Strack v. Continental Resources, Inc.
405 P.3d 131
Okla. Civ. App.2017Background
- Four family trusts (the Strack and Ariola Trusts) sued Continental Resources as royalty owners, alleging underpayment of royalties, improper deductions, insufficient reporting, and schemes to skim production across >1,100 wells and thousands of royalty owners dating back to 1993.
- Plaintiffs sought certification of a large putative class (over 14,000–17,000 royalty owners) and moved for a hybrid/issue class: declaratory/injunctive relief and an accounting under the Production Revenue Standards Act (PRSA), plus certification of ~48 legal issues for court resolution.
- Plaintiffs argued PRSA §570.12 creates a uniform reporting/accounting duty and sought a well-by-well, month-by-month statutory accounting and broad class-wide relief (injunctive/mandamus) before individual damages proceedings.
- Continental opposed, arguing Oklahoma law disfavors hybrid/issue classes here, that many questions are individualized (leases, marketing, contracts), and that PRSA remedies and lease language require case-by-case adjudication.
- The trial court certified a hybrid/issue class under 12 O.S. §2023(B)(1), (B)(2), and (C)(6), including certification of the accounting claim and the 48 legal/equitable issues. Continental appealed.
- The Court of Civil Appeals reviewed certification de novo and reversed, holding plaintiffs failed to satisfy the statutory prerequisites for B(1) and B(2) certification and that the requested declaratory issues were impermissibly advisory and would not resolve highly individualized claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether class certification (hybrid/issue) is proper | Certification appropriate to decide uniform legal issues (48) and a statutory accounting under PRSA §570.12; accounting is non-discretionary and equitable relief supports B(1)/(B)(2) certification | Hybrid/issue certification is improper; claims require individualized inquiry tied to lease language, well facts, and contracts; plaintiffs really seek money damages (B(3)) | Reversed: hybrid/issue certification improper; prerequisites for B(1)/(B)(2) not met |
| Whether PRSA accounting claim warrants class injunctive/mandamus relief under B(1)/(B)(2) | PRSA creates a uniform duty to report; accounting (specific performance) is an independent statutory remedy suitable for class treatment | No established PRSA violation; equitable accounting inappropriate where liability and damages are disputed and legal remedies exist; accounting would require individualized proofs | Reversed: plaintiffs not entitled to class-wide accounting; accounting is premature and individualized; fails B(1)/(B)(2) criteria |
| Whether separate adjudications would create incompatible standards (§2023(B)(1)(a)) | Interpretation of PRSA would be generally applicable and could create incompatible obligations if decided separately | No showing that inconsistent judgments would make compliance with one judgment impossible without violating another; plaintiffs’ argument speculative | Reversed: B(1)(a) not satisfied; plaintiffs failed to show incompatible standards of conduct risk |
| Whether declaratory rulings on 48 legal/equitable issues are appropriate as class-wide issue certification | Court should decide core legal questions (marketability, PRSA scope, pooling, affiliated transactions) to streamline later proceedings | Issues are advisory, abstract, and will not resolve the individualized liability/damages inquiries tied to leases, marketing, and contracts | Reversed: declaratory certification of 48 issues improper; would produce advisory opinions and not settle class-wide legality |
Key Cases Cited
- Harvell v. Goodyear Tire & Rubber Co., 164 P.3d 1028 (Okla. 2006) (B(2) requires injunctive/declaratory relief to be primary; predominance of monetary relief defeats B(2) certification)
- Dukes v. Wal-Mart Stores, Inc., 564 U.S. 338 (U.S. 2011) (Rule 23(b)(2) applies only where a single injunction or declaratory judgment would provide relief to each class member; individualized monetary awards belong in (b)(3))
- Homesales, Inc. v. Marshall Cty., 339 P.3d 878 (Okla. 2014) (class certification reviewed de novo; monetary claims should proceed under §2023(B)(3))
- Howell v. Texaco, Inc., 112 P.3d 1154 (Okla. 2004) (PRSA gives royalty owners the right to be accurately informed; statutory reporting duties exist)
- Mittelstaedt v. Santa Fe Minerals, Inc., 954 P.2d 1203 (Okla. 1998) (post-production costs and marketability require individualized, fact-specific inquiry tied to lease language and custom)
- Masquat v. DaimlerChrysler Corp., 195 P.3d 48 (Okla. 2008) (courts may consider merits to the extent they inform certification, but should not resolve them)
- Krug v. Helmerich & Payne, Inc., 320 P.3d 1012 (Okla. 2013) (equitable relief is barred when an adequate legal remedy exists)
- Dobry v. Dobry, 324 P.2d 534 (Okla. 1958) (plaintiff seeking an accounting must first prove entitlement and show a balance due)