H&T Fair Hills, Ltd., on behalf of themselves v. Alliance Pipeline L.P., also known as Alliance USA

United States Court of Appeals
For the Eighth Circuit
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No. 22-1817
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H&T Fair Hills, Ltd., on behalf of themselves and all others similarly situated;
Norman Zimmerman, on behalf of themselves and all others similarly situated;
Donna Zimmerman, on behalf of themselves and all others similarly situated;
Steven Wherry, on behalf of themselves and all others similarly situated; Valerie
Wherry, on behalf of themselves and all others similarly situated; Robert Ruebel,
on behalf of themselves and all others similarly situated; Mary Ruebel, on behalf
of themselves and all others similarly situated; Larry Ruebel, on behalf of
themselves and all others similarly situated; Mark Hein, on behalf of themselves
and all others similarly situated; Debra Hein, on behalf of themselves and all others
similarly situated; Nicholas Hein, on behalf of themselves and all others similarly
situated
Plaintiffs - Appellees
v.
Alliance Pipeline L.P., also known as Alliance USA
Defendant - Appellant
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Appeal from United States District Court
for the District of Minnesota
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Submitted: December 13, 2022
Filed: August 10, 2023
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Before LOKEN, MELLOY, and KOBES, Circuit Judges.
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MELLOY, Circuit Judge.

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Alliance Pipeline L.P. (“Alliance”) entered into contracts with four states
(“State Agreements”) as well as contracts with individual landowners in order to
build a natural gas pipeline. The contracts with landowners provide easements for
the pipeline right-of-way. In 2018, some landowners on the pipeline right-of-way
filed a class-action lawsuit against Alliance. The plaintiffs asserted Alliance violated
their contractual rights by refusing to pay landowners for damages to crops. After
the class was certified, Alliance moved to compel arbitration for the approximately
73 percent of plaintiffs whose easements contain arbitration provisions. The district
court found the plaintiffs whose easements contain arbitration provisions had agreed
to arbitrate some, but not all, of the relevant issues in the litigation. Alliance
appealed, arguing the district court erred by not sending all issues to arbitration for
the plaintiffs whose easements contain arbitration provisions. We affirm in part and
reverse in part.
I.
In 1997, Alliance entered into the State Agreements with North Dakota,
Minnesota, Iowa, and Illinois to build a natural gas pipeline through the states. 1 The
State Agreements, entitled Agricultural Impact Mitigation Agreements, require
Alliance “to mitigate, or provide compensation for, negative agricultural impacts
that may occur due to Pipeline Construction” including damages or losses to crops.
The State Agreements include provisions for Alliance to continue to compensate
landowners for damages or losses caused after the construction of the pipeline. The
states and Alliance negotiated and signed the State Agreements. The landowners
were not parties to the State Agreements.
After Alliance signed the State Agreements, but before constructing the
pipeline, Alliance negotiated the easements with individual landowners to give
Alliance a right-of-way across the land. Alliance sent solicitation letters to and met
with landowners to negotiate the easements. In addition to providing for an initial
1 There are three State Agreements: 1) Alliance, Iowa, and Minnesota; 2)
Alliance and North Dakota; and 3) Alliance and Illinois.

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payment, each easement contained a provision requiring Alliance to pay for damages
to crops. The easements were not identical, but typical easement language stated:
“[t]he Grantee shall pay for damages to crops, . . . which may arise from the laying,
constructing, maintaining, operating, repairing, replacing or removing of the said
pipeline.” 2 The majority of easements went on to state: “[s]aid damages, if not
mutually agreed upon, shall be determined by arbitration before three (3)
disinterested persons[.]” Because Alliance negotiated the easements with individual
landowners, not all of the easements contain an arbitration provision; approximately
27 percent of landowners negotiated easements without arbitration provisions.
Alliance began construction of the pipeline after acquiring all the easements.
After the pipeline became operational in 2000, Alliance created the “Crop
Yield Program,” an optional program to assist in administering compensation to
landowners. If landowners chose to participate in the program, Alliance would
provide an agronomist to take crop samples and determine if there was a difference
in yields between parcels on and off the pipeline right-of-way. Alliance and
landowners would then negotiate both the compensable magnitude of any
differential as well as any payment. Alliance began putting restrictions on the Crop
Yield Program after only a few years. In 2003, Alliance put strict deadlines on
applying for the program. In 2006, Alliance put more restrictions on how the samples
were taken. In 2013, Alliance stated it would no longer provide complimentary
agronomists to the landowners as part of the Crop Yield Program. And finally in
2015, Alliance ended the Crop Yield Program. After Alliance ended the Crop Yield
Program, landowners continued to hire agronomists and submit crop-loss claims to
Alliance in a decentralized manner. In the present complaint, Plaintiffs assert
Alliance denied all claims for compensation after 2015. Reportedly, Alliance denied
the claims because without any “operational activities” on the land Alliance could
not determine causation.
2 Easement language varies. For example, some easements also cover damages
caused by surveying, inspecting, altering, or abandoning the pipeline.

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In 2019, Plaintiffs filed this class-action complaint alleging breach of contract,
nuisance, and fraudulent inducement. In their complaint, Plaintiffs requested
declaratory judgment to require Alliance to pay for crop loss starting in 2015 and
moving forward. None of the named plaintiffs’ easements contain arbitration
provisions. Alliance argued against class certification in part because, while none of
the named plaintiffs’ easements have arbitration provisions, many of the proposed
class plaintiffs’ easements have arbitration provisions. In June 2021, the district
court certified a class for: “All persons or entities who held or hold a land interest
on Defendant’s Pipeline Right of Way and who, since 2014, were or are eligible for
crop loss compensation pursuant to easements or [State Agreements].” Alliance filed
a petition for permission to appeal the class certification, which our court denied.
II.
After the class was certified, Alliance filed a motion to compel arbitration.
Plaintiffs opposed the motion for three reasons. First, Plaintiffs argued the arbitration
provisions are limited to damages to crops, whereas the complaint seeks remedies
for ongoing yield loss caused by soil injury. Second, Plaintiffs argued their causes
of action arose under the State Agreements, which do not contain arbitration
provisions. Third, Plaintiffs argued Alliance waived the right to enforce any
arbitration provision by waiting to file the motion to compel arbitration until more
than two years after the complaint was filed. The district court addressed the motion
to compel arbitration in a March 2022 order.
The district court concluded the arbitration provisions are valid agreements to
arbitrate which cover some of the issues in the case. The district court ordered the
plaintiffs with easements containing arbitration provisions to arbitrate as to two
issues related to damages, namely whether the pipeline had caused damages to crops
and the value of any damages to crops. The district court found Plaintiffs could not
keep these issues in court by claiming to sue under the State Agreements. The district
court concluded that while Plaintiffs could enforce the State Agreements as intended

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beneficiaries, they could not bring a claim under the State Agreements if the same
claim could be brought under the easements.
The district court did not order any plaintiff whose easement lacked an
arbitration provision to participate in arbitration. Further, the district court ordered
the case to continue in court for all plaintiffs as to three issues the district court
“carved out” as non-arbitrable under the arbitration provisions: first, whether
“Alliance breached its contractual obligations by announcing the termination of its
Crop Yield Program;” second, whether “Plaintiffs are entitled to compensation for
any diminution in crop yield on the Pipeline right-of-way even without showing that
Alliance caused crop damage;” and third, whether Plaintiffs are entitled to
“declaratory relief interpreting the requirements of the easements and [State
Agreements].” Accordingly, the district court ordered a limited stay, staying only
the damages issues discussed previously, for the parties subject to the arbitration
agreement. However, in the order on the motion to compel, the district court did not
order any issues be stayed for the plaintiffs it found were not subject to an arbitration
provision.
Finally, the district court found Plaintiffs did not meet the burden of proof
necessary to show Alliance waived the right to compel arbitration. The district court
noted, “since no Named Plaintiffs are subject to the arbitration agreements, Alliance
had no reason to raise arbitration as an affirmative defense in an Answer that
preceded class certification.”
Alliance filed a timely appeal, arguing all issues are subject to arbitration for
those plaintiffs whose easements contain an arbitration provision. Essentially,
Alliance left unchallenged the district court’s arbitration ruling other than the district
court’s carving out of three issues to preserve for litigation. Alliance also filed a
motion in the district court to stay all proceedings pending appeal including
proceedings for those plaintiffs whose easements do not contain an arbitration
provision. The district court granted the broader stay pending appeal as requested by
Alliance.

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After the window to appeal the original order on the motion to compel had
passed, the plaintiffs filed their responsive brief with this court. The responsive brief
argued none of the issues, including the damages issues, should be subject to
arbitration. In addition to the responsive brief, the plaintiffs filed a separate petition
with this court seeking reversal of the later-issued stay pending appeal in which the
district court stayed litigation of all issues. In the same filing, plaintiffs sought
permission to file an untimely cross appeal of the original stay, arguing this court
should be able to review whether the district court erred by finding any issue
arbitrable. Both requests were denied.
Plaintiffs now argue a cross-appeal is not necessary for this court to reverse
that part of the district court’s original stay that finds some issues arbitrable. Alliance
asserts that reversing the district court’s order to stay some issues for arbitration, in
effect finding no issues are subject to arbitration, would reach beyond issues raised
in Alliance’s own timely filed appeal. According to Alliance, such a ruling would
expand Plaintiffs’ rights in a manner that would be prohibited without a cross appeal.
See East Iowa Plastics, Inc. v. PI, Inc., 889 F.3d 454, 459 (8th Cir. 2018). Because
we conclude the district court properly ordered arbitration of damages issues but
erred in carving out issues from arbitration, we essentially hold that the plaintiffs’
arguments concerning the scope of arbitration lack merit. As such we need not
decide whether Plaintiffs’ request to appeal the decision to arbitrate damages issues
was “fairly included” in Alliance’s appeal. See Donelson v. Ameriprise Fin. Servs.,
Inc., 999 F.3d 1080, 1087 (8th Cir. 2021) (citation omitted).
III.
We review the district court’s decision to deny or grant a motion to compel
arbitration de novo. Triplet v. Menard, Inc., 42 F.4th 868, 870 (8th Cir. 2022).
Because there is no question that valid agreements exist, “[t]he party resisting
arbitration bears the burden of showing either that the arbitration provision is invalid
or that it does not encompass the claims at issue.” Id.; but see Ballou v. Asset Mktg.
Servs., LLC, 46 F.4th 844, 851 (8th Cir. 2022) (holding “party seeking to compel

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arbitration bears the burden to prove a valid contract.”). “‘The scope of an arbitration
agreement is given a liberal interpretation, with any doubts resolved in favor of
arbitration.’ A motion to compel arbitration ‘should not be denied unless it may be
said with positive assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute.’” Indus. Wire Prods., Inc. v. Costco
Wholesale Corp., 576 F.3d 516, 520 (8th Cir. 2009) (citations omitted); see also
Triplet, 42 F.4th at 870.
As a preliminary matter, Plaintiffs argue Alliance waived the right to enforce
any arbitration provision. “Waiver . . . ‘is the intentional relinquishment or
abandonment of a known right.’” Morgan v. Sundance, Inc., 142 S. Ct. 1708, 1713
(2022) (citation omitted). “To decide whether a waiver has occurred, the court
focuses on the actions of the person who held the right; the court seldom considers
the effects of those actions on the opposing party.” Id. Alliance did not act
inconsistently with its right to arbitrate. As the district court noted, none of the
named plaintiffs in this class action have arbitration provisions in their easements.
Therefore, a motion to compel arbitration prior to class certification would have been
a motion to bind parties who were not yet part of the case. Alliance acted consistently
with its right to arbitrate by filing a motion to compel arbitration quickly after the
class was certified to include some plaintiffs whose easements have an arbitration
provision.
A.
We agree with the district court that the damages issues are subject to
arbitration for the plaintiffs whose easements contain an arbitration provision.
Plaintiffs make two arguments against sending any issues to arbitration: (1)
Plaintiffs’ claims cannot be within the scope of the arbitration provisions because
the claims allege lack of compensation for “ongoing yield losses” not “damages to
crops” and (2) Plaintiffs’ claims arise under the State Agreements, which do not have
arbitration provisions. We find the arbitration agreements to be enforceable and to
cover all issues.

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Plaintiffs’ first argument, that they are suing for compensation for diminished
crop yield and not damages to crops, fails to draw a distinction which puts the dispute
outside the scope of the arbitration provision. As discussed, if doubts exist as to the
arbitrability of an issue, the Federal Arbitration Act requires the disputes to be
resolved in favor of arbitration. Triplet, 42 F.4th at 870. “Our task is to look past the
labels the parties attach to their claims to the underlying factual allegations and
determine whether they fall within the scope of the arbitration clause.” 3M Co. v.
Amtex Sec., Inc., 542 F.3d 1193, 1199 (8th Cir. 2008).
Under the easements, Alliance must pay for “damages to crops, . . . which
may arise from the laying, constructing, maintaining, operating, repairing, replacing
or removing of the said pipeline.” The easements with arbitration provisions go on
to state: “[s]aid damages, if not mutually agreed upon, shall be determined by
arbitration[.]” Plaintiffs argue no landowners whose easements contain an arbitration
provision are subject to arbitration because the provisions are limited to “damages
to crops” and do not cover “diminished crop yield.” Nowhere in either the State
Agreements nor the easements do parties differentiate between “diminished crop
yield” and “damages to crops.” Plaintiffs’ attempt to draw such a distinction lacks
any textual basis. Any distinction between “diminished crop yield” and “damages to
crops” is subtle and, for purposes of determining arbitrability, the dispute about
whether a distinction exists must be resolved in favor of arbitration. It will be up to
the arbitrator to determine the nature and extent of any crop loss and to what extent
“crop yield loss” is included in “damages to crops.”
Second, Plaintiffs argue in essence that the State Agreements either invalidate
any arbitration provision in the easements or provide a separate avenue for Plaintiffs’
arguments to end up in court. Because we find the issues in this case fall under the
arbitration provisions, the question becomes whether the State Agreements prohibit
the use of arbitration provisions in the easements. We conclude they do not. The
State Agreements set a baseline level of protection for landowners but require
landowners to negotiate the details of their own protections through easements.

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Additionally, the vague nature of any damages provisions in the State Agreements
show the easements are necessary to specify compensation. For example, the North
Dakota State Agreement and the Iowa-Minnesota State Agreement both require
Alliance to pay for damages which “may include but are not limited to loss of crops
. . .” The Illinois State Agreement does not specify which properties are covered by
the agreement, only specifying causes of damage to private property. The State
Agreements do not prohibit the use of arbitration provisions in easements.
B.
In addition to finding damages issues are subject to the arbitration provisions,
we conclude that the three issues carved out by the district court to remain in
litigation are also subject to the arbitration provisions. The issues carved out by the
district court are integral to the issues subject to arbitration. If the court determines
a contract shows the parties intended to arbitrate grievances “then it is for the
arbitrator to determine the relative merits of the parties’ substantive interpretations
of the agreement.” AT&T Techs., Inc. v. Commc’ns Workers of America, 475 U.S.
643, 651 (1986).
The first question carved out by the district court, whether Alliance is required
to continue the Crop Yield Program, is inextricably intertwined with the damages
issues that are to be arbitrated. Neither the State Agreements nor the easements
expressly require the use of the Crop Yield Program. Alliance created the Crop Yield
Program to help manage its duty to compensate landowners. How Alliance fulfills
its duties under the easements, including whether Alliance was required to run the
Crop Yield Program, is an issue to be arbitrated. If a court were to decide this issue
it would be “rul[ing] on the potential merits of the underlying claims.” Crown Cork
& Seal Co. v. Int’l Ass’n of Machinists & Aerospace Workers, AFL-CIO, 501 F.3d
912, 917 (8th Cir. 2007) (citation omitted). Something that should be avoided. Id.
The second question, whether Plaintiffs must show the damages to crops were
caused by Alliance, is likewise bound together with the issues of damages. The

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easements require Alliance to pay for damages “which may arise from the laying,
constructing, maintaining, operating, repairing, replacing or removing of said
pipeline[.]” The easements do not specify whether landowners must show damage
observed after operational activities are linked to previous operational activities. The
easements with arbitration provisions provide: “[s]aid damages, if not agreed upon,
shall be determined by arbitration.” The question about interpreting the definition of
damages in the easement is subject to arbitration for those plaintiffs whose
easements contain arbitration provisions.
Finally, the arbitration provisions cover the question of declaratory relief. The
complaint asks for declaratory relief “to require the ongoing payment of crop yield
loss damages starting from the 2015 cancellation of the Crop Loss Program, and
continuing for the operational life of the Pipeline.” A finding on this issue would
require the district court to define damages and the scope of said damages. Two
issues clearly reserved for arbitration.
IV.
The district court order is affirmed in part and reversed in part. Essentially,
the district court will be required to dismiss from the class those members subject to
arbitration agreements. As to the arbitration class members, the claims should be
dismissed without prejudice. As to the members of the class without arbitration
provisions, we see no reason why these class members cannot proceed with the
lawsuit in the normal course at the district court.
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