Summary
In Consul, the plaintiffs alleged the lessee breached the express and implied duty to market because it "improperly charged or deducted... certain costs necessarily incurred to transform the raw natural gas from the Subject Wells into a marketable product."
Summary of this case from Chieftain Royalty Co. v. BP Am. Prod. Co.Opinion
Case No. CIV-15-840-R
02-02-2016
CONSUL PROPERTIES, LLC, et al., Plaintiffs, v. UNIT PETROLEUM COMPANY, Defendant.
ORDER
Before the Court is Defendant's motion to dismiss the class action allegations in this case. Doc. No. 18. Defendant proffers its motion pursuant to Federal Rules of Civil Procedure 23(d)(1)(D), 12(b)(1) and (6) or Rule 56, F.R.Civ.P. See id. Because this Court can take judicial notice of pleadings in and decisions of the state court and may in any event, consider evidence in a factual attack on its subject matter jurisdiction, see e.g., Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995), the Court decides this motion pursuant to Rule 12(b)(1), F.R.Civ.P.
In Panola Independent School District No. 4. v. Unit Petroleum Co., 287 P.3d 1033 (Okla. Civ. App. 2012), cert. denied, (Okla. 2012), the district court had certified a class of all royalty and unleased mineral owners whose minerals were included in drilling and spacing units in Oklahoma where Unit Petroleum Company or any of its affiliates, successors or assigns had the right to drill and produce gas. See Panola, 287 P.3d at 1035. On appeal, the Oklahoma Court of Civil Appeals reversed the certification order, holding that the claims of the royalty owners who acquired their interest through leases would require a multiplicity of subclasses, with a subclass for each lease type, to decide claims for the underpayments of royalty interest. Defendant argues that because the class in the Panola case was nearly identical to the putative class alleged in this case, issue preclusion should apply to bar any class certification in this case. See Second Amended Complaint at p. 4. To support its issue preclusion argument, Defendant cites to Rees v. BP America Production Co., 211 P.3d 910 (Okla. Civ. App. 2008), cert. denied (Okla. 2009). In Rees, the Oklahoma Court of Civil Appeals held that an unnamed member of the proposed class in Watts, wherein denial of class certification was fully and fairly adjudicated and final, was bound by the court's ruling denying class certification and could not seek certification in a subsequent action of essentially the same nationwide class. See Rees at 912. The Oklahoma Court of Civil Appeals did say that Plaintiff or other putative class members could seek certification of a narrower class but the Plaintiff only argued that his claim was narrower because he had deleted a fraud claim. The Court is of the opinion that Plaintiff's slight modification of the geographical distribution of leases and the other modifications in the putative class, see note 1, supra, do not sufficiently narrow the putative class in this case from the putative class in Panola
The putative class in this case differs only in the following respects: Owners of royalty interests having leases in three of Oklahoma's 77 counties are excluded. Forced pooled royalty owners are omitted. Only leases which include the implied duty to market are included because owners whose leases explicitly negate the implied duty to market are excluded. Overriding royalty interest owners are included. --------
This Court must apply Oklahoma law of issue preclusion whenever courts of that state would do so. See 28 U.S.C. § 1738. Accordingly, because Rees demonstrates that Oklahoma would apply issue preclusion based on the denial of class certification in Panola to the case now before this Court, this action is barred. Plaintiff argues that the Supreme Court's abrogation of In Re Bridgestone/Firestone, 333 F.3d 763 (7th Cir. 2003), a case cited in Rees, dictates a different outcome herein because in Smith v. Bayer Corp., 54 U.S. 299, 131 S.Ct. 2368, 180 L.Ed.2d 341 (2011), the Supreme Court unanimously held that the denial of class certification in one case does not preclude absent class members of the failed putative class from pursuing the same claims in a separate class action. However, Smith involved the question of whether issue preclusion applied as a matter of federal law, which is not applicable in this case. Moreover, there is an identity of interest between the named plaintiffs in Panola and the named Plaintiffs in this case sufficient to constitute privity. But in any event, Oklahoma as a matter of state law has clearly recognized non-mutual defensive collateral estoppel or issue preclusion to apply in the circumstances of this case.
In accordance with the foregoing, Defendant's motion to dismiss the class action allegations is GRANTED pursuant to F.R.Civ.P. 12(b)(1).
IT IS SO ORDERED this 2nd day of February, 2016.
/s/ _________
DAVID L. RUSSELL
UNITED STATES DISTRICT JUDGE