Schell v. OXY USA Inc.
2016 U.S. App. LEXIS 2593
| 10th Cir. | 2016Background
- Class of ~2,200 Kansas surface owners sued OXY USA, Inc., claiming oil-and-gas lease "free gas" clauses required OXY to provide usable domestic gas; class certified and plaintiffs sought declaratory relief (and later abandoned damages).
- District court granted plaintiffs summary judgment declaring OXY required to provide usable free gas, denied a permanent injunction (finding OXY had provided usable gas), then vacated and reentered judgment after limited discovery; denied plaintiffs’ motion for attorneys’ fees, expenses, and incentive awards.
- OXY appealed the merits and class certification rulings; plaintiffs cross-appealed the denial of fees. While appeals were pending, OXY sold all Kansas lease interests to Merit, and plaintiffs moved to dismiss OXY’s appeal as moot.
- The Tenth Circuit held OXY’s sale mooted the declaratory-judgment appeal because OXY no longer could be affected by a ruling interpreting lease provisions it no longer owned.
- The court declined to vacate the district-court declaratory judgment, concluding OXY voluntarily caused mootness and equities did not favor vacatur.
- The cross-appeal (fees, expenses, incentive award) survived as a live controversy; the panel affirmed the district court’s denial of monetary relief to plaintiffs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OXY’s appeal of the declaratory-judgment ruling is moot after OXY sold the leases | Plaintiffs: sale moots appeal because OXY no longer bound; thus dismiss appeal | OXY: sale doesn’t defeat interest because judgment could have preclusive effects in future damages suits | Held: Moot — sale removed any prospect that a declaratory ruling would affect OXY’s behavior; speculative preclusion concerns insufficient to avoid mootness. |
| Whether the district-court declaratory judgment should be vacated because the case became moot on appeal | Plaintiffs: oppose vacatur; OXY: asked to vacate if moot | Plaintiffs: vacatur unwarranted because OXY caused mootness; OXY: sought vacatur to avoid preclusive effect | Held: Denied vacatur — equitable factors (OXY voluntarily mooted appeal; no third-party cause or compelling equities) favor leaving judgment in place. |
| Whether plaintiffs may recover attorneys’ fees under the common-benefit equitable exception | Plaintiffs: class litigation conferred a substantial, class-wide benefit so fees should be shifted | OXY: common-benefit inapplicable because fees would be a penalty on OXY, and after sale OXY cannot spread fees across class | Held: Denied — common-benefit exception inapplicable because OXY no longer has relationship to spread costs to class (sale to Merit), so fees would penalize defendant. |
| Whether 28 U.S.C. § 2202 independently authorizes an award of attorneys’ fees or related relief | Plaintiffs: § 2202 permits "further relief" after declaratory judgment, including fees | OXY: § 2202 does not create an independent fee-shifting basis beyond statute/contract/equitable exceptions | Held: Denied — § 2202 not recognized as an independent basis for awarding attorneys’ fees absent statutory, contractual, or recognized equitable basis; district court did not abuse discretion. |
Key Cases Cited
- Rio Grande Silvery Minnow v. Bureau of Reclamation, 601 F.3d 1096 (10th Cir. 2010) (mootness and vacatur equitable framework)
- Lewis v. Continental Bank Corp., 494 U.S. 472 (1990) (case-or-controversy must exist at all stages)
- U.S. Bancorp Mortg. Co. v. Bonner Mall Partnership, 513 U.S. 18 (1994) (vacatur principles when appeal mooted by settlement/happenstance)
- Alvarez v. Smith, 558 U.S. 87 (2009) (vacatur may be appropriate even when party voluntarily causes mootness under compelling equities)
- Mills v. Electric Auto-Lite Co., 396 U.S. 375 (1970) (common-benefit rule for spreading fees among beneficiaries)
- Hall v. Cole, 412 U.S. 1 (1973) (common-benefit exception described)
- Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010) (American Rule baseline for fee awards)
- Fox v. Vice, 563 U.S. 826 (2011) (each party ordinarily bears own litigation expenses)
- Dahlem ex rel. Dahlem v. Bd. of Educ., 901 F.2d 1508 (10th Cir. 1990) (fees controversy can survive mootness of underlying claim)