Date: 06-22-2001

Case Style: Bowen v. Amoco Pipeline Company

Case Number: 00-7039

Judge: Tacha

Court: United States Court of Appeals for the Tenth Circuit

Plaintiff's Attorney: Michael L. Darrah of Durbin, Larimore & Bialick, Oklahoma City, Oklahoma (Bill M. Roberts and Katherine T. Loy, Durbin, Larimore & Bialick, Oklahoma City, Oklahoma, and Allan DeVore, The DeVore Law Firm, P.C., Oklahoma City, Oklahoma, with him on the brief), appearing for Appellee.

Defendant's Attorney: Stephen Ward of Gardere, Wynne, Sewell, LLP, Tulsa, Oklahoma, and G. Steven Stidham of Sneed, Lang, P.C., Tulsa, Oklahoma (Brian S. Gaskilland Steven K. Balman, Sneed, Lang, P.C., Tulsa, Oklahoma, and Steven J. Adams, Gardere, Wynne, Sewell, LLP, Tulsa, Oklahoma, with them on the briefs), appearing for Appellant.

Description: In 1993, Ernest Bowen noticed an oily sheen in Flag Branch Creek, which is located on his property. After investigating the matter, the Oklahoma Corporate Commission (OCC) concluded remediation of the creek would be more detrimental than beneficial. In 1993, however, Mr. Bowen again observed a sheen in the creek, after which he notified the Pollution Control Division of the OCC, as well as Amoco Pipeline Company (Amoco) and Koch Gathering Systems, Inc. (Koch). Both Amoco and Koch own oil pipelines that cross the creek; Koch owns two idled lines and Amoco owns two idled lines and two active lines. (Aplt. 167) After being notified by Mr. Bowen, Amoco retained Geosearch Environmental to determine the source of the sheen. Although Geosearch found hydrocarbon contamination near the creek, it concluded the source was an upstream historic release of oil, rather than a leak from Amoco's pipelines. Contrary to Amoco's conclusions, research conducted by Mr. Bowen's expert, Fox Hollow Consultants, Inc., suggested that a leak in Amoco's lines may be the source of contamination. Under Fox Hollow's theory, oil had leaked from Amoco's lines, migrated downward to the water table about nine feet below, and then floated on the water table to the creek.

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The Bowens' case was tried to a panel of three arbitrators in August 1999. The parties agreed to use the Rules for Non-Administered Arbitration of Business Disputes (NABD), but they also agreed to modify these rules to expand the scope of judicial review. Specifically, the parties agreed that both would have the right to appeal any arbitration award to the district court within thirty days "on the grounds that the award is not supported by the evidence." They also agreed that the district court's ruling "shall be final."

On October 18, 1999, the arbitration panel granted the following relief: (1) $3,032,000 to be deposited in an escrow fund for the use and benefit of a special master responsible for supervising the abatement of the contamination on the Bowens' property; (2) $100,000 for the diminution in property value; (3) $1,200,000 for annoyance, inconvenience, and aggravation; (4) $1,000,000 in punitive damages; and (5) $41,000 for the costs of investigation and mitigation. One panel member dissented, objecting to the escrow fund for abatement and punitive damages award. Under the Federal Arbitration Act (FAA), 9 U.S.C. § 9, the Bowens then filed a motion for confirmation of the arbitration award in district court. Amoco responded by filing an objection to the confirmation and a motion to vacate the award. In addition, Amoco filed a notice of appeal of the arbitration award pursuant to the modified arbitration rules. Limiting its review to that provided under the FAA, the district court did not apply the parties' expanded judicial standard of review and declined to vacate the award. The court granted the Bowens' motion to confirm the award and affirmed the arbitrators' order awarding the Bowens attorneys fees, costs, and arbitrators' fees. Amoco appeals the district court's order, urging us to vacate the entire award and remand for a new arbitration, or alternatively to vacate the remediation award and remand the case to district court for review based on the expanded standard of review.

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Click the case caption above for the full text of the court's opinion.

Outcome: We recognize, of course, that this case presents the unique situation in which the parties contracted for an expanded judicial standard of review, which was later invalidated. When the parties agreed to arbitrate all claims, including the punitive damages claim, they also agreed to the added security of a broader scope of judicial review. Our response to this concern is twofold. First, Amoco petitioned the district court to compel all claims to arbitration before agreeing to an expanded judicial standard of review; the Bowens' claim for exemplary damages did not therefore deter Amoco from arguing the entire matter should be submitted to arbitration. Second, because the arbitration rules adopted by the parties required the arbitration panel to detail the reasoning behind the award, NABD R. 13.2, even our limited review has produced ample evidence in support of the panel's award of punitive damages.

We therefore AFFIRM the district court's confirmation of the arbitration award.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: None