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Cline v. Sunoco, Inc. (R&M)

United States District Court, E.D. Oklahoma

October 3, 2019

PERRY CLINE, on behalf of himself and all others similarly situated, Plaintiff,


          John A. Gibney, Jr. United States District Judge

         Perry Cline owns a royalty interest in oil wells in Oklahoma. The defendants, Sunoco, Inc. (R&M), and Sunoco Partners Marketing & Terminals, L.P. ("Sunoco"), purchase oil from the wells, which they then sell. Sunoco pays interest owners, including Cline, proceeds from the oil it purchases and sells. Oklahoma's Production Revenue Standards Act ("PRSA") governs when Sunoco must pay those proceeds and imposes statutory interest for paying the proceeds late. See Okla. Stat. tit. 52, § 570, et seq. Cline has sued Sunoco for failing to pay the statutory interest on late payments it made on oil proceeds. Cline also seeks to maintain a class action on behalf of well owners who did not receive their production proceeds on time and did not receive statutory interest with those payments. He seeks money damages for violating the PRSA, damages for fraud, punitive damages, an accounting, and other equitable relief.

         After Cline filed this lawsuit, Sunoco investigated the claim and tendered to Cline the statutory interest Sunoco believes it owed him. Cline has not cashed the check Sunoco sent him for the interest. Sunoco now moves to dismiss this action, arguing that the Court lacks subject matter jurisdiction because the tender of payment has mooted Cline's claim.

         The Court will deny the motion because the tender of payment does not provide Cline with complete relief. Cline, therefore, has standing to pursue his class claims.

         I. BACKGROUND

         Sunoco purchases oil from numerous wells in Oklahoma and distributes proceeds from the oil to well owners. Under the PRSA, Sunoco must pay statutory interest to interest owners when it does not pay the proceeds on time, based on timetables set forth in the statute. The PRSA contains several exceptions to the requirement to pay within those timetables.

         Sunoco often waits to pay the statutory interest until an interest owner requests the interest. Sunoco then investigates the payment and pays the interest if it determines it paid the proceeds late and owes the requestor interest under the PRSA.

         In July, 2017, Cline sued Suncoco in Oklahoma state court, alleging that its practice for investigating and paying the proceeds violates the PRSA. He also alleges that Sunoco has committed fraud by hiding the fact that Sunoco owes interest to the class members. Cline seeks class certification, actual damages, an accounting, disgorgement, an injunction, punitive damages, [1] and attorneys' fees and costs. Sunoco removed the action to this Court in August, 2017.

         After Cline filed the lawsuit, Sunoco investigated Cline's claims that Sunoco owed Cline statutory interest. In December, 2017, Sunoco sent Cline a check for the interest it believes it owed him for late payments made in 2015 and 2016. Sunoco attached a check to a letter that described the check as an unconditional payment and not an offer to settle the lawsuit. To date, Cline has not cashed the check.

         Cline moved to certify the class and name him as class representative in June, 2019. In August, 2019, Sunoco moved to dismiss for lack of jurisdiction. Sunoco argues that it has paid Cline all the statutory interest Sunoco owes him, and that Sunoco has not made any late payments to Cline since 2016. Sunoco says this unconditional tender moots Cline's claim. Sunoco argues that because Cline no longer has a live controversy with Sunoco, the Court should dismiss the case and deny the class certification motion.


         A. Legal Standard [2]

         Federal courts have jurisdiction over "cases" and "controversies." U.S. Const., Art. Ill. § 2. A plaintiff must show that he has a legally cognizable interest, or personal stake, in the outcome of the litigation. Genesis Healthcare Corp. v. Symcyzk, 569 U.S. 66, 71 (2013). "This requirement ensures that the Federal Judiciary confines itself to its constitutionally limited role of adjudicating actual and concrete disputes, the resolutions of which have direct consequences on the parties involved." Id. To have standing to bring an action, a plaintiff must prove (1) that he suffered an injury in fact that is "concrete and particularized and ... actual or imminent, not conjectural or hypothetical;" (2) that the injury is "fairly traceable to the challenged action of the defendant;" and (3) that it is "likely, as opposed to merely speculative, that the injury will be redressed by the relief requested." Tandy v. City of Wichita, 380 F.3d 1277, 1283 (10th Cir. 2004); see Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992).

         An actual controversy must exist at all stages of the action; if the plaintiff loses his "personal stake" at any point during the litigation, the court must dismiss the action as moot. See Genesis Healthcare Corp., 569 U.S. at 71. "A case becomes moot, however, 'only when it is impossible for a court to grant any effectual relief whatever to the prevailing party.'" Campbell-Ewald Co. v. Gomez, 136 S.Ct. 663, 669 (2016) (quoting Knox v. Serv. Emps. Int'l Union, Local 1000, 567 U.S. 298, 307 (2012)). If a party has a concrete interest in the outcome of the action, "however small," a court should not dismiss the case as moot. Id. (quoting Chafin v. Chafin, 568 U.S. 165, 172(2017)).

         B. The Campbell-Ewald Decision

         Campbell-Ewald lies at the heart of this dispute. In Campbell-Ewald, the Supreme Court considered whether an "unaccepted offer to satisfy the named plaintiffs individual claim [is] sufficient to render a case moot when the complaint seeks relief on behalf of the ...

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