“One Scheme, One Class” – Glover v. EQT and the Fourth Circuit’s Clarification that a Uniform Royalty-Payment Methodology Can Sustain Class Certification Despite Lease Variations

Introduction

William Glover v. EQT Corporation is a high-stakes energy-royalty dispute out of West Virginia that travelled to the United States Court of Appeals for the Fourth Circuit under Federal Rule of Civil Procedure 23(f). Thousands of lessors allege that EQT – the nation’s largest natural-gas producer – underpaid royalties by valuing “wet gas” at the wellhead rather than valuing natural gas liquids (NGLs) downstream when sold to third parties. The district court certified a 3,800-lease class for breach of contract and fraudulent concealment. EQT appealed.

In its published decision, the Fourth Circuit (1) AFFIRMED class certification on the breach-of-contract claim and (2) REVERSED certification on the fraudulent-concealment claim. Judge Benjamin authored the majority opinion; Judge Niemeyer concurred in part and dissented in part. The ruling crystallises a new, practical principle for Rule 23 litigation in the oil-and-gas context:

New Principle: When a lessee employs a single, uniform royalty-payment methodology that allegedly breaches every lease, variations in lease language that do not expressly authorise the challenged methodology will not defeat Rule 23(a)/(b)(3) commonality, typicality, or predominance.

Summary of the Judgment

• Breach-of-contract class: Upheld. The court agreed that EQT used the same “BTU-value” payment formula for all class members, and that no lease facially permitted that approach. Common questions therefore predominated.
• Fraudulent-concealment class: Decertified. Reliance and knowledge are inherently individual issues; the district court erred by presuming reliance across thousands of lessors.
• Ascertainability: The class was deemed ascertainable because EQT’s own accounting data can objectively link royalty payments to leases and owners.
• Sub-classes: Three subclasses (no-deduction, improper-deduction, and dekatherm leases) were approved for manageability; leases in prior Kay settlement were excluded.
• Dissent: Judge Niemeyer argued that 70 distinct lease forms preclude commonality, and that forcing EQT to create data compilations shifted the ascertainability burden.

Analysis

1. Precedents Cited

• Wellman v. Energy Resources (W. Va. 2001) – adopted the “marketable-product rule” and barred deduction of post-production costs unless leases provide otherwise.
• Estate of Tawney v. Columbia Natural Resources (W. Va. 2006) – held that vague “at the wellhead” clauses are insufficient to shift post-production costs.
• SWN Production v. Kellam (W. Va. 2022) – reaffirmed Wellman/Tawney and noted ambiguity questions may be fact-specific.
• Romeo v. Antero Resources (W. Va. 2025) – decisive late-breaking authority: default definition of “sale” is the first arms-length, third-party transaction and includes NGL by-products.
• EQT Production v. Adair (4th Cir. 2014) – earlier decision vacating certification where lease differences were outcome-determinative; distinguished here.
• Comcast v. Behrend, Wal-Mart v. Dukes, Amgen v. CT Retirement – Supreme Court bedrock on Rule 23 burden and “rigorous analysis.”

2. Legal Reasoning

A. Commonality & Predominance (Rule 23(a)(2); (b)(3))

The majority anchored its reasoning in two evidentiary pillars:

1. EQT’s March 2021 Letter – admitted the historical practice of paying royalties on the BTU value of wet gas, and announced a future switch to separate NGL valuation.
2. Deposition of EQT Expert Kris Terry – conceded that, with one potential exception (Z1 leases, not in class), no lease authorised BTU-based NGL payment.

Because EQT’s interpretation was uniform and (on plaintiffs’ evidence) uniformly inconsistent with every lease, the court concluded that one answer (whether the BTU methodology breaches) would resolve liability “in one stroke” for thousands of lessors – the very test laid down in Wal-Mart.

B. Ascertainability

The Fourth Circuit accepted the district court’s finding that royalty accounting data in EQT’s possession could be matched—via compelled interrogatory responses—to leases and owners, making membership objectively determinable without “mini-trials.”

C. Distinguishing Adair & Other Lease-Variation Cases

• Adair involved Virginia deeds with mixed language that arguably did authorise deductions for some owners; by contrast, EQT’s own expert here said zero leases authorised BTU valuation.
• The key difference: the contract variations in Adair could change the outcome; the variations here were deemed immaterial because none permitted the challenged practice.

D. Fraudulent Concealment – Individual Reliance

The court reiterated that, under West Virginia law (Lengyel v. Lint), reliance and knowledge are elements of fraud, and such individualised proof defeats predominance absent an accepted presumption (none applied here). The district court’s statement that “fraudulent concealment does not require reliance” misapplied state law and Adair’s holding that plaintiff-focused elements cannot be ignored.

3. Impact of the Judgment

• Class Litigation Strategy: Plaintiffs’ counsel can confidently frame royalty-underpayment cases around a defendant’s uniform payment algorithm, using company-wide documents and expert concessions to neutralise lease-language scatter.
• Lease Drafting & Operations: Producers will likely re-examine form leases and payment software to be sure that any specialised royalty methodology is explicitly authorised.
• West Virginia Substantive Law: Although the state high court’s pronouncements (e.g., Romeo) are controlling on the “sale” issue, the Fourth Circuit’s endorsement gives the rule interstate persuasive force.
• Fraud-Based Class Actions: The reversal is a clear signal that courts in the Fourth Circuit will scrutinise reliance on a claimant-by-claimant basis unless a statutory or common-law presumption applies.
• Dissent’s Warning: Judge Niemeyer’s critique may invite future appellants to challenge compelled data-creation orders and to press the ascertainability doctrine more aggressively.

Complex Concepts Simplified

• BTU / Dekatherm: A British thermal unit measures heat; 1 dekatherm = 1 million BTUs. Paying royalties “per dekatherm” values raw gas solely by energy content, ignoring the extra NGL value downstream.
• Wet Gas vs. Residue Gas vs. NGLs:
  • Wet Gas – raw, straight-from-the-well gas entrained with liquids.
  • Residue Gas – methane-rich gas after NGLs are stripped.
  • NGLs – liquid hydrocarbons (propane, butane, etc.) separated and sold at higher value.
• Marketable-Product Rule: In West Virginia, unless the lease says otherwise, the producer must bear costs to produce, condition, and deliver hydrocarbon products to an arms-length sale.
• Alter-Ego Sales: A “sale” to a corporate affiliate (same economic entity) is not an arms-length transaction; royalties must be keyed to the first non-affiliate sale price.
• Rule 23(f) Appeal: An interlocutory, discretionary appeal of a class-certification order; the Fourth Circuit granted EQT’s petition on both claims.

Conclusion

The Fourth Circuit’s decision in Glover v. EQT sends a clarion message: where an operator uses one royalty-payment formula across the board – and that formula is facially unsupported by any lease language – defendants cannot rely on boilerplate or minor textual variations to defeat class certification. The opinion fortifies plaintiff-side class actions in the energy sector, harmonises federal class-procedure doctrine with West Virginia’s marketable-product jurisprudence, and simultaneously preserves the traditional limitations on fraud-based classes. Going forward, producers should expect heightened scrutiny of internal payment policies, while litigants should note that fraud theories premised on concealment still demand individual reliance proof. The “One Scheme, One Class” approach, now articulated by the Fourth Circuit, is poised to shape royalty litigation and class certification battles throughout energy-producing jurisdictions.