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 represents class members who own interests in oil wells
in Oklahoma. The defendants, Sunoco, Inc. (R&M), and
Sunoco Partners Marketing & Terminals, L.P.
("Sunoco"), purchase and sell oil from the wells.
Sunoco pays the class members proceeds when it sells the oil.
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.
has moved for partial summary judgment on two issues: (1)
whether Sunoco violates the PRSA by not paying statutory
interest on late royalty payments until an owner demands that
interest; and (2) whether the PRSA requires Sunoco to pay the
statutory interest at the same time it makes the late
payments. Because the Court concludes that Sunoco must pay
the statutory interest without a demand and at the same time
it makes the late payment, the Court will grant Cline's
motion for partial summary judgment.
buys oil from numerous wells in Oklahoma and distributes
proceeds from the oil to well owners. The class members own
interests in those wells. The PRSA dictates when Sunoco must
pay the proceeds, and it requires Sunoco to pay statutory
interest to interest owners when it pays the proceeds
often waits until an interest owner requests the statutory
interest before it pays that interest. When it receives a
request, Sunoco investigates the payment and pays the
interest if it determines that it owes interest under the
PRSA. Sunoco, however, says that it sometimes pays interest
owners the required statutory interest without a request.
July, 2017, Cline sued Sunoco in Oklahoma state court. Cline
alleges that Sunoco's practice of paying interest on late
proceed payments violates the PRSA, and that Sunoco has
committed fraud by hiding the fact that Sunoco owes interest
to the class members. Sunoco removed the action to this Court
in August, 2017.
moved to certify the class and name him as class
representative in June, 2019. In his motion, Cline explained
that this action raises common questions of law and fact,
(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.
(Dk. No. 91, at 22-23.) On October 3, 2019, the Court
certified a class of interest owners to whom Sunoco paid
proceeds late but did not pay the statutory
interest. The Court approved the manner and form of
class notice in November, 2019. The class opt-out period
expired on December 9, 2019.
October, 2019, Cline moved for partial summary judgment on
whether Sunoco violates the PRSA by waiting to pay statutory
interest until an owner requests it, and whether the PRSA
requires Sunoco to pay the statutory interest with the late
payments. Sunoco moved to strike or stay briefing on the
motion until after the class notice period expired. The Court
denied the motion to strike or stay and instructed the
parties to brief the motion as ordered by the Court. On
December 6, 2019, the Court held a hearing on the motion for
partial summary judgment. Because the opt-out period has
expired, the Court finds it appropriate to issue a ruling on
the merits of this action.
Disputes of Facts
succeed on the motion for partial summary judgment, Cline
must first establish that Sunoco omits interest on late
payments and waits for a demand from an owner before paying
that interest. The parties disagree about whether
Sunoco's actions constitute a uniform "policy"
or a frequent "practice," and Sunoco insists that
it sometimes pays interest with the late payment and without
the request of the interest owner. Those arguments miss the
point. Sunoco cannot seriously dispute that it waits to pay
statutory interest until it receives a request from the
interest owner; indeed, it has admitted that it does.
(See, e.g., Dk. No. 103-2; Dk. No. 105, at 17-18.)
The record establishes that Sunoco engages in this conduct.
(See Dk. No. 142-1, 7:13-8:19; Dk. No. 142-2,
6:6-8:10; Dk. No. 142-3, 7:2-9:10; Dk. No. 142-5, 7:8-15; Dk.
No. 160-1, 6:12-7:19.) Thus, no genuine dispute of material
fact exists about Sunoco's actions with regard to the
Questions of Law
asks the Court to decide two legal questions that lie at the
center of this litigation.First, he asks for a ruling that
Sunoco's "uniform policy of not paying statutory
interest until an owner makes a demand" violates the
PRSA. (Dk. No. 142, at 9.) Second, he asks the Court to
decide whether the PRSA "expressly require[s]
payment of interest at the time proceeds are paid
late." (Dk. No. 142, at 11.) Because any demand
requirement depends on when Sunoco must pay interest, the
Court first considers when the PRSA requires Sunoco to pay
interest on late payments.
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