Cardinal Energy, LLC v. Equitrans LP et al

Filing 18

MEMORANDUM OPINION AND ORDER GRANTING MOTION TO REMAND: It is ORDERED that Plaintiff's 10 Motion to Remand is hereby GRANTED and this case is REMANDED to the Circuit Court of Marion County, West Virginia. Signed by District Judge Irene M. Keeley on 12/22/16. (cnd)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
CARDINAL ENERGY, LLC,
Plaintiff,
v.

//

CIVIL ACTION NO. 1:16CV187
(Judge Keeley)

EQUITRANS, LP;
EQT GATHERING, LLC; and
CURTIS YOAK,
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
On

August

23,

2016,

the

plaintiff

Cardinal

Energy,

LLC

(“Cardinal”), filed this action in the Circuit Court of Marion
County,

West

Virginia,

against

defendants

Equitrans,

LP

(“Equitrans”), EQT Gathering, LLC (“EQT Gathering”),1 and Curtis
Yoak (Dkt. No. 1-1). On September 23, 2016, the defendants timely
removed

the

case

to

this

Court,

citing

federal

question

jurisdiction (Dkt. No. 1). Cardinal moved to remand the case to
state court on October 21, 2016 (Dkt. No. 10). After full briefing,
the Court heard argument on the motion on December 21, 2016 (Dkt.
No. 17), and for the reasons that follow, finds that it lacks
subject matter jurisdiction on the basis of federal question.

It

therefore GRANTS Cardinal’s motion to remand (Dkt. No. 10), and
REMANDS this case to the Circuit Court of Marion County, West
Virginia.

1

The two corporate defendants
collectively as “the EQT defendants.”

will

be

referred

to

CARDINAL ENERGY, LLC v. EQUITRANS, LP, ET AL.

1:16CV187

MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
I. BACKGROUND
A.

Factual Allegations
Cardinal operates gas wells located in Marion County, West

Virginia, and the EQT defendants own and operate a pipeline system
for the transportation of natural gas (Dkt. No. 1-1 at 2). On
December 19, 2008, Cardinal and Equitrans executed a Gathering
Interconnect

Agreement

(“Agreement”)

that

governs

the

transportation of Cardinal’s gas. Gas produced from Cardinal’s
wells is transported through the EQT defendants’ pipeline and sold
to Dominion Resources (“Dominion”), which pays Cardinal based on
Cardinal’s production as reported by the EQT defendants’ meter
readings. The meters at issue in this case are Weekley Meter No.
24104 and Stalnaker Meter No. 23883. Id. at 3.
Pursuant to the Agreement, as well as prior agreements,
Cardinal

installed

“high-tech

satellite

telemetry

Flow

Boss

Meters,” which were constructed by Gas Analytical and certified by
the EQT defendants. Id. In 2010, after settlement of certain
litigation, the EQT defendants reimbursed Cardinal approximately
$12,000 related to the meter installation. In 2010 and 2011, the
EQT defendants then replaced the Flow Boss meters with older,
mechanical Barton meters without providing any explanation.

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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
Cardinal soon began to notice problems with the Barton meters.
Among these problems were recording pens becoming stuck or running
out of ink, batteries running out of power, charts being left on
for too long, lack of proper calibration, and the failure of moving
parts. Although Cardinal reported these malfunctions to the EQT
defendants, including several complaints in 2015, the defendants
allegedly denied any problems and only made repairs when presented
with video evidence. Id. at 4-5.
Defendant

Curtis

Yoak

(“Yoak”)

is

employed

by

the

EQT

defendants and monitors meters, including those owned by Cardinal.
In the past, he has expressed personal animus toward Randy Elliot,
one of Cardinal’s owners. Cardinal alleges that, despite open and
obvious problems with its meters, Yoak did not report or repair the
issues. Id. at 6-7. Nor has Cardinal received notice of any
adjustment as a result of the alleged malfunctions. Id. at 5.
On July 15, 2015, the EQT defendants directed Cardinal to shut
off all meters, including the Weekley and Stalnaker Meters at issue
here, due to service work on the Underwood Compressor Station
(“UCS”). Although the EQT defendants have the right to control flow
in order to conduct maintenance, Cardinal alleges that it was
singled out for closure and shut out two months prior to any work
being performed on UCS. Moreover, other wells and meters – owned by
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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
larger producers – were not required to be shut in, and some other
producers continued to produce even after being ordered to shut
down their wells. Unlike Cardinal, those producers did not have
their meters locked out by the EQT defendants. Id. at 5-6.
On October 15, 2015, while its wells were shut in, Cardinal
hired Gas Analytical to investigate the Weekley and Stalnaker
meters.

The

EQT

defendants

had

stated

that

the

meters

were

operating properly, but Gas Analytical found loose linkage, carbon
in the orifice plates, and other adjustments that needed to be
made. It calibrated the meters, but they continued to malfunction
after being put back into production on March 14, 2016. Id. at 7.
B.

Claims for Relief
Cardinal claims to have suffered damages as a result of the

alleged defective condition of the Barton meters. It claims that
when the 2008 and 2009 production from the Weekley and Stalnaker
Flow Boss meters is compared to subsequent years after the Barton
meters were installed, there is an average yearly difference of
32,000 mcf.2 Therefore, Cardinal claims that, when calculated with
an average rate of $3.50 per mcf, the defendants’ actions have
2

When calculated in this manner, the average yearly mcf
difference seems to take into account the time period in 2015
during which Cardinal alleges to have been prejudicially shut down
for the EQT defendants’ maintenance on the UCS.
4

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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
resulted in the loss of $560,000 in production that was conveyed to
Dominion but not accurately measured by the EQT defendants’ Barton
meters. Id. at 8.
Cardinal’s complaint makes three state-law claims for relief.
Count One alleges that “[t]he defendants were negligent in failing
to properly monitor, service and calibrate the Barton Meters as set
forth above,” resulting in the loss of “$560,000.00 for gas
produced but not properly reported.” Id. at 9. Likewise, Count Two
claims that “[t]he EQT defendants have breached the Interconnect
Agreement . . . by failing to properly record and report to
Dominion the production,” resulting in the same $560,000 loss. Id.
In addition, Count Three adds that “[t]he aforesaid actions and
conduct of the defendants were intentional, wilful, wanton and
malicious toward the plaintiff and was [sic] in retaliation for
actions

of

the

plaintiff.”

Id.

at

10.

In

total,

Cardinal’s

complaint seeks $600,000 in compensatory damages and $5,000,000 in
punitive damages. Id. at 11.
II. STANDARD OF REVIEW
Title 28 U.S.C. § 1441(a) provides that “any civil action
brought in a state court of which the district courts of the United
States have original jurisdiction, may be removed by the defendant

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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
or

the

defendants.”

jurisdiction

is

“The

placed

burden

upon

the

of

party

establishing
seeking

the

federal
removal.”

Mulcahey v. Columbia Organic Chems., Inc., 29 F.3d 148, 151 (4th
Cir. 1994).
Federalism

counsels

that

removal

jurisdiction

should

be

strictly construed. Palisades Collections LLC v. Shorts, 552 F.3d
327, 334 (4th Cir. 2008) (citing Md. Stadium Auth. v. Ellerbe
Becket Inc., 407 F.3d 255, 260 (4th Cir. 2005)). As this Court has
previously noted, “[a]ll doubts about the propriety of removal
should be resolved in favor of retaining state court jurisdiction,”
and

thus

remanding

a

case

to

state

court.

Vitatoe

v.

Mylan

Pharmaceuticals, Inc., 2008 WL 3540462, at *2 (N.D.W. Va. Aug. 13,
2008) (citing Hartley v. CSX Transp., Inc., 187 F.3d 422, 425 (4th
Cir. 1999)). When considering a motion to remand, the Court is
limited to considering the record at the time of removal. See
Lowrey v. Ala. Power Co., 483 F.3d 1184, 1213-15 (11th Cir. 2007).
Here, the Court is limited in its consideration to the facts
alleged in the complaint.3

3

The Agreement was neither attached to the complaint nor
filed with the notice of removal. The defendants advise that this
is because the Agreement contains a confidentiality clause (Dkt.
No. 5 at 4 n.1). Neither party sought leave to file the Agreement
under seal.
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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
III. APPLICABLE LAW
District courts have original jurisdiction to hear cases
involving a federal question, those cases that “arise under”
federal law or the Constitution. 28 U.S.C. § 1331. The clearest
cases are those where federal law creates the cause of action
asserted. Am. Well Works Co. v. Layne & Bowler Co., 241 U.S. 257,
260 (1916). Pursuant to the well-pleaded complaint rule, a case
“arise[s] under” federal law “only when a federal question is
presented

on

the

face

of

the

plaintiff’s

properly

pleaded

complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987).
The existence of a federal defense is therefore not typically
sufficient to establish federal question jurisdiction. Id. at 398.
In a limited number of circumstances, state-law claims may be
sufficient to establish federal question jurisdiction. “Where state
law creates the cause of action, federal-question jurisdiction will
nonetheless lie if the ‘plaintiff’s right to relief necessarily
depends on resolution of a substantial question of federal law.’”
Columbia Gas Transmission Corp. v. Drain, 191 F.3d 552, 557 (4th
Cir. 1999) (quoting Franchise Tax Bd. v. Constr. Laborers Vacation
Trust, 463 U.S. 1, 27-28 (1983)). “[T]he mere presence of a federal
issue in a state cause of action does not automatically confer

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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
federal-question jurisdiction.” Merrell Dow Pharmaceuticals Inc. v.
Thompson, 478 U.S. 804, 813 (1986).
District
necessarily

courts

raise[s]

must
a

inquire

federal

whether

issue,

“a

state-law

actually

claim

disputed

and

substantial, which a federal forum may entertain without disturbing
any congressionally approved balance of federal and state judicial
responsibility.” Grable & Sons Metal Prods., Inc. v. Darue Eng’g &
Mfg., 545 U.S. 308, 314 (2005). “That is, federal jurisdiction over
a state law claim will lie if a federal issue is: (1) necessarily
raised, (2) actually disputed, (3) substantial, and (4) capable of
resolution in federal court without disrupting the federal-state
balance approved by Congress.” Gunn v. Minton, 133 S.Ct. 1059, 1065
(2013). This is a “special and small category” of cases. Empire
Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006).
The Supreme Court of the United States has distinguished cases that
involve “nearly ‘pure issue[s] of law’ . . . ‘that [can] be settled
once and for all’” from those that are “fact-bound and situationspecific.” Id. at 700-01.
In Pressl v. Appalachian Power Co., a recent Fourth Circuit
case, the landowner plaintiffs brought an action in Virginia state
court “seeking a declaration of their rights to build a dock on
property

subject

to

a

flowage
8

easement”

owned

by

defendant

CARDINAL ENERGY, LLC v. EQUITRANS, LP, ET AL.

1:16CV187

MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
Appalachian Power Company (“APCO”). 842 F.3d 299, 301 (4th Cir.
2016). APCO removed the case to the district court, arguing that
federal question jurisdiction existed because the flowage easement
was

“within

the

project

boundary

for

APCO’s

Smith

Mountain

hydroelectric project, which APCO operate[d] under a license issued
by [FERC].” Id. at 302. Applying the test from Grable, the Fourth
Circuit determined that federal question jurisdiction did not lie.
In Pressl, APCO had acquired the easement separately from its
federal license, and the plaintiffs did not challenge APCO’s duties
to FERC. Therefore, because the plaintiffs only challenged the
extent of APCO’s property rights under a state conveyance, the
Fourth Circuit concluded that there was no necessarily raised
federal issue. Id. at 303-04. Moreover, our circuit court concluded
that

not

every

legal

theory

supporting

the

plaintiff’s

interpretation of the easement required the resolution of a federal
issue. Id. at 304. Virginia law applied to interpret the easement,
and the most important factor was the language of the easement
itself, not the strictures of APCO’s FERC license. Id. at 304-05.
There also was no dispute over APCO’s federal license or the
duties it owed to FERC; therefore, no federal question was actually
disputed. Id. at 305. Finally, as there was no substantial federal
interest

in

interpreting

the

flowage
9

easement,

to

exercise

CARDINAL ENERGY, LLC v. EQUITRANS, LP, ET AL.

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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
jurisdiction would “disrupt the congressionally approved federalstate balance.” Id. “State courts are just as able (perhaps more
able) to interpret and enforce the property rights conveyed through
instruments governed by state law.” Id.
IV. LEGAL ANALYSIS
In support of its motion to remand, Cardinal contends that its
complaint contains only state-law claims that do not necessarily
raise any federal issues (Dkt. No. 11 at 9-10). The defendants,
however, assert that Cardinal’s allegations implicate both the
filed-rate doctrine and duties arising under the Natural Gas Act
(“NGA”), rather than state tort law or the Agreement (Dkt. No. 14
at 8-10).4
In particular, reflecting certain allegations in the complaint
about their discriminatory treatment of Cardinal, the defendants
raise their duty under the NGA not to “(1) make or grant any undue
preference or advantage to any person or subject any person to any
undue prejudice or disadvantage, or (2) maintain any unreasonable
difference in rates, charges, service, facilities, or in any other
4

The defendants allude repeatedly to FERC’s exclusive
jurisdiction over the federal issues that they claim are raised in
this case. However, because Cardinal has only made state-law
claims, the NGA’s grants of exclusive jurisdiction only apply if
the Grable test is satisfied. See Merrill Lynch, Pierce, Fenner &
Smith Inc. v. Manning, 136 S.Ct. 1562 (2016).
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GRANTING MOTION TO REMAND [DKT. NO. 10]
respect, either as between localities or as between classes of
service.” 15 U.S.C. § 717c(b). In support of their argument that
the Grable test is satisfied by the existence of these duties, the
defendants rely chiefly on persuasive authority from the District
of Minnesota that has since been overturned by the Eight Circuit.
See Great Lakes Transmission Ltd. P’ship v. Essar Steel Minn., LLC,
No. 16-1101, 2016 WL 7046743 (8th Cir. Dec. 5, 2016) (“[T]here is
little national interest in having a federal court interpret tariff
provisions if it will merely apply state law.”).
After careful review, the Court concludes that the defendants’
arguments lack merit, and that they have not satisfied their burden
to establish subject matter jurisdiction in this case. Cardinal is
the “master of the claim” and may “avoid federal jurisdiction by
exclusive reliance on state law.” Pinney v. Nokia, Inc., 402 F.3d
430 (4th Cir. 2005) (quoting Caterpillar, 482 U.S. at 392). The
defendants cannot seek removal based on a recharacterized version
of Cardinal’s complaint. Because, as discussed below, neither the
filed-rate doctrine nor any substantial federal issue establish
federal question jurisdiction, this case must be remanded.

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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
A.

Filed-Rate Doctrine
The defendants have not established that Cardinal’s complaint

raises

a

federal

question

by

implication

of

the

filed-rate

doctrine. Contrary to the defendants’ arguments, the reference in
the complaint to an average rate of $3.50 per mcf is insufficient
to confer subject matter jurisdiction on this Court (Dkt. No. 14 at
8-10).
Because

a

federal

tariff

is

equivalent

to

a

federal

regulation, “a filed tariff carries the force of federal law.”
Bryan v. BellSouth Commc’ns, Inc., 377 F.3d 424, 429 (4th Cir.
2004).

Therefore,

an

action

seeking

to

enforce,

alter,

or

invalidate the terms of a tariff, such as the rates thereunder,
raises a federal question. See id. at 429-30. The “‘filed-rate
doctrine’ . . . forbids a regulated entity to charge rates for its
services other than those properly filed with the appropriate
federal regulatory authority.” Ark. La. Gas Co. v. Hall, 453 U.S.
571, 577 (1981) (noting that the doctrine has its origins in
Supreme Court precedent interpreting the Interstate Commerce Act).
“The doctrine’s purpose is twofold: to prevent discrimination among
consumers and to preserve the rate-making authority of federal
agencies.” Bryan, 377 F.3d at 429.

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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
Therefore, neither a state nor federal court may hear a case
that “does not, in theory, attack the filed rate, [but] an award of
damages . . . would, effectively, change the rate paid.” Id.
(quoting Hill v. BellSouth Telecommunications, Inc., 364 F.3d 1308,
1316

(11th

Cir.

2004)).

Indeed,

“[i]t

would

undermine

the

congressional scheme of uniform rate regulation to allow a state
court to award as damages a rate never filed with the Commission
and thus never found to be reasonable within the meaning of the
Act.” Hall, 453 U.S. at 579.
Cardinal’s allegations in this case are markedly different
from other cases where courts have applied the filed-rate doctrine.
For instance, in Hill v. BellSouth Telecommunications, Inc., the
plaintiff brought state-law claims challenging the defendant’s
“alleged practice of misleading customers about the filed tariffs
it charged to customers.” 364 F.3d at 1311. The claims at issue
were based on the Georgia Unfair Trade Practices Act as well as
common law fraud and negligent misrepresentation. Id. at 1312. The
Eleventh Circuit reasoned that, because the claims effectively
sought to recoup portions of the rate that the defendant had
charged pursuant to a filed tariff, the claims “would have the
effect of retroactively reducing” the plaintiff’s rate. Id. at
1316. An award of such damages would fall prey to both the
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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
nondiscrimination and nonjusticiability principles embodied in the
filed-rate doctrine. Id. at 1317. Therefore, the court found there
was federal question jurisdiction and dismissed the claims. Id.
Similarly, in Bryan v. BellSouth Communications, Inc., the
Fourth Circuit addressed whether the filed-rate doctrine applied to
bar a claim brought under the North Carolina Unfair Trade Practices
Act. Bryan, 377 F.3d at 428. The court concluded that the only
plausible reading of the relevant claims was that they sought a
refund of a portion of the rate charged under a filed tariff.
Therefore, resolution of the claim would require the court to pass
on the reasonableness of the defendant’s filed rate, and it was
thus barred by the filed-rate doctrine. Id. at 432.
The Supreme Court has recognized the filed-rate doctrine in a
case involving the NGA. In Arkansas Louisiana Gas Co. v. Hall, the
parties had entered into a contract, filed with and authorized by
FERC, for the sale of natural gas. Hall, 453 U.S. at 573. In 1974,
the sellers filed suit in state court, arguing that a provision of
the contract should have operated to increase the applicable rate
from 1961 forward. Id. at 574.
The Supreme Court of Louisiana ultimately concluded that,
because the buyers had failed to inform the sellers of certain
contract-relevant facts, the sellers had been precluded from filing
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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
rate increases with FERC and were entitled to damages for the
period during which a higher rate should have been applicable. Id.
at 575. The Supreme Court of the United States overturned that
judgment, finding that, even though a breach of contract may have
prevented the seller from filing rate increases, the filed-rate
doctrine prevented a state court from retroactively applying a rate
other than that filed with FERC during the relevant period. Id. at
578-79.
The facts alleged in the instant lawsuit stand in stark
contrast to the facts in these cases. Cardinal alleges that it has
lost “approximately 32,000 mcf per year” because its production was
“not accurately measured by the Barton Meters” (Dkt. No. 1-1 at 8).
The complaint applies an “average” rate of “$3.50 per mcf” to
arrive

at

an

alleged

monetary

loss

totaling

$560,000.

Id.

Cardinal’s demand for compensatory damages is then rounded up to
$600,000.

Id.

at

11.

When

analyzing

the

allegations

in

the

complaint under the well-pleaded complaint rule, none of Cardinal’s
claims

for

relief

challenges

the

reasonableness

of

the

EQT

defendants’ filed rate or seeks to apply a different rate. Each of
the claims simply seeks to collect the net amount Cardinal would
have received had the defendants properly reported its production
to Dominion.
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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
Unlike Bryan and Hill, where the state-law claims effectively
challenged the reasonableness of the filed-rate, Cardinal’s claims
for negligence, breach of contract, and intentional conduct take
issue with the defendants’ conduct as it relates to certain
specific meters. Id. at 9-10. In addition, unlike Hall, where the
plaintiffs sought damages based on a higher rate that may have
applied absent the defendant’s breach of contract, Hall, 453 U.S.
at 574, Cardinal’s breach of contract claim relates to the proper
measurement of its production, not a different rate that should
have been applied (Dkt. No. 1-1 at 9).
The “average” rate that Cardinal uses to calculate its damages
simply bears no relation to the claims it has made. Exercising
jurisdiction and dismissing this suit pursuant to the filed-rate
doctrine

would

serve

neither

the

nondiscrimination

nor

nonjusticiability principles underlying the doctrine. Bryan, 377
F.3d at 429. Indeed, “a judgment in plaintiffs’ favor would require
this court neither ‘to invalidate a filed rate nor assume a rate
would be charged other than the rate adopted by the federal
agency.” PPL EnergyPlus, LLC v. Nazarian, 753 F.3d 467, 474 n.1
(4th Cir. 2014) (quoting Pub. Util. Dist. No. 1 v. IDACORP Inc.,
379 F.3d 641, 650 (9th Cir. 2004)). If the defendants are found to
be

guilty

of

negligence,

breach
16

of

contract,

or

intentional

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MEMORANDUM OPINION AND ORDER
GRANTING MOTION TO REMAND [DKT. NO. 10]
conduct, the Court would not be required to apply Cardinal’s
average rate, as it would not be the proper measure of damages.
Therefore, because Cardinal does not challenge the reasonableness
of the EQT defendants’ rates, and the effect of its claims would
not be to apply a different rate, the filed-rate doctrine is not
implicated in this case.
B.

Federal Question Jurisdiction Under Grable
Because the filed-rate doctrine does not apply here, the

defendants must establish that the state-law claims of Cardinal’s
complaint present a federal issue that is “(1) necessarily raised,
(2)

actually

disputed,

(3)

substantial,

and

(4)

capable

of

resolution in federal court without disrupting the federal-state
balance approved by Congress.” Gunn, 133 S.Ct. at 1065. The
defendants have not met their burden to establish that this case
falls within the “special and small category” of state-law claims
that confer federal question jurisdiction on the Court. Empire
Healthchoice, 547 U.S. at 699; Mulcahey, 29 F.3d at 151.
1.

Necessarily Raised

The defendants have identified a number of federal issues
relevant to the facts of this case, but none of those issues is
necessarily raised by Cardinal’s state-law claims for relief. “[A]

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plaintiff’s right to relief for a given claim necessarily depends
on

a

question

of

federal

law

only

when

every

legal

theory

supporting the claim requires the resolution of a federal issue.”
Flying Pigs, LLC v. RRAJ Franchising, LLC, 757 F.3d 177, 182 (4th
Cir. 2014) (quoting Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 816
(4th Cir. 2004) (en banc)). Neither the tort or breach of contract
claims requires resolution of a federal issue.
First, West Virginia law, not federal law, provides the
applicable duty of care for Cardinal’s tort claims, which will
succeed or fail accordingly. See Syl. Pt. 3, Aikens v. Debow, 541
S.E.2d 576 (W. Va. 2000) (“In order to establish a prima facie case
of negligence in West Virginia, it must be shown that the defendant
has been guilty of some act or omission in violation of a duty owed
to the plaintiff.”); Syl. Pt. 3, Sewell v. Gregory, 371 S.E.2d 82
(W. Va. 1988) (“The ultimate test of the existence of a duty to use
care is found in the foreseeability that harm may result if it is
not exercised.”). Although it is conceivable that a West Virginia
court would reference federal statutory duties as it determines the
applicable duty of care, it would certainly not be required to do
so. Therefore, Cardinal’s tort claims do not necessarily raise a
federal issue. See Pressl, 842 F.3d at 304-05 (citing Columbia Gas
Transmission Corp. v. Drain, 191 F.3d 552 (4th Cir. 1999)) (holding
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that interpreting the scope of a state-law easement did not
necessarily raise a federal issue when “the most important factor
. . . is the language of the easement itself”).
The breach of contract claim likewise does not necessarily
raise a federal issue. In order for Cardinal to succeed on this
claim, it must prove that the defendants breached the terms of the
Agreement.5 The elements of a breach of contract claim are that
“there was a contract, the defendant breached it, and plaintiffs
suffered damages from the breach.” McShea v. City of Philadelphia,
995 A.2d 334, 340 (Pa. 2010) (citing Hart v. Arnold, 884 A.2d 316,
332 (Pa. Super. 2005)). Although the defendants cite federal law,
particularly their obligations under the NGA, as providing the
controlling duties (Dkt. No. 14 at 9), Cardinal chose not to make
claims based on those duties.
Cardinal’s claims are based on the defendants alleged failure
to properly record and report production to Dominion as required by
the Agreement (Dkt. No. 1-1 at 9). In order to succeed on its
breach of contract claim, Cardinal must prove that such duties are
embodied in the Agreement. The defendants have not established how

5

The defendants aver that the Agreement contains a choice of
law provision selecting Pennsylvania as the governing law (Dkt. No.
5 at 13 n.1).
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interpretation of the Agreement’s duties necessarily relies on an
application of federal law. In fact, Cardinal avers that the
Agreement does not mention FERC or the NGA (Dkt. No. 15 at 5).
Therefore, its breach of contract claims do not necessarily raise
a federal issue.
2.

Actually Disputed

Cardinal’s complaint does not dispute the reasonableness of
the EQT defendants’ rates or tariff. What Cardinal’s allegations do
make clear is that the defendants’ compliance with NGA duties would
be actually disputed. The EQT defendants may not “make or grant any
undue preference or advantage to any person or subject any person
to any undue prejudice or disadvantage.” 15 U.S.C. § 717c(b).
Cardinal alleges that it “lost production for approximately two
months during July and August of 2015, while [its] meters were shut
off by the EQT defendants while other producers were permitted to
continue to produce” (Dkt. No. 1-1 at 8). This factual allegation
amounts to an argument that the defendants have failed to comply
with their duties under 15 U.S.C. § 717c(b) by treating Cardinal in
an unduly prejudicial manner. The defendants dispute the allegation
(Dkt. No. 14 at 12).

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3.

Substantial

Even if the Court assumes that the purported federal issues
are necessarily raised and actually disputed, it is apparent that
they are “not substantial in the relevant sense.” Gunn, 133 S.Ct.
at 1066. Indeed, any federal issue necessarily raised and disputed
in this case may be substantial to the parties, but, in order to
establish

federal

question

jurisdiction,

the

issue

must

be

substantial “to the federal system as a whole.” Id. The Supreme
Court has defined the contours of this requirement in the two
landmark cases of Grable and Gunn.
In Grable, the plaintiff brought a state-law quiet title
action but alleged “that the IRS had failed to comply with certain
federally imposed notice requirements.” Grable, 545 U.S. at 310-11.
The Supreme Court found federal question jurisdiction because the
government had a strong interest in recovering delinquent taxes
through property sales.” The government thus had a “direct interest
in the availability of a federal forum to vindicate its own
administrative action.” Id. at 315.
On the other hand, in Gunn, the plaintiff brought a state-law
legal malpractice claim. To succeed on the claim, the plaintiff had
to show that, if the defendant had raised a certain “experimental
use” argument in an underlying patent case, the result of the
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underlying case would have been different. Gunn, 133 S.Ct. at 1067.
The Supreme Court reasoned that, although the hypothetical question
held great significance to the parties, it would affect neither the
outcome of the underlying case nor the continued development of
patent law precedent. Id.
Here, Cardinal has brought state-law claims for negligence,
breach of contract, and intentional conduct. The federal issue
alleged to be substantial is whether the EQT defendants violated
their federally imposed duty to act with fairness toward producers.
See 15 U.S.C. § 717c. Were a court required to answer that
question, it would not fit within the narrow category of cases
defined by the Supreme Court, which answers “a nearly pure issue of
law, one that could be settled once and for all and thereafter
would govern numerous . . . cases.” Empire Healthchoice Assur.,
Inc., 547 U.S. at 700. In contrast, this case presents “fact-bound
and situation-specific” questions concerning whether the defendants
have complied with their duties under the NGA only as they are
relevant to a state-law tort or contract claim. Id. at 701.
Although, concededly, in deciding this case a court may be
required to interpret the Agreement, which pertains to an industry
heavily regulated by FERC, the interpretation of that Agreement
will be governed by state law; the federal system as a whole would
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not benefit from an interpretation of how this isolated contract
between two parties should be interpreted under one state’s law.
See Great Lakes Gas, 2016 WL 70467343, at *6. The terms of the
Agreement apply only to the parties that executed it, not every
participant in the natural gas industry. The state court can
readily decide if the defendants have breached duties imposed upon
them by contract or tort law.
4.

Capable of Resolution

Finally, exercising jurisdiction over this case would be
inconsistent with the congressionally approved balance of power set
by

the

NGA.

The

NGA

provides

that

the

district

courts

have

“exclusive jurisdiction of violations of this chapter or the rules,
regulations, and orders thereunder, and of all suits in equity and
actions at law brought to enforce any liability or duty created by,
or

to

enjoin

any

violation

of,

this

chapter

or

any

rule,

regulation, or order thereunder.” 15 U.S.C. § 717u.
The Court takes note of the Eight Circuit’s conclusion that
this provision does not evince a congressional intent to provide a
federal forum for breach of contract claims. Great Lakes Gas, 2016
WL 70467343, at *7. In Great Lakes Gas, the contract at issue
incorporated provisions of a tariff, thus requiring the district
court to apply state law and interpret the provisions. Id. at *5.
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On review, the Eighth Circuit concluded that, although the tariff
was properly considered federal law, interpretation of the parties’
contract did not present a federal question pursuant to Grable. It
noted that the NGA’s grant of exclusive jurisdiction provides “no
federal cause of action and no preemption of state remedies,” thus
providing an “important clue” that Congress disfavored federal
involvement in related state-law claims. See id. at *7 (quoting
Grable, 545 U.S. at 318).
Had Congress intended to divest state courts of their ability
to hear common law tort and breach of contract claims such as those
alleged by Cardinal here, it could have done so. Instead, it chose
to grant exclusive jurisdiction only over specific suits brought to
enforce

the

NGA.

See

15

U.S.C.

§

717u.

Much

as

“[t]he

interpretation of a state conveyance is a quintessential question
of state property law,” Pressl, 842 F.3d at 305, the adjudication
of tort and contract claims properly lies with the state unless
Congress clearly intends otherwise. Therefore, exercising federal
question jurisdiction over state-law claims that do not allege
violations of the NGA would “disrupt the federal-state balance
approved by Congress.” Gunn, 133 S.Ct. at 1065.

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GRANTING MOTION TO REMAND [DKT. NO. 10]
V. CONCLUSION
For the reasons discussed, the Court concludes that it lacks
subject matter jurisdiction to hear this case. It therefore GRANTS
Cardinal’s motion to remand (Dkt. No. 10) and REMANDS this case to
the Circuit Court of Marion County, West Virginia.
It is so ORDERED.
The Court directs the Clerk to transmit copies of this Order
to counsel of record.
DATED: December 22, 2016.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE

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