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Jeter v. Bullseye Energy Inc.

United States District Court, N.D. Oklahoma

June 22, 2019

KEVIN JETER, JOE A. JETER, BARBARA LUCAS, JAMES H. MILLER, SHARON RIGSBY MILLER, LARRY SMITH, JANICE SUE PARKER, individually and as Class Representatives on Behalf of All Similarly-Situated Persons, Plaintiffs,
v.
BULLSEYE ENERGY INC., CEP MID-CONTINENT, LLC, KRS&K, an Oklahoma Partnership, GASHOMA, INC. PURGATORY CREEK GAS, INC., REDBIRD OIL, an Oklahoma Partnership, WILD WEST GAS, LLC, WHITE HAWK GAS, INC., FOUNTAINHEAD, LLC, ROBERT M. KANE, LOUISE KANE ROARK, ANNE KANE SEIDMAN, MARK KANE, PAMELA BROWN, GARY BROWN, Defendants. and KEVIN JETER, JOE A. JETER, BARBARA LUCAS, JAMES H. MILLER, SHARON RIGSBY MILLER, LARRY SMITH, JANICE SUE PARKER, JAMES D. ENLOE, CAROLYN R. ENLOE, and SCOTT BAILY, individually and as Class Representatives on Behalf of All Similarly-Situated Persons, Plaintiffs,
v.
CEP MID-CONTINENT, LLC, ROBERT M. KANE, LOUISE KANE ROARK, ANNE KANE SEIDMAN, MARK KANE, PAMELA BROWN, and GARY BROWN, Defendants.

          OPINION AND ORDER

          TERENCE C. KERN United States District Judge.

         On September 29, 2017, Plaintiffs' Class Representatives Kevin L. Jeter and Joe Jeter (“Settling Plaintiffs”), filed a Joint Motion for Preliminary Approval of Settlement Agreement with Defendant Bullseye Energy Inc., et al., for Certification of a Settlement Class, and for Approval of Notice of Settlement and Plan of Notice. Doc. 244. On October 20, 2017, Plaintiffs Barbara Lucas, James H. Miller, Sharon Rigsby Miller, Larry Smith, Janice Sue Parker, James D. Enloe, Carolyn R. Enloe and Scott Baily (“Non-Settling Plaintiffs”), filed their Response in Objection to Motion for Preliminary Approval of Settlement Agreement by Non-Moving Parties. Doc. 249. On March 21, 2018, the Court entered an order preliminarily approving class settlement. Doc. 262.

         Under the proposed settlement agreement, Defendants would pay $700, 000 into a Settlement Account, and would agree to binding changes in their future royalty payment methodology, which the settling parties contend have a present value of at least $810, 248.10 to $2, 383, 843.37, for a total settlement value of between $1, 510, 248.10 to $3, 083.843.37. Doc. 244- 1. In exchange, the members of the settlement class would release their claims against Defendants. Additionally, class counsel would seek a fee not in excess of 33 percent of the total recovery, and expert fees and litigation costs of approximately $170, 000, leaving a Net Settlement Amount of $485, 666.67. Id.

         On October 12, 2018, Settling Plaintiffs and Defendants filed a Joint Motion for Final Approval of Settlement Agreement. Doc. 287. The Non-Settling Plaintiffs filed a Response in Opposition to the motion, in which they argued that Settling Plaintiffs and Defendants had not met their burden of proof to show that the Settlement Agreement is fair, reasonable and adequate. Doc. 29. They specifically argued that the proposed settlement did not adequately compensate the class members, and-citing Mittelstaedt v. Santa Fe Minerals, Inc., 954 P.2d 1203, 1205 (Okla. 1998)- they asserted that defendants had been improperly burdening lessors with post-production costs.

         I. Applicable Law

         In the Tenth Circuit, as in other circuits, a class-action settlement is entitled to final approval where it is “fair, reasonable and adequate.” Gottlieb v. Wiles, 11 F.3d 1004, 1014 (10th Cir. 1993). The Tenth Circuit has identified four non-exclusive factors courts must consider in determining whether proposed settlement meets this requirement:

A. Whether the proposed settlement was fairly and honestly negotiated;
B. Whether serious questions of law and fact exist, placing the ultimate outcome of the litigation in doubt;
C. Whether the value of an immediate recovery outweighs the mere possibility of future relief after protracted and expensive litigation; and
D. The judgment of the parties that the settlement is fair and reasonable.

Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1188 (10th Cir. 2002). Other relevant factors may include the risk of establishing damages at trial; the extent of discovery and the current posture of the case; the range of possible settlement; and the reaction of class members to the proposed settlement. In re N.M. Natural as Antitrust Litig., 607 F.Supp. 1491, 1504 (D. Colo. 1984).

         II. Analysis

         A. Whether the Agreement Was Fairly and Honestly Negotiated

         There is no evidence that the proposed settlement agreement was not honestly negotiated, but substantial questions exist regarding the fairness of negotiations. As an initial matter, the proposed settlement was reached after former class counsel's representation of the eight Non-Settling Named ...


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