Antitrust Law Daily Wrap Up, ANTITRUST—D.N.M.: Most claims survive dismissal in Shale Oil antitrust suit, (Sep 1, 2026)

By Justin Marcus Smith, J.D.

Most of the defendants’ challenges were premature or unpersuasive at the pleading stage.

Allegations of parallel conduct in the form of reduced relative output of shale oil, when read in combination with allegations addressing market structure, communications, common ownership, and anomalous output decisions, were just enough to nudge Sherman Act class action conspiracy claims against eight shale oil producers from possible to plausible, held the federal district court in Albuquerque, New Mexico. The political question and act of state doctrines were inapplicable because the plaintiffs were not asking the court to regulate OPEC production decisions or invalidate foreign government actions. The plaintiffs satisfied all AGC factors for standing. Some state antitrust law and consumer protection claims failed. Injunctive relief did not apply to Expand because the consolidated class action complaint did not allege involvement in shale oil production (In Re: Shale Oil Antitrust Litigation, No. 1:25-cv-00568-MLG-LF (D.N.M. Aug. 31, 2026)).

Background. In early 2025, several individuals, businesses, and state political subdivisions filed a consolidated class action complaint (CCAC) alleging that eight of the largest U.S. shale oil producers and two of their CEOs conspired to constrain shale oil production to artificially inflate petroleum product prices. The defendants are Permian Resources Corporation; Expand Energy Corporation (formerly Chesapeake Energy); Continental Resources; Diamondback Energy; EOG Resources; Hess Corporation; Occidental Petroleum; and Pioneer Natural Resources; Pioneer’s former CEO; and Hess Corporation’s CEO. Requested relief included treble damages, injunctive relief, attorney fees, and other remedies.

The district court initially held the State of Kansas failed to establish an impaired interest necessary to intervene as a defendant as a matter of right. The district court also denied permissive intervention because Kansas only articulated a collateral issue that would complicate the matter and thus cause undue prejudice and delay (see Antitrust Law Daily, Jun 12, 2026).

With fifty-four claims for relief pending, the defendants filed a joint motion to dismiss contending: (1) lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) and the political question and act of state doctrines; (2) failure to plead a plausible antitrust conspiracy claim; (3) lack of antitrust standing; (4) failure of state antitrust consumer protection law claims based on the purportedly under-supported Sherman Act claim; and (5) numerous other deficiencies in the state law claims. Continental, Diamondback, EOG, Permian, Occidental, Expand, Pioneer, and the Hess defendants also filed individual motions to dismiss.

Political question. The court held that neither the political question nor the act of state doctrines required dismissal. First, dismissal pursuant to the political question doctrine was not warranted. At trial, the fact-finder would not need to conclude that the defendants entered into an agreement with OPEC member nations to fix prices as a condition precedent for finding liability. The defendants’ cites were neither controlling nor persuasive because the instant plaintiffs did not sue a foreign government or a sovereign-owned oil company. The plaintiffs were not asking the court to regulate OPEC production decisions or invalidate a foreign government’s actions. No executive branch policy choices were in play. The plaintiffs claimed the defendants conspired to constrain domestic shale production. OPEC’s role, even as a purported facilitator, did not involve foreign or domestic political decisions. The act of state doctrine was also inapplicable for essentially the same reasons.

Conspiracy. The court found the plaintiffs’ put forth a plausible claim that the defendants benefited from reduced production growth. Considered holistically, the allegations of parallel conduct in the form of reduced relative output of shale oil, when read in combination with allegations addressing market structure, communications, common ownership, and anomalous output decisions, were enough to nudge the plaintiffs’ conspiracy claims from possible to plausible.

First, variations in the degree of reduced production did not invalidate the plaintiffs’ claims of parallelism. Next, allegations about market structure and demand were relevant plus factors for finding a conspiracy, but they were not dispositive. The market concentration and inelastic demand conditions described lent themselves to permissible parallel conduct and provided modest support for a plausible inference of conspiracy.

The court found that the plaintiffs identified interactions that extended beyond the exchange of standard industry information and gave some support for an inference of an agreement. The plaintiffs alleged more than mere attendance of industry events or the innocent collection of information. They identified meetings that evinced sharing of information to fix production and pricing and engagement in conspiratorial action. Taken together, the court found the plaintiffs’ allegations about corporate communications and related FTC investigations supported a plausible inference that the defendants’ conduct was consistent with coordination and not just ordinary industry activity.

Common horizontal ownership did not prove an anti-competitive agreement, but the allegations here addressed structural conditions that, when considered with production restraints and other plus factors, made the alleged agreement more plausible.

The plaintiffs also met their burden in plausibly alleging that, absent coordination, each defendant had rational incentives to expand shale oil production more aggressively than they did.

Antitrust standing. After considering the AGC factors, the court found the plaintiffs plausibly alleged sufficient facts to establish antitrust standing. See Associated Gen. Contractors of Cal. v. Cal. State Council of Carpenters, 459 U.S. 519 (1983) (AGC). They claimed the defendants conspired to restrain crude oil production and that they paid supracompetitive prices for oil derivative products.

The first and fourth AGC factors address injuries from purported antitrust violations and causality. The defendants argued the alleged injuries were too attenuated, but the question was whether the plaintiffs plausibly alleged a conspiracy to restrain production that inflated prices for oil derivative products. The court found the plaintiffs made allegations sufficient to meet their burden based on the defendants’ role as swing producers in the global oil market, control of about 16.2% of U.S. total crude oil production, and allegations that explained the connection between inflated crude oil prices and downstream price increases.

The plaintiffs satisfied AGC factors 2 and 3 about intent and injury meant for redress. The plaintiffs alleged conspiracy to restrain crude oil production to increase prices of derivative products. The alleged injury was not merely incidental, it was predictable.

The plaintiffs also satisfied AGC factors 5 and 6. The defendants’ concerns about speculativeness and the risk of duplicate recoveries were, in the court’s estimate, “minimal and manageable” through quantitative methods, like regression analysis.

Individualized motions. The court granted Expand’s individual motion to dismiss but denied all other individual motions to dismiss in their entirety apart from holding the R. 12(b)(2) parts of the Pioneer and Hess defendants’ motions in abeyance. Continental, Diamondback, EOG, Permian, Occidental, Expand, Pioneer, and the Hess defendants all raised questions about lack of parallel conduct, insufficient plus factors, and personal jurisdiction, and contended the court should look beyond the CCAC at the dismissal stage.

Allegations of parallel conduct were sufficient, as already discussed. The Hess defendants argued the plaintiffs could not establish parallel conduct by focusing on the defendants’ domestic production, but the court said that misread the CCAC. As already explained, the plaintiffs alleged a conspiracy to constrain domestic production and artificially inflate the price for crude oil and derivative products in the U.S. The plaintiffs also met their burden by identifying company-specific meetings, communications with competitors that endorsed limited growth, and other conduct relevant to the alleged conspiracy. As for looking beyond the complaint, the court declined to resolve the parties’ competing factual narratives or inferences at this stage.

With respect to the Pioneer and Hess defendants’ individual motions to dismiss for lack of personal jurisdiction, the court declined to navigate a circuit split about nationwide service on an insufficient record. Whereas the Ninth and Third Circuits interpreted the Clayton Act Section 12 phrase “in such cases” to provide for nationwide-service regardless of additional venue requirements, the Second, Seventh, and D.C. Circuits call for satisfaction of venue before availment of nationwide service. There was not enough on the present record to make a determination either way. The court found some limited jurisdictional recovery was both necessary and appropriate. The court accordingly held the relevant R. 12(b)(2) portions of the Pioneer and Hess defendants’ motions in abeyance.

The court otherwise agreed with Expand that the plaintiffs could not state a claim for injunctive relief against it. The CCAC did not contain any allegations indicating that Expand produces shale oil nor facts plausibly suggesting it was likely to resume challenged conduct.

State law claims. The court declined to dismiss the West Virginia Antitrust Act claim due to limited briefing on the issue of whether named plaintiffs resided in or made purchases in the state. Allegations of interstate conspiracy with anticompetitive conduct within West Virginia were sufficient, as were allegations about anticompetitive conduct within Mississippi, but Alabama antitrust law did not support claims premised on interstate conspiracy allegations.

The court disagreed with the defendants’ contention that the state laws of Illinois, Montana, and South Carolina barred indirect purchasers from bringing class action or consumer protection claims. The laws of these states did not limit the scope of substantive rights at issue. They merely addressed the process for resolving claims.

The court dismissed the counts pertinent to indirect purchasers under Colorado and New Jersey state laws that applied only prospectively. The counts in question sought recovery predating June 7, 2023 and August 5, 2022, respectively.

A corrected misstep about statutory notice did not support dismissal of counts pertaining to Arizona, Colorado, Connecticut, Hawaii, Nevada, New York, Rhode Island, and Utah state antitrust laws.

The court declined to dismiss District of Columbia and Minnesota consumer protection law claims because those laws recognized that purchases made in connection with a business may pertain if the purpose is not for resale. Missouri and Montana consumer protection laws called for a different result. Purchases had to be made for personal, family, or household purchases. The court declined to dismiss the Nevada deceptive trade practices act claim because it was not limited to natural persons.

The court likewise analyzed numerous other state law claims at great length.

The Case is No. 1:25-cv-00568-MLG-LF.

Judge: Garcia, M.

Attorneys: Christopher M. Burke (Burke LLP) for William Basinski.

Companies: Permian Resources Corp.; Expand Energy Corp.

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