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Should the Rule of Capture Apply in Texas Hydraulic Fracturing Cases?

A federal judge in West Virginia recently opined on the Texas Supreme Court case Coastal Oil & Gas v. Garza Energy Trust, saying that it allowed oil and gas drillers to “steal” from small landowners.

In the 2008 Garza case, the Texas Supreme Court overturned a verdict awarding millions of dollars to Hidalgo County landowners who claimed that hydraulic fracturing on neighboring property had caused drainage of their underground minerals to an adjacent well. The Texas high court ruled that the rule of capture applied, protecting drillers from such claims as long as they followed the law and did not, for instance, drill a slanted well underneath neighboring property.

Some legal observers have argued that in cases of hydraulic fracturing, also known as “fracking,” drainage is nearly inevitable and the rule of capture should not apply. The Texas Supreme Court said in the Garza case that the remedy for landowners worried about drainage is to dig their own well. Some landowners have said that this is not always practical.

Texas law prohibits drilling close to a neighbor’s property line, but drillers may apply to the Railroad Commission of Texas, which regulates drilling, for what is known as a Rule 37 exception. According to an analysis by the Texas Tech Law Review, such exceptions can result in drillers capturing hydrocarbons from underneath adjacent property, with landowners receiving no compensation.

Despite criticism of the rule of capture, landowners should be aware that it is still the law in Texas.

Employment Lawsuit Filed Against Texas-based Servisair

An employment lawsuit has been filed against Houston-based Servisair, which provides services such as cleaning and fueling planes and pushing wheelchairs in airports across the country. More than 170 employees claim that they have been cheated out of pay amounting to millions of dollars.

The lawsuit, filed in federal court in New York, alleges that Servisair rounded down the hours employees worked, docked employees for lunch breaks not taken and used a system for time-keeping that automatically reduced the hours recorded for employees.

The plaintiffs estimate that each employee was docked about five hours of overtime each week since 2010. The lawsuit is seeking class-action status. Employees from airports in Texas, Illinois, Florida, New York and Massachusetts signed on as initial plaintiffs. There may be other plaintiffs found in Servisair’s more than 30 U.S. locations.

According to the lawsuit, employees had half an hour deducted from their paychecks even when they did not take a lunch break. The complaint also alleges that the company manipulated its time-keeping system such that an employee who clocked in at 7:30 a.m., for example, would only be paid beginning at 8 a.m. At the end of a shift, according to the lawsuit, employees were also docked, with an employee who worked until 11:30 p.m., for example, only being compensated for time up until 11 p.m. Though employees were not paid for arriving early or working late, they were docked pay if they arrived late or left early.

The complaint estimates that employees have been docked tens of millions of dollars over the past three years. The lawsuit seeks damages and attorney’s fees. Three previous actions against Servisair were settled out of court.

The lawsuit was filed against Servisair, owned by French company Derichbourg, and Matt Ellingson, an executive for U.S. and Caribbean operations. Attorneys for the plaintiffs said they believed that Ellingson benefited personally from the alleged underpayments, and that he could be held personally liable if it could be proven that he had operational control.

The legal action could cost the company between $50 million and $100 million and could also complicate Servisair’s impending acquisition by Swissport. A Swissport spokesperson declined to comment on the case but said that the acquisition would likely continue. Shares in Derichbourg rose 25 percent after the announcement of the planned acquisition.

Servisair said in a statement that the lawsuit had no merit and that the company had an “unwavering commitment” to its employees.

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