H & T Fair Hills, Ltd. et al v. Alliance Pipeline L.P.

Filing 514

ORDER: 1. Plaintiffs' Motion for Reconsideration [Docket No. 500 ] is GRANTED. 2. Insofar as the Court dismissed the claims of class members subject to arbitration agreements, the Order [Docket No. 472 ] is VACATED. 3. The claims of class members subject to arbitration agreements are STAYED. (Written Opinion) Signed by Judge Joan N. Ericksen on 11/22/2024. (CBC)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
H & T Fair Hills, Ltd., Mark Hein, Debra
Hein, Nicholas Hein, Norman Zimmerman,
Donna Zimmerman, Steven Wherry, Valerie
Wherry, Robert Ruebel, Mary Ruebel, and
Larry Ruebel, on behalf of themselves and
all others similarly situated,
Plaintiffs,
v.

Case No. 19-cv-1095 (JNE/DTS)
ORDER

Alliance Pipeline L.P., a/k/a Alliance USA,
Defendant.

This case is before the Court on Plaintiffs’ Motion for Reconsideration. For the
reasons set forth below, the Court grants the motion.
To facilitate the construction and operation of a natural gas pipeline, Alliance
Pipeline L.P. obtained easements on agricultural property in North Dakota, Minnesota,
Iowa, and Illinois. Claiming that Alliance failed to compensate them for losses
associated with the pipeline, Plaintiffs brought this action against Alliance. Plaintiffs
moved to certify a class. The Court granted their motion and certified this class: “All
persons or entities who held or hold a land interest on Defendant’s Pipeline Right of Way
and who, since 2014, were or are eligible for crop loss compensation pursuant to
Easements or Agricultural Impact Mitigation Agreements.” Alliance petitioned for
permission to appeal the Order certifying the class. The United States Court of Appeals
for the Eighth Circuit denied Alliance’s petition.

1

After the Court certified the class, Alliance moved to compel arbitration and to
dismiss arbitrable claims. Alliance stated that “[t]he certified class includes class
members who are subject to individual arbitration clauses in their respective easement,”
that “Alliance has not waived enforcement of arbitration provisions,” that the Court must
either dismiss or stay the claims of plaintiffs whose easements contain arbitration
provisions, and that the Court should dismiss the claims. To support its argument that the
Court should dismiss the claims, Alliance relied on Green v. SuperShuttle International,
Inc., 653 F.3d 766 (8th Cir. 2011). In Green, the Eighth Circuit stated that it had not
“previously addressed which standard of review applies when a party challenges the
district court’s dismissal of an action in favor of arbitration, as opposed to a stay of the
action,” and that “such a decision should be reviewed for an abuse of discretion.” 653
F.3d at 769.
The Court granted in part and denied in part Alliance’s motion to compel
arbitration and to dismiss arbitrable claims:
Alliance has presented valid arbitration agreements
that apply to some but not all of the issues in this litigation.
Resolving non-arbitrable issues on a class-wide basis before
addressing issues that are arbitrable with respect to some class
members will fulfill the purposes of class treatment. The
Court therefore will grant a limited stay of its consideration of
arbitrable issues as to class members who are subject to
arbitration agreements.
The Court issued this stay:
Claims concerning tracts that are subject to easements
containing arbitration agreements . . . are STAYED only as to
the following issues: whether crop damages arising from the
Pipeline have occurred or will occur on those tracts; and the
2

amount or value of those damages. With respect to all other
issues, litigation shall proceed.
Alliance appealed.
On appeal, Alliance asserted the Court “correctly held that the Arbitration
Easements contain enforceable agreements to arbitrate, and that Plaintiffs who are subject
to Arbitration Easements must arbitrate their claims for crop damage.” Alliance
maintained that the Court erred by “carv[ing] out three crop damage issues for litigation,
not arbitration.” Alliance argued that the Eighth Circuit “should enforce the Arbitration
Easements, reverse the District Court’s decision to deny in part Alliance’s Motion to
Compel Arbitration, and remand to the District Court to dismiss without prejudice the
claims of Plaintiffs subject to Arbitration Easements.” To support its argument that the
claims of Plaintiffs subject to arbitration easements should be dismissed, Alliance relied
on Sommerfeld v. Adesta, LLC, 2 F.4th 758 (8th Cir. 2021). In that case, the Eighth
Circuit, quoting Green, stated:
While the Federal Arbitration Act “generally requires a
federal district court to stay an action pending an arbitration,
rather than to dismiss it[,] . . . district courts may, in their
discretion, dismiss an action rather than stay it where it is
clear the entire controversy between the parties will be
resolved by arbitration.”
Sommerfeld, 2 F.4th at 762 (alterations in original) (quoting Green, 653 F.3d at 769–70).
The Eighth Circuit affirmed in part and reversed in part. H&T Fair Hills, Ltd. v.
Alliance Pipeline L.P., 76 F.4th 1093, 1097 (8th Cir. 2023). The court of appeals rejected
Plaintiffs’ waiver argument: “Alliance acted consistently with its right to arbitrate by
filing a motion to compel arbitration quickly after the class was certified to include some
3

plaintiffs whose easements have an arbitration provision.” H&T Fair Hills, 76 F.4th at
1100. The Eighth Circuit “agree[d] with the district court that the damages issues are
subject to arbitration for the plaintiffs whose easements contain an arbitration provision.”
Id. The court of appeals “conclude[d] that the three issues carved out by the district court
to remain in litigation are also subject to the arbitration provisions.” Id. at 1101. Having
“conclude[d] the district court properly ordered arbitration of damages issues but erred in
carving out issues from arbitration,” id. at 1099, the Eighth Circuit directed this Court to
dismiss the arbitration class members’ claims without prejudice:
Essentially, the district court will be required to dismiss from
the class those members subject to arbitration agreements. As
to the arbitration class members, the claims should be
dismissed without prejudice. As to the members of the class
without arbitration provisions, we see no reason why these
class members cannot proceed with the lawsuit in the normal
course at the district court.
Id. at 1101–02.
After the Eighth Circuit issued the mandate, the Court dismissed the claims of
class members subject to arbitration agreements without prejudice. Several months later,
the United States Supreme Court decided Smith v. Spizzirri, 601 U.S. 472 (2024).
In Spizzirri, “current and former delivery drivers for an on-demand delivery
service” brought an action in state court for alleged “violations of federal and state
employment laws.” 601 U.S. at 474. “After removing the case to federal court,
respondents moved to compel arbitration and dismiss the suit.” Id. The drivers
“conceded that all of their claims were arbitrable, but they argued that § 3 of the [Federal
Arbitration Act] required the District Court to stay the action pending arbitration rather
4

than dismissing it entirely.” Id. “The District Court issued an order compelling
arbitration and dismissing the case without prejudice.” Id. The United States Court of
Appeals for the Ninth Circuit affirmed. Id. Answering a question previously left open 1
and resolving a circuit split, id. at 475, the Supreme Court reversed the Ninth Circuit and
remanded for further proceedings, id. at 479. The Supreme Court stated that section 3 of
the Federal Arbitration Act does not “permit[] a court to dismiss the case instead of
issuing a stay when the dispute is subject to arbitration and a party requests a stay
pending arbitration”:
The Federal Arbitration Act (FAA) sets forth
procedures for enforcing arbitration agreements in federal
court. Section 3 of the FAA specifies that, when a dispute is
subject to arbitration, the court “shall on application of one of
the parties stay the trial of the action until [the] arbitration”
has concluded. The question here is whether § 3 permits a
court to dismiss the case instead of issuing a stay when the
dispute is subject to arbitration and a party requests a stay
pending arbitration. It does not.
Id. at 473–74 (alteration in original) (citation omitted).
In its description of the circuit split, the Supreme Court cited the Eighth Circuit’s
decision in Green as one that “recogniz[es] a district court’s discretion to dismiss, rather
than stay, [an] action where all of the issues are subject to arbitration.” Id. at 475 n.1
(citing Green, 653 F.3d at 769–70). The Supreme Court rejected the Eighth Circuit’s
position: “When a federal court finds that a dispute is subject to arbitration, and a party
has requested a stay of the court proceeding pending arbitration, the court does not have

Spizzirri, 601 U.S. at 475 n.1 (citing Lamps Plus, Inc. v. Varela, 587 U.S. 176, 181
n.1 (2019), and Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 87 n.2 (2000)).
1

5

discretion to dismiss the suit on the basis that all the claims are subject to arbitration.” Id.
at 475-76. As noted above, Alliance relied on Green to support its argument that the
Court should dismiss the claims of plaintiffs whose easements contain arbitration
provisions, and, on appeal, Alliance relied on Sommerfeld, which quotes Green.
After the Supreme Court decided Spizzirri, Plaintiffs requested and received
permission to file a motion to reconsider. See D. Minn. LR 7.1(j). Plaintiffs moved the
Court to vacate the dismissal of “the claims of Class members who are subject to
arbitration agreements” and to “stay[] trial of claims of those Class members.” Plaintiffs
asserted that Spizzirri is an intervening change in controlling law that the Court must
follow and that their motion is timely. Alliance responded that Plaintiffs’ motion should
be denied for four reasons: (1) the Court lacks authority to revise the Eighth Circuit’s
decision; (2) “the Eighth Circuit’s holding and direction are not affected by” Spizzirri;
(3) “Spizzirri does not and cannot apply retroactively in this case”; and (4) Plaintiffs’
requested relief is “fraught with problems.”
“Law of the case terminology is often employed to express the principle that
inferior tribunals are bound to honor the mandate of superior courts within a single
judicial system.” United States v. Bartsh, 69 F.3d 864, 866 (8th Cir. 1995) (citation
omitted); see Lamb Eng’g & Constr. Co. v. Neb. Pub. Power Dist., 145 F.3d 996, 998
(8th Cir. 1998) (“Under the law of the case doctrine, the district court was bound on
remand to obey the Eighth Circuit’s mandate and not to re-examine issues already settled
by our prior panel opinion.”); Jaramillo v. Burkhart, 59 F.3d 78, 80 (8th Cir. 1995)
(“Under the law of the case doctrine, a district court must follow our mandate, and we
6

retain the authority to decide whether the district court scrupulously and fully carried out
our mandate’s terms.”). “Absent a change in the governing law, when a case is remanded
for further proceedings, the appellate mandate must be followed ‘unless a party
introduces substantially different evidence, or the prior decision is clearly erroneous and
works a manifest injustice.’” United States v. Winters, 600 F.3d 963, 965 (8th Cir. 2010)
(quoting Bartsh, 69 F.3d at 866); see Carmody v. Bd. of Trs., 893 F.3d 397, 407–08 (7th
Cir. 2018) (“Both the mandate rule and the law-of-the-case doctrine are strong, but they
can bend in sufficiently compelling circumstances. The mandate rule may give way ‘in
light of subsequent factual discoveries or changes in the law.’ And the law-of-the-case
doctrine may yield ‘if an intervening change in the law, or some other special
circumstance, warrants reexamining the claim.’” (citations omitted)); 18B Charles Alan
Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4478.3
(3d ed. 2019) (“If final judgment has not yet been entered, a compelling showing may
justify departure from the mandate. The most likely justification arises when events
outside the particular action establish a clear change in controlling law.”).
When the Eighth Circuit directed the Court to dismiss the claims of arbitration
class members without prejudice, district courts in the Eighth Circuit could, “in their
discretion, dismiss an action rather than stay it where it is clear the entire controversy
between the parties will be resolved by arbitration.” Sommerfeld, 2 F.4th at 762 (quoting
Green, 653 F.3d at 769–70). The Supreme Court’s decision in Spizzirri is an intervening
change of law by a controlling authority: “When a federal court finds that a dispute is
subject to arbitration, and a party has requested a stay of the court proceeding pending
7

arbitration, the court does not have discretion to dismiss the suit on the basis that all the
claims are subject to arbitration.” 601 U.S. at 475–76.
According to Alliance, “Spizzirri is not applicable to this case.” Alliance asserted
that “the unnamed individuals with arbitration agreements are not parties to the case,”
that Spizzirri does not apply to nonparties, and that Plaintiffs are attempting to avoid
application of the Federal Arbitration Act. The Court certified a class that includes
members whose easements are subject to arbitration provisions. “Alliance acted
consistently with its right to arbitrate by filing a motion to compel arbitration quickly
after the class was certified to include some plaintiffs whose easements have an
arbitration provision.” H&T Fair Hills, 76 F.4th at 1100; cf. United States v. SanchezGomez, 584 U.S. 381, 387 (2018) (“‘The certification of a suit as a class action has
important consequences for the unnamed members of the class.’ Those class members
may be ‘bound by the judgment’ and are considered parties to the litigation in many
important respects.” (citations omitted)). The Eighth Circuit “agree[d] with [this Court]
that the damages issues are subject to arbitration for the plaintiffs whose easements
contain an arbitration provision,” H&T Fair Hills, 76 F.4th at 1100, and “conclude[d]
that the three issues carved out . . . to remain in litigation are also subject to the
arbitration provisions,” id. at 1101. Having “conclude[d] [this Court] properly ordered
arbitration of damages issues but erred in carving out issues from arbitration,” id. at 1099,
the Eighth Circuit directed this Court to dismiss the claims of “arbitration class members”
without prejudice, id. at 1101–02. Spizzirri is an intervening change in law by a

8

controlling authority, and it establishes that dismissal of the arbitration class members’
claims on the basis that the claims are subject to arbitration is improper.
Alliance maintained that “Spizzirri does not apply retroactively here.” To support
the proposition that “[a]n intervening change of law does not automatically require
reconsideration,” Alliance cited Williams v. York, 891 F.3d 701, 706 (8th Cir. 2018), and
Kansas Public Employees Retirement System v. Reimer & Koger Associates, Inc., 194
F.3d 922, 925 (8th Cir. 1999). In Williams, the Eighth Circuit affirmed the district
court’s denial of the defendants’ motion for reconsideration of the denial of their motion
for summary judgment based on qualified immunity. 891 F.3d at 703. The motion for
reconsideration was based on distinguishable authority. Id. at 707. In Kansas Public
Employees Retirement System, the Eighth Circuit stated: “Generally, a change in the law
that would have governed the dispute, had the dispute not already been decided, is not by
itself an extraordinary circumstance. Society’s powerful countervailing interest in the
finality of judgments simply requires that each case have an end, though the law
continues to evolve.” 194 F.3d at 925 (citations omitted). Here, judgment has not been
entered. Cf. Ute Indian Tribe v. Utah, 114 F.3d 1513, 1521 (10th Cir. 1997) (“[T]he
intervening-change-in-law exception does not apply where . . . the case in which the
erroneous ruling occurred is no longer sub judice—that is, where the case has become
final.”).
In addition, Alliance cited Harper v. Virginia Department of Taxation, 509 U.S.
86, 97 (1993), to support the proposition that “the retroactivity of a new civil rule applies
only to cases ‘on direct review.’” Because “Plaintiffs did not seek further review of the
9

[Eighth Circuit’s] Opinion,” Alliance reasoned, “[t]he Eighth Circuit’s decision is . . . no
longer on direct review—it is final.” The Court rejects Alliance’s contention that
Spizzirri does not apply here. See Reynoldsville Casket Co. v. Hyde, 514 U.S. 749, 752
(1995) (“Hyde acknowledges that this Court, in Harper . . . , held that, when (1) the
Court decides a case and applies the (new) legal rule of that case to the parties before it,
then (2) it and other courts must treat that same (new) legal rule as ‘retroactive,’ applying
it, for example, to all pending cases, whether or not those cases involve predecision
events.”); Harper, 509 U.S. at 96–97.
Finally, Alliance asserted that “Plaintiffs’ proposal to return unnamed individuals
with arbitration agreements—who cannot litigate—to the litigation, would be fraught
with problems and should be rejected.” Alliance claimed that “[t]he Court no longer has
jurisdiction over the claims of unnamed individuals with arbitration agreements”; that
“Plaintiffs should not be allowed to obtain via a motion to reconsider what they chose not
to pursue via a timely appeal”; and that, “if the Court were to reconsider the Order, it
must still follow the Eighth Circuit’s Opinion, which held that the arbitration agreements
are enforceable, and that unnamed individuals subject to arbitration agreements may not
litigate this case or be members of the class.” Alliance asserted that “the Court may issue
an order that formally alters or amends the Class Certification Order to remove
individuals subject to arbitration agreements.” See Fed. R. Civ. P. 23(c)(1)(C).
The Court granted Plaintiffs’ motion to certify a class. “Alliance acted
consistently with its right to arbitrate by filing a motion to compel arbitration quickly
after the class was certified to include some plaintiffs whose easements have an
10

arbitration provision.” H&T Fair Hills, 76 F.4th at 1100. In its memorandum in support
of its motion to compel arbitration and dismiss arbitrable claims, Alliance relied on
Green and argued that the Court must either dismiss the claims of “any plaintiff who is
subject to an Arbitration Easement” or stay the claims. In its reply memorandum,
Alliance asserted that a dismissal or a stay is appropriate and that “[t]he only claims
stayed would be those of Class Members who are subject to Arbitration Easements.” The
Court granted in part and denied in part Alliance’s motion. The Eighth Circuit affirmed
in part and reversed in part. Id. at 1097. The court of appeals “conclude[d] the district
court properly ordered arbitration of damages issues but erred in carving out issues from
arbitration.” Id. at 1099. The Eighth Circuit directed the Court to dismiss the arbitration
class members’ claims without prejudice. Id. at 1101–02. The Court did so; judgment
has not been entered. Spizzirri is an intervening change of law by a controlling authority,
and it establishes that dismissal of the arbitration class members’ claims on the basis that
the claims are subject to arbitration is improper.
The Court grants Plaintiffs’ motion to reconsider, vacates the Order dismissing the
claims of class members subject to arbitration agreements, and stays the claims of class
members subject to arbitration agreements. The Court expresses no opinion on whether
“there is a separate reason to dismiss, unrelated to the fact that an issue in the case is
subject to arbitration.” Id. at 476 n.2. The Court expresses no opinion on altering or
amending the Order granting class certification.

11

Based on the files, records, and proceedings herein, and for the reasons stated
above, IT IS ORDERED THAT:
1.

Plaintiffs’ Motion for Reconsideration [Docket No. 500] is GRANTED.

2.

Insofar as the Court dismissed the claims of class members subject to
arbitration agreements, the Order [Docket No. 472] is VACATED.

3.

The claims of class members subject to arbitration agreements are
STAYED.

Dated: November 22, 2024

s/Joan N. Ericksen
JOAN N. ERICKSEN
United States District Judge

12