District Court Decertifies Class based on Dukes, Comcast and Tenth Circuit Precedent

Plaintiff sued for underpayment or nonpayment of royalties on natural gas produced from wells in Kansas due to defendant’s failure to place the gas in marketable condition.  The district court initially certified the class in 2011.  Defendant moved to decertify the class in 2013 based on the United States Supreme Court opinions in Dukes and Comcast together with two recent Tenth Circuit opinions vacating class certification orders in similar oil and gas royalty cases:  Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc., 725 F.3d 1213 (10th Cir. 2013); and Chieftain Royalty Co. v. XTO Energy, Inc., 528 F. App’x 938 (10th Cir. 2013).

The district court granted defendant’s motion to decertify.  Specifically, the court determined that commonality was not satisfied where the court would be required to review each of the leases and employ a “well-by-well analysis” to determine at what point a product is marketable.  The court determined “that individual inquiries into the language of each lease and the marketability of gas at each well preclude a finding of commonality.”  With regard to damages, the court found “that determining damages will require review of the applicable lease language and gas quality for each royalty owner” and, as a result, the individual inquiries outweigh and “overwhelm” questions common to the class.

Arkalon Grazing Assoc. v. Chesapeake Operating, Inc., Case No. 09-1394-CM, Order Granting Motion To Decertify Class (D. Kansas July 7, 2014).

 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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