In a 6-1 ruling, the state Commonwealth Court upheld a judge’s ruling that denied motions filed by
The lawsuit, filed in
The suit also alleges the companies violated antitrust laws by agreeing not to compete against each other, which reduced competition and allowed them to keep royalty payments artificially low.
The attorney general’s office was prompted to act after receiving complaints from landowners who say the companies improperly deducted post-production costs from their royalty checks. The fees were so high that landowners sometimes received nothing.
Attorneys for Chesapeake and
Bradford County Senior Judge
The majority of the Commonwealth Court affirmed the ruling, finding that lease agreements fall under the trade and commerce protections of the unfair trade practices law.
In a dissenting opinion, Judge
“The majority holds that … a consumer protection statute intended to bolster consumers’ bargaining powers, can authorize legal action against a purchaser,” Covey said.
The majority opinion does overturn a portion of Brown’s ruling regarding the antitrust allegations. It dismissed one count that alleged the companies engaged in “market sharing agreements” to reduce competition, finding that type of activity is not covered under existing law. It let stand a claim the companies violated antitrust laws by engaging in unfair or deceptive practices, however.
Pennoyer noted Chesapeake has reached settlements resolving the “vast majority” of lawsuits landowners filed against it regarding royalty disputes. The attorney general’s case has interfered with those settlements, he said.
“Chesapeake will continue to pursue resolution of this matter with the attorney general so that our royalty owners can enjoy the benefits of those settlements and choose their royalty formula going forward,” he said in an email.
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