Is it an Unfair Trade Practice When You're the Buyer?

Most consumers are at least familiar with the existence of unfair trade practice statutes and anti-trust law. Likely very few, however, have stopped to consider whether those statutes apply to the leasing of oil and gas interests in the Marcellus Shale. Yet, those are the precise questions at issue in Commonwealth of Pennsylvania v. Chesapeake Energy Corp. et al., No. 2015IR0069 (Pa. Ct. Comm. Pl. Dec. 15, 2017).The Pennsylvania Attorney General filed suit against Chesapeake and Anadarko (referring here, generally, to a number of affiliates and holding companies) alleging that they misled lessors about post-production deductions, that they failed to disclose certain revenues, and that they unlawfully divided certain territories within the Commonwealth. Using the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) and anti-trust common law as a basis, the Commonwealth sought wide-ranging relief on behalf of Pennsylvania lessors:

  • Disgorgement of unlawful post-production deductions;
  • Disgorgement of unlawfully-obtained profits;
  • Per violation payments of $1,000 to persons over 60 years of age and $3,000 to persons under 60 years of age;
  • Reimbursement of the Commonwealth’s litigation expenses; and
  • Forfeiture of the right to engage in oil and gas exploration and development pending compliance with other penalties.

Chesapeake and Anadarko set up any number of preliminary objections (i.e., attacks on the legal sufficiency of the Commonwealth’s complaint) of which three are of particular importance. First, does the UTPCPL govern oil and gas leasing activities? Chesapeake and Anadarko argued that the UTPCPL is targeted toward sellers and that, as lessees, they fall outside the statute’s ambit. Second, does Pennsylvania recognize a common-law anti-trust claim? And, third, does the Attorney General have the authority to prosecute the asserted claims.

In a lengthy opinion, the Bradford County Court of Common Pleas answered each of the key questions in the affirmative. The net effect is that oil and gas lessees in Pennsylvania are at risk of statutory unfair trade practices claims and common law anti-trust claims. Recognizing that its key holdings were not only matters of particular importance but also matters of first impression, however, the Bradford Court of Common Pleas certified these questions to the Commonwealth Court for immediate review. Until the Commonwealth Court weighs in and any further appeals are resolved, these important questions likely will be the subject of both considerable interest and uncertainty.


Disclaimer: This website is for informational purposes only and is not intended as legal advice. Your access to, and engagement with, this website should not be construed as creating an attorney-client relationship. Any legal questions should be directed to an attorney licensed in your jurisdiction.

Opinions are my own and do not necessarily reflect the opinions of Spilman Thomas & Battle, PLLC,  its employees, or its clients. To contact me, please e-mail jschaeffer@spilmanlaw.com

Attorney Advertising Disclaimer: This website may be considered Attorney Advertising under the laws and rules of some jurisdictions. Each case is different, and outcomes depend on multiple factors, including the unique set of facts and applicable law. No attorney can guarantee a particular outcome in a given case.

I, Joseph Schaeffer, am solely responsible for the content of this website. My primary office address is located at 48 Donley St., Morgantown, West Virginia, 26501.

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