United States District Court, D. New Mexico
THE ANDERSON LIVING TRUST f/k/a THE JAMES H. ANDERSON LIVING TRUST, et al., Plaintiffs,
ENERGEN RESOURCES CORPORATION, Defendant.
MEMORANDUM OPINION AND ORDER GRANTING PLAINTIFFS'
NARROWED MOTION FOR CLASS CERTIFICATION
MATTER comes before the Court upon Plaintiffs' Narrowed
Motion for Class Certification Filed Pursuant to District
Court Order of July 23, 2018 (Doc. 235).
Having reviewed the parties' pleadings and the applicable
law, the Court finds that Plaintiffs' motion is
well-taken and, therefore, is granted.
are four trusts owning royalty interests in oil and gas wells
that filed a putative class action complaint against
Defendant Energen Resources Corporation
(“Energen”). Energen is the owner and operator of
oil and gas wells in the San Juan Basin, located in
Northwestern New Mexico and Southern Colorado. Plaintiffs
allege that Energen was systematically underpaying royalties
due them from the production of oil and gas from the wells in
which they own royalty interests. On appeal, the Tenth
Circuit affirmed this Court's rulings granting summary
judgment to Defendant on claims asserted by two of the
Plaintiffs, but remanded certain claims asserted by the
Neely-Robertson Revocable Family Trust which owns royalty
interests in New Mexico oil and gas wells, and the Tatum
Living Trust which owns royalty interests in wells located in
Colorado. See Anderson Living Tr. v. Energen Res.
Corp., 886 F.3d 826, 847 (10th Cir. 2018)
Resources Corporation operated and produced natural gas from
approximately 112 wells in the State of Colorado (see
Energen's expert report, Doc. 158-1, p. 15) from 2004
until 2015, when it conveyed its interests to Southland
Royalty Company. Energen's gathering, treating and
processing agreements with “Red Cedar” allowed
the use, as fuel, natural gas from Energen's Colorado
wells for compression, gas movement, gathering, treating and
processing volumes of natural gas produced from the Tatum
Trust and Class Members' wells. It is undisputed that
Energen does not pay royalty on the volumes of gas produced
from the Tatum Trust and putative Class wells, which gas is
used for compression, field fuel and plant fuel by Energen
and its contracting parties, principally Red Cedar Gathering
Defendant notes, Plaintiffs now seek to certify a much
different class than they originally proposed. Plaintiffs no
longer seek to certify a class consisting of all
Colorado and New Mexico royalty owners and instead restrict
the proposed class to the Tatum Trust (“Trust”)
and only Colorado royalty owners with interests in the 153
leases at issue in this case. Also, Plaintiff seeks class
certification based on a single underpayment theory, namely
that Energen failed to pay additional royalties on gas used
as fuel and that Energen breached its duty of good faith and
fair dealing by failing to disclose all deductions related to
those royalties. Plaintiffs define the putative class as:
All persons or entities who own non-cost bearing interests
that are subject to the Class oil and gas leases productive
of natural gas and other hydrocarbons in the State of
Colorado, which were previously owned in whole or in part by
Energen and its predecessors by name change, conveyance or
acquisition. Southland Royalty Company LLC now owns the
Doc. 235 at 4. These oil and gas leases provide for the
payment of royalty on natural gas used off the lease
premises, and do not contain other language which indicates
the lessor is to share the expense or cost of off-lease
processes or gathering activity for which the fuel gas is
used. Colorado has adopted a version of the marketable
condition rule, which in its purest form requires the lessor
to market the gas solely at its expense. Under Colorado law,
the marketable condition rule applies only when the lease
does not provide otherwise. ALT, 886 F.3d at 830.
trial court may certify a class only if, after rigorous
analysis, it determines that the proposed class satisfies the
prerequisites of Federal Rule of Civil Procedure 23(a).
Trevizo v. Adams, 455 F.3d 1155, 1163 (10th Cir.
2006). Rule 23(a) imposes four prerequisites for class
(1) the class is so numerous that joinder of all members is
(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 will fairly and adequately
protect the interests of the class.
analysis by the district court before granting class
certification is necessary because of the “potential
unfairness to the class members bound by the judgment if the
framing of the class is overbroad.” Trevizo v.
Adams, 455 F.3d 1155, 1163 (10th Cir. 2006) (citing
Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161
action may be maintained if Rule 23(a) is satisfied and if
falls into one of the types of class actions described in
Rule 23(b). Plaintiff contends that the putative class
satisfies Rule 23(b)(3)'s requirements of predominance
and superiority. Harrel's LLC v. Chaparral Energy,
LLC (Naylor Farms, Inc.), 923 F.3d 779, 789 (10th Cir.
23(c) requires the Court to “define the class and the
class claims, issues, or defenses.” Fed.R.Civ.P.
23(c)(1)(B); see Abraham v. WPX Prod. Prods., LLC,
317 F.R.D. 169, 254 (D.N.M. 2016) (citing cases); Marcus
v. BMW of N. Am., LLC, 687 F.3d 583, 592-93 (3d
Cir.2012) (“essential” prerequisite to a rule
23(b)(3) class action is that the “class must be
currently and readily ascertainable based on objective
criteria”). It is Plaintiffs' burden to show that
the proposed class complies with Rule 23. Wallace B.
Roderick Revocable Living Tr. v. XTO Energy, Inc., 725
F.3d 1213, 1218 (10th Cir. 2013).
Rule 23(a) Requirements
23(a)(1) requires that the putative class membership be
sufficiently large to warrant a class action, because the
alternative of joinder is impracticable. Some courts have
held that numerosity may be presumed at a certain number; the
Tenth Circuit, however, “has never adopted such a
presumption.” Abraham v. WPX Prod. Prods.,
LLC, 317 F.R.D. 169, 220 (D.N.M. 2016) (citing
Trevizo v. Adams, 455 F.3d 1155, 1162 (10th
Cir.2006). Defendant does not challenge this factor and the
Court finds that the proposed class is so numerous that
joinder of all members is impracticable. This factor is
23(a)(2) requires that “there are questions of law or
fact common to the class.” Fed.R.Civ.P. 23(a)(2)
(emphasis added). A single common question will suffice to
satisfy rule 23(a)(2), but the question must be one
“that is central to the validity of each one of the
claims.” Wal-Mart Stores, Inc. v. Dukes, 564
U.S. 338, 374 (2011), cited in Abraham v. WPX Prod.
Prods., LLC, 317 F.R.D. 169, 221 (D.N.M. 2016).
The focus of Rule 23(a)(2)'s commonality requirement is
not so much on whether there exist common questions,
but rather on “the capacity of a classwide proceeding
to generate common answers apt to drive the
resolution of the litigation.” Wal-Mart, 564
U.S. at 350, cited in Naylor Farms, Inc. v. Chaparral
Energy, LLC, 923 F.3d 779, 789 (10th Cir. 2019)
(emphasis in original).
in Leases Language
contends that the Trust's fuel gas claim also is atypical
of any claim held by the putative Class Members and that in
fact, only two leases are the same as the leases held by the
Trust. The leases expressly require royalties to be paid on
gas used as fuel, because they “explicitly prohibit
Energen from deducting post-production costs.” ALT, 886
F.3d at 848-49. Defendant points to language in the Tatum
3/16 of the gross proceeds received by Lessee for all gas
(including all substances contained in such gas) recovered or
separated on the leased premises, produced from the leased
premises and sold by ...