United States District Court, W.D. Oklahoma
IN RE SANDRIDGE ENERGY, INC. SECURITIES LITIGATION
CHARLES B. GOODWIN, UNITED STATES DISTRICT JUDGE.
December 2012, Lead Plaintiffs filed this lawsuit alleging that
Defendants SandRidge Energy, Inc. (“SandRidge”)
and its senior executives Tom L. Ward, James D. Bennett, and
Matthew K. Grubb had violated the federal securities laws in
2011 and 2012. Following dismissal of various claims, there
remain pending allegations of violation of sections 10(b) and
20(a) of the Securities Exchange Act of 1934, 15 U.S.C.
§§ 78j(b) and 78j(a), as amended, and the
Securities and Exchange Commission's Rule 10b-5
promulgated thereunder, 17 C.F.R. §
before the Court is Lead Plaintiffs' Motion for Class
Certification, in which Lead Plaintiffs request certification
of a class “consisting of all purchasers of SandRidge
common stock between February 24, 2011 and November 8, 2012,
inclusive, ” “who were damaged
thereby.” Lead Pls.' Mot. (Doc. No. 268) at 7;
see also Lead Pls.' Decl. (Doc. No. 269); Third
Am. Compl. ¶¶ 1, 33 (Doc. No. 225). Defendants have
responded, see Doc. Nos. 329, 330, 331, 332, and
Lead Plaintiffs have replied, see Doc. Nos. 340,
341, 342, 343, 344, 345, 346. In addition, the Court heard
argument at a hearing on the Motion on September 6, 2019.
See Doc. No. 448.
review of the relevant record, and for the reasons outlined
below, the Court hereby GRANTS Lead Plaintiffs' Motion,
subject to one modification to the named Class
previously outlined by the Court,
SandRidge is an oil and gas exploration company, see
[Third Am. Compl.] ¶ 2, and this lawsuit focuses on
“one of SandRidge's core holdings referred to as
the Mississippian play, ” id., “a
geological formation that extends hundreds of miles across
northern Oklahoma and south-central Kansas.”
Id. at 21, ¶ 53.
The Lead Plaintiffs have contended that during the Class
Period, co-defendant Tom L. Ward, SandRidge's founder and
then chief executive officer and Chairman of its Board of
Directors (“Board”), see Id. at 15,
¶ 29, together with Bennett, then SandRidge's chief
financial officer and a senior vice president, see
Id. at 16, ¶ 30, and Grubb, then SandRidge's
president and chief operating officer, see Id.
¶ 31, made certain materially false and misleading
statements and failed to disclose certain material
information about SandRidge's business and its activities
in the Mississippian formation.
In re SandRidge, 2017 WL 3309758, at *2-3 (footnote
In their remaining claim, Lead Plaintiffs allege that
although Ward, Grubb and Bennett “told investors that
SandRidge was investing in the Mississippian due to the large
amounts of oil reserves and the favorable amount of oil
relative to gas in the area, '” [Third Am. Compl.]
at 7, ¶ 4; e.g., id. at 62, ¶
152, these “statements misrepresented the nature of the
Mississippian properties, ” id. at 7, ¶
Id. at *4 (alteration omitted). Specifically, Lead
Plaintiffs allege that Defendants misrepresented the economic
value of the Mississippian formation to investors by (i)
understating the amount of gas relative to oil (the
“GOR”) in the formation; and (ii) overstating the
amount of oil recoverable from a typical horizontal
well-i.e., the estimated ultimate recovery (the
“EUR”)-in the formation. Id. at *4 n.10;
see also Third Am. Compl. ¶¶ 47, 51, 132,
141-148, 152, 153(d), 155-156.
Class Certification Standard
class action is an exception to the usual rule that
litigation is conducted by and on behalf of the individual
named parties only.'” Wallace B. Roderick
Revocable Living Tr. v. XTO Energy, Inc., 725
F.3d 1213, 1217 (10th Cir. 2013) (quoting Wal-Mart
Stores, Inc. v. Dukes, 564 U.S. 338, 348 (2011)).
Federal Rule of Civil Procedure 23 prescribes the
requirements for class certification.
Rule 23(a) requires the party seeking certification to
demonstrate that: (1) the class is so numerous that joinder
of all members is impracticable (numerosity); (2) there is a
question of law or fact common to the class (commonality);
(3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class (typicality);
and (4) the representative parties will fairly and adequately
protect the interests of the class (adequacy).
class also must satisfy one of the three requirements listed
in Rule 23(b). In this case, Lead Plaintiffs rely on Rule
23(b)(3), which requires the Court to find that
“questions of law or fact common to class members
predominate over any questions affecting only individual
members” and that “a class action is superior to
other available methods for fairly and efficiently
adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3).
party seeking class certification must affirmatively
demonstrate his compliance with [Rule 23]-that is, he must be
prepared to prove that there are in fact
sufficiently numerous parties, common questions of law or
fact, etc.” Dukes, 564 U.S. at 350. The Court
“has an independent obligation to conduct a rigorous
analysis before concluding that Rule 23's requirements
have been satisfied.” Roderick, 725 F.3d at
1217 (internal quotation marks omitted). “Granting or
denying class certification is a highly fact-intensive matter
of practicality.” Monreal v. Potter, 367 F.3d
1224, 1238 (10th Cir. 2004).
analyzing the Rule 23(a) factors, the Court must determine
whether the suit has been brought by “[o]ne or more
members of [the] class.” Fed.R.Civ.P. 23(a); Paton
v. N.M. Highlands Univ., 275 F.3d 1274, 1278 (10th Cir.
2002); see also Dukes, 564 U.S. at 348 (noting that
“a class representative must be part of the
class” (internal quotation marks omitted)).
defined above, the putative class consists of “all
purchasers of SandRidge common stock between
February 24, 2011 and November 8, 2012, inclusive, ”
“who were damaged thereby.” Lead Pls.' Mot.
at 7 (emphasis added). The parties' argument and evidence
reflect that the SandRidge stock relevant to Vladimir and
Angelica Galkin, who are husband and wife, was purchased
during the class period through an individual brokerage
account owned and held by Angelica Galkin only. See
Defs.' Resp. (Doc. No. 332) at 32-33; id. Ex.
12, V. Galkin Dep. 38:19-40:6 (Doc. No. 331-4); id.
Ex. 21 (Doc. No. 331-7) at 22-100; id. Ex. 21 (Doc.
No. 331-8) at 2-60; Hr'g Tr. 55:19-56:18 (Doc. No. 449).
As a result, regardless of how the law in the Galkins'
state of residence might characterize the posttrade ownership
of the stock, Vladimir Galkin was not a
“purchaser” of SandRidge stock during the class
period. It follows that Mr. Galkin is not a member
of the proposed class and may not “sue . . . as [a]
representative part[y] on behalf of all members” of
that class. Fed.R.Civ.P. 23(a); see Dukes, 564 U.S.
at 348; cf. Tellabs, Inc. v. Makor Issues & Rights,
Ltd., 551 U.S. 308, 318 (2007) (“Section 10(b) . .
. affords a right of action to purchasers or sellers
of securities injured by its violation.” (emphasis
satisfy the element of numerosity, Lead Plaintiffs must show
that “the class is so numerous that joinder of all
members is impracticable.” Fed.R.Civ.P. 23(a)(1). This
element, which is “rarely disputed in securities fraud
class actions, ” is not contested by Defendants and is
clearly met here. In re NII Holdings, Inc. Sec.
Litig., 311 F.R.D. 401, 406 (E.D. Va. 2015);
see Third Am. Compl. ¶ 35 (alleging that
SandRidge is a publicly traded company with approximately
415.4 million shares outstanding in February 2012).
establish commonality, Lead Plaintiffs need only demonstrate
a “single” “question of law or fact
common to the class.” Dukes, 564 U.S. at 359;
Fed.R.Civ.P. 23(a)(2). Here, Lead Plaintiffs' claims all
“depend upon” at least one “common
contention”-i.e., that Defendants made material
misrepresentations as to the makeup of the Mississippian
formation-that is “of such a nature that it is capable
of classwide resolution-which means that determination of its
truth or falsity will resolve an issue that is central to the
validity of each one of the claims in one stroke.”
Dukes, 564 U.S. at 350; see also Third Am.
Compl. ¶ 39. Defendants do not contest that this element
has been met and the Court likewise finds it so.