Lead Opinion
11 This is a class-action case. Appellants SEECO, Inc., DeSoto Gathering Company, LLC, and Southwestern Midstream Services Company (collectively SEECO), are subsidiaries of Southwestern Energy Company. In this interlocutory appeal, SEECO challenges an order of the St. Francis County Circuit Court granting class certification to a group of landowners who entered into natural-gas leases with SEECO. SEECO also challenges whether Mrs. Stephanie DeVazier is a proper substitute class representative. After the circuit court had certified the class, SEECO filed an appeal to this court and completed briefing, but before submission of the case, Mrs. Stewmon passed away. This court entered, on appellee’s motion, an order for substitution of a new qualified class representative. Before the substitution was made, Circuit Judge L.T. Simes passed away. Judge Kathleen Bell was assigned as Judge Simes’s replacement. |aOn March 22, 2016, Judge Bell entered an order finding that DeVazier was a - qualified class representative and approved her as a substitute for Stewmon.
SEECO timely filed a supplemental notice of appeal and presented an additional 27 pages of argument, some of which duplicates what was presented in the original brief. When appropriate, we will combine the redundant arguments in our discussion.
In the original appeal, SEECO argues: (1) the prior filing of Snow
At issue is a provision in more than 16,000 of SEECO’s standard gas leases that allows SEECO to deduct from royalty payments reasonable expenses incurred in gathering, [ ^compression, treatment, and marketing the natural gas that is extracted from the wells. The St. Francis County Circuit Court defined the class as
[a]ll residents of the State of Arkansas who entered into leases with Defendant SEECO (up through September 27, 2013) for the development and operation of natural gas wells on property located in the State of Arkansas and who signed leases allowing for deduction of reasonable costs for gathering, compression, treatment and marketing. Specifically excluded are any leases which have non-Arkansas residents as parties to the lease.
(Hereinafter, “the class.”)
SEECO, Inc. is an energy company engaged in the exploitation of natural-gas deposits found in the geological region of Arkansas known as the “Fayetteville Shale.”
The lessors’ dissatisfaction with SEE-CO’s deductions from their royalty payments has, to date, spawned two other class-action lawsuits. On May 7, 2010, El-dridge Snow became lead plaintiff in a similar lawsuit filed in Conway County. On October 14, 2014, the Conway County Circuit Court entered an order that certified the proposed class in Snow.
At the certification hearing in the instant case, the St. Francis Circuit Court had before it the complaint, Stewmon’s copy of the SEECO form gas lease, the Dedicated Field Services Agreement entered into between SEECO and DeSoto Gathering Company that sets the rates for gathering charges on gas SEECO produces in the Fayetteville Shale, which does not make any special provisions for a particular gas well; SEECO’s admission that over 10,000 leases |ncontain similar language to the deduction clause in the Stew-mon lease; SEECO employee Stephen Guidry’s deposition in which he testified that 66.2% of the 16,760 or 11,095 leases with SEECO are implicated by the class definition proposed by Stewmon. It also had copies of check stubs memorializing the deductions to Stewmon’s royalties. Also submitted was a deposition from Stewmon and the entire record from the Snow case, which contained copies of additional SEECO gas leases. Based on the information that the circuit court had before it, it certified the class.
On appeal, SEECO first argues that the prior filing of Snow precludes this case from going forward. It contends that this court prohibits co-equal lower courts from competing with each other over the same action and the same parties under an exclusive-jurisdiction rule that provides either for dismissal on appeal or an extraordinary writ. Citing Foster v. Hill,
Stewmon asserts that at this stage of the proceedings, an interlocutory appeal of the class certification, the issue of whether competing class-action lawsuits should be allowed is outside the scope of what SEECO designated for appeal. Stew-mon argues that this issue was raised and rejected by the circuit court in a motion for summary judgment, which is not ap-pealable in this case. We find merit in Stewmon’s argument.
In pertinent part, Rule 2(a) of the Arkansas Rules of Appellate Procedure-Civil provides,
(a) An appeal may be taken from a circuit court to the Arkansas Supreme Court from:
1. A final judgment or decree entered by the circuit court; (or)
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9. An order granting or denying a motion to certify a case as a class action in accordance with Rule 23 of the Arkansas Rules of Civil Procedure.
Certainly SEECO’s argument is outside the scope of the class certification. This court has made it clear that it will not entertain other issues in an interlocutory appeal pursuant to Rule 2(a)(9) under the guise of a challenge to class certification. Lenders Title Co. v. Chandler,
We are also unpersuaded by SEE-CO’s contention that the “concurrent-jurisdiction doctrine” bars competing class-action lawsuits. In our view, there is no such “doctrine.” Rather, it is a legal response to the situation in which there are two actions between the same parties on the same subject that test the same rights. In Askew v. Murdoch Acceptance Corp.,
SEECO next argues that the class definition erroneously requires a determination of the merits to identify class members. It urges us to find analogous Southwestern Bell Yellow Pages, Inc. v. Pipkin Enterprises, Inc.,
This court reviews class certification under an abuse-of-discretion standard. Id. An 19abuse of discretion means discretion exercised improvidently, thoughtlessly and without due consideration. Id. A class must be susceptible to precise definition. Id. Before a class may be certified under Rule 23, the class description must be sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member of the proposed class, and the identity of the class members must be ascertainable by reference to objective criteria. Id.
SEECO’s reliance on Pipkin Enterprises, Inc. is misplaced. Whereas the Pipkin class description required a determination of the ultimate issue, the class in Stewmon is defined simply by residency and whether the class members signed a gas lease with SEECO that contained a specific clause. The ultimate issue, whether SEE-CO deducted money from royalty checks in excess of “reasonable costs for gathering, compression, treatment and marketing” is reserved for the finder of fact.
Finally, we decline SEECO’s invitation to exercise our superintending control to manage these competing lawsuits. While amendment 80 to the Arkansas Constitution gives this court broad superintending control over the courts of this state, we have to this point primarily employed this power to exercise administrative control over the inferior courts. We do not believe it is necessary for us to take a more active role in this case.
For its third point on appeal, SEECO argues that Stewmon did not introduce evidence to, prove the Rule 23 requirements for class certification. It contends that the circuit court erroneously relied on “allegations and arguments” in support of its Rule 23 findings.
The record belies SEECO’s argument. As previously noted the circuit court had before | init a considerable quantity of evidence and other documentation to justify its findings. In making this argument, SEECO misapprehends the role of the circuit court in certifying a class action. Unlike the federal courts, which require a “rigorous analysis,” Arkansas courts are much more liberal in allowing certification. See 2 David Newbern et al., Civil Practice and Procedure § 8:1 (4th ed.). In Chandler, supra, this court stated that the circuit court is obligated to “undertake enough of an analysis to enable us to conduct a meaningful review of the certification issue on appeal. At a minimum, this requires more than a cursory mention of the six criteria or bare conclusions that those criteria have been satisfied. The trial court cannot simply rubber stamp the complaint.”
(a) Prerequisites to Class Action.. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties and their counsel will fairly and adequately protect the interests of the class.
(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. At an early practicable time after the commencement of an action brought as a class action, the court shall determine by order whether it is to be so maintained. For purposes of this subdivision, “practicable” means reasonably capable of being accomplished. An order under this section may be altered or amended at any time before the court enters final judgment. An order certifying a class action must define the class and the class claims, issues, or defenses.
As appellees note, in United American Insurance Co. v. Smith,
SEECO, however, does not merely argue that the proof submitted in support of the certification is incompetent. It argues further that the proof offered was also inadequate. SEECO challenges each of the elements that Rule 23 requires for certification of a class: ascertainability, numer-osity, typicality, adequacy, commonality and predominance and superiority. We address each in turn.
a. No Evidence of Ascertainability.
Citing Ferguson v. Kroger Co.,
SEECO seems to confuse the issue of whether a circuit court can determine by objective criteria whether a person is or is not a member of the class with whether the proposed class | ^description is under-inclusive or overinclusive. The class description requires only that of its members that they be residents of Arkansas and that they have signed a gas lease with SEECO prior to September 27, 2013. These two facts are easily proved by proof of residence and a copy of the gas lease. Both constitute objective criteria.
b. No Evidence of Numerosity.
SEECO argues that Rule 23 requires “that the class is so numerous that joinder of all members is impracticable.” BPS Inc. v. Richardson,
We have previously indicated, the Gui-dry affidavit was properly before the circuit court, and the circuit court did not err in relying on it to certify the class. Additionally, the circuit court had before it the Dedicated Field Services Agreement entered into between SEECO and | iaDeSoto Gathering Company that sets the rates for gathering charges on all gas that SEECO extracted in the Fayetteville Shale. In BPS Inc. v. Richardson,
[w]e held that the exact size of the proposed class and the identity of the class members need not be established for the court to certify a class, and the numer-osity requirement may be supported by common sense. We have not adopted a bright-line rule to determine how many class members are required to satisfy the numerosity requirement.
It is therefore not improper for the circuit court to infer that, out of approximately 10,000 gas leases held by Arkansas residents and a uniform policy of upcharging the gas-lease lessor, a potential class of at least several thousand members would emerge.
c. No Evidence of Typicality.
SEECO asserts that Rule 23(a) requires that “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” However, it argues that it presented unrebutted evidence that Ms. Stewmon is “subject to unique defenses that threaten to become the focus of the litigation.”
Because Stewmon has died and been substituted as class representative, and because SEECO makes an equivalent argument with regard to DeVazier in its supplemental point B, we decline to further address this argument because it is moot.
d. No Evidence of Adequacy.
Because this argument was directed toward Stewmon, and she is no longer the class representative, argument under this rubric is moot. However, we are mindful that this point is essentially revived with regard to DeVazier in supplemental point C, so we will defer our | ^discussion.
e. No Evidence of Commonality and Predominance.
SEECO next argues that Ms. Stewmon failed to present any evidence of commonality and predominance. Instead, she erroneously presumed that she could rely on another lawsuit decided almost 20 years ago, SEECO v. Hales,
The commonality element under Rule 23(a)(2) of the Arkansas Rules of Civil Procedure requires a determination by the trial court that “there are questions of law or fact common to the class.” BPS, Inc.,
SEECO also challenges Stew-mon’s proof of predominance. As with the commonality 11fiargument, it asserts that she relied entirely, and erroneously, on Hales, supra, a 20-year-old lawsuit about other issues. It notes that she called no witnesses and that argument of counsel was not evidence. This argument is not persuasive.
In Kersten v. State Farm Mutual Automobile Insurance Co.,
f.Multiple Class Actions Destroy Superiority.
Finally, under this section, SEE-CO argues that Rule 23(b) requires “that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.” It asserts that superiority exists when representative litigation promotes judicial efficiency and is fair to both sides and that the avoidance of multiple suits lies at the heart of any class-action decision. However, it contends that the in-fighting between the Snow and Stewmon lawsuits, which resulted in the invocation of judicial process to enjoin each other’s case, put the lie to any claim of superiority. Further, SEECO asserts that Ms. Stewmon did not offer any evidence to support superiority, and the record overwhelmingly defeats superiority because (1) SEECO is subject to multiple cases involving the same class and claims, (2) SEECO is subject to the risk of inconsistent rulings and judgments in two state courts and a federal court, (3) judicial efficiency is destroyed by multiple proceedings, and (4) there is nothing fair to SEECO (or absent class members) in either the warring state-court cases or the split of SEECO’s lessors between federal and state forums. It argues that this destroys superiority because “there exists [ iñthe possibility of a multiplicity of suits across the state with the potential that circuit courts may reach inconsistent results. We disagree.
In spite of the fact that there are three class actions, they represent a substantial amount of judicial economy when there are over 16,000 gas leases potentially involved. We note further that, although it is couched in terms of challenging an element required for class certification, it is really attempting to have this court address, yet again, the propriety of multiple class actions filed against SEECO. As we stated in SEECO’s first point, we will not entertain other issues in an interlocutory appeal pursuant to Rule 2(a)(9), under the guise of a challenge to class certification. Lenders Title Co. v. Chandler, supra.
For its fourth point, SEECO argues that the redundant class certification violates its federal and state constitutional rights to due process. It asserts that the “astounding deviations from fair, orderly, and traditional rules of practice” in this case violate SEECO’s state and federal constitutional rights to due process of law. Specifically, it contends that the mere pen-dency of this action is forbidden by the previously filed Snow lawsuit and defeats any notion of superiority, finality, and fairness to SEECO. Further, Judge Simes should have shut it down immediately. In addition, it argues that the circumstances of this ease deprive SEECO of any meaningful opportunity to be heard on the reasonableness of costs for gathering, treatment and marketing based on actual costs of service to each well and on whether the SEECO lessor is barred by the notiee-of-breach clause. We decline to discuss the merits of this point for several reasons.
First, this argument is outside the scope of what is permitted for this interlocutory | appeal. Lenders Title Co. v. Chandler, supra. As with SEECO’s first point, the argument exceeds the bounds prescribed by Rule 2(a)(9) of the Arkansas Rules of Appellate Procedure-Civil. Second, it is not the function of this court to police everyday aspects of trial practice via interlocutory appeal; Rule 23(d) gives the circuit court broad authority to make appropriate orders affecting fairness and the “fair conduct of the action.” Finally, in oral argument, SEECO confirmed our observation that it did not secure a ruling in any circuit court regarding the activity it now complains of on appeal. We will not address arguments that are not raised and ruled upon below. Beverly Enters.-Ark., Inc. v. Thomas,
Next we consider SEECO’s supplemental points. It first argues that DeVazier was not properly substituted as lead plaintiff. It asserts that Rule 25 of the Arkansas Rules of Civil Procedure was not complied with, and neither was Rule 24, if she was entering the lawsuit as an intervenor. This argument has no merit.
First, we do not address SEE-CO’S Rule 24 argument as it is not cognizable in this interlocutory appeal. Regarding SEECO’s Rule 25 argument, as noted previously, after Stewmon’s untimely demise, appellees filed a motion to substitute a class representative pursuant to Rule 25. Upon consideration of the motion, we entered the following order:
APPELLEE’S EMERGENCY MOTION. TO TEMPORARILY REMAND FOR SUBSTITUTION OF A DECEASED PARTY IS GRANTED FOR THE PURPOSE OF SUBSTITUTING A NEW QUALIFIED CLASS REPRESENTATIVE.
SEECO’s contention that Rule 25 of the Arkansas Rules of Civil Procedure were not 11sfollowed is of no moment. This was a situation where no procedure was specified under our rules. Accordingly, our order purposely did not limit the circuit court to make a substitution in accordance with Rule 25. We, and the circuit court pursuant to our mandate, acted in a manner authorized by Rule 81(c) of the Arkansas Rules of Civil Procedure, which provides, “When no procedure is specifically prescribed by these rules, the court shall proceed in any lawful manner not inconsistent with the Constitution of this State, these rules or any applicable statute.” We hold that there is no error here.
SEECO next argues that Mrs. DeVazier is not a proper class representative and that class counsel is not adequate. It first contends that the appellees failed to present competent proof because it submitted no live testimony. As we previously opined in this opinion, affidavits may supply sufficient proof of required elements in class certification when viewed in conjunction to pleadings and other materials before the circuit court. It is the totality of all the evidence before the circuit court that forms the basis of the circuit court’s order. Thus we cannot say that the circuit court abused its discretion.
SEECO further argues that De-Vazier is not an adequate class representative because she is a member of other classes, Smith and Snow and has her own lawsuit pending.
Arguing further, SEECO asserts that DeVazier would be unable to serve as class representative because she will be unable to dismiss her pending lawsuit because it would constitute a second dismissal under Rule 41(a) of the Arkansas Rules of Civil Procedure.
SEECO also contends that DeVazier has defenses unique to her situation that will make her atypical of other members of the class. We find these arguments unpersuasive.
A class representative satisfies the Rule 23 requirement of typicality if the claims and defenses are representative of the class. The Money Place, LLC v. Barnes,
SEECO next asserts that because De-Vazier has a “multiplicity” of “recycled” lawsuits against SEECO, plus unique claims and defenses, she is not “typical” of other members of the class and therefore cannot be class representative. Of particular concern is the notice provision in her lease that gave SEECO the opportunity to cure.
121 In DIRECTV, Inc. v. Murray,
Finally, SEECO argues under this point that the remand raised additional issues concerning the adequacy of class counsel. It notes that the appellees considered Stewmon’s personal representative and the spouse of class counsel before selecting DeVazier. SEECO faults the appellees for not selecting the “obvious” successor, Stewmon’s surviving spouse. We reject this argument.
Class counsel- is presumed to be adequate. Diamante, LLC v. Dye,
SEECO next argues that the circuit court did not have jurisdiction because De-Vazier’s claims are being litigated in the June Merrell lawsuit and the Snow class action. It contends that | ⅞⅞⅛⅛ involvement is a matter of subject-matter jurisdiction which may be raised at any time. Citing Tortorich v. Tortorich,
SEECO’s reliance on Tortorich and Foster is misplaced. In the supplemental opinion on denial of rehearing in Tortorich, this court made it very clear that its decision was based on the fact that Saline County was the improper venue for a suit for absolute divorce when a suit for separate maintenance and divorce from bed and board was pending in Pulaski County. The case turned on statutory interpretation, not subject-matter jurisdiction being argued for the first time on appeal. Further, the Tortorich court made it clear that Rule 12(b)(8) provided a defense, not a rule of subject-matter jurisdiction.
SEECO’s reliance on Foster is likewise misplaced. There, this court exercised its superintending authority, but only in regard to the administrative decision of whether a duly appointed special prosecutor acting in one division of a circuit court would conduct a murder investigation rather than the division that regularly handled criminal matters. See Smith v. Simes,
Finally, SEECO argues that when Stewmon died, the class-certification order should have been dismissed. We hold that this issue is outside the scope of the interlocutory appeal that we have before us. In this appeal, our role is to determine whether the circuit court abused its discretion in certifying the class that we have before us. We have already determined that the circuit court did not err in finding that DeVa-zier was a suitable class representative. Nothing more is required in this appeal. Furthermore, when Stewmon died, we remanded this case to the circuit court to allow for a proper substitution. Nothing argued by SEECO suggests to us that this court lacked the authority to make such an order.
Affirmed.
Notes
. SEECO, Inc. v. Snow,
. The Fayetteville Shale is a geographic region in Arkansas that runs in a band just north of Little Rock from Sebastian and Washington Counties to Phillips County. According to the US Energy Information Administration, the Fayetteville Shale is estimated to cover 5,853 square miles, 60 to 575 feet thick, at a depth of 1450—6700 feet. It holds 13,240 billion cubic feet of improved, technically recoverable gas. The average well was estimated to produce 1.3 billion cubic feet of gas.
.At the certification hearing, the class attorney asserted that through discovery he learned that processing the gas cost SEECO twenty-seven cents per thousand cubic feet, and SEECO deducted from royalty payments almost sixty cents per thousand cubic feet.
. All non-excluded persons or entities who are citizens of the State of Arkansas as of the commencement date of this civil action (that is, the date of filing of the original Complaint) and who are, or were, royalty owners in wells producing natural gas from the Fayetteville Shale where SEECO, Inc. is or was the operator and/or working interest owner/lessee under oil and gas leases that provide for the payment of royalty as follows:
(a) "Lessee shall pay Lessor [stated fraction or %] of the proceeds derived from the sale of all gas (including substances contained in such gas) produced, saved and sold by Lessee. Proceeds are defined as the actual amount received by the Lessee for the sale of said gas. In calculating the proceeds derived from the sale of gas produced, saved and sold by Lessee, Lessee shall be entitled to deduct all reasonable gathering, transportation, treatment, compression, processing and marketing costs that are incurred by Lessee in connection with the sale of such gas” and
(b) "Lessee shall have the right to use, free of cost, gas, oil and water found on said land for its operations, except water from the wells of the "lessor,”
from and after January 1, 2006, and where DeSoto Gathering Company, LLC and Southwestern Energy Services, Inc. are gathering and purchasing the natural gas, respectively. The Class Claims relate only to the proper payment of royalty arising from SEECO, Inc’s sales of natural gas to these affiliated entities and produced from the wells completed in the Fayetteville Shale and located in the State of Arkansas. The Class does not include overriding royalty owners or other owners who derive their interest through the oil and gas lessee. The Class is limited to natural gas production from the Fayetteville Shale.
The Class Claims shall not include royalty owners' claims in those wells and during those periods where SEECO, Inc. did not, through itself or DeSoto Gathering Company, LLC and Southwestern Energy Services, Inc., gather, market and sell natural gas.
The persons or entities excluded from the Class are (a) all governmental entities, including federal, state and local governments and their respective agencies, departments, or instrumentalities, (b) the States and territories of the United States or any foreign citizens, states, territories or entities; (c) the United States of America, (d) publicly traded entities and their respective parents, affiliates, and related entities, including SEECO, Inc., DeSoto Gathering Company, LLC and Southwestern Energy Services, Inc.; (e) owners of any interests and/or leases located on or within any unit operations of an entire pool created under A.C.A. § 15-72-308 et seq. and any federally created units, including the Ozark Highlands Unit, (f) owners of any non operating working interest for which SEECO, Inc., or its agents or representatives, as operator, disburses royalty, and (g) any persons or entities that Plaintiff’s counsel is, or may be, prohibited from representing under the Arkansas Rules of Professional Conduct, including SEECO’s counsel, their firms, and member's of their firms (the "Class” or "Class Members”).
. DeVazier is suing SEECO along with another individual, June Merrell. Hereinafter, this will be referred to as the June Merrell lawsuit.
. We note that, in oral argument, SEECO stated that this lawsuit was dismissed prior to being served.
. The lease includes the following notice-of-breach clause:
11. In the event lessor considers that lessee is in breach of any of its obligations hereunder, lessor shall notify lessee in writing of the facts relied upon as constituting a breach hereof, and lessee, if in breach hereof, shall have sixty days after receipt of such notice in which to commence the compliance with the obligations imposed by virtue of this lease. Until such time as . lessee has been given the above described written notice and opportunity to cure the asserted breach, lessee shall not be considered in default under the terms of this lease.
Concurrence Opinion
concurring.
I concur for the same reasons set out in SEECO, Inc. v. Snow,
Brill, C.J., joins.