Gagon et al v. Merit Energy Company, LLC

Filing 76

ORDER. ORDERED that defendant Merit Energy Company, LLC's Motion to Stay Briefing as to Plaintiffs' Motion for Partial Summary Judgment 62 is GRANTED in part. ORDERED that plaintiffs Wade Gagnon, Valerie Van Tassel, and David F. William s' Motion for Partial Summary Judgment on Lease Language and Marketable Condition Rule 55 is DENIED without prejudice as premature. ORDERED that defendant Merit Energy, LLC's Motion to Strike Plaintiffs' Motion for Partial Summary Judgment for Lack of Jurisdiction and Authorization 63 is DENIED as moot by Judge Philip A. Brimmer on 06/29/15.(jhawk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 14-cv-00832-PAB-KLM
WADE GAGNON,
VALERIE VAN TASSEL, and
DAVID F. WILLIAMS, individually and on behalf of themselves and all others similarly
situated,
Plaintiffs,
v.
MERIT ENERGY COMPANY, LLC, f/k/a Merit Energy Company,
Defendant.

ORDER

This matter is before the Court on the Motion to Stay Briefing as to Plaintiffs’
Motion for Partial Summary Judgment [Docket No. 62] and the Motion to Strike
Plaintiffs’ Motion for Partial Summary Judgment for Lack of Jurisdiction and
Authorization [Docket No. 63] filed by defendant Merit Energy Company, LLC (“Merit”).
The Court has jurisdiction pursuant to 28 U.S.C. § 1332(d).
I. BACKGROUND
Plaintiffs are individuals who own oil and gas royalty interests in property located
in Colorado and Oklahoma. Docket No. 21 at 15, ¶36. In this putative class action,
plaintiffs allege that Merit systematically underpays royalty owners like plaintiffs through
a number of different tactics, including failure to pay royalty owners for all valuable
constituents produced from the wells and improper deduction of the costs necessary to
place the wells’ output in marketable condition. Id. at 14-15, ¶ 35.

On April 6, 2015, plaintiffs filed a motion for class certification, Docket No. 54,
and a motion for partial summary judgment. Docket No. 55. Plaintiffs bring their motion
for partial summary judgment “on behalf of the certified Plaintiff Class,” Docket No. 55
at 1, seeking summary judgment that all leases of class members contain an implied
agreement that Merit would bear the cost of putting all gas obtained from the wells in
which the class owns royalty interests in marketable condition and that Merit breached
this agreement by charging royalty owners for all of the services that are required to
turn raw gas into a marketable product. Docket No. 55 at 3, ¶ 7, 18.
II. ANALYSIS
Merit moves to strike plaintiffs’ motion for summary judgment on the grounds that
the Court lacks jurisdiction to decide the motion because plaintiffs bring the motion on
behalf of a class that has not yet been certified. Docket No. 63 at 2-3. Additionally, in
Merit’s motion to stay, it argues that plaintiffs’ motion for summary judgment violates the
scheduling order, which bifurcated discovery on class certification and liability issues
into two separate phases. Docket No. 62 at 3.
The Court agrees with defendant that plaintiffs’ motion impermissibly seeks to
modify the scheduling order without having shown good cause to do so. See Fed. R.
Civ. P. 16(b)(4) (a “schedule may be modified only for good cause and with the judge’s
consent”). Accordingly, the Court does not reach the claimed jurisdictional issue.
The scheduling order in this action, which the parties jointly proposed and the
magistrate judge accepted, calls for bifurcated discovery between class certification and
liability issues. See Docket No. 31 at 6. Plaintiffs argue, first, that defendant already
has all of the discovery necessary to respond to plaintiffs’ motion, namely, the leases at
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issue in this case and information on gas condition, and second, that plaintiffs have
provided defendants the opportunity to take discovery on liability issues. Docket No. 65
at 5-6. Merit represents that plaintiffs’ argument that the gas was not in marketable
condition is based on expert testimony that requires both discovery from plaintiffs’
experts and time for Merit to identify its own rebuttal experts. Docket No. 62 at 6. Merit
further represents that it has not yet taken this discovery because the parties agreed to
bifurcate discovery into class certification and liability phases. Id. at 5; see also Docket
No. 66 at 2 (noting that bifurcated discovery in the scheduling order “contains important
protections that Merit negotiated for”).
The Court is persuaded that summary judgment is premature in light of the
parties’ agreed-upon discovery plan. At the time of plaintiffs’ filing, Merit had not
conducted the necessary expert discovery to respond to the motion, in part because of
the bifurcated discovery plan, which the parties agreed upon and the magistrate judge
ordered. Docket No. 62 at 5-6. Plaintiffs’ willingness to comply with discovery that is
contrary to the scheduling order does not constitute good cause for a motion for
summary judgment that requires deviation from the court-ordered discovery plan.
Federal Rule of Civil Procedure 56(d) provides that, when a nonmovant cannot present
sufficient facts to submit a proper opposition, the Court may either “(1) defer
considering the motion or deny it; (2) allow time to obtain affidavits or declarations or to
take discovery; or (3) issue any other appropriate order.” As stated by Merit, see
Docket No. 66 at 2, bifurcated discovery in this matter could potentially save the parties’
resources by postponing class-wide discovery that, depending on the outcome of
plaintiffs’ motion for class certification, may not be necessary. Because the parties
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agreed to such a plan, the Court finds that it would be inappropriate to grant only a
temporary stay that lasts long enough for Merit to take adequate discovery to respond
to plaintiffs’ motion. Accordingly, the Court finds that the most appropriate course is to
deny plaintiffs’ partial motion for summary judgment without prejudice as premature.1
III. CONCLUSION
For the foregoing reasons, it is
ORDERED that defendant Merit Energy Company, LLC’s Motion to Stay Briefing
as to Plaintiffs’ Motion for Partial Summary Judgment [Docket No. 62] is GRANTED in
part. It is further
ORDERED that plaintiffs Wade Gagnon, Valerie Van Tassel, and David F.
Williams’ Motion for Partial Summary Judgment on Lease Language and Marketable
Condition Rule [Docket No. 55] is DENIED without prejudice as premature. It is further
ORDERED that defendant Merit Energy, LLC’s Motion to Strike Plaintiffs’ Motion
for Partial Summary Judgment for Lack of Jurisdiction and Authorization [Docket No.
63] is DENIED as moot.

DATED June 29, 2015.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

1

Although Merit asks the Court to stay briefing, Merit’s motion acknowledges that,
when a showing is made under Rule 56(d) that a party lacks the information necessary
to respond to a motion for summary judgment, the Court has authority to deny the
motion. See Docket No. 62 at 5.
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