United States District Court, W.D. Oklahoma
DUANE & VIRGINA LANIER TRUST, individually and on behalf of all others similarly situated, Plaintiffs,
SANDRIDGE MISSISSIPPIAN TRUST I, et al., Defendants.
CHARLES B. GOODWIN UNITED STATES DISTRICT JUDGE.
the Court are the motions for partial judgment on the
pleadings based on the Court's January 18, 2019 Order,
filed by Defendants Tom Ward, James Bennett, and Matthew
Grubb (“Individual Defendants”) and Defendant
SandRidge Energy, Inc. (“SandRidge”).
See Ind. Defs.' Mot. (Doc. No. 284);
SandRidge's Mot. (Doc. No. 299). Lead
Plaintiffs have responded in opposition. See
Doc. Nos. 294, 295, 296, 297, 310, 311, 312, 313. The
Individual Defendants and SandRidge have replied.
See Ind. Defs.' Reply (Doc. No. 298);
SandRidge's Reply (Doc. No. 318).
of the Pleadings
explored, developed, and produced natural gas and oil
reserves in, among other locations, the Mississippian
Formation, “a geological formation located in northern
Oklahoma and south-central Kansas.” Consol. Am. Compl.
¶ 87. “[T]o finance increased capital expenditures
planned for 2011, SandRidge decided to ‘monetize'
certain of its existing oil and gas assets in [n]orthern
Oklahoma by selling interests in those assets to the public
via a royalty trust.” Id. ¶ 4. To this
end, SandRidge created the SandRidge Mississippian Trust I
(“Trust I”) and conveyed to it royalty interests
consisting of a share of Sandridge's revenue from (a)
existing horizontal oil and gas wells in five Oklahoma
counties, collectively referred to as the “Trust I Area
of Mutual Interest” (“Trust I AMI”), and
(b) certain horizontal oil and gas wells to be drilled in the
Trust I AMI. Id. To pay for these royalty interests,
Trust I committed to sell common units to investors in an
initial public offering (“Trust I IPO”) and
transfer the net proceeds of that sale to SandRidge.
Id. ¶ 5.
subsequently decided to raise additional funds to finance its
capital expenditures and, in December 2011, formed the
SandRidge Mississippian Trust II (“Trust II”).
Id. ¶ 19. SandRidge conveyed to Trust II
royalty interests consisting of a share of SandRidge's
revenue from (a) existing horizontal wells in nine counties
in Oklahoma and Kansas, collectively referred to as the
“Trust II Area of Mutual Interest” (“Trust
II AMI”), and (b) certain horizontal oil and gas wells
to be drilled in the Trust II AMI. Id. As with Trust
I, to compensate SandRidge for these royalty interests, Trust
II committed to sell common units in an initial public
offering (“Trust II IPO”) and transfer those
proceeds to SandRidge. Id. ¶ 20.
Trust brought the instant action on June 9, 2015.
See Compl. (Doc. No. 1). A consolidated amended
complaint followed on November 11, 2016. See Consol.
Am. Compl. In that pleading, Lanier Trust joined with Nibur
and Rath (who like Lanier Trust had purchased Trust I units)
and with Luna and Willenbucher (who like Lanier Trust had
purchased Trust II units) to bring claims on behalf of
themselves and those individuals and entities that had
purchased or otherwise acquired common units of (a) Trust I
pursuant or traceable to the Trust I IPO, deemed effective
April 5, 2011, and/or at all other times between April 5,
2011, and November 8, 2012, inclusive (the “Class
Period”), see, e.g., Consol. Am.
Compl. ¶¶ 2, 3, and/or (b) Trust II pursuant or
traceable to the Trust II IPO, deemed effective April 17,
2012, and/or at all other times during the Class Period,
see, e.g., id.
was sought under Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 (“Exchange Act”), as amended
by the Private Securities Litigation Reform Act of 1995, 15
U.S.C. §§ 78j(b), 78t(a), and Rule 10b-5,
promulgated thereunder. See 17 C.F.R. §
240.10b-5. Lead Plaintiffs also sought to hold certain
defendants liable under Sections 11, 12(a)(2), and 15 of the
Securities Act of 1933 (“Securities Act”), 15
U.S.C. §§ 77k, 77l(a)(2), 77o.
Exchange Act and Rule 10b-5 claims were asserted against
Trust I, SandRidge, and the Individual Defendants. The
Securities Act claims were asserted against both Trust I and
Trust II, SandRidge, the Individual Defendants, a number of
other individuals associated with SandRidge, and certain
entities that had underwritten the Trust offerings and/or had
helped draft and disseminate prospectuses for the two
offerings. On August 30, 2017, the Court, without objection,
dismissed Lead Plaintiffs' Securities Act claims.
See Doc. No. 129.
January 18, 2019, the Court granted Trust I's motion for
partial judgment on the pleadings and dismissed the Trust II
purchasers' claims against Trust I with prejudice.
See Order of Jan. 18, 2019 (Doc. No. 282) at 14.
Specifically, the Court found that Trust II purchasers (Luna,
Willenbucher, and certain purchasers in Lanier Trust) lacked
statutory standing to assert their Exchange Act claims
against Trust I. See id.
upon the Court's January 18, 2019 Order, both the
Individual Defendants and SandRidge have moved for partial
judgment on the pleadings, contending that Trust II
purchasers (Luna, Willenbucher, and certain purchasers in
Lanier Trust) also lack statutory standing to assert their
Exchange Act claims against them.
12(c) of the Federal Rules of Civil Procedure permits a party
to move for judgment on the pleadings “[a]fter the
pleadings are closed-but early enough not to delay
trial.” Fed.R.Civ.P. 12(c). The Court evaluates the
motion under the familiar standard for Federal Rule of Civil
Procedure 12(b)(6) motions. See Atl. Richfield Co. v.
Farm Credit Bank of Wichita, 226 F.3d 1138, 1160 (10th
Cir. 2000) (citing Mock v. T.G. & Y. Stores Co.,
971 F.2d 522, 528 (10th Cir. 1992)). Accordingly, the Court
“accept[s] all facts pleaded by the non-moving party as
true and grant[s] all reasonable inferences from the
pleadings in favor of the same.” Adams v.
Jones, 577 Fed.Appx. 778, 782 (10th Cir. 2014)
quotation marks omitted). “[T]o survive judgment on the
pleadings, the complaint “must allege ‘a claim to
relief that is plausible on its face.'” Sanchez
v. U.S. Dep't of Energy, 870 F.3d 1185, 1199 (10th
Cir. 2017) (quoting Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009)). “To determine whether the claim to relief
is ‘plausible on its face,' we examine the elements
of the particular claim and review whether the plaintiff has
pleaded factual content that allows the court to draw the
reasonable inference that the defendant is liable for the