United States District Court, E.D. Oklahoma
PERRY CLINE, on behalf of himself and all others similarly situated, Plaintiff,
SUNOCO, INC. (R&M), and, SUNOCO PARTNERS MARKETING & TERMINALS, L.P., Defendants.
A. Gibney, Jr. United States District Judge
Cline owns a royalty interest in one or more oil wells in
Oklahoma. Sunoco, Inc. (R&M), and Sunoco Partners
Marketing & Terminals, L.P. ("Sunoco"),
purchase and resell oil from Cline's wells. Oklahoma law
requires Sunoco to pay proceeds from the oil to Cline. If
Sunoco pays the proceeds late, it must pay Cline interest on
the payment at a rate set forth in Oklahoma's Production
Revenue Standards Act ("PRSA"). See Okla.
Stat. tit. 52, § 570, et seq.
has sued Sunoco for paying his production proceeds late
without paying the required interest. Cline seeks to maintain
a class action on behalf of other owners whom Sunoco paid
late and did not pay interest.
Cline meets the requirements for class certification under
Federal Rule of Civil Procedure 23, the Court will grant the
motion and certify the class.
PRSA governs the payment of proceeds for oil and gas
production from Oklahoma wells. See Okla. Stat. tit.
52, § 570, et seq. The PRSA requires the first
person who buys oil or gas from an interest owner
("first purchaser") or the person holding the
proceeds from the sale of the oil and gas ("holder of
proceeds") to pay the wells' interest owners their
proceeds within specific times. The first purchaser or holder
of proceeds must keep the funds "separate and distinct
from all other funds." Id. § 570.10(A).
With some exceptions, the first purchaser or holder of
proceeds must pay statutory interest if it does not pay the
proceeds on time. The payor must pay 6 percent or 12 percent
interest, depending on the cause of the delay in payment.
buys crude oil from oil and gas producers, collects and
transports the oil, and resells the oil. It contracts with
thousands of oil and gas producers in Oklahoma to purchase
their oil. Sunoco has paid over 100, 000 well owners royalty
proceeds for oil and gas production from over 20, 000
properties since 2006. It maintains a division
order for each property. Sunoco sends division
orders to owners and suspends payment until the owner returns
a signed and completed division order. If an owner does not
want to sign a division order, Sunoco says that it will
remove the account from suspension and pay the owner, but
that the owner must first tell Sunoco that he or she refuses
to sign the division order. When Sunoco pays proceeds late,
it often waits until an owner makes a request for interest
before investigating the request and paying any necessary
contends that Sunoco has engaged in an ongoing scheme to
avoid making the required interest payments.
proposed class comprises owners of wells in Oklahoma who
allege that Sunoco paid them oil proceeds late and without
the statutory interest. Specifically, Cline seeks to represent
the following class:
All non-excluded persons or entities who: (1) received
Untimely Payments from Defendants (or Defendants'
designees) for oil proceeds from Oklahoma wells and (2) who
have not already been paid statutory interest on the Untimely
Payments. An "Untimely Payment" for purposes of
this class definition means payment of proceeds from the sale
of oil production from an oil and gas well after the
statutory periods identified in O[kla]. S[tat]. tit 52,
§570.10(B)(1) (i.e., commencing not later than six (6)
months after the date of first sale, and thereafter not later
than the last day of the second succeeding month after the
end of the month within which such production is sold).
Untimely Payments do not include: (a) payments of proceeds to
an owner under O[kla]. S[tat]. tit 52, §570.10(B)(3)
(minimum pay); (b) prior period adjustments; or (c)
The persons or entities excluded from the Class are: (1)
agencies, departments, or instrumentalities of the United
States of America or the State of Oklahoma; (2) publicly
traded oil and gas companies and their affiliates; (3)
persons or entities that Plaintiffs counsel may be prohibited
from representing under Rule 1.7 of the Oklahoma Rules of
Professional Conduct; and (4) officers of the court.
(Dk. No. 91, at 30; Dk. No. 114, at 13.)
Rule of Civil Procedure 23 governs class actions, including
class certification. The party seeking certification must
first satisfy the requirements of Rule 23(a): (1) numerosity,
(2) commonality, (3) typicality, and (4) adequacy.
Fed.R.Civ.P. 23(a). In addition to the requirements of Rule
23(a), the proposed class must fall within at least one of
the three types of class actions listed in Rule 23(b). Rule
23(b)(3), the relevant type of class action in this case,
requires (5) predominance and (6) superiority. Fed.R.Civ.P.
23(b)(3). Although the Tenth Circuit does not require a
separate ascertainability analysis, the Court will consider
(7) ascertainability as a separate factor. The Court
addresses each requirement in turn.
proposed class representative must demonstrate that "the
class is so numerous that joinder of all members is
impracticable." Fed.R.Civ.P. 23(a)(1). The plaintiff
must present "some evidence of established,
ascertainable numbers constituting the class in order to
satisfy even the most liberal interpretation of the
numerosity requirements. There is, however, no set formula to
determine if the class is so numerous that it should be so
certified." Rex v. Owens ex rel State of Okla.,
585 F.2d 432, 436 (10th Cir. 1978). The Court must consider
"the particular circumstances of the case." Id;
see also Gen. Tel. Co. of the Nw. v. EEOC, 446 U.S. 318,
330 (1980) ("The numerosity requirement requires
examination of the specific facts of each case and imposes no
the proposed class encompasses thousands of interest owners,
which easily satisfies the numerosity requirement under Rule
23(a)(1). See Rex, 585 F.2d at 436 (citing certified
classes comprising 17 to 358 members).
proposed class meets the commonality requirement because it
presents "questions of law or fact common to the
class." Fed.R.Civ.P. 23(a)(2). "Even a single
[common] question" satisfies this requirement.
Wal-Mart, 564 U.S. at 359. Cline must show that
"the class members have suffered the same injury,"
and that the "common contention... is capable of
classwide resolution . . . [and] will resolve an issue that
is central to the validity of each . . . claim in one
stroke." Id. at 350; see also Wallace B.
Roderick Revocable Living Tr. v. XTO Energy, Inc., 725
F.3d 1213, 1218 (10th Cir. 2013). Furthermore, "every
member of the class need not be in a situation identical to
that of the named plaintiff," and "[f]actual
differences in the claims of the class members should not
result in a denial of class certification where common
questions of law exist." Milonas v. Williams,
691 F.2d 931, 938 (10th Cir. 1982). A common question of law
requires the putative class to "share a discrete legal
question of some kind." J.B. ex rel. Hart v.
Valdez, 186 F.3d 1280, 1289 (10th Cir. 1999)
sets forth four questions of law and fact that he argues
satisfy the commonality requirement:
(1) whether, under Oklahoma law, Sunoco owed interest to
Plaintiff and the Class on any and all Untimely Payments;
(2) whether owners must make a demand prior to being entitled
to receive statutory interest;
(3) whether Sunoco's failure to pay interest to Plaintiff
and the putative class on any Untimely Payments constitutes a
violation of the PRSA; and
(4) whether Sunoco defrauded Plaintiff and the putative class
by knowingly withholding statutory interest [as applied to
Count II ...