CHARLESTON – Leading up to and following the Supreme Court of Appeals of West Virginia's decision in Leggett v. EQT Production Company, there was much attention given to the fact that newly elected Justice Beth Walker’s husband had held some energy stocks before the Court’s rehearing of the case.
In response, Justice Walker notified the court that her husband had divested himself of ownership of shares of stock of any company engaged in the business of producing coal, oil, natural gas, wind, and solar energy.
There was never any allegation that he held stock of the producer involved in litigation in Leggett or any stock of another company with an interest in the litigation. Still, articles seem to ask, why would Justice Walker want to participate in the rehearing?
The answer is simple. One need only read the original Leggett decision and the May Leggett decision on rehearing to understand that the original Leggett decision was wrong. The decision continued the Supreme Court of Appeals of West Virginia's prior trend of seeking to redistribute wealth, without a legal basis, to individuals whom it believed were more morally entitled to the money. That, however, is not the job of the Court.
The Court must interpret the law and apply established legal principals to arrive at a well- reasoned decision. That is what the Supreme Court did on rehearing, finding that the phrase “1/8th of the proceeds received at the wellhead” means that a royalty is based on a wellhead value of gas, not the value at some other distant location after the producer’s downstream activities have enhanced the value of the gas.
The May Leggett decision rightly calls into question the Supreme Court of Appeals of West Virginia's 2006 opinion in Tawney v. Columbia Natural Resources, which found that “at the well” has no clear meaning as to the calculation of royalties. Legal scholars across the nation have criticized this decision as one of the worst reasoned oil and gas decisions ever.
What no news article has addressed since the May decision is why all West Virginia Supreme Court justices except for Justice Robin Davis agreed that the first Leggett decision should be overturned. Her dissent was scathing and offered no legally sound reason for disagreeing with every other member of the Court. One Charleston newspaper reporter wrote an article on her dissent, noting Justice Walker’s tenuous connection to the energy industry. However, it is Justice Davis’ connections to the case that should have been the reporter’s focus.
Justice Davis is married to well-known Charleston personal injury attorney Scott Segal. Segal was one of the lead plaintiffs’ attorneys in the Tawney case; he made the plaintiffs’ closing argument just hours before the $404 million verdict was entered against Columbia Natural Gas. Following post-trial appeals, the parties agreed to settle Tawney, and Segal was one of a small group of personal injury lawyers who shared in a fee award of more than $126 million. The Tawney verdict was the third largest jury verdict in the United States that year. Segal even boasts of his involvement in Tawney on his law firm website.
Not only did Justice Davis and her husband profit directly from Tawney, but also Segal went on to act as plaintiffs’ counsel in further class action royalty litigation seeking damages based on the West Virginia Supreme Court’s Tawney decision. These cases included class action royalty litigation against Dominion, in which Segal and his co-counsel received $10 million, and against EQT, in which they received a fee award of roughly $5.6 million. Filing royalty lawsuits based on the Tawney decision is how Justice Davis’ husband’s law firm has earned millions.
Of course, Justice Davis did not participate in the Tawney case when it came up for review at the West Virginia Supreme Court. She bowed out because her husband was litigating the case for the plaintiffs, and she and her husband stood to profit from the high court’s decision. Why now should she feel that it is appropriate to chime in on the continued validity and scope of Tawney when she and her husband have profited so significantly from the decision?
Sadly, no discussion on whether Justice Davis should recuse herself from the Leggett matter ever occurred. It is clear that Justice Davis' interests in the case are more direct, financially significant, and give rise to more than an “appearance of impropriety” that would have called for her recusal from the Leggett case.
In the face of all of this, Justice Davis made no attempt to recuse herself in Leggett and then saw fit to write a dissent criticizing the other justices for rightly calling into question the Tawney decision. The Tawney decision has no doubt helped keep up Justice Davis’ lavish lifestyle, including a $17 million Charleston mansion and private jet.
The majority opinion in Leggett seems to invite producers to bring Tawney back before the Court so that it can correct its prior analysis on royalties. In light of Justice Davis’ financial stake in that issue, one can only hope that she makes better decisions on her involvement should the issue come back to the Supreme Court for review.
Stauffer is executive director of West Virginia Citizens Against Lawsuit Abuse.