Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc.
281 F.R.D. 477
D. Kan.2012Background
- Roderick Revocable Living Trust sues XTO Energy, Inc. alleging royalty deductions for rendering gas marketable violate Kansas law.
- Plaintiff moves to certify a class of Kansas royalty owners from XTO wells producing gas and related constituents since 1999; certain wells and owners are excluded.
- Proposed class includes all Kansas wells with gas/gas constituents, excluding Timberland serviced wells and 68 Timberland-excluded wells; Colorado wells are excluded.
- XTO contracts with third parties for marketability work; deductions ('netbacks') and conservation fees reduce royalty payments; Avatar accounting system standardizes payments.
- Court holds issue ripe for certification; find implied duty to market under Kansas law; common question exists despite lease language variations; hearing not required.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is there a common question on marketability justifying class treatment? | Roderick argues uniform marketability duty applied to all class members. | XTO asserts lease variations defeat commonality and require lease-by-lease analysis. | Yes; common duty to market exists; common claim viable. |
| Is the class sufficiently numerous under Rule 23(a)? | There are over 20,000 royalty owners; numerous wells in Kansas. | No challenge to numerosity; not contested. | Numerosity satisfied. |
| Are the claims typical and the representative adequate? | Roderick's breach/marketability/ accounting claims are typical of class. | Roderick leases represent only some forms and trustee's control is limited. | Typicality and adequacy satisfied; trustee adequately represents class. |
| Do common issues predominate and is a class action superior? | Common marketability issues and uniform deductions predominate; class action is superior due to economies of scale. | Lease language variety could require individualized inquiries. | Predominance and superiority satisfied. |
Key Cases Cited
- Amchem Prods. v. Windsor, 521 U.S. 591 (U.S. 1997) (rigorous analysis required for class certification)
- Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147 (U.S. 1982) (commonality and cohesion for class actions)
- Wal-Mart Stores v. Dukes, 131 S. Ct. 2541 (Supreme Court 2011) (commonality requires a common policy; individualized proof limited)
- Shook v. El Paso County, 386 F.3d 963 (10th Cir. 2004) (broad discretion in determining certification; focus on Rule 23 elements)
- Farrar v. Mobil Oil, 234 P.3d 19 (Kan. Ct. App. 2010) (common implied covenants and marketability in Kansas leases)