Supporting Independent Oil Producers in Litigation Against Water Company for Charging Unfair Fees
We represented four independent oil producers in litigation against a non-profit mutual water company that had assisted our clients in disposing of wastewater produced in the operation of their oil, gas and hydrocarbon businesses.
The Regional Water Quality Control Board subjected the water company to regulatory action that resulted in a cease-and-desist order that ultimately required the district in which our clients operated to be shut down. The water company then tried to pass off all of its closure costs solely to its current members (including our clients) rather than to all producers of wastewater since its inception in 1950 — in direct contravention of its own bylaws. Our clients also had numerous affirmative claims against the water company and its directors relating to breaches of fiduciary duties, breach of contract and negligence.
We represented our clients in defense of a lawsuit filed by the water company to recover unpaid fees and also in a cross-complaint against the water company and its directors. This case had the potential to set precedent for the way all independent oil producers are treated in the wake of historic oil production by large oil companies. We ultimately negotiated a favorable settlement on behalf of our clients that resulted in a discounted sum due to the water company's recognition of our clients’ affirmative claims. We received support from the water company to pursue a major oil company for indemnity. That subsequent claim against the major oil company resulted in a further payment of more than 50% of the liability associated with closure of the water company facility at issue.