EQT Production Company v. Magnum Hunter Production, Inc.

Filing 78

MEMORANDUM OPINION & ORDER: that plaintiff's 65 Objections to Judge Wier's 61 Order, are OVERRULED. Signed by Judge Joseph M. Hood on 7/19/17.(KJR)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
EQT PRODUCTION COMPANY,

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Plaintiff,
v.
MAGNUM HUNTER PRODUCTION
COMPANY,
Defendant.

Action No. 5:16-cv-150-JMH

MEMORANDUM OPINION
AND ORDER

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I. INTRODUCTION

This matter is before the Court upon Plaintiff EQT Production

Company’s Objections [DE 65] to United States Magistrate Judge
Robert E. Wier’s Memorandum Opinion and Order of May 25, 2017 [DE
43], wherein he precluded EQT from relying on any evidence that it
used to calculate its damages and failed to disclose to Magnum
Hunter.1

Defendant Magnum Hunter Production Company having filed

a Response [DE 69] at the Court’s behest and the Court being
otherwise sufficiently advised, this matter is now ripe for review.
For

the

reasons

stated

herein,

EQT’s

Objections

are

hereby

OVERRULED.

1
 EQT requested that the Court hold oral argument on its Objections. [DE
65].
Such a measure is unnecessary because EQT reiterates arguments
that have already been thoroughly analyzed in Judge Wier’s Memorandum
Opinion and Order [DE 43].
1

II. FACTUAL AND PROCEDURAL BACKGROUND
EQT and Magnum Hunter are in the business of producing and
selling oil and natural gas.

[DE 1, p. 1-2, ¶ 1-6].

Between 1996

and 2002, the predecessors in interest of both companies entered
into

eleven

Farmout

Agreements

(“FOAs”),

which

allocated

exploration and drilling rights on lands situated in Eastern
Kentucky.

[Id. at p. 2-5, ¶ 9].

Specifically, the FOAs allowed

Magnum Hunter to drill wells on lands owned or leased by EQT and
sell oil and/or gas produced from those wells.

[Id.].

In

exchange, EQT would receive a royalty from Magnum Hunter based on
those sales.

[Id.].

EQT alleges that Magnum Hunter breached the

terms of the FOAs by failing to pay the appropriate royalties, as
well as other fees.

[DE 1, p. 8, ¶ 26].

After discovery closed, the parties contacted Judge Wier and
requested a telephone conference to discuss a dispute that they
had been unable to resolve themselves.

[DE 41].

the requested conference on April 10, 2017.

Judge Wier held
[DE 43].

After

hearing arguments from the parties, he provisionally “exclude[d]
as a preclusive sanction under Rule 37(c) and (d), from further
proceedings in this case any evidence on which EQT relied to make
damages calculations that EQT did not produce to Magnum Hunter.”
[DE 43].

EQT filed a Motion for Reconsideration, which Judge Wier

denied in a written Memorandum Opinion and Order on May 25, 2017.

2

[DE 49, 54, 55, 61].

EQT then submitted the Objections currently

pending before the Court.

[DE 69].
III. ANALYSIS

A district court judge may refer non-dispositive pretrial
matters to a magistrate judge for resolution.
636(b)(1)(A); Fed. R. Civ. P. 72(a).

See 28 U.S.C. §

Once the magistrate judge

conducts the necessary proceedings and issues a written order
stating

his

or

her

decision,

“[a]

party

may

serve

and

file

objections to the order within 14 days after being served with a
copy.”

Fed. R. Civ. P. 72(a).

“The district judge in the case

must consider timely objections and modify or set aside any part
of the order that is clearly erroneous or is contrary to law.”
Id.

“A finding is clearly erroneous when the reviewing court on

the entire evidence is left with the definite and firm conviction
that a mistake has been committed.”2 Heights Cmty. Cong. V. Hilltop
Realty, Inc., 774 F.2d 135, 140 (6th Cir. 1985).

2
 Judge Wier treated this matter “as non-dispositive because … there is
no suggestion here that the exclusion DE #43 countenanced was dispositive
as to any specific claim.” [DE 61 at 18]. Although Magnum Hunter has
since moved for summary judgment on all of EQT’s claims, arguing that
EQT cannot prove damages without the excluded Enertia data, the Court
finds that Judge Wier appropriately characterized this issue as nondispositive. As the Court explains more fully in a separate Memorandum
Opinion and Order, the excluded Enertia data corresponds to parts of
EQT’s various claims. Its absence does not, at this juncture, dispose
of any claim in toto.
3

“A

general

objection,

or

one

that

merely

restates

the

arguments previously presented is not sufficient to alert the court
to alleged errors on the part of the magistrate judge.”
v. Martin, 304 F. Supp. 2d 934, 937 (E.D. Mich. 2004).

VanDiver
Stated

another way, “[a]n ‘objection’ that does nothing more than state
a disagreement with the magistrate’s suggested resolution, or
simply summarizes what has been presented before, is not an
‘objection’ as that term is used in this context.”

Id.; see also

United States v. Walters, 638 F.2d 947, 949-50 (6th Cir. 1981)
(explaining that objections provide the district court “with the
opportunity to consider the specific contentions of the parties
and to correct any errors immediately”).
In this case, the Court could simply overrule EQT’s Objections
on the basis that they are nothing more than a restatement of
arguments already rejected by Judge Wier.

However, the Court has

considered EQT’s Objections out of an abundance of caution and
finds that they are not well-taken because they fail to demonstrate
that Judge Wier’s ruling was clearly erroneous in any respect.
Federal Rule of Civil Procedure 37(c)(1) provides as follows:
If a party fails to provide information or identify a
witness as required by Rule 26(a) or (e), the party is
not allowed to use that information or witness to supply
evidence on a motion, at a hearing, or at a trial, unless
the failure was substantially justified or is harmless.

4

“In order to assess whether a party’s omitted or late disclosure
is ‘substantially justified’ or ‘harmless,’” the United States
Court of Appeals for the Sixth Circuit directs lower courts to
consider the following five factors: (1) the surprise to the party
against whom the evidence would be offered; (2) the ability of
that party to cure the surprise; (3) the extent to which allowing
the evidence would disrupt the trial; (4) the importance of the
evidence; and (5) the nondisclosing party’s explanation for its
failure to disclose the evidence.

Howe v. City of Akron, 801 F.3d

718, 747-48 (6th Cir. 2015).
EQT insists that Judge Wier’s ruling is clearly erroneous
because it is based on a misunderstanding of the Enertia database,
in which EQT stored production and payment records for wells
subject to the FOAs.

In his Memorandum Opinion and Order, Judge

Wier reasoned that the use of such records at trial would result
in

surprise

to

Magnum

Hunter

because

EQT

used

this

data

to

calculate its damages but failed to provide it to Magnum Hunter.
EQT contends that Judge Wier overstated the extent of the surprise
to Magnum Hunter because he did not understand that Magnum Hunter
provided EQT with the numbers that it entered into the Enertia
database.

Because Magnum Hunter already had possession of the

data entered into Enertia, and later used to calculate damages,
EQT concludes that the surprise to Magnum Hunter is minimal.

5

The Memorandum Opinion and Order demonstrates that Judge Wier
was well aware of this circumstance and took it into account in
rendering his decision.

As he explained, “[t]he raw data inputted

into Enertia may well have (and apparently did) originally come
from MHP, as EQT argues at length, but MHP was not aware of how
EQT had processed the information, how Enertia treated, computed,
or utilized it, how EQT used it to calculated damages, and the
like.”

[DE 61 at 9].

Without such information, Magnum Hunter was

unable to fully and meaningfully question John Bergonzi, EQT’s
corporate

representative,

calculations.
EQT
erroneous

also

about

Enertia-based

damages

[Id.].
suggests

because

disrupting trial.

there

that
is

Judge
time

Wier’s

to

cure

ruling
its

is

clearly

error

without

In support of this proposition, EQT notes that

it has now disclosed the Enertia data and is willing to let Magnum
Hunter re-depose Bergonzi.

However, as Judge Wier points out,

this solution rewards EQT for its failure to comply with the rules
of discovery.

It would also require Magnum Hunter to spend time

reviewing the Enertia data and re-deposing Bergonzi while EQT
prepares for trial, unless the Court opted to revise the case
schedule at this late date.
purpose of Rule 37.

Both courses of action defy the

Because Judge Wier’s analysis of these two

Howe factors does not leave this Court the definite and firm

6

conviction

that

a

mistake

has

been

characterized as clearly erroneous.

committed,

it

cannot

be

Absent that, the Memorandum

Opinion and Order of May 25, 2017, stands.
IV. CONCLUSION
Accordingly, for the reasons stated herein,
IT

IS

ORDERED

that

Plaintiff

EQT

Production

Company’s

Objections [DE 65] to Judge Wier’s Order of May 25, 2017 [DE 61]
be, and are, hereby OVERRULED.
This the 19th day of July, 2017.

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