax Check Servs., Inc., 181 F.3d 832 (7th Cir. 1999) Briseno v. ConAgra Foods, Inc., 844 F.3d 1121 (9th Cir. 2017)... 22, 23 Butler v. Sears, Roebuck & Co., 727 F.3d 796 (7th Cir. 2013) Campion v. Old Republic Protection Co., 775 F.3d 1144 (9th Cir. 2013) Castano v. Am. Tobacco Co., 84 F.3d 734 (5th Cir. 1996) Chamberlan v. Ford Motor Co., 402 F.3d 952 (9th Cir. 2005)... passim Delodder v. Aerotek, Inc., 471 Fed. Appx. 804 (9th Cir. 2012) Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010) Ellis v. Costco Wholesale Corp., 657 F.3d 970 (9th Cir. 2011)... 8 Faus v. Nelson, 241 Cal. App. 2d 320 (1966) Fisher v. Virginia Electric & Power Co., 217 F.R.D. 201 (E.D. Va. 2003)... 21, 22 Good v. Am. Water Works Co., 310 F.R.D. 274 (S.D. W. Va. 2015) In re Nassau County Strip Search Cases, 461 F.3d 219 (2d Cir. 2006) In re Salomon Analyst Metromedia Litig., 544 F.3d 474 (2d Cir. 2008)... 16, No. CV , 2016 WL (C.D. Cal. June 7, 2016)...6, 7 Kamakahi v. Am. Soc y for Reprod. Med., 305 F.R.D. 164 (N.D. Cal. 2015) Koyle v. Level 3 Commc ns, Inc., No. CV S-BLW, 2005 WL (D. Idaho Dec. 1, 2005)... 20, 21 McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482 (7th Cir. 2012)... 4 ii

4 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 4 of 65 (4 of 66) Narouz v. Charter Commc ns, LLC, 591 F.3d 1261 (9th Cir. 2010) Safwenberg v. Marquez, 50 Cal. App. 3d 301 (1975) Sepulveda v. Wal-Mart Stores, Inc., 464 Fed. Appx. 636 (2011) Tasion Commc ns, Inc. v. Ubiquiti Networks, Inc., 308 F.R.D. 630 (N.D. Cal. 2015)... 2 Union Pac. R.R. Co. v. Santa Fe Pac. Pipelines, Inc., 231 Cal. App. 4th 134 (2014)...5, 6 Valentino v. Carter-Wallace, Inc., 97 F.3d 1227 (9th Cir. 1996)... passim Vaquero v. Ashley Furniture Indus., Inc., 824 F.3d 1150 (9th Cir. 2016) Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288 (1st Cir. 2000) Williams v. Sinclair, 529 F.2d 1383 (9th Cir. 1975) Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168 (9th Cir. 2010) Statutes 28 U.S.C. 1292(b)... 6, 11 Cal. Civ. Code Cal. Civ. Code Rules Fed. R. Civ. P passim Other Authorities S. Gensler, Federal Rules of Civil Procedure, Rules and Commentary (2016) Manual for Complex Litigation (Fourth) , 14 The Late Charles Alan Wright, et al., Fed. Prac. & Proc. Civ. (3d ed. 2017) iii

5 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 5 of 65 (5 of 66) I. INTRODUCTION AND SUMMARY OF ARGUMENT This Court has already accepted one pending interlocutory appeal in this case. See (Serrano v. Union Pac. R.R. Co.), No (9th Cir.). There, Defendant-Appellant Union Pacific Railroad, and multiple amicus curiae, challenge the district court s conclusion that federal land grant statutes enacted in the 1860s and 1870s (the Land Grants ) do not bestow upon the Railroad the right to install and operate a high-pressure commercial petroleum pipeline in the subsurface of its right-of-way. The district court proceedings are stayed pending resolution of that appeal. This Court should further the efficient resolution of this case by accepting immediate review under Rule 23(f) in tandem with the pending interlocutory appeal, because the district court s refusal to certify an issue class under Federal Rule of Civil Procedure 23(c)(4) precludes efficient class treatment of those same important issues. The district court s denial of issue class certification (Dkt. 264 at 33-34) is dubious because it does not meaningfully analyze issue certification and ignores the fact that class resolution of the common issues will materially advance the litigation by avoiding serial, prohibitively-expensive litigation of the Railroad s right-of-way rights. This Court should also accept a Rule 23(f) appeal because the district court s order presents an important unsettled question of law implicating the proper standard for issue class certification under Rule 23(c)(4). The district court s order 1

6 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 6 of 65 (6 of 66) denying certification relies on and follows the District of Arizona s order in a parallel case that raises similar issues, both as to the scope of Defendants right-ofway rights and class certification. Mooney v. Union Pacific R.R. Co., No. 2:15-cv DGC (D. Ariz.) (the Arizona litigation ) at Dkt. 260, 268, 278. Plaintiff- Petitioners there, represented by the undersigned counsel, also seek an immediate appeal under Rule 23(f). See Mooney v. Union Pacific R.R. Co., No (9th Cir.) (petition filed May 3, 2017). As argued in the Arizona litigation, this Court should accept interlocutory appeal here to articulate and clarify the legal standard for issue class certification under Rule 23(c)(4). Here, the district court suggests a general materially advance the litigation standard for issue certification. Dkt. 264 at 33 (citing Tasion Commc ns, Inc. v. Ubiquiti Networks, Inc., 308 F.R.D. 630, 633 (N.D. Cal. 2015)). But it then rests its perfunctory conclusion on its Rule 23(a) findings on typicality and adequacy, and its Rule 23(b)(3) finding on predominance. Id. at 34 ( Therefore, as discussed, the thrust of this case is now individual ownership. ). As in the Arizona litigation, the district court here did not fully articulate the legal standard for issue certification, perhaps because Ninth Circuit law in this regard is largely undeveloped. The Court in Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996), noted that even where the predominance requirement of Rule 23(b)(3) is not satisfied, the district court should proceed with class treatment of particular 2

7 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 7 of 65 (7 of 66) common issues in appropriate cases. But the legal test for application of Rule 23(c)(4) has not been fully elucidated by this Court, leaving a void in the development of law on this important and sometimes controversial provision of Rule 23. The district court did not acknowledge the authorities suggesting that the issue-certification analysis should focus only on the issues to be classed that, for example, the typicality and adequacy requirements of Rule 23(a) need be met only as needed for class adjudication of the particular issues presented, and not as to the claims as a whole as in a broad analysis under Rule 23(b)(3). See, e.g., Manual for Complex Litigation (Fourth) (Rule 23(c)(4) may enable a court to achieve the economies of class action treatment for a portion of a case, the rest of which may either not qualify under Rule 23(a) or may be unmanageable as a class action. ); cf. Valentino, 97 F.3d at 1234 (certification may be appropriate where predominance lacking). The district court s overly restrictive test for application of Rule 23(c)(4) would render the Rule essentially useless, because rejection of certification under Rule 23(a) and (b)(3) would invariably end the inquiry, as it effectively did here. The district court thus erred in applying Rule 23(c)(4), resulting in a denial of certification that will likely ensure that this issue of general procedural importance, and specific importance in this case, will evade appellate review without an immediate appeal. 3

8 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 8 of 65 (8 of 66) Without issue certification, thousands of adjacent landowners in California will be forced to litigate this issue serially, as urged by Union Pacific. The proposed class representatives here, Martin and Susan Wells, and Sandra L. Hinshaw, and all other putative class members, are exposed to the same defendant conduct and scope of right-of-way rights, satisfying typicality, adequacy, and predominance as to the key common issues. Resolution of these critical common issues in a single trial will undoubtedly advance the litigation as a whole. See McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482, (7th Cir. 2012) (reversing denial of certification and certifying issue class) (Posner, J.), abrogated on other grounds as recognized in Phillips v. Sheriff of Cook Cty., 828 F.3d 541, 559 (7th Cir. 2016). Finally, this Court should accept appeal to review the district court s questionable application of Rule 23 s typicality and predominance requirements in denying class certification under Rule 23(b)(2) and (b)(3). A denial of immediate review will sound the death knell for the class claims here. Particularly given the pendency of the related interlocutory appeal granted to Union Pacific, No , and the stay of all proceedings entered in the district court, review under Rule 23(f) will efficiently further resolution of this litigation as a whole, including this case, the Arizona litigation, and another parallel case pending in the District of Nevada. 4

9 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 9 of 65 (9 of 66) II. FACTS NECESSARY TO UNDERSTAND THE QUESTION PRESENTED A. SUMMARY OF THE ALLEGATIONS AND PROCEDURAL HISTORY Petitioners own real property adjacent to a railroad right-of-way operated by Defendant Union Pacific Railroad Company. Dkt. 264 at 2-3. For several decades, Defendants SFPP, L.P., Kinder Morgan Operating L.P. D, and Kinder Morgan G.P., Inc. (collectively, Kinder Morgan) paid Union Pacific rent to operate a highpressure commercial petroleum pipeline under the right-of-way. Id. at 3. Petitioners, claiming the land under the right-of-way was neither Union Pacific s to rent nor Kinder Morgan s to use, brought this action for inverse condemnation and other property-related causes of action on behalf of a putative class of all landowners who... own or have owned land in fee adjoining and underlying the railroad right-of-way granted under the Land Grants, or through condemnation, under which the pipeline is located within the State of California. Id. In a rent dispute lawsuit between Kinder Morgan and Union Pacific involving this very pipeline, the California Court of Appeals (applying United States Supreme Court precedent), previously determined that leasing the subsurface to a third party to operate a commercial petroleum pipeline is outside the scope of the railroad s statutory rights under Land Grants and is not an authorized railroad purpose. See Union Pac. R.R. Co. v. Santa Fe Pac. Pipelines, Inc., 231 Cal. App. 4th 134, (2014). Remarkably, as noted by the California 5

10 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 10 of 65 (10 of 66) appellate court, in-house attorneys for the defendants knew consent from adjoining landowners was necessary to use the subsurface for a pipeline. Id. at Nevertheless, the Railroad continued to grant easements to the Pipeline. Id. at 150. In granting a motion to dismiss, in part, counterclaims against the individual named plaintiffs, the district court here also found that Union Pacific lacked sufficient rights under the federal Land Grants to grant easements for the construction and operation of this pipeline beneath the right-of-way. See In re SFPP Right-of-Way Claims, No. CV , 2016 WL , at *7-9 (C.D. Cal. June 7, 2016). Union Pacific sought certification of the district court s rulings pursuant to 28 U.S.C. 1292(b) which Judge Selna said limped over the line for interlocutory review and this Court accepted appeal. See at Dkt. 12 (9th Cir. Oct. 18, 2016). Briefing on that appeal is currently underway. See (9th Cir.). The issues presented, as briefed by Union Pacific, are (1) whether the Railroad can authorize a use of the subsurface underneath the railroad right-of-way even where the use does not serve a railroad purpose; and (2) whether Union Pacific can demonstrate a railroad purpose in granting a subsurface easement to a third party to operate a commercial petroleum pipeline through the subsurface of the right-of-way. Id. at Dkt. 16. The United 6

11 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 11 of 65 (11 of 66) States of America and the Chamber of Commerce of the United States of America support the Railroad s position as amicus curiae. Id. at Dkt. 21, 22. In the parallel Arizona litigation, the district court found Rule 23 s commonality requirement satisfied because important contested issues were shared by the named plaintiffs and putative class members, including whether the Railroad lacks sufficient property interests in the subsurface of its right-of-way to convey property rights in the subsurface to the Pipeline, and whether the commercial pipeline constitutes a railroad purpose. See Petition for Appeal in Arizona litigation, No , Dkt. 1 at 6-7. Despite the existence of these crucial common issues which are being litigated vigorously by Union Pacific on all fronts the District of Arizona denied certification, including certification of an issue class under Rule 23(c)(4). Plaintiffs there have petitioned this Court for permission to appeal under Rule 23(f). See generally id. B. THE CLASS-CERTIFICATION ORDER Plaintiffs moved for class certification under Rule 23(b)(2), (b)(3), and (c)(4). The district court found that numerosity under Rule 23(a)(1) was satisfied. Dkt. 264 at As for commonality under Rule 23(a)(2), the district court adopted the District of Arizona s certification order and concluded that three important contested issues were shared by the named plaintiffs and putative class members: whether Union Pacific acquired rights in the subsurface, whether Kinder 7

12 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 12 of 65 (12 of 66) Morgan s pipeline fulfills a railroad purpose, and whether Union Pacific knew its rights were limited. Id. at 17. The district court determined that the Wells and Hinshaw are not typical for purposes of Rule 23(a) because they do not have the same or similar injury as other class members. Id. at 19 (citing Ellis v. Costco Wholesale Corp., 657 F.3d 970, 984 (9th Cir. 2011)). Adopting the District of Arizona s reasoning, and based solely on its finding that typicality was not satisfied, the district court determined that the named plaintiffs were not adequate class representatives. Id. at As for predominance, the district court rejected that the common issues will dominate the litigation and instead fixated on proof of ownership and individual affirmative defenses the same bases for finding typicality was not met. Id. at The district court then rejected issue class certification out-of-hand: Although an issue class might resolve the common issues already outlined, it would not advance the litigation. The Court has already resolved two of the three common issues as a matter of law.[ 1 ] Therefore, as discussed, the thrust of this case is now individual ownership. An issue class would not help resolve this. Id. at This petition for appeal is timely because it was brought within 14 days after entry of the order denying certification on May 23, The issues that are the subject of Union Pacific s pending interlocutory appeal. 8

13 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 13 of 65 (13 of 66) III. QUESTIONS PRESENTED 1. This Court has not fully elucidated the legal standard for issue class certification under Federal Rule of Civil Procedure 23(c)(4). Does the certification decision here present an unsettled and fundamental issue of law relating to application of Rule 23(c)(4), important both to this litigation and generally, that is likely to evade end-of-case review? 2. The issues presented for certification under Rule 23(c)(4) are central to the claims of all class members. Despite this, in denying issue class certification with no substantial analysis, the district court applied an over-broad interpretation of Rules 23(a) and (b)(3) to reject the narrowly drawn class issues. The district court s order also relied too heavily on adjacent parcel ownership issues and affirmative defenses to reject Rule 23(b) certification for lack of typicality and predominance. The value of named plaintiffs property-related claims is much smaller than the costs of continued litigation, particularly considering the factual development and trial of the proposed class issues urged by the Railroad. Is there a death-knell situation for Petitioners that is independent of the merits of the underlying claims, coupled with a class certification decision by the district court that is questionable? 9

14 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 14 of 65 (14 of 66) IV. RELIEF SOUGHT Under Rule 23(f) of the Federal Rules of Civil Procedure, Petitioners respectfully request that this Court permit an interlocutory appeal of the May 23, 2017 order denying class certification (Dkt. 264). V. REASONS APPEAL SHOULD BE ALLOWED A. THIS COURT HAS WIDE DISCRETION TO PERMIT APPEAL Under Federal Rule of Civil Procedure 23(f), a court of appeals may permit an appeal from an order granting or denying class-action certification. In Chamberlan v. Ford Motor Co., 402 F.3d 952 (9th Cir. 2005), this Court described the standard authorizing discretionary appeals under Rule 23(f) and adopted three general guidelines for consideration: Review of class certification decisions will be most appropriate when: (1) there is a death-knell situation for either the plaintiff or defendant that is independent of the merits of the underlying claims, coupled with a class certification decision by the district court that is questionable; (2) the certification decision presents an unsettled and fundamental issue of law relating to class actions, important both to the specific litigation and generally, that is likely to evade end-of-thecase review; or (3) the district court s class certification decision is manifestly erroneous. Chamberlan, 402 F.3d at 959. While a case warranting review ordinarily falls into one of the specified categories, a case that does not fit within these general categories may nonetheless be worthy of interlocutory appeal. Id. at 960. In fact, the Rule provides this Court a wide open grant of discretion in considering 10

15 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 15 of 65 (15 of 66) petitions for permission to appeal. Id. at 957. The Rule does not include the potentially limiting requirements of [28 U.S.C. 1292(b)] that the district court order involve a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation. Fed. R. Civ. P. Advisory Committee Notes to Rule Amendments, Sub. (f). The first two categories of this standard are readily satisfied here. In addition to assisting the development and clarity of Ninth Circuit law on issue class certification, acceptance of this appeal also will further the efficient resolution of this dispute, and the parallel cases pending in the District of Arizona and the District of Nevada. B. THE DISTRICT COURT S ORDER PRESENTS AN IMPORTANT UNSETTLED QUESTION OF LAW IMPLICATING THE PROPER STANDARD FOR ISSUE CLASS CERTIFICATION UNDER RULE 23(C)(4) The district court s erroneously strict application of Rule 23(c)(4) a legal standard that has not been fully articulated by this Court justifies appeal under the second prong of Chamberlan. This is a prototypical case in which an interlocutory appeal may facilitate the development of the law of class actions because such actions often settle or are resolved without clear resolution of procedural matters. Chamberlan, 402 F.3d at 958 (quoting Blair v. Equifax Check Servs., Inc., 181 F.3d 832, 835 (7th Cir. 1999); see also Fed. R. Civ. P. Advisory 11

16 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 16 of 65 (16 of 66) Committee Notes to Rule Amendments, Sub. (f) ( Permission is most likely to be granted when the certification decision turns on a novel or unsettled question of law, or when, as a practical matter, the decision on certification is likely dispositive of the litigation. ). [T]he rule furnishes an avenue, if the need is sufficiently acute, whereby the court of appeals can take earlier-than-usual cognizance of important, unsettled legal questions, thus contributing to both the orderly progress of complex litigation and the orderly development of the law. Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 293 (1st Cir. 2000). Illumination of the legal standard for Rule 23(c)(4) certification will assist resolution of this case and inform future class proceedings in this Circuit on this relatively unexplored provision of the Federal Rules. The district court did not detail the standard for Rule 23(c)(4) certification, nor do Ninth Circuit decisions provide concrete guidance. The Court in Valentino stated that [e]ven if the common questions do not predominate over the individual questions so that class certification of the entire action is warranted, Rule 23 authorizes the district court in appropriate cases to isolate the common issues under Rule 23(c)(4)(A) and proceed with class treatment of these particular issues. 97 F.3d at There, in a pharmaceutical mass tort case, the Court pointed out that the district court had not considered whether the adjudication of the certified issues would significantly advance the resolution of the underlying case, thereby 12

17 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 17 of 65 (17 of 66) achieving judicial economy and efficiency. Id. at Beyond this general explanation of the Rule lacking instruction on how to apply it this Court has not addressed in any detail the interplay of Rule 23(c)(4) with the rest of the certification analysis. 2 The district court s denial of issue certification is grounded in the overlyrigorous philosophy espoused by Defendants in the briefing below that the typicality, adequacy, and predominance findings necessarily preclude issue class certification. The truncated order relies heavily on a vague reference to the district court s application of Rules 23(a) and (b)(3) as to the case as a whole: as discussed, the thrust of this case is now individual ownership. Dkt. 264 at 34. In other words, though the court did not expressly so state, its (c)(4) analysis was in fact dominated by this broad typicality/predominance concern, despite the court s acknowledgement of the importance of the common issues concerning Defendants rights to install and operate this pipeline. Given the district court s cursory treatment Rule 23(c)(4) certification, and the lack of applied guidance in this Circuit, this Court should take this opportunity 2 Since Valentino, this Court s treatment of Rule 23(c)(4) has not further articulated the applicable legal standard. See Avilez v. Pinkerton Gov t Servs., Inc., 596 Fed. Appx. 579, (9th Cir. 2015) (unpublished); Delodder v. Aerotek, Inc., 471 Fed. Appx. 804, 807 (9th Cir. 2012) (unpublished); Sepulveda v. Wal- Mart Stores, Inc., 464 Fed. Appx. 636, 637 (2011) (unpublished); Dukes v. Wal- Mart Stores, Inc., 603 F.3d 571, 620 n.43 (9th Cir. 2010), rev d, 564 U.S. 338 (2011). 13

18 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 18 of 65 (18 of 66) to announce a comprehensive framework for analysis of issue certification. This would include this Court s consideration of the materially advance the litigation standard articulated by the district court, as well as clarification of how a court should consider the requirements of Rule 23(a) and (b): as applied to the case as a whole, or rather more narrowly, focusing only on the issues to be classed. As to predominance, this issue has generated significant differences among the Circuits but has not yet been confronted by this Court beyond the above-quoted statements in Valentino. Compare In re Nassau County Strip Search Cases, 461 F.3d 219, 227 (2d Cir. 2006) (proper to certify an issue class regardless of whether the entire claim satisfies Rule 23(b)(3)), with Castano v. Am. Tobacco Co., 84 F.3d 734, 745 n.21 (5th Cir. 1996) ( The proper interpretation of the interaction between subdivisions (b)(3) and (c)(4) is that a cause of action, as a whole, must satisfy the predominance requirement of (b)(3) and that (c)(4) is a housekeeping rule that allows courts to sever the common issues for a class trial. ). And as to the Rule 23(a) requirements, this Court has not addressed their proper application in the context of issue certification. Various authorities have taken a more permissive approach. According to the Manual for Complex Litigation (Fourth) 21.24, Rule 23(c)(4) may enable a court to achieve the economies of class action treatment for a portion of a case, the rest of which may either not qualify under Rule 23(a) or may be unmanageable as a class action. See 14

19 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 19 of 65 (19 of 66) also 7A The Late Charles Alan Wright, et al., Fed. Prac. & Proc. Civ (3d ed. 2017) (Rule 23(c)(4) may prove useful if the court does not want to eliminate the class-action aspects of the litigation but feels that the claims of the original representatives are not typical of all the members of the class. ); Good v. Am. Water Works Co., 310 F.R.D. 274, 295 (S.D. W. Va. 2015) ( The facts to be used by the representatives to establish the liability issues would also prove them up for the putative class. Inasmuch as the two issues here span the spectrum of representative plaintiffs and putative class members alike, they clearly satisfy the typicality requirement of Rule 23(a)(3) ). As in the Arizona litigation, that practical approach is in tension with the district court s rigid reliance on its overall typicality and adequacy analysis here. This Court should thus accept an appeal to articulate and clarify the legal standard for certification under Rule 23(c)(4), a fundamental question of law that is important not only here but in class actions generally. And as further discussed infra, given the modest size of the individual claims at issue and the enormous resources being devoted to their defense, this procedural issue of class-action law is likely to evade post-judgment review after individual trials. The second category of interlocutory appeal under Chamberlan, 402 F.3d at 959, is thus satisfied. 15

20 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 20 of 65 (20 of 66) C. THE DISTRICT COURT S DECISION IS QUESTIONABLE AND IS A DEATH KNELL TO THE CLASS CLAIMS The presentation of an important unresolved issue of class-action procedure is alone reason enough to allow this appeal. Additionally, this case satisfies the first category of Chamberlan, 402 F.3d at 959, because there is a death-knell situation for Petitioners that is independent of the merits of the underlying claims, coupled with a class certification decision by the district court that is questionable. When reviewing a denial of class certification, this Court accords the district court considerably less deference than when considering a grant of certification. Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1171 (9th Cir. 2010) (citing In re Salomon Analyst Metromedia Litig., 544 F.3d 474, 480 (2d Cir. 2008)). And importantly here, this Court does not apply a deferential abuse of discretion standard where the district court fails to make sufficient findings to support its application of Rule 23. Narouz v. Charter Commc ns, LLC, 591 F.3d 1261, (9th Cir. 2010) (reversing denial of certification where district court did not provide findings or analysis). While the district court did memorialize an analysis of the Rule 23(a) and (b) criteria as applied to the claims as a whole, the district court did not meaningfully examine application of Rule 23(c)(4), calling into question the court s conclusory finding in that regard. The district court s brief discussion of issue certification itself calls into question the court s conclusion. The court emphasizes that it already resolved two 16

21 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 21 of 65 (21 of 66) of the three common issues as a matter of law. Dkt. 264 at 34. But that resolution is interlocutory, subject to vigorous ongoing dispute including on interlocutory appeal in this Court, and applies only to Union Pacific s counterclaims against the named plaintiffs. If Plaintiffs-Petitioners had simply delayed their challenge to Union Pacific s counterclaims, this justification for denial of issue certification would not exist. Regardless of the ultimate decision on the scope of the Railroad s right-of-way rights under the Land Grants and whether this pipeline constitutes a railroad purpose, these crucial common issues should be decided once for the entire class. That is the very purpose of Rule 23(c)(4). Aside from the district court s questionable reliance on the timing of Plaintiffs-Petitioners dispositive motion as to the Railroad s counterclaims, the court appears to have considered only its overall Rule 23(a) and (b)(3) analysis in rejecting an issue class. As discussed supra, this approach is flawed because it effectively depends upon a broad predominance inquiry not envisioned by this Court. See Valentino, 97 F.3d at 1234 ( Even if the common questions do not predominate over the individual questions so that class certification of the entire action is warranted, Rule 23 authorizes class treatment of particular issues.) (emphasis added). The district court s de facto dependence on its overall predominance finding is simply not consistent with Valentino. 17

22 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 22 of 65 (22 of 66) The district court s denial of issue certification is also questionable because resolution of the common issues will materially advance the litigation, thus satisfying the general standard identified in the order. Dkt. 264 at 33. These issues are unquestionably vital to every class member s claim. Despite the district court s legal rulings (now on appeal to this Court), the Railroad continues to assert that resolution of whether the pipeline is a railroad purpose under the Land Grants may be a factual dispute that would require analysis of a complicated history dating back to 1955, when the Southern Pacific parent company formed Southern Pacific Pipe Lines, Inc., to construct and operate a petroleum pipeline on the railroad s right of way. The trial would take time and considerable judicial resources.... Arizona litigation, Dkt. 270 at The district court s denial of issue certification thus encourages the wasteful, serial litigation of these same issues championed by Union Pacific. Issue certification solves this problem. Judgment (whether summary or after trial) in Defendants favor for example a finding that operation of this pipeline falls within the scope of Land Grant right-of-way rights would resolve the litigation in one fell swoop, binding the entire class. See Butler v. Sears, Roebuck & Co., 727 F.3d 796, 799 (7th Cir. 2013) (noting that where a defendant has a classwide defense, class adjudication is a course it should welcome, as all class members who did not opt out of the class action would be bound by the 18

23 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 23 of 65 (23 of 66) judgment ). Judgment in Petitioners favor on those issues resolves them for all subsequent litigation, which would instead focus on individual plaintiffs ownership, any asserted individual defenses, and damages. See Kamakahi v. Am. Soc y for Reprod. Med., 305 F.R.D. 164, 193 (N.D. Cal. 2015) (certifying (c)(4) class would be far more efficient for both the parties and the courts than requiring Defendants to litigate the same issue against however many [individuals] may decide to proceed with their own claims if certification is denied. ). This is precisely the application of Rule 23(c)(4) contemplated by the Rule. See S. Gensler, Federal Rules of Civil Procedure, Rules and Commentary at 545 (2016) ( Should the defendant prevail on an essential issue in the case e.g., the court enters summary judgment for the defendant on the basis that there is insufficient proof to support a finding for the plaintiffs on an essential element then a dispositive judgment against the class would be warranted. Should the plaintiffs prevail, however, the effect of the issue class generally would be to arm the class members with favorable findings on the issues in question for the class members to use later in individual suits. ). The district court ruled consistent with Defendants urging that the court should discourage trials by denying certification and thereby increasing the already steep cost of individual litigation. Such an approach is inconsistent not only with Rule 23, but with Rule 1, which requires just determination of disputes brought 19

24 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 24 of 65 (24 of 66) before the Court. The value of named plaintiffs property-related claims based on the value of individual-parcel strips of land is much smaller than the costs of continued litigation. Given the significant resources contributed to the defense of this litigation by Union Pacific and Kinder Morgan, and by amici in this Court, it is exceedingly unlikely that this case will reach appellate review of class certification after an individual judgment. This Petition thus meets the death knell criterion for immediate review. See Chamberlan, 402 F.3d at 957 ( A plaintiff who is denied certification might be left with only one path to appellate review: proceeding to a final judgment on the merits of an individual claim that, without the class, is worth far less than the cost of litigation. ); Campion v. Old Republic Protection Co., 775 F.3d 1144, (9th Cir. 2013) (per curiam) (class representative who voluntarily settles individual claims following denial of class certification cannot then appeal certification decision). The district court s decision under Rules 23(b)(2) and (b)(3) is also questionable and likely to evade later review. As an initial matter, the district court erred in effectively applying a de facto rule that real property disputes cannot be certified for class treatment. Dkt. 264 at & Rule 23 makes no such limitation. See Koyle v. Level 3 Commc ns, Inc., No. CV S-BLW, 2005 WL , at *5 (D. Idaho Dec. 1, 2005) (certifying class of landowners 20

25 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 25 of 65 (25 of 66) adjacent to Land Grant right-of-way under Rules 23(b)(2) and (b)(3)) 3 ; see also Fisher v. Virginia Electric & Power Co., 217 F.R.D. 201, 218 (E.D. Va. 2003) (emphasizing that Congress did not exclude from Rule 23 claims implicating property ownership, as such construction of the rule would exempt a defendant from liability so long as it harms a large enough number of persons (each to an extent that does not exceed the costs of individual litigation) that notice and management will present some degree of complexity. ). Indeed, the district court s mistaken belief that it would need to perform a chain-of-title analysis that examined the source of each owner s interest to determine whether a putative class member owns an underlying interest of the right-of-way is contrary to California law and Rule 23. Dkt. 264 at 24. Under California law, landowners need only present proof of ownership of property adjacent to the railroad right-of-way (i.e., deed), thereby giving rise to the centerline presumption, which satisfies the ownership element. Safwenberg v. Marquez, 50 Cal. App. 3d 301, 306 (1975); Faus v. Nelson, 241 Cal. App. 2d 320, 3 The district court attempts to distinguish the analogous situation in Koyle by contending the named plaintiffs [in Koyle] all own land in fee simple that is subject to a Union Pacific easement, whereas in the present matter evidence shows that Plaintiffs may not own the land necessary to bring their claims. Dkt. 264 at 20. But this distinction is incorrect. The defendant in Koyle actually asserted the same attacks Union Pacific and Kinder Morgan do here, by claiming the Koyle named plaintiffs did not own the subsurface of the right-of-way. Koyle v. Level 3 Commc ns, Inc., No. CV S-BLW, Dkt. 28 at (D. Idaho May 1, 2002) (arguing, as does Kinder Morgan, that the Koyle named plaintiffs deeds reveal that they do not own an interest in the subsurface of the right-of-way). 21

26 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 26 of 65 (26 of 66) (1966); Cal. Civ. Code 831 & But despite the district court s explanation to the contrary, it incorrectly flips the burden onto [Petitioners] by requiring chain-of-title evidence for all landowners to prove ownership in the subsurface as a prerequisite[] to class membership, because the presumption is rebuttable or may not apply. Dkt. 264 at 19 & The court thus erroneously concluded that application of the centerline presumption would necessarily cause individual issues to predominate and result in no landowner s claim being typical of another. Id. at 28-30; but see Fisher, 217 F.R.D. at 218 ( Every class requires some individualized inquiry to determine class membership... [b]ut where... the defendant admittedly has performed the challenged acts on specific, identifiable property owned by others, these issues are purely a matter of claims administration identifying the particular individuals who own or owned the identifiable property. ). The district court s predominating focus on identifying eligible class members through individual ownership inquiries at this stage of the case is also in conflict with this Court s recent decision in Briseno v. ConAgra Foods, Inc., 844 F.3d 1121, 1123 & (9th Cir. 2017) (rejecting standard requiring administratively feasible method for identifying absent class members). Further, the district court erred in overemphasizing the importance of Respondents various asserted affirmative defenses. Dkt. 264 at 30-33; Williams v. Sinclair, 529 F.2d 22

27 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 27 of 65 (27 of 66) 1383, 1388 (9th Cir. 1975) (existence of affirmative defenses does not compel a finding that individual issues predominate over common ones ). As this Court pointed out in ConAgra, defendants have opportunities to individually challenge the claims of absent class members during the claims administration stage. 844 F.3d at The district court s fixation on identifying adjacent landowners and questioning their individual property rights is simply not consistent with current Circuit precedent. Finally, the district court s decision is questionable in that it explicitly declines to address the parties arguments regarding class-wide proof of damages because the court excludes Plaintiffs appraisal expert, David Matthews. Dkt. 264 at 10 n.3. But even if exclusion of Matthews opinions was appropriate (it was not), certification is still proper where, as here, damages can be proved by nonexpert evidence of rents paid, profits, or other benefits conferred on Defendants. And it cannot be disputed that the damages (if any are proved) stemmed from Defendants actions. Vaquero v. Ashley Furniture Indus., Inc., 824 F.3d 1150, 1155 (9th Cir. 2016) (emphasis in original). VI. CONCLUSION For the reasons set forth above, the Court should grant this petition for permission to appeal. 23

28 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 28 of 65 (28 of 66) Respectfully submitted, Dated: June 6, 2017 Thomas S. Stewart Elizabeth G. McCulley STEWART, WALD & MCCULLEY, LLC 2100 Central, Suite 22 Kansas City, Missouri Phone: (816) Steven M. Wald STEWART, WALD & MCCULLEY, LLC 100 North Broadway, Suite 1580 St. Louis, Missouri Phone: (314) /s/ Norman E. Siegel Norman E. Siegel Barrett J. Vahle Ethan M. Lange STUEVE SIEGEL HANSON LLP 460 Nichols Road, Suite 200 Kansas City, Missouri Phone: (816) Jason S. Hartley STUEVE SIEGEL HANSON LLP 550 West C Street, Suite 1750 San Diego, California Phone: (619) Counsel for Petitioners and Plaintiffs Interim Co-Lead Class Counsel 24

29 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 29 of 65 (29 of 66) CERTIFICATE OF COMPLIANCE 1. This brief complies with the type-volume limitation of Circuit Rule 5-2(b) and Circuit Rule 32-3(2) because this brief contains 5,483 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(f). Pursuant to Circuit Rule 32-3, the word count divided by 280 does not exceed the designated limit of 20 pages. 2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6), because it has been prepared in a proportionally spaced typeface using Microsoft Word 2010 in 14-point Times New Roman type. Dated: June 6, 2017 /s/ Norman E. Siegel Norman E. Siegel C-1

30 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 30 of 65 (30 of 66) CERTIFICATE OF SERVICE I hereby certify that on June 6, 2017, I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by using the CM/ECF system. I further certify that copies were sent to the following via U.S. First Class Mail and electronic mail. Steven M. Strauss M. Ray Hartman III Summer J. Wynn Catherine J. O Connor COOLEY LLP 4401 Eastgate Mall San Diego, CA sms@cooley.com rhartman@cooley.com swynn@cooley.com coconnor@cooley.com Attorneys for Defendants SFPP, L.P., Kinder Morgan Operating L.P. D, and Kinder Morgan G.P., Inc. Joseph Rebein Andrew Carpenter Brent Dwerlkotte SHOOK, HARDY & BACON L.L.P Grand Blvd. Kansas City, MO jrebein@shb.com acarpenter@shb.com dbdwerlkotte@shb.com Tammy B. Webb John K. Sherk, III SHOOK, HARDY & BACON L.L.P. One Montgomery, Ste San Francisco, CA jsherk@shb.com tbwebb@shb.com Attorneys for Defendant Union Pacific Railroad Company /s/ Norman E. Siegel Norman E. Siegel C-2

31 Case: , 06/06/2017, ID: , DktEntry: 1-1, Page 31 of 65 (31 of 66) Attachment Pursuant to Rule 5(b)(1)(E) of the Federal Rules of Appellate Procedure 1. Order Denying Class Certification, Dkt. # 264 (05/23/17)

32 (32 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , Filed 05/23/17 DktEntry: Page 1-1, Page 1 of of Page 65 ID #:8319 Present: The Honorable James V. Selna Karla J. Tunis Deputy Clerk Attorneys Present for Plaintiffs: Not Present Not Present Court Reporter Attorneys Present for Defendants: Not Present Proceedings: (IN CHAMBERS) ORDER : DENYING Plaintiff s Motion for Class Certification (Dkt. No 235); DENYING Plaintiff s Motion to Strike Expert Kelly Melle Response to Opposition to Motion (Dkt. No. 251); DENYING Defendant Union Pacific Railroad Company s Motion to Exclude Cindi Straup (Dkt. No. 241); and GRANTING Kinder Morgan Defendants Motion to Exclude Expert C. David Matthews (Dkt. No. 243). Before the Court are four motions: one motion for class certification and three related Daubert motions. First, Plaintiffs Martin and Susan Wells, as trustees of the Martin and Susan Wells Revocable Trust, and Sandra L. Hinshaw, as trustee of the Sandra L. Hinshaw Living Trust (collectively, Plaintiffs ) moved for class certification. Mot., Docket No Defendants Union Pacific Railroad Company ( Union Pacific ) and Kinder Morgan G.P. Inc., Kinder Morgan L.P. D, and SFPP L.P. (collectively, Kinder Morgan ) opposed. Docket Nos. 242 ( Union Pacific Opp n ), 245. ( Kinder Morgan Opp n ). Plaintiffs replied. Reply, Docket No For the following reasons, the Court denies the motion. 1 The Court refers to the class certification briefing as motion, opposition, and reply. The Court refers to the other motions by their docket numbers. CV-90 (06/04) Page 1 of 34

33 (33 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , Filed 05/23/17 DktEntry: Page 1-1, Page 2 of of Page 65 ID #:8320 Second, Union Pacific moved to exclude Plaintiffs expert Cindi Straup ( Straup ). Docket No Kinder Morgan joined the motion. Docket No Plaintiffs opposed. Docket No Union Pacific replied. Docket No For the following reasons, the Court denies the motion. Third, Kinder Morgan moved to exclude Plaintiffs expert C David Matthews ( Matthews ). Docket No Union Pacific joined the motion. Docket No Plaintiffs opposed. Docket No Kinder Morgan replied. Docket No For the following reasons, the Court grants the motion. Fourth, Plaintiffs moved to strike the declaration of Kinder Morgan s expert, Kelly Melle ( Melle ). Docket No Kinder Morgan opposed. Docket No Plaintiffs replied. Docket No For the following reasons, the Court denies the motion. For the following reasons, the Court denies the motion for class certification. It denies Union Pacific s motion to exclude Ms. Straup and Plaintiffs motion to exclude Mr. Melle. The Court grants Kinder Morgan s motion to exclude Mr. Matthews. BACKGROUND This case s facts are well-known to the parties. The following background is based on the Consolidated Complaint and is therefore based solely on allegations. The Wells Trust owns land in Riverside County and San Bernardino County. Consol. Compl. 5, Exs. A B. In Riverside County, the land is lying Northeasterly of the Northeasterly line of the 200 foot right-of-way of the Southern Pacific Railroad company. Id. Ex. A. In San Bernardino County, the land is lying Northeasterly of the right of way of the Southern Pacific Railroad. Id. Ex. B. The Hinshaw Trust owns land in San Bernardino County. Consol. Compl. 6. That CV-90 (06/04) Page 2 of 34

34 (34 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , Filed 05/23/17 DktEntry: Page 1-1, Page 3 of of Page 65 ID #:8321 land adjoins Union Pacific s right-of-way. Id. Additionally, the Hinshaw Trust formerly owned land in San Bernardino adjoining Union Pacific s right-of-way. Id. Plaintiffs are successors in title to land that was once public land through which Union Pacific s rights-of-way now pass. Id. 21. Union Pacific operates a railroad running tens of thousands of miles. Id. 22. Union Pacific s predecessor acquired its right-of-way easement to operate this railroad by 19th century Congressional acts and by private grants. Id Beginning in the 1950s, Union Pacific s predecessor constructed a pipeline system throughout the Southwest (including in California), and over half of that pipeline runs beneath Union Pacific s right-of-way. Id. 24, 26. Union Pacific and its predecessor purported to lease easements to this pipeline system and related real property interests to Kinder Morgan and its predecessors. Id. 28, Beginning in August 1994, Union Pacific leased access to this pipeline system to Kinder Morgan with rents based on court judgments determining the fair market value for the purported easements. Id But on Kinder Morgan s appeal from one such judgment, the California Court of Appeals allegedly found that Union Pacific could not collect rent for Kinder Morgan s continued use of the subsurface of Union Pacific s rightof-way. Id The court held that only fee owners of the right-of-way could grant the rights Kinder Morgan needed to operate the pipeline. Id. Plaintiffs allege that they are among those fee owners and represent a class of similarly-situated fee owners. Id , 69. They now seek to certify the following class: [A]ll landowners who, from January 1, 1983 to the date of class certification, own or have owned land in fee adjoining and underlying the railroad right-of-way granted under the Land Grants, or through condemnation, under which the pipeline is located within the State of California. CV-90 (06/04) Page 3 of 34

35 (35 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , Filed 05/23/17 DktEntry: Page 1-1, Page 4 of of Page 65 ID #:8322 Docket No. 235 at 1. Plaintiffs further ask the Court to certify the following Current Owner Sub-Class: [A]ll landowners who, as of the date of class certification, own land in fee adjoining and underlying the railroad right-of-way granted under the Land Grants, or through condemnation, under which the pipeline is located within the State of California. Id. Alternatively, Plaintiffs ask the Court to certify for class treatment common questions. Id. Finally Plaintiffs ask the Court to appoint Sandra L. Hinshaw, Martin Wells, and Susan Wells, as class representatives, and appoint Norman E. Siegel and Thomas S. Stewart as Class Counsel. Id. LEGAL STANDARD A motion for class certification involves a two-part analysis. First, the plaintiffs must demonstrate that the proposed class satisfies Rule 23(a) s requirements: (1) the members of the proposed class must be so numerous that joinder of all claims would be impracticable; (2) there must be questions of law and fact common to the class; (3) the claims or defenses of the representative parties must be typical of the claims or defenses of absent class members; and (4) the representative parties must fairly and adequately protect the class interest. Fed. R. Civ. P. 23(a). The plaintiffs may not rest on mere allegations, but must provide facts to satisfy these requirements. Doninger v. Pac. Nw. Bell, Inc., 564 F.2d 1304, 1309 (9th Cir. 1977) (citing Gillibeau v. Richmond, 417 F.2d 426, 432 (9th Cir. 1969)). Second, the plaintiffs must meet the requirements for at least one of Rule 23(b) s subsections. Under Rule 23(b)(1), plaintiffs may certify a class if there is either (1) a risk of prejudice from separate actions establishing incompatible standards of conduct or (2) judgments in individual lawsuits would adversely affect the rights of other members of the class. Under Rule 23(b)(2), a plaintiff may maintain a class where the defendant has acted in a manner applicable to the entire class, making injunctive or declaratory relief CV-90 (06/04) Page 4 of 34

36 (36 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , Filed 05/23/17 DktEntry: Page 1-1, Page 5 of of Page 65 ID #:8323 appropriate. Finally, under Rule 23(b)(3), a plaintiff may certify a class only if questions of law or fact common to class members predominate over any questions affecting only individual members, and if a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. Fed. R. Civ. P. 23(b)(3) (emphasis added). The plaintiffs must show that the class satisfies Rule 23. See Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir. 2001), amended by 273 F.3d 1266 (2001). A district court must rigorously analyze whether the plaintiffs have met Rule 23 s prerequisites. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). Rule 23 confers broad discretion to determine whether a class should be certified, and to revisit that certification throughout the legal proceedings before the court. Armstrong v. Davis, 275 F.3d 849, 872 n.28 (9th Cir. 2001), abrogated on other grounds by Johnson v. California, 543 U.S. 499, (2005). ANALYSIS I. EVIDENTIARY MOTIONS On a motion for class certification, courts apply Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 597 (1993) to expert testimony. Ellis v. Costco Wholesale Corp., 657 F.3d 970, 982 (9th Cir. 2011). Expert testimony is admissible if the party offering such evidence shows that the testimony is both reliable and relevant. Fed. R. Evid. 702; Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999); Daubert, 509 U.S. at Federal Rule of Evidence 702 permits expert testimony if (a) the expert s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case. Fed. R. Evid A expert can be qualified by knowledge, skill, experience, training, or education. Id. While the parties agree that district courts apply Daubert to class certification, they disagree on the precise scope of that analysis. Defendants argue that a full-fledged analysis is necessary, while Plaintiffs argue the Court should only apply a tailored CV-90 (06/04) Page 5 of 34

37 (37 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , Filed 05/23/17 DktEntry: Page 1-1, Page 6 of of Page 65 ID #:8324 approach. Docket Nos. 253 at 3, 256 at 2. The confusion comes from the Supreme Court s statement in Dukes: the district court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings. We doubt that is so U.S. at 354. Initially, many district courts assumed that this statement required them to conduct a full-fledged Daubert inquiry at class certification. Reply at 2 (citing Cholakyan v. Mercedes-Benz, USA, LLC, 281 F.R.D. 534, 541 (C.D. Cal. 2012); Keegan v. Am. Honda Motor Co., 284 F.R.D. 504, 514 (C.D. Cal. 2012) Shiferaw v. Sunrise Senior Living Mgmt., Inc., No. LACV JAKPLAX, 2014 WL , at *25 (C.D. Cal. June 11, 2014), on reconsideration in part, No. LACV JAKPLAX, 2016 WL (C.D. Cal. Mar. 21, 2016)). But Tait v. BSH Home Appliances Corp., after exhaustively analyzing Dukes, Ellis, and extra-circuit precedent, determined that Dukes does not require a complete Daubert analysis and that Ellis suggests district courts only have to apply a tailored approach. 289 F.R.D. 466, (C.D. Cal. 2012). Since Tait, other Ninth Circuit district courts have adopted its analysis. See, e.g., Senne v. Kansas City Royals Baseball Corp., 315 F.R.D. 523, 587 (N.D. Cal. 2016), on reconsideration in part, No. 14-CV JCS, 2017 WL (N.D. Cal. Mar. 7, 2017); Spann v. J.C. Penney Corp., 307 F.R.D. 508, 516 (C.D. Cal. 2015), modified, 314 F.R.D. 312 (C.D. Cal. 2016). The Court agrees with Tait s discussion of the standard and applies it as set forth below. At class certification, district courts do not have to conduct a full Daubert analysis. Tait, 289 F.R.D. at 495. Instead, district courts must conduct an analysis tailored to whether an expert s opinion was sufficiently reliable to admit for the purpose of proving or disproving Rule 23 criteria, such as commonality and predominance. Id. For this tailored analysis, district courts apply Daubert s relevance and reliability requirements as useful guideposts but the court[s] retain[] discretion in determining how to test reliability as well as which expert s testimony is both relevant and reliable. Id. (quoting Ellis v. Costco Wholesale Corp., 240 F.R.D. 627, 635 (N.D. Cal affirmed on this point by Ellis, 657 F.3d at 982 (holding the district court correctly applied the evidentiary standard set forth in Daubert ). But courts still must resolve any factual disputes necessary to determine whether the putative class satisfies Rule 23. Id. (quoting Ellis, 657 F.3d at 982. CV-90 (06/04) Page 6 of 34

38 (38 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , Filed 05/23/17 DktEntry: Page 1-1, Page 7 of of Page 65 ID #:8325 A. Union Pacific s Motion to Exclude Plaintiffs Expert Cindi Straup Union Pacific seeks to exclude Ms. Straup as an expert because (1) she lacks the qualifications needed to reach her opinions, (2) her opinions are the product of unreliable methods applied to insufficient data, and (3) her opinions will not help the trier of fact. Docket No at 2. Plaintiffs hired Ms. Straup to identify parcels of land adjacent to those segments of Union Pacific s right-of-way beneath which a Kinder Morgan pipeline exists. Mot., Ex. 14 ( Straup Report ) at 2. Ms. Straup used a multi-step process: (1) identify the Union Pacific right-of-way at issue; (2) identify a master list of landowner parcels adjacent to either side of the right-of-way; (3) label the right-of-way segments according to the particular source of conveyance; (4) identify which side of the centerline the Kinder Morgan pipelines lay on; (5) identify parcels that are adjacent to the same side of the right-of-way of center as where a pipeline is buried; (6) identify the owner(s) of these parcels via county tax assessors data. Id. at ) Ms. Straup is sufficiently qualified. First, Union Pacific argues that Ms. Straup lacks the qualifications needed to unearth (1) the location of parcels of land adjoining the railroad right of way under which the pipeline is located and (2) the legal owners of those parcels. Docket No at 2. In particular, Union Pacific argues that Ms. Straup lacks a land surveyor s license, which California law requires to determine property line boundaries. Id. at 3. It further argues that she lacks experience in title examination. Id. Plaintiffs argue that Ms. Straup s qualifications as land surveyor or title expert are irrelevant because she serves as a mapping expert. Docket No. 252 at 4. The Court rejects Union Pacific s challenge. Ms. Straup is a well-qualified mapping expert. See Straup Report, Addendum 1 (Ms. Straup s CV). Although title examination may be necessary to determine legal ownership of the land, such challenges go to whether Ms. Straup s methodology can support the Plaintiffs certification arguments not her qualifications. CV-90 (06/04) Page 7 of 34

39 (39 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , Filed 05/23/17 DktEntry: Page 1-1, Page 8 of of Page 65 ID #:8326 2) Ms. Straup s data is sufficiently reliable. Second, Union Pacific argues that Ms. Straup s methodology is unreliable because none of her secondary sources county assessors GIS data, the Southern Pacific valuation maps, and the Kinder Morgan alignment sheets can substitute for a land title survey. Docket No at 7. Plaintiffs argue that counties throughout California regularly use such data and that such data is reliable. Docket No. 252 at 5. The Court finds that Ms. Straup s data sources are sufficiently reliable. Union Pacific does not contest that California counties use the GIS data. Reply at 2 3. Union Pacific argues that counties do not generally use this data to determine property rights. Reply at 3. But that goes towards the weight of Ms. Straup s testimony to survive a Daubert challenge it is sufficient that Ms. Straup s data and method simply produce a consistent result. Furthermore, Ms. Straup suggests that the GIS data can be crosschecked via other data. Straup Report 3.d. Union Pacific also argues against Ms. Straup s use of the Southern Pacific valuation maps, which the railroad prepared for the Interstate Railroad Commission ( ICC ) to evaluate railroad properties. Id. 4.b. Union Pacific relies on its own expert report to argue that these maps are only a general indicator of the location of the pipeline and do not identify its actual location. Docket No at 6. But this again goes to the weight of the testimony. Moreover, Ms. Straup uses multiple sources to reduce the margin of error. 3) Ms. Straup s report is helpful to the trier of fact. Third, Union Pacific argues that Ms. Straup s method will not help the trier of fact because it does not identify the current owners of each parcel. Docket No at Union Pacific argues that the Ms. Straup s method is useless because a full title search is the only way to reliably determine the legal ownership of parcels. Docket No at 8. This bleeds into the Court s later inquiries; even if a title search is the best practice, that does not disqualify Ms. Straup s method. In sum, the Court denies Union Pacific s motion to strike Ms. Straup s declaration. B. Kinder Morgan s Motion to Exclude Plaintiffs Expert David C. CV-90 (06/04) Page 8 of 34

40 (40 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , Filed 05/23/17 DktEntry: Page 1-1, Page 9 of 340 of Page 65 ID #:8327 Matthews A trial court has a gatekeeping obligation to admit expert testimony only when it is both reliable and relevant. Daubert, 509 U.S. at 589; Kumho Tire Co., 526 U.S. at In Daubert, the Supreme Court gave a non-exhaustive list of factors for determining whether scientific testimony is sufficiently reliable to be admitted into evidence, including: (1) whether the scientific theory or technique can be (and has been) tested; (2) whether the theory or technique has been subjected to peer review and publication; (3) whether there is a known or potential error rate; and (4) whether the theory or technique is generally accepted in the relevant scientific community. Domingo ex rel. Domingo v. T.K., 289 F.3d 600, 605 (9th Cir. 2002). The Supreme Court later held that a trial court may consider one or more of the Daubert factors in determining the reliability of nonscientific expert testimony. Kumho Tire Co., 526 U.S. at 141 (emphasis in original). Furthermore, the court has broad latitude to decide how to determine the reliability of the testimony and whether the testimony is in fact reliable. Mukhtar v. Cal. State Univ., 299 F.3d 1053, 1064 (9th Cir. 2002); see Kumho Tire Co., 526 U.S. at 141. The test of reliability is flexible, and Daubert s list of specific factors neither necessarily nor exclusively applies to all experts or in every case. Id. (internal citations omitted). Here, Mr. Matthews bases his report off of a 2004 appraisal, which was authored by Kinder Morgan s expert (Richard Marchitelli ( Marchitelli )) in the rent value litigation between Union Pacific and Kinder Morgan. Docket No. 243, Ex. 1 ( Matthews Report ) 1, 2. After adjustments and his own investigations, Mr. Matthews determined that this 2004 appraisal represents the value of the proposed class s fee interest in the California pipeline easement. Id. The 2004 appraisal, and thus Mr. Matthews Report, rely on the Across the Fence valuation method ( ATF Method ). Docket No. 243, Ex. 2 ( Marchitelli Report ) at 5. The ATF method values complete transportation corridors. Id. at 8; Matthews Report at 25. It consists of four elements: (1) the total value of the land occupied by the easement within the transportation corridor, determined by examining the value of unimproved properties across CV-90 (06/04) Page 9 of 34

41 (41 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 1041 of of 3465Page ID #:8328 the fence from the corridor [( the ATF Value )]; (2) the enhancement factor, or corridor factor, if any, which is applied on the theory that long, narrow corridors containing railroad tracks are worth more than the land hypothetically across the fence that was used to determine land value; (3) the easement percentage of fee, or use factor, which is the portion of the fee interest that is occupied or affected by the particular easement within the corridor; and (4) the rental rate of return reflecting the fair market rate of return on unimproved land. Id. at 8 9 (alterations to paragraph format). These elements are then multiplied together. 2 Id. at 9. Kinder Morgan challenges Mr. Matthews report on the basis that the 2004 appraisal does not provide a reliable basis to appraise the putative class members interests. Plaintiffs argue that the ATF Method was appropriate in the underlying action; therefore it is appropriate now. Docket No. 253 at 6. The Court finds that Mr. Matthews method is unreliable because (1) significant differences exist between the rent dispute and the dispute here, (2) Mr. Matthews does not sufficiently account for the twelve-year time-gap between the 2004 appraisal and his appraisal, (3) Mr. Matthews admits that he lacks proficiency in this methodology, and (4) he developed this methodology for litigation. 3 2 The formula is Rent = Land Value x Corridor Factor x Use Factor x Rate of Return. Marchitelli Rebuttal Report at 9. 3 Because the Court excludes Mr. Matthews testimony, it does not consider the parties arguments related to class-wide proof of damages. CV-90 (06/04) Page 10 of 34

42 (42 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 1142 of of 3465Page ID #:8329 First, the 2004 appraisal concerned completely different property than the dispute here. Mr. Matthews admits that the method s primary purpose is to value corridors, yet he does not address that there is no corridor here. 4 See Matthews Report at 25. While the 2004 appraisal involved a lengthy transportation corridor, this case involves hundreds of separate parcels. These parcels also cannot provide the administrative benefit of dealing with a single landowner. Therefore, the method cannot value the individual easements at issue here because it would improperly value the parcels as one aggregate unit. Marchitteli Report at This would confer a greater value on the parcels than they would receive in separate transactions. Id. As a result, other courts have rejected an aggregate-valuation method. See, e.g., Calhoun v. Kansas City S., No. 3-03CV1511, 2004 WL , at *3 (W.D. La. June 10, 2004), report and recommendation adopted sub nom. Calhoun v. Southern, No. 3-03CV1511, 2004 WL (W.D. La. July 12, 2004); Hebert v. Doyle Land Servs., Inc., No. 2:00 CV 1851, 2002 WL , at *2 (W.D. La. Mar. 5, 2002), report and recommendation adopted, No. CV , 2002 WL (W.D. La. Apr. 24, 2002); Corley v. Entergy Corp., No. 1:98-CV-2006, 2004 WL , at *3 (E.D. Tex. Apr. 14, 2004). Second, Mr. Matthews does not adjust the 2004 appraisal for 12 years of market changes. Although Mr. Matthews updates the ATF value, he does not explain why no update is necessary for the other three factors. Matthews Report 44, 66. This is particularly concerning because the California Court of Appeals found that both the use and corridor factors shifted over time. Union Pac. R.R. Co. v. Santa Fe Pac. Pipelines, Inc., 231 Cal. App. 4th 134, (2014). Third Mr. Matthews method has never been used before and lacks any independent evidence of reliability. At his deposition, Mr. Matthews testified that he could not recall any previous times he had based his appraisal off of a decade-old appraisal. Docket No Ex. 4 ( Matthews Depo. ) at Even more problematically, Mr. Matthews testified that he has never performed a reverse ATF analysis. Id. 171:14 172:13. 4 Plaintiffs argue that the pipeline itself does not follow a continuous railroad corridor. Docket No Regardless of whether this is true, this argument critiques the appropriateness of the ATF method in the rent litigation it does not strengthen its applicability here. CV-90 (06/04) Page 11 of 34

43 (43 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 1243 of of 3465Page ID #:8330 Although Mr. Matthews stated that the methodology itself is common, he admitted that he was unique among appraisers in applying it to ATF. Id. 173:10 174:12. No matter how common the basic principle, Mr. Matthews application to this type of valuation is unique and untested. Yet, despite his lack of past experience, Mr. Matthews could not identify any peer-reviewed literature discussing a reverse ATF analysis. Id. 172:25 173:10; 173:24 174:5. Likewise, Mr. Marchitelli confirms that his methodology was never intended to value adjoining properties and cannot be reversed to do so. Marchitteli Rebuttal Report at 7, 9. Fourth, Mr. Matthews developed this method specifically for litigation. See Daubert, 43 F.3d at 1317 ( [I]n determining whether proposed expert testimony amounts to good science, we may not ignore the fact that a scientist s normal workplace is the lab or the field, not the courtroom or the lawyer s office. ). While the term junk science may be unduly pejorative, the fact is that Mr. Matthews invented this methodology for this case. See Clausen v. M/V NEW CARISSA, 339 F.3d 1049, 1056 (9th Cir. 2003) (opinions prepared for litigation are unreliable, particularly absent any proof of peer review or publication); Feduniak v. Old Republic Nat l Co., No. 13-CV BLF, 2015 WL , at *4 (N.D. Cal. May 1, 2015) (fact that new property valuation method was created for purposes of litigation undermined court s confidence in its reliability). And he has not offered any other objective, verifiable evidence that the testimony is based on scientifically valid principles. The indices of peer review or publication are absent. At the hearing, Plaintiffs stressed that these criticisms impact the testimony s weight, not its admissibility. But even under class certification s tailored Daubert standard, the Court may only admit testimony that satisfies a threshold of reliability. Here, because Mr. Matthews method has never been used to value property before and likely never will be used again Feduniak, 2015 WL , at *5, it is not sufficiently reliable under Rule 702. Therefore, even under the tailored Daubert standard, Mr. Matthews opinion fails because it is not sufficiently reliable. The Court grants Kinder Morgan s motion. C. Plaintiffs Motion to Strike Kinder Morgan Expert Kelly Melle CV-90 (06/04) Page 12 of 34

44 (44 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 1344 of of 3465Page ID #:8331 Plaintiffs moved to strike Kinder Morgan s Declaration of Kelly Melle ( Melle Declaration ) and its attached exhibits (Docket Nos , , ) on the basis that Kinder Morgan did not provide his timely expert disclosures under Federal Rule of Civil Procedure 26(a)(2). Docket No. 242 at 1. Specifically, Plaintiffs argue that the Court s September 20, 2016, order required the parties to serve expert disclosures by November 28, Id. Plaintiffs argue that the Court should strike Mr. Melle s declaration because Kinder Morgan did not provide any such disclosures. Id. In response, Kinder Morgan argues that Mr. Melle is not an expert witness and that his declaration merely authenticates two exhibits that demonstrate existing expert opinion in the record. Docket No. 254 at 1. Mr. Melle s declaration explains that Kinder Morgan asked him to map and assess a sample portion of Union Pacific s right-of-way in terms of the different methods by which Union Pacific purports to have obtained its property interests in the right-of-way. Melle Decl. 3. Exhibit G depicts Union Pacific s parcels containing the right-of-way and the pipeline s location in the right-of-way. Id. 10. Exhibit V depicts in general terms the beginning and ending points of the pipeline segment adjacent to Hinshaw s property, as it was identified and valued by Kinder Morgan s appraisal expert, Richard Marchitelli, during the 2004 Rent Litigation. Id. 12. Kinder Morgan states that these two exhibits support the opinions already proffered by its title expert, Lawrence Lacombe ( Lacombe ), and its valuation expert, Mr. Marchitelli. Docket No. 254 at 2. Federal Rule of Civil Procedure 26(a)(2)(B) provides that parties must disclose their expert witnesses identities, along with written reports that must contain... any exhibits that will be used to summarize or support them.... But here, Mr. Melle did not offer expert testimony. Instead, he created demonstrative exhibits to support Kinder Morgan s experts analysis. This does not fall within Rule 26(a)(2)(B) s scope. In sum, the Court denies the motion to strike these declarations. CV-90 (06/04) Page 13 of 34

45 (45 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 1445 of of 3465Page ID #:8332 II. RULE 23(a) PREREQUISITES The Court finds that Plaintiffs satisfy Rule 23 s numerosity and commonality requirements, but cannot satisfy Rule 23 s typicality and adequacy requirements. A. Numerosity Rule 23(a)(1) requires that a class be sufficiently numerous such that it would be impracticable to join all members individually. To determine whether a proposed class is sufficiently numerous, a court must examine the specific facts because the numerosity requirement imposes no absolute limitations. Gen. Tel. Co. of the Nw. v. EEOC, 446 U.S. 318, 330 (1980). The Court notes that Judge Campbell recently denied class certification in the related Arizona litigation. Valenzuela v. Union Pac. R.R. Co., 2017 WL , at *1 (D. Ariz. Feb. 21, 2017) ( Valenzuela ), vacated in part pending consideration of Rule 23(c)(4) certification (Mar. 3, 2017). Yet Judge Campbell still found the numerosity requirement satisfied because the evidence suggested that there are several hundred parcels of property adjacent to portions of the right-of-way acquired through the 1875 Act and containing the pipeline. Id. at *3. Here, Plaintiffs argue that the class comprises at least several hundred adjacent landowners. Mot. at 13. In support, Plaintiffs submit an attorney declaration based on a review of valuation maps, alignment sheets, taxlot shapefiles, assessor ownership information, and Kinder Morgan s Geographic Information System ( GIS ) data. Mot., Ex. B, Decl. of Michael Smith ( Smith Decl. ) The declaration states that there are 100 parcels and landowners adjacent to Union Pacific railroad right of way acquired pursuant to condemnation proceedings on the same side of the center line of the right of way where a Kinder Morgan petroleum pipeline is located... Id The declaration also states that there are at least several hundred parcels and landowners that are adjacent to Union Pacific railroad right of way acquired pursuant to one or more of the Land Grants on the same side of the center line of the right of way where a Kinder Morgan petroleum pipeline is located. Id. 11, 13. CV-90 (06/04) Page 14 of 34

46 (46 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 1546 of of 3465Page ID #:8333 Kinder Morgan argues that Plaintiffs have not identified the number of landowners who own under right-of-way acquired by pre-1871 or 1875 Act, or condemnation.... Kinder Morgan Opp n at 15. Therefore, they cannot satisfy numerosity. Id. Union Pacific does not contest numerosity. Union Pacific Opp n. The Court finds that the proposed class satisfies the numerosity requirement. Although Plaintiffs have not precisely identified the number and makeup of proposed class members, that inquiry goes more towards typicality. At this stage, it is sufficient that Plaintiffs have shown the proposed class likely includes several hundred members. See In re Badger Mountain Irrigation Dist. Sec. Litig., 143 F.R.D. 693, 696 (W.D. Wash. 1992) ( A reasonable estimate of the number of purported class members satisfies the numerosity requirement... ). B. Commonality Rule 23(a)(2) requires some questions of law or fact common to the class. A common question must be capable of classwide resolution. Dukes, 564 U.S. at 350. This means that the determination of its truth or falsity will resolve an issue that is central to the validity of each of the claims in one stroke. Id. Furthermore, mere pleading of common issues is insufficient the moving party must show proof that a common question exists. Id. at 351, 359. Here, Plaintiffs have proposed eight common issues: whether Union Pacific lacks sufficient property interests in the subsurface of its right-of-way to convey property rights in that subsurface to Kinder Morgan; whether the commercial pipeline underneath Union Pacific s right-of-way is a railroad purpose under the federal land grants or condemnation; whether Defendants knew or had reason to know CV-90 (06/04) Page 15 of 34

47 (47 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 1647 of of 3465Page ID #:8334 that Union Pacific did not possess a sufficient ownership interest in the subsurface underneath its right-of-way to grant easements or other property rights to Kinder Morgan; whether Union Pacific attempted to grant easements in the subsurface of its right-of-way to Kinder Morgan; whether Union Pacific collected rent from Kinder Morgan for these easements; whether Union Pacific lacks property interests in the subsurface of its right-of-way to convey property rights in the subsurface beneath its right-of-way to Kinder Morgan; whether Defendants concealed their actions; whether Defendants acted with malice and reckless indifference to the rights of Plaintiffs and the members of the Class; and whether Defendants have profited or been unjustly enriched by their collection of rents or profits derived from property owned by Plaintiffs and members of the Class. Mot. at Union Pacific does not challenge commonality. Union Pacific Opp n. Kinder Morgan argues that courts routinely find commonality absent in right-of-way cases because significant factual and legal variations exist as to (1) the extent of the railroads rights in the disputed right-of-way and (2) the putative class members rights. Kinder CV-90 (06/04) Page 16 of 34

48 (48 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 1748 of of 3465Page ID #:8335 Morgan Opp n at 16. In analyzing the same proposed common issues, Judge Campbell found the commonality requirement satisfied with respect to the first three questions. Valenzuela, 2017 WL , at *4. He also found that Defendants did not dispute the next two questions whether Union Pacific attempted to grant easements in the subsurface to Kinder Morgan, and whether Union Pacific collected rent for Kinder Morgan. Id. at *3 n.4. He found that the last three questions required class-member-specific inquiries into Defendants relationships with particular class members. Id. The Court agrees with Judge Campbell that Plaintiffs first three proposed issues whether Union Pacific acquired rights in the subsurface, whether Kinder Morgan s pipeline fulfills a railroad purposes, and whether Union Pacific s knew its rights were limited are common issues capable of class-wide resolution. These threshold issues must be answered in connection with every class member s claims; therefore, class resolution would generate common answers apt to drive the resolution of the litigation. Dukes, 564 U.S. at 350 (emphasis and internal quotations omitted). Furthermore, Plaintiffs have presented significant proof that these issues exist. The California Court of Appeals decision raises questions about the first two issues. See Union Pac. R.R., 231 Cal. App. 4th at And Plaintiffs have submitted Union Pacific letters that show Union Pacific may have known that it lacked the right to convey subsurface rights to Kinder Morgan. See Mot., Exs Therefore, the Court finds that commonality is met. C. Typicality Rule 23(a)(3) requires that the claims or defenses of the representative parties are typical of the claims or defenses of the class. To meet the typicality requirement, the plaintiffs must show that: (1) other members have the same or similar injury ; (2) the action is based on conduct which is not unique to the named plaintiffs ; and (3) other class members have been injured by the same course of conduct. Ellis, 657 F.3d at 984. Claims must be reasonably co-extensive with those of absent class members but do not need to be substantially identical. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th CV-90 (06/04) Page 17 of 34

49 (49 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 1849 of of 3465Page ID #:8336 Cir. 1998). Plaintiffs may satisfy their burden through pleadings, affidavits, or other evidence. See Lewis v. First Am. Ins. Co., 265 F.R.D. 536, 556 (D. Idaho 2010). Here, Defendants argue that numerous individualized inquiries mean that neither the Wells nor Ms. Hinshaw are typical plaintiffs. Each one has unique title histories, levels of notice, and susceptibility to affirmative defenses. Kinder Morgan Opp n at 16 19; Union Pacific Opp n at 3 7. The Court addresses the chain-of-title argument here, but discusses notice and affirmative-defense in its Rule 23(b)(3) analysis. Defendants argue that the Wells are atypical plaintiffs because their deed cuts off any interest in the right-of-way and a prior owner conveyed any interest in the right-ofway to Union Pacific via a quitclaim deed. First, they argue that the Wells deed cuts off any interest in the right-of-way. Kinder Morgan Opp n at 18. They rely on deed language that their properties lie northeasterly of the right-of-way. Kinder Morgan Opp n, Ex. F. ( Lacombe Report ) at 24, Ex. 9; see also Warden v. S. Pasadena Realty & Imp. Co., 178 Cal. 440, 442, 174 P. 26 (1918) (deed that conveyed property along the southerly line of a right of way did not convey to center). Second, one of the Wells predecessors in title conveyed land to the railroad via a quitclaim deed. Id. at 24, Ex. 11. The deed s language suggests that the Wells predecessor gave up any title it may have had to the right-of-way. 5 Although Mr. Wells testified that he believed the quitclaim deed was invalid, his subjective, lay assessment cannot overcome the evidence. See Kinder Morgan Opp n, Ex. I, Deposition of Martin Wells ( Wells Depo. ) at The July 15, 1936 quitclaim deed conveyed a Riverside and a San Bernardino parcel: [I]n the County of Riverside... a strip of land, 100 feet in width, lying northeasterly of and contiguous to the center line of the Southern Pacific Railroad Company s main track [I]n the County of San Bernardino... a strip of land, 100 feet in width, lying northeasterly of and contiguous to the center line of the Southern Pacific Railroad Company s main track.... Lacombe Report, Ex. 11. CV-90 (06/04) Page 18 of 34

50 (50 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 1950 of of 3465Page ID #:8337 Furthermore, such dispute strengthens the argument against typicality because it shows that the Wells are unique among putative class members. If this quitclaim deed is valid an assertion that Plaintiffs do not challenge then the Wells never acquired any interest in the land underlying the right-of-way. Defendants similarly argue that Ms. Hinshaw s claims are atypical because her property originates from a grant that conveyed only an interest in the land outside the right-of-way. Kinder Morgan Opp n at 18 (citing Lacombe Report at 25 26). Defendants expert argues that the April 4, 1879, grant to Ms. Hinshaw s predecessor did not include any interest within the right-of-way. Lacombe Report at 25 (citing Lacombe Report, Ex. 12). The Court does not decide this argument, but it does note that whether Ms. Hinshaw s predecessor received any interest in the right-of-way is unique to her claims. In response, Plaintiffs argue that Defendants ability to raise defenses does not defeat typicality or deprive the Court of jurisdiction. Reply at But these title issues are more than defenses they are prerequisites to class membership, which requires that class members own land in fee adjoining and underlying the railroad right-of-way.... Docket No. 235 at 1; see also Kirkman v. N. Carolina R. Co., 220 F.R.D. 49, 53 (M.D.N.C. 2004) (in railroad right-of-way case, no typicality when each potential class member would have to establish individual property rights ). Defendants evidence suggests that Plaintiffs cannot show that the Wells and Ms. Hinshaw have the same or similar injury as other class members. See Ellis 657 F.3d at 984. Furthermore, similar cases have declared plaintiffs claims atypical of the proposed class. Most recently, in the related Arizona litigation, Judge Campbell found that it is likely that many class members will face unique facts that Plaintiffs equally unique circumstances would not reflect. Valenzuela, 2017 WL , at *8. Other right-ofway cases have likewise determined that the necessary differences between the proof of the various class members claims so overwhelm the common issues as to make it unlikely that any individual or group of individuals could have claims typical of the class. Sustainable Forest, 2005 WL , at *8 (internal quotations omitted); see also Kirkman, 220 F.R.D. at 53 ( individual property interest questions defeated typicality, particularly in the absence of evidence that the named plaintiff s deed [was] CV-90 (06/04) Page 19 of 34

51 (51 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 2051 of of 3465Page ID #:8338 similar to the deeds held by other potential class members, or that there [was] a limited range of possible deed language ); Chambers v. MCI Worldcom Network Serv., Inc., No. 00-C-348-C, 2001 WL , at *7 (W.D. Wis. Mar. 2, 2001) ( Even if the railroad is limited to railroad purposes for the entire length of the right-of-way, each class member must demonstrate that he or she possesses the underlying interest in the right-of-way. The proposed class member obtained their property interests through such a large number of instrument that plaintiffs are not typical of the class. ). 6 Plaintiffs rely on Koyle v. Level 3 Commc ns, Inc., No. CV S-BLW, 2005 WL , (D. Idaho Dec. 1, 2005). Koyle certified a class of railway-adjacent property owners alleging that the defendant improperly laid fiber-optic cable over their properties. Id. at *1. Koyle found that the named plaintiffs were typical of the proposed class because the named plaintiffs all own land in fee simple that is subject to a Union Pacific easement. The named plaintiffs are thus in the same position as the proposed class members, and will be seeking the same relief. Id. at *1. Here, in contrast, Defendants evidence shows that Plaintiffs may not own the land necessary to bring their claims. Therefore, the Court finds that Plaintiffs have not shown by a preponderance of the evidence that their claims are typical of the proposed class. Defendants have put forward credible evidence that suggests Plaintiffs do not own the necessary interest to bring typical claims. D. Adequacy Rule 23(a)(4) requires that the representative party fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a)(4). This requirement is grounded in constitutional due process concerns: absent class members must be afforded adequate representation before entry of a judgment which binds them. Evans v. IAC/Interactive Corp., 244 F.R.D. 568, 577 (C.D. Cal. 2007) (quoting Hanlon, 150 F.3d at 1020). Representation is adequate if (1) the named plaintiffs and their counsel are able to prosecute the action vigorously; (2) the named plaintiffs do not have conflicting interests 6 Judge Campbell likewise found these cases persuasive. Valenzuela, 2017 WL , at *7. CV-90 (06/04) Page 20 of 34

52 (52 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 2152 of of 3465Page ID #:8339 with the unnamed class members; and (3) the attorney representing the class is qualified and competent. Lerwill v. Inflight Motion Pictures, Inc., 582 F.2d 507, 512 (9th Cir. 1978). The adequacy requirement often merges with the commonality and typicality requirements. See Amchem, 521 U.S. at 626 n.20. This is because the other requirements serve as guideposts for determining whether... maintenance of a class action is economical and whether the named plaintiff s claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence. Id. (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 n. 13 (1982)). Then the adequacy requirement additionally factors in competency and conflicts of interest. Id. Because of this overlap, similar cases have found that an atypical plaintiff cannot be an adequate one. For instance, Judge Campbell held that the named plaintiffs claims were not sufficiently typical of the class claims to represent the class adequately. Valenzuela, 2017 WL , at *8. Kirkman and Chambers reached identical conclusions. 220 F.R.D. at 53; 2001 WL , at *7 8. Therefore, because the Court finds that Plaintiffs claims are atypical of the proposed class, it also finds that Plaintiffs are inadequate representatives. The Court need not question the diligence of the Plaintiffs, nor the demonstrated experience and capability of counsel. In sum, the Court finds that Plaintiffs cannot meet Rule 23(a) s requirements. CV-90 (06/04) Page 21 of 34

53 (53 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 2253 of of 3465Page ID #:8340 III. RULE 23(b)(3) REQUIREMENTS Subdivision (b)(3) encompasses those cases in which a class action would achieve economies of time, effort, and expense, and promote uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about other undesirable results. Kamm v. Cal. City Dev. Co., 509 F.2d 205, 211 (9th Cir. 1975). This subdivision permits certification where common questions of law and fact predominate over questions affecting individual members, and where a class action is superior to other means to adjudicate the controversy. Fed. R. Civ. Proc. 23(b)(3). The Court finds that, even if the proposed class satisfied Rule 23(a), the putative class does not meet Rule 23(b)(3) s requirements: despite the presence of some commonality, individual issues particularly land ownership and affirmative defenses will inevitably predominate over common ones. As a result, the putative class cannot satisfy Rule 23(b)(3) s predominance or superiority requirements. A. Predominance The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation. Amchem, 521 U.S. at 623 (citation omitted). This requires courts to carefully scrutinize the relationship between a case s common and individual questions. Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036, 1045 (2016). An individual question requires putative class members to present evidence that varies from member to member.... Id. In contrast, a common question is one where the same evidence will suffice for each member to make a prima facie showing [or] the issue is susceptible to generalized, class-wide proof. Id. (alterations in original). The test asks whether the common, aggregation-enabling, issues in the case are more prevalent or important than the non-common, aggregation-defeating, individual issues. Id. (internal quotations omitted). The test is met when one or more of the central issues are common to the class and predominate over the individual issues. This requirement is far more demanding than Rule 23(a) s commonality requirement. Keegan, 284 F.R.D. at 526 (quoting Amchem Prods., 521 U.S. at ). CV-90 (06/04) Page 22 of 34

54 (54 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 2354 of of 3465Page ID #:8341 The predominance inquiry begins with the elements of the underlying cause of action. Erica P. John Fund, Inc. v. Halliburton Co., 563 U.S. 804, 809, (2011). Here, Plaintiffs bring claims for declaratory judgment, trespass, quiet title, ejectment, inverse condemnation, quasi-contract (unjust enrichment), unlawful competition, and accounting. Consol. Compl. at Plaintiffs argue that three already-discussed common issues will dominate the litigation: (1) whether Union Pacific lacked sufficient rights to the subsurface, (2) whether Kinder Morgan s pipeline fulfills a railroad purposes, and (3) whether Union Pacific s knew its rights were limited. Mot. at 20. Plaintiffs argue that these predominant issues will focus on Defendants conduct, thus making common resolution preferable. Defendants argue that the issues of individual ownership and affirmative defenses will dwarf any common issues. Kinder Morgan Opp n at 20 27; Union Pacific Opp n at ) Common issues do not predominate because each of Plaintiffs claims require an inquiry into individual ownership and the source of Union Pacific s ownership. Each of Plaintiffs claims requires that class members own the subsurface beneath the railroad s right-of-way. For instance, the declaratory judgement claim asks the Court to determine the parties respective rights and duties to real property situated in the subsurface beneath the Railroad s right-of-way. Consol. Compl. 80. Likewise, trespass, quiet title, ejectment, and inverse condemnation all require ownership See Whittaker v. Otto, 248 Cal. App. 2d 666, 672 (1967) (trespass); Delino v. Platinum Cmty. Bank, 628 F. Supp. 2d 1226, 1237 (S.D. Cal. 2009) (quiet title); Baugh v. Consumers Assocs., Ltd., 241 Cal. App. 2d 672, 675 (1966) (ejectment); City of Los Angeles v. Superior Court, 194 Cal. App. 4th 210, 221 (2011) (inverse condemnation). Finally, quasi-contract and accounting both rely on class members ownership of subsurface rights to the right-of-way. Consol. Compl , , Plaintiffs argue that their claims for declaratory judgment, quiet title, ejectment, accounting are all suitable for class resolution because they challenge Defendants conduct towards the whole class. Mot. at 22. But this ignores the claims ownership requirements: unless the putative class members own the property at issue, Defendants cannot have violated their rights. CV-90 (06/04) Page 23 of 34

55 (55 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 2455 of of 3465Page ID #:8342 Not only do Plaintiffs claims require individual ownership, but each class member s ownership is an individual issue that is not susceptible to class-wide proof. To determine whether a putative class member owns an underlying interest and thus falls within the class the Court would need to perform a chain-of-title analysis that examined the source of each owner s interest. See Lacombe Report at 7 8. This would be necessary to determine whether the landowner or any of its predecessors granted an easement to Union Pacific. See Lacombe Report at It would also be necessary to uncover any potential cut-off language in the deed or if there was a prior grant to Union Pacific. Finally, the Court might have to analyze whether California s centerline presumption applied. The Court s analysis of the Wells and Hinshaw s interests shows that a chain-of-title analysis and subsequent legal determinations will often be necessary to determine ownership interests. Furthermore, the Court would not only have to conduct an individual inquiry into putative class members parcels it would also need to analyze the source of Union Pacific s interest. Putative class members own land in fee adjoining and underlying the railroad right-of-way granted under the Land Grants, or through condemnation. Docket No. 235 at 1. But Union Pacific also alleged in its counterclaim that it may have also acquired small portions of its railroad right-of-way adjacent to the Alleged Plaintiff Parcels by private conveyance(s). Docket No. 133, Counterclaims, 28. And the Court s prior order did not dismiss Union Pacific s quiet title claim for those parcels it acquired by private conveyance. Docket No. 175 at 14. Therefore, the Court would also have to consider the source of Union Pacific s interest to determine whether a putative class member s ownership interest fell within the class definition. CV-90 (06/04) Page 24 of 34

56 (56 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 2556 of of 3465Page ID #:8343 The following matrix further illustrates the complexity of the ownership issue. It tracks Union Pacific s interest versus that of adjacent owners: Source of Union Pacific s Interest Pre-1875 Grant 1875 Grant Condemnation Private Grant Deed/License Landowner s Interest Dual License Cut-Off Language Centerline Presumption Prior Grant to Union Pacific For each parcel in the putative class, to assess whether it is within the class definition, the Court would have to determine where the parcel falls in the matrix. The answer could involve multiple cells depending on a given owner s title history. Plainly, this determination could not be made on a class basis. Moreover, as discussed below, there is a further overlay that would entail defenses, including statute of limitations, waiver, and laches, unique to each owner. And the foregoing does not even attempt to chart all of the factors affecting ownership, nor all the factors that could stand as a defense. Furthermore, Plaintiffs cannot use Ms. Straup s expert testimony to defeat this individualized inquiry. Ms. Straup purports to identify specific owners of specific land.... Reply at 6. To do so, she primarily relies on GIS data, valuation maps, and tax assessor data. But Defendants present evidence that these sources do not accurately represent legal boundaries and ownership. See Lacombe Report at 15 17; Geographic CV-90 (06/04) Page 25 of 34

57 (57 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 2657 of of 3465Page ID #:8344 Information Services, County of San Bernardino (Aug. 2011), (disclaiming the use of GIS data for non-tax purposes). They also present expert testimony that her method was inaccurate with respect to the Wells property. Lacombe Report at While the Court does not rule that Ms. Straup s method is so unreliable as to be inadmissible, Defendants contrary evidence shows that her testimony is only a starting point she does not engage in the chain-of-title analysis necessary to conclusively determine individual ownership. Therefore, even crediting her testimony, Defendants could still contest that evidence with property-specific facts showing that her opinion on a particular parcel is incorrect. Individual issues would still predominate. Valenzuela, 2017 WL , at *12; see also Chambers, 2001 WL , at *5 (extensive factual inquiry required despite use of valuation maps, and property tax data). The Court also rejects Plaintiffs argument that its finding improperly injects an ascertainability requirement into this case. See Mot. at 11; Reply at 4 5. The Ninth Circuit recently held that the language of Rule 23 does not impose a freestanding administrative feasibility prerequisite to class certification. Briseno v. ConAgra Foods, Inc., 844 F.3d 1121, 1126 (9th Cir. 2017). Plaintiffs, citing Briseno, characterize the individual ownership issues as a manageability concern that can be addressed via claims administration. Mot. at 11. Briseno concerned a class action for false advertising of cooking oil. 844 F.3d at The court held that defendants could individually challenge the claims of absent class members through the claims administration process. Id. at But here, as Judge Campbell found, property ownership is a threshold liability concern that requires a legal determination. See Valenzuela, 2017 WL , at *18. Therefore, the Court itself not claims administrators must rule on them. 7 There is nothing administrative about the findings of ownership required here. The inescapable conclusion is that the parcel-specific issues in terms of both Union Pacific s ownership and the owner s rights dwarf any issue that might cut across all parcels and qualify as a common issue. This is especially true because the 7 Plaintiffs reliance on Koyle is similarly unpersuasive. Reply at 3. Unlike in Koyle, the Court has already determined the key common issues. See 2005 WL at *3 4. This reduces the prominence of these issues moving forward. CV-90 (06/04) Page 26 of 34

58 (58 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 2758 of of 3465Page ID #:8345 Court has already determined as a matter of law that Union Pacific could only convey rights in the subsurface if they furthered a railroad purpose. Docket No Thus, as Judge Campbell found, the effort to litigate the property-specific issues of individual class members will greatly outweigh the relatively modest amount of trial time and effort required for the three common issues.... Valenzuela, 2017 WL , at *11. Other courts analyzing this issue have reached similar conclusions. See, e.g., Kirkman, 220 F.R.D. at 54 (common issues did not predominate on claims for trespass, unjust enrichment, and reverse condemnation because individualized property inquiries would be necessary to establish liability); Sustainable Forest,2005 WL , at *10 11 (need for transaction-specific inquiry into source of railroad rights-of-way precluded predominance). 2) Plaintiffs cannot rely on the centerline presumption to establish classwide ownership because the presumption requires reference to the conveyance itself. Plaintiffs argue that California s centerline presumption permits class treatment of ownership. Reply at 7 9. Union Pacific argues that Plaintiffs cannot rely on the presumption because it is not always applicable. California law recognizes a rebuttable centerline presumption, under which [a]n owner of land bounded by a road or street is presumed to own to the center of the way, but the contrary may be shown. Cal. Civ. Code 831. The general rule is that [i[n the absence of any qualifying term the designation in a conveyance of any physical object or monument as a boundary implies the middle or central point of such boundary. Faus v. Nelson, 241 Cal. App. 2d 320, (1966). The presumption applies to railroad easements. Id. at 324. To apply, the conveyance must designate the object itself as a boundary. Millyard v. Faus, 268 Cal. App. 2d 76, 83 (1968). Millyard rejected plaintiffs attempts to apply the centerline presumption when their deed s metes and bounds did not designate the railroad right-of-way as a boundary. Id. at Therefore, the presumption does not apply merely because the property abuts a right-of-way. Id. at 83. CV-90 (06/04) Page 27 of 34

59 (59 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 2859 of of 3465Page ID #:8346 Here, the presumption does not allow class-treatment of ownership because the presumption requires individualized reference to the conveyance itself. Furthermore, even if the Court were to apply the presumption class-wide, the presumption would remain rebuttable. Therefore, Defendants could contest its application to individual class members. Individual issues would inevitably predominate. See Valenzuela, 2017 WL , at *12 (rejecting contention that Arizona s centerline presumption could substitute for individualized inquiry). The named Plaintiffs demonstrate how the centerline presumption rapidly becomes an individualized issue. For instance, Mr. Lacombe identified several ways in which Ms. Straup s report does not accurately represent the boundaries of the Wells parcels. Lacombe Report at Furthermore, the Wells deed states that their property lies northeasterly of the right-of-way. Kinder Morgan Opp n, Ex. F. ( Lacombe Report ) at 24, Ex. 9. Thus, under Millyard, their deed may not be subject to the centerline presumption because their deed s metes and bounds did not designate the railroad right-of-way as a boundary. Likewise, Mr. Lacombe suggests that Ms. Hinshaw s predecessor-in-interest did not receive an interest in land adjoining the right of way. Id. at Hence, the centerline presumption would not apply to her. Therefore, even a brief analysis of the named Plaintiffs claims shows that an individualized inquiry will be necessary with respect to the centerline presumption. Plaintiffs contrary argument rests on inapplicable case law. First, they cite a previous decision by this Court s that an individualized inquiry would not defeat predominance. Reply at 8 (citing Walker v. Life Ins. Co. of the Sw., No. CV JVS RNBX, 2012 WL , at *15 (C.D. Cal. Nov. 9, 2012)). But Walker concerned claims for fraudulent concealment and violation of California s Unfair Competition Law with respect to insurance policies. Id. at *1. The Court noted that case law conclusively establishes the presumption that reliance may be presumed where materiality is found... especially in connection with material omission cases. Id. at *15. Likewise, under the UCL, California law unequivocally does not require individualized proof of deception, reliance and injury. Id. at *14. In contrast, here case law suggests that an individualized inquiry is necessary. See, e.g., Melton ex rel. Dutton v. Carolina Power & Light Co., 283 F.R.D. 280, (D.S.C. 2012) ( [A] title search is the only reliable way to determine the relevant class members. ); Chambers, 2001 WL , at *5 ( It is not sufficient CV-90 (06/04) Page 28 of 34

60 (60 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 2960 of of 3465Page ID #:8347 that a person own land adjacent to the cable side of the right-of-way: that person must establish also that he or she owns the underlying (or superior) interest in the right-of-way. ). Plaintiffs also rely on two Court of Federal Claims cases. Reply at 8 9 (citing Thompson v. United States, 101 Fed. Cl. 416, 431 (2011); Macy Elevator, Inc. v. United States, 97 Fed. Cl. 708, 720 (2011)). But the Thompson plaintiffs dropped their class allegations. 101 Fed. Cl. at 422. Furthermore, they proffered warranty or quitclaim deeds... to establish fee simple absolute ownership of the property underlying and abutting the Line. 101 Fed. Cl. at 430. Therefore, although Thompson held that a full chain-of-title analysis was unnecessary, it did so because the plaintiffs had already proffered individual deeds for each property at issue. Id. at Therefore, Thompson supports the Court s holding that an individualized inquiry is necessary. Macy Elevator is similarly unavailing because it concerned Indiana s centerline presumption. Macy Elevator held that, under Indiana law, where no known deed includes a description of the right-of-way, those landowners holding property abutting a railroad right-of-way have a present fee interest to the center of the right-of-way, subject to the railroad s easement. 97 Fed. Cl. at 720. In contrast, Millyard explicitly held that California law requires the deed to designate the right-of-way as a boundary. 268 Cal. App. 2d at Therefore, Macy Elevator does not apply because it contradicts settled California law. Plaintiffs argue that Union Pacific, in the underlying rent litigation, previously argued that only title and possession is necessary to establish a prima facie case of ownership.... Reply at 9. But even if the Court were to accept that argument, ownership does not automatically trigger the centerline presumption. See Millyard, 268 Cal. App. 2d at Furthermore, Defendants would still need an opportunity to rebut the presumption. Finally, at the hearing, Plaintiffs argued that an individualized inquiry flips the burden onto them and renders the presumption meaningless for class certification. But there is no special centerline presumption for class-certification purposes: class certification neither changes the requirement that a conveyance designate the right-of- CV-90 (06/04) Page 29 of 34

61 (61 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 3061 of of 3465Page ID #:8348 way as a boundary, nor does it alter the presumption s rebuttable nature. In sum, the Court holds that Plaintiffs cannot use the centerline presumption to overcome the need for individualized inquiries. 3) Defendants affirmative defenses also require individualized determinations as to whether each class member granted Kinder Morgan a dual easement or had notice of the pipeline. Finally, individual issues predominate over common ones because the relevant defenses apply individually. Although the mere existence of affirmative defenses does not defeat certification, a class cannot be certified on the premise that [Defendants] will not be entitled to litigate [their] statutory defenses to individual claims. Dukes, 564 U.S. at 367. Kinder Morgan argues that dual easements, statute of limitations, consent, acquiescence, waiver, estoppel, and laches all require individual inquiry. Kinder Morgan Opp n at Plaintiffs argue that these defenses raise common issues and that Plaintiffs claims of fraudulent concealment will rebut any knowledge-based defenses class wide. Mot. at First, Kinder Morgan asserts that Defendants dual-easement defenses will require individualized inquiry. Kinder Morgan Opp n at 25. Because of ambiguities in Union Pacific s right-of-way under the 1875 Act, Kinder Morgan also entered into easements with adjacent landowners. Kinder Morgan Opp n, Ex. D at These easements expressly permit a pipeline under the right-of-way. Lacombe Report at 27 28, Exs. 17, 18. Kinder Morgan states that it does not keep a separate database of dual easements; therefore, it would need to identify these easements via a property-by-property process. See Kinder Morgan Opp n, Wynn Decl. 5 6, Ex. D. Plaintiffs argue that the Court should manage this issue as a subclass because the dual-easement defense only covers the 1875 Act land. Reply at 10. But identification of such a subclass would itself be a factually-intensive effort. Therefore, while the dual-easements defense cannot alone 8 The Court refers to the exhibit pagination for this exhibit. CV-90 (06/04) Page 30 of 34

62 (62 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 3162 of of 3465Page ID #:8349 defeat certification, it weighs against certification. Second, Kinder Morgan argues that the statute of limitations raises individualized issues because it runs against the land and any application of the discovery rule would also require an individualized inquiry. Kinder Morgan Opp n at 26. Kinder Morgan likewise argues that consent, acquiescence, waiver, estoppel, and laches are all noticebased defenses. Id. at 27. Hence, these too require an individualized inquiry. Plaintiffs argue that Defendants concealed that the pipeline did not serve a railroad purpose; because Defendants took this action with respect to the class as a whole, the statute of limitations issue can be adjudicated on a class-wide basis. Repl at They rely on Nitsch v. Dreamworks Animation SKG Inc., which found predominance satisfied when the plaintiffs offered generalized evidence of concealment and the defendants responded with generalized evidence. 315 F.R.D. 270, (N.D. Cal. 2016). Although the defendants offered some individualized evidence, Nitsch concluded that the relatively small number of individual inquiries which might be required do not defeat predominance. Id. at 312. But here, in contrast to Nitsch, Defendants evidence of notice will likely be highly individualized. The discrepancies between the Wells and Ms. Hinshaw s notice illustrate this point. Mr. Wells has known about the pipeline for a long time, including its location underneath the right-of-way adjacent to his property. Wells Depo. 67:1 9. Yet Ms. Hinshaw only learned of the property when she received a letter from Plaintiffs counsel in this case. Union Pacific Opp n, Ex. E ( Hinshaw Depo. ) 43:3 47:1; 122: This contrast shows that notice of the pipeline as well as any notice of its purpose will likely vary between class members. Unlike in Nitsch, which focused on class-wide proof, the defenses here will likely require individualized proof of notice. Therefore, this Court agrees with Judge Campbell s conclusion: When one class member learned of the pipeline or of her rights in the right-of-way will not determine when other class members acquired such knowledge. And an individual property owner s knowledge will depend on a host of individual facts: what disclosures of the easement and pipeline is found in her chain of title, what posting of CV-90 (06/04) Page 31 of 34

63 (63 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 3263 of of 3465Page ID #:8350 the easement and pipeline is found on or near her property, what if anything she observed when Defendants performed installation or maintenance on the right-of-way adjacent to her property, whether there are above-surface pipeline structures on or near her property, whether she inhabited the property continuously or visited it only occasionally, and what other communications she had or information she acquired that might have informed her of the pipeline s presence. What is more, some of these defenses apply against the land, not the landowner, requiring an inquiry into what a class member s predecessors on the property knew and did. Valenzuela, 3027 WL , at *15. At the hearing, Plaintiffs argued that individual defenses should not defeat class certification per se. 9 But the Court does not find that individual defenses necessarily defeat class certification rather it finds that the existence of numerous individual defenses overwhelm Plaintiffs theories. Furthermore, these individual defenses remain even under the Plaintiffs theory of concealment; some class members may be subject to notice-based defenses regarding when they learned that the pipeline did not constitute a railroad purpose. In sum, the Court finds that the presence of affirmative defenses further show that individual issues predominate over common ones. This finding combined with need for an individualized ownership inquiry demonstrates that individual issues predominate over common issues. Therefore, the Court finds that Plaintiffs have not met their burden to show that the proposed class satisfies Rule 23(b)(3) s predominance 9 Plaintiffs rely on Williams v. Sinclair, 529 F.2d 1383, 1388 (9th Cir. 1975). Reply at 17, 19. Williams held that [t]he existence of a statute of limitations issue does not compel a finding that individual issues predominate over common ones. 539 F.2d at But Williams is easily distinguishable as securities-fraud case. Furthermore, Williams finding relied on a sufficient nucleus of common questions. Id. In contrast to Williams, here multiple affirmative defenses exist. Thus, these overwhelm common issues. CV-90 (06/04) Page 32 of 34

64 (64 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 3364 of of 3465Page ID #:8351 requirement. B. Superiority A court considers whether a class action would be superior to individual suits. Amchem, 521 U.S. at 615. This requires that the court evaluate alternative options. Hanlon, 150 F.3d at Rule 23(b)(3) provides a non-exhaustive list of factors relevant to the superiority analysis that includes the likely difficulties in managing a class action. Fed. R. Civ. P. 23(b)(3). Rule 23(b)(3) s non exclusive factors are: (A) class members interest in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the difficulties involved in the management of a class action. Here, the Court finds that common issues do not predominate. Therefore, given the scope and complexity of the individual issues, it necessarily follows that a class prosecution of the claims here would not be a superior vehicle. IV. ISSUE CLASS CERTIFICATION Rule 23(c)(4) allows a district court to certify a class action with respect to particular issues. In such issue class certification, the district court isolate[s] the common issues... and proceed[s] with class treatment of these particular issues. Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996). But this is appropriate only if the proposed issue class meets Rule 23 s other requirements and would materially advance the litigation. Tasion Commc ns, Inc. v. Ubiquiti Networks, Inc., 308 F.R.D. 630, 633 (N.D. Cal. 2015) Plaintiffs alternatively request issue-class certification under Rule 23(c)(4) with respect to each of the common issues. Mot. at They argue that this will streamline individual adjudications. Id. at 34. The Court denies Plaintiffs request. Although an issue class might resolve the CV-90 (06/04) Page 33 of 34

65 (65 of 66) Case 8:15-cv JVS-DFM Case: , 06/06/2017, Document ID: , 264 Filed DktEntry: 05/23/171-1, Page Page 3465 of of 3465Page ID #:8352 common issues already outlined, it would not advance the litigation. The Court has already resolved two of the three common issues as a matter of law. Therefore, as discussed, the thrust of this case is now individual ownership. An issue class would not help resolve this. CONCLUSION For the foregoing reasons, the Court denies Plaintiffs motion to certify. It also denies Union Pacific s motion to exclude Ms. Straup and Plaintiffs motion to exclude Mr. Melle. The Court grants Kinder Morgan s motion to exclude Mr. Matthews. 00 : 00 Initials of Preparer kjt CV-90 (06/04) Page 34 of 34

66 Case: , 06/06/2017, ID: , DktEntry: 1-2, Page 1 of 1 (66 of 66) Molly C. Dwyer Clerk of Court Office of the Clerk United States Court of Appeals for the Ninth Circuit Post Office Box San Francisco, California June 06, 2017 No.: D.C. No.: 8:15-cv JVS-DFM Short : Martin Wells, et al v. Union Pacific Railroad Company, et al Dear Appellant/Counsel This is to acknowledge receipt of your Petition for Permission to Appeal under 23(f). All subsequent letters and requests for information regarding this matter will be added to your file to be considered at the same time the cause is brought before the court. The file number and the title of your case should be shown in the upper right corner of your letter to the clerk's office. All correspondence should be directed to the above address pursuant to Circuit Rule 25-1.