Abraham v. BP America Production Company
685 F.3d 1196
10th Cir.2012Background
- BP seeks relief from a jury verdict in an underpayment of royalty case in the San Juan Basin.
- Class/royalty owners allege two lease types: market-value and same-as-fed, with BP using a netback method.
- Parties dispute BP’s affiliate transfers and processing fees within the netback method.
- COP (ConocoPhillips) evidence regarding royalty practices was admitted and heavily relied upon at trial.
- District court denied punitive damages and the implied covenant instruction; BP and class cross-appealed, and this court reverses and remands for new trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| JMOL on market-value leases warranted? | Class argues BP breached by flawed netback method. | BP contends market existed and payments aligned with market values. | No JMOL; material issues of fact preclude. |
| JMOL on same-as-fed leases warranted? | Class contends underpayment relative to federal method. | BP paid similarly to federal calculations; no underpayment shown. | BP entitled to JMOL; class evidence insufficient. |
| Admission of COP evidence reversible error? | COP practices are probative of market-value calculation. | COP evidence is irrelevant to BP’s market-value obligations. | Admission was reversible error; remand for new trial. |
| Implied covenant of good faith and fair dealing instruction? | Class entitled to jury instruction on implied duty. | District court properly limited instruction. | District court must explain ruling on remand. |
| Remand scope and disposition on the implied duty claim? | Remand for ruling on implied duty and punitive damages. | Remand limited to market-value/same-as-fed issues. | Remand with partial judgment for BP on same-as-fed; require explanation on implied duty. |
Key Cases Cited
- Elliott Indus. L.P. v. BP Am. Prod. Co., 407 F.3d 1091 (10th Cir. 2005) (market-value and same-as-fed distinctions; COP evidence not relevant to market-value)
- Jones v. United Parcel Serv., Inc., 674 F.3d 1187 (10th Cir. 2012) (JMOL standard; evidence points one way only then JMOL proper)
- Henry v. Storey, 658 F.3d 1235 (10th Cir. 2011) (JMOL appropriate where evidence lacks legally sufficient basis)
- Sanjuan v. IBP, Inc., 160 F.3d 1291 (10th Cir. 1998) (prejudice standard for evidentiary error; substantial influence on verdict)
- Davis v. Devon Energy Corp., 218 P.3d 75 (N.M. 2009) (state law on implied covenant considerations (context on remand))