Texas Supreme Court to Hear Defamation Case Involving Fracking Claims

by BakerHostetler

On August 21, 2014, the Texas Supreme Court agreed to hear oral arguments in an ongoing dispute between a homeowner and Texas-based oil driller Range Resources Corp. The case is not a typical homeowner vs. oil driller lawsuit, though—in this case, Range is counterclaiming for defamation, and the Texas Supreme Court has agreed to hear the case. The case turns on what Range views as an issue of first impression: how much evidence a plaintiff needs to show to avoid dismissal of a suit under the Texas Citizens Participation Act , which is intended to prevent strategic lawsuits against public participation, or SLAPP suits.

The lawsuit was filed by Steven Lipsky and his wife in 2011, when they alleged that Range’s fracking activities contaminated their drinking water supply. But the saga began in 2009, when Lipsky started to have issues with the water supply pump to his family’s Parker County, Texas, home. He had his water well driller come out to repair the pump, and Lipsky alleges that the pump wasn’t the issue – the real issue was “explosive levels of methane gas” in the well. He notified state inspectors from the Texas Railroad Commission, who investigated and found evidence of a leak in one of Range’s gas wells near the Lipskys’ home that was causing the contamination of the Lipskys’ water supply. They cited Range for a violation. Range fixed the leak, but Lipsky insisted that the repair did not help with the high gas content in his water well.

Lipsky also hired Wolf Eagle Environmental and Alysa Rich to test his water supply. The results showed a number of gases in the water well. Outraged by these findings, Lipsky contacted the EPA. The EPA performed testing and found high levels of benzene and toluene in the Lipskys’ water well. The Agency issued an Emergency Administrative Order, saying Range’s drilling activities had introduced gases into the Lipskys’ water well and that these gases could potentially be harmful. The Agency ordered immediate testing and remediation by Range of any contamination. Around that time, Lipsky posted a video on YouTube that showed him holding a garden hose that he claimed was hooked up to his water well. He held up a lighter, flicked the switch, and the water spewing from the hose burst into flames. The video went viral, and the Lipskys began a vocal press campaign against Range and the Texas fracking industry.

The Texas Railroad Commission disagreed with the EPA’s findings, concluding in March 2011 that Range had not polluted the Lipskys’ water. In 2012, the EPA also withdrew its Order. Nevertheless, in June of 2011, the Lipskys filed a lawsuit against Range claiming that two natural gas wells and a pipeline near their home used by Range for fracking operations polluted their private water supply with methane gas.

In response, Range counterclaimed against the Lipskys for civil conspiracy, aiding and abetting, defamation, and business disparagement. Range used the Texas Railroad Commission’s finding to bolster its argument, saying it was fracking a deep shale formation and could not have polluted the Lipskys’ relatively much shallower well. The Lipskys moved to dismiss the claims, but the trial court denied their motion. On appeal, a Texas appeals court dismissed most of Range’s claims against the Lipskys. But, the court allowed the company to proceed with its defamation claim. Both parties filed mandamus petitions, Range seeking to vacate the dismissal of its claims against Lipsky, and Lipsky seeking to dismiss all of Range’s counterclaims under the Texas Anti-SLAPP statute, the Texas Citizens Participation Act. The Texas Supreme Court has decided to take the case, and has set oral argument for December 4, 2014.

The outcome of this case could provide a new avenue for the oil and gas industry to defend itself under the Texas Anti-SLAPP statute. If the court agrees with Range, then a company could theoretically sue opponents of hydraulic fracturing for defamation under the plain language of the Anti-SLAPP statute, as long as the company sufficiently proves the essential elements of its case. The statute certainly leaves room for that interpretation – on the one hand, a court must dismiss a legal action against the moving party if the legal action is based on, relates to, or is in response to the party’s exercise of First Amendment activity. On the other hand, a court may not dismiss a legal action if the party bringing the legal action establishes by clear and specific evidence a prima facie case for each essential element of the claim. The Texas Court of Appeals held that Range presented clear and specific evidence to establish its prima facia case for its defamation and business disparagement claims against the Lipskys. Thus, the Court of Appeals held that the trial court did not abuse its discretion by refusing to grant the Lipskys’ Anti-SLAPP motion, despite the Lipskys’ contention that the lawsuit is based on First Amendment activity.

More information can be found here and here. The Texas Court of Appeals decision is In re Lipsky, 411 S.W.3d 530 (Tex. Ct. App. 2013), and is available here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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