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Gilley v. Kansas Gas Service Co.

October 26, 2007

JOHN NEAL GILLEY, ET AL., INDIVIDUALLY AND AS REPRESENTATIVES OF THOSE PERSONS SIMILARLY SITUATED, APPELLANTS/CROSS-APPELLEES,
v.
KANSAS GAS SERVICE COMPANY, ET AL., APPELLEES/CROSS-APPELLANTS.



Appeal from Reno district court; RICHARD J. ROME, judge.

SYLLABUS BY THE COURT

1. In a class action, the named representatives of the class assume the burden of proving the total, class-wide damages, rather than the individual damages of each member of the class.

2. Where a putative member of a class testifies about damages which are unique to that witness, the trial judge has the discretion to instruct the jury that the witness' experience is not to be considered common and typical of the damages suffered by all class members.

The opinion of the court was delivered by: Johnson, J.

Affirmed.

A class of business owners (business class) in Reno County, Kansas, sought damages against ONEOK, Inc. (ONEOK), Mid Continent Market Center, Inc. (MCMC), and Western Resources, Inc. (Westar) for profits lost as a consequence of the defendants' negligence which permitted natural gas to escape from the Yaggy Field gas storage facility in the vicinity of Hutchinson, Kansas. The jury found ONEOK and MCMC at fault but determined that the business class had suffered no damages. The business class appeals the jury's verdict on damages, claiming that the trial court erred in giving a limiting instruction to the jury regarding the testimony of a lay damages witness. Finding no error in the instruction, we affirm.

The business class brief sets forth, in considerable detail, the events leading up to and following the escape of natural gas from defendants' underground storage facility. Much of that recitation is unnecessary for our opinion, and we will refrain from such a chronicle here. See Hayes Sight & Sound, Inc. v. ONEOK, Inc., 281 Kan. 1287, 136 P.3d 428 (2006) (setting forth a detailed factual recitation).

An explosion in downtown Hutchinson on January 17, 2001, and a subsequent explosion the following day in the Big Chief Mobile Home Park, caused property damage and two fatalities, and led to the evacuation of a number of residences and businesses in the vicinity of the explosions. The problem was traced to the escape of natural gas from the Yaggy underground natural gas storage facility located northwest of Hutchinson. The gas migrated underground through a porous geologic formation and rose to the surface in Hutchinson through abandoned brine wells which were not properly plugged. In this lawsuit, the jury found the defendants, ONEOK and MCMC, caused the explosions by being negligent in the ownership, operation, and maintenance of Yaggy facility. Westar, which had been involved in the ownership and control of the Yaggy facility prior to 1997, was found not to be at fault for the natural gas escape.

This lawsuit was filed as a class action, and the district court certified the class, defined as follows:

"All owners of businesses within Reno County as of January 17, 2001, to the present. Excluded from the class are governmental entities, officers, directors, employees, subsidiaries and affiliates of any of the defendants and any judges and justices who preside over this case or any portion thereof."

However, many of the business owners who suffered damages from the incident individually settled or litigated their respective claims and were not part of this class action. See, e.g., Hayes Sight & Sound, Inc., 281 Kan. 1287.

A class of Reno County real property owners was included in the initial petition, and the two class actions were tried together. However, the district court maintained separate case numbers for the two class actions, and we have been presented with separate appeals. See Smith v. Kansas Gas Service Co., (No. 94,602, this day decided). This opinion only deals with the business owners' class action.

The business class claimed that the gas incident caused an interruption in business in Reno County and that the class of business owners suffered a loss of revenue due to defendants' negligence. To establish class-wide damages, the business class presented the testimony of John Korschot, an investment banker who specialized in valuing middle market businesses.

Initially, Korschot prepared a report based upon his study of documentation which had been voluntarily provided by business owners. Korschot received information from approximately 50 business owners, but he testified that the information on all but 14 businesses was insufficient for him to calculate the lost revenue resulting from the escaped gas ...


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