Hershey v. ExxonMobil Oil Corporation

Filing 406

FINAL JUDGMENT. Signed by District Judge J. Thomas Marten on 10/26/2012. (mss)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

JIMMIE HERSHEY,
individually and on behalf
of all others similarly situated,
Plaintiff,

vs.

Case No. 07-1300-JTM

EXXONMOBIL OIL CORPORATION,
Defendant.

FINAL JUDGMENT

On October 23, 2012, the court conducted a final fairness hearing on the
proposed Settlement. Consistent with the findings of the court at the hearing and as
subsequently confirmed its Orded resolving the various motions before the court, the
court hereby enteres this Judgment and Final Settlement Approval Order. Specifically,
the court ORDERS, ADJUDGES, AND DECREES that :

1. This Order and Judgment incorporates by reference the definitions in the
Settlement Agreement, and all capitalized terms used herein shall have the same
meanings as assigned to them in the Agreement.

2. This Court has jurisdiction over the subject matter of the case and over all
parties to the case, including all Class Members.
3. Except as to any individual claim of those persons identified below who have
validly and timely requested exclusion from the Class, the case and all claims contained
therein, including all of the Released Claims, are dismissed with prejudice as to the
Class Representative, Class, and each of the Class Members. The parties are to bear their
own costs, except as otherwise provided in the Agreement.
4. Pursuant to Rule 23 of the Federal Rules of Civil Procedure, this Court hereby
approves the settlement set forth in the Agreement and finds that said settlement is, in
all respects, fair, reasonable, and adequate to, and is in the best interests of, the Class
Representative, the Class, and each of the Class Members. In so doing, the court has
considered any argument that could reasonably be made against approval of same,
even if such argument was not actually presented to the Court by pleading or oral
argument.
5. This Court further finds the settlement set forth in the Agreement is the result
of arm’s-length negotiations between experienced counsel representing the interests of
the Class and ExxonMobil. Accordingly, the settlement embodied in the Agreement is
hereby approved in all respects and shall be consummated in accordance with its terms
and provisions. The parties are hereby directed to perform the terms of the Agreement.
6. Upon this Judgment becoming Final, the Class Representative does, and each
of the Class Members shall be deemed to have, and by operation of this Judgment shall
have, fully, finally, and forever released, relinquished and discharged all Released

Claims against the ExxonMobil Releasees. Any and all Released Claims are
permanently barred, enjoined, and finally discharged.
7. Adequate notice of the settlement of the Litigation has been given as required
by law to the members of the Settlement Class. All members of the Settlement Class
have been afforded a reasonable opportunity to opt out of the Settlement Class and to
object to the settlement.
8. A list of those members of the Settlement Class who timely and validly have
opted-out of this settlement is set forth in Appendix A. Those persons listed in
Appendix A are not bound by any of the following provisions of this Final Judgment,
and they are not entitled to receive a Distribution Check as a result of this class
settlement. Objectors Lahey and Farrar Trust object to certain aspects of the class
settlement notice; these objections are overruled.
9. Upon entry of this Judgment, each and every Class Member is deemed to have
accepted and ratified the Agreement.
10. The settlement is fair, reasonable, and adequate. Under the Settlement,
ExxonMobil has agreed to pay $54 million in cash, has already reimbursed over
$800,000 to the Class on conservation fees, pay $200,000 in administrative expenses, has
stopped taking conservation fee deductions altogether, and agreed to limit some
gathering fee deductions in the future amounting to an additional $5.5 million present
value. The Total Settlement Amount is valued at over $60.5 million.
11. The settlement occurred through the mediation efforts of Dick Watt, the
numerous meetings among counsel over the years of litigation, and the affidavit

testimony of both defense and Class Counsel establishes that the settlement process was
lengthy, arduous, fair, unbiased, and productive. The settlement process was free of
collusion or reverse auction.
12. Serious questions of law and fact remain contested between experienced
counsel and parties alert to vindicate their interests. The settlement provides a means of
gaining immediate valuable and reasonable compensation, foreclosing the prospect of
uncertain results after years of additional discovery. Finally, the considered judgment of
the parties, aided by experienced legal counsel, supports the settlement.
13. The court approves the plan of allocation as fair, reasonable and adequate.
The court specifies that the the Plan of Allocation for damages older than March 1996 be
discounted at 50%. Thus modified, the Plan of Allocation and Distribution Order is
finally approved and ordered.
14. Distribution under the Plan of Allocation will be made to the current royalty
owner Class Members based on the assumptions that: (a) very few actual sales of
royalty interests have occurred in gas produced from the Class Wells from January 1,
1988 to the present; (b) where sales did occur, it was the intent of the parties that the
buyer was entitled to receive payment for past claims; and (c) where royalty interest
passed through inheritance, devise or interfamily transfers, it was the intent that the
heir, or devisee or transferee also receive payment for past claims. To the extent that
these assumptions are not correct in relation to particular transfers of interests, the
Court orders that Class Members who receive payment shall in turn make payment to
the proper person entitled to such payment.

15. Any Class Member who receives a payment pursuant to this Settlement and
fails to make payment to the proper person pursuant to the paragraph above, shall
indemnify Class Counsel, the Class Representative, the Court appointed Claims
Administrators, ExxonMobil and ExxonMobil's counsel against any claim made against
any of them by the person asserting entitlement to the payment, but only to the extent
of the payment received. ExxonMobil shall have priority to recovery for the indemnity
unless one of the other indemnitees has made payment to the proper party.
16. Consistent with the findings above, the court approves the request for
Attorney Fees of Class Counsel.
17. Consistent with the findings above, the court approves the request for
$309,242.39 in reasonable and necessary expenses of Class Counsel.
18. Consistent with the findings above, the court approves the Incentive Award
of 1/10 of 1% of the Total Settlement Amount, in the amount of $60,500, plus accrued
interest.
19. The Objections of the Farrar Trust and Thomas Lahey to the Certification, the
alleged lack of due process, the Settlement, the Plan of Allocation, the Class Counsel
Attorney Fees and Expenses, the Class Representative Incentive Award are denied for
the reasons stated in the Order Approving Settlement and pursuant to the plaintiff’s
Proposed Final Settlement Approval Order (¶¶ 44-101).
20. The Application for Fees and Expenses by counsel in Farrar is denied for the
reasons stated in the Order Approving Settlement and pursuant to the plaintiff’s
Proposed Final Settlement Approval Order (¶¶ 105-115).

21. The Settlement nor any act performed or document executed pursuant to or
in furtherance of the Settlement: (a) is or may be deemed to be or may be offered,
attempted to be offered, or used in any way by the parties as a presumption, a
concession, or an admission of or evidence of, any fault, liability or wrongdoing by the
ExxonMobil Releasees or of the validity of any Released Claims against the ExxonMobil
Releasees; or (b) is or may be offered or received as evidence or otherwise used by any
person in these or any other actions or proceedings, whether civil, criminal, or
administrative, against any parties to the Agreement other than to enforce the terms of
the Agreement or orders or judgments issued by the Court in connection with the
Settlement.
22. The provisions of Section 4 of the Settlement Agreement providing for
“Future Royalties and Rights” in regard to calculating royalty due in the future are
hereby adjudged to amend the leases of the Class Members who have not opted out of
the Settlement Agreement and will run with the land. Attached hereto as Appendix B
are the provisions comprising Section 4 of the Settlement Agreement. A copy of this
Judgment may be recorded in the land records of the counties in which the various
leases are located to give notice of this amendment to the leases.
23. This lawsuit and all claims asserted therein are hereby DISMISSED WITH
PREJUDICE to the refiling of same or any portion thereof. Without affecting the finality
of this Judgment in any way, this Court hereby retains continuing jurisdiction over: (a)
implementation of this Settlement and any award or distribution of the Settlement
Fund, including interest earned thereon; and, (b) disposition of the Settlement Fund;

this Judgment therefore is a final appealable Order and Judgment. The Judgment
should be entered forthwith by the clerk in accordance with Federal Rule of Civil
Procedure 58.
24. Each Class Member is ordered and adjudged to have conclusively released
the Released Claims against the ExxonMobil Releasees as defined in the Settlement
Agreement.
25. Each Class Member and anyone acting in concert are hereby barred and
permanently enjoined from prosecuting, commencing or continuing any of the Released
Claims against the Released Parties, by way of claim, counterclaim, offset, or otherwise.
26. All documents designaed as confidential by any party pursuant to the
Confidentiality Agreement and Protective Order in the Lawsuit shall be returned to the
producing party or destroyed within 30 dyas after the date of this Order and Judgment
becoming Final and Non-Appealable and/or as set forth in the Settlement Agreement.
27. The Settlement of the Lawsuit, the Settlement Agreement, the Plan of
Allocation and Distribution, and the carrying out of this Order and Judgment may
never be used for any purpose in any subsequent litigation against ExxonMobil and the
ExxonMobil Releasees, other than to enforce the terms of the Settlement Agreement and
this Judgment.
IT IS SO ORDERED this 26th day of October, 2012.

s/ J. Thomas Marten, Judge
J. THOMAS MARTEN, JUDGE

Appendix A
Class members who have opted out of the settlement:









Edna D. Olinger Trust (Edna D. Olinger, Trustee)
Koch Industries, Inc.
State Farm Insurance Companies
Osborn Heirs Company
Estate of Etta Cuccinello (Toni Pfaff, Personal Representative)
Gregory L. Adams
Charles W. and Brenda M. Thompson "as joint tenants w/f/r/s."
The Marie Gregg Trust u/a dated April 26. 1979.

Class members who have requested opting out of the settlement, but who have not
opted out in compliance with the requirements for opting out:


Francis Littell individually and as Administrator of the Estate of Allen Drew
Littell Estate.

Appendix B

The Opt-Out Adjustment is the sum in dollars of the opt-out factors for all Excluded
Persons.

4.

FUTURE ROYALTIES AND ROYALTY RIGHTS
Section 4.1.

Calculation and Payment of Future Royalties. ExxonMobil and each

Current Royalty Owner agree that from and after the first day of the first full production month
fo llowing the date the Settlement becomes Final, the Class Leases shall and shall be deemed to
expressly provide for the payment of Royalties for Gas (whenever paid, or required or permitted
to be paid in money and not in-kind) in an amount equal to the Royalty Owner's Lease Decimal
multiplied by the "Royalty Value" for Gas allocated to production from a Class Lease
determined pursuant to Section 4.2. "Lease Decimal" means a Royalty Owner's fractional share
of ownership in the production (net of Fuel) from a Class Lease according to the leases, division
orders, and other instruments affecting title, as such interests are reflected from time to time on
ExxonMobil's books and records.
Section 4.2.

Determination of Royalty Value.

Royalty Value for Gas volumes

allocated to production from a Class Lease (net of Fuel) for any production month will be
determined using a "net back" or "cost netting" method as described in this Section 4.2 and
Section 4.6. Royalty Value shall be determined from cumulative amounts received by
ExxonMobil from the first Arm's-Length Sale(s) of such Gas and Gas Plant Products attributed
to such Gas (if such Gas is processed to extract separate Gas Plant Products), less all reasonable
fees (including in-kind fees, fees under percentage of proceeds and like processing
arrangements), expenses and Fuel attributed to such Class Lease to transport, move, compress,
dehydrate, gather, process, fractionate, treat, store, and market the Gas and Gas Plant Products,
subject to Section 4. 7.

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Section 4.3.

Processing Elections.

Any election or decision concerning whether

to process Gas to extract Gas Plant Products or any particular Gas Plant Product shall be at
ExxonMobil's sole discretion.
Section 4.4.

Special Provision for Certain Wellhead Dispositions. Where Gas from

any Class Lease gathered on the Hickok Gathering System or the Bushton Gathering System is
sold at the wellhead under terms that require the purchaser to bear the fees and costs defmed in
this Agreement as Gathering Fees and Expenses, then in that event, if the amount realized from
said wellhead sale is less than the Royalty Value determined under 4.1, 4.2, 4.6, and 4.7 for Gas
and Gas Plant Products had there not been a wellhead sale, then ExxonMobil will pay the
Royalty Owner as fo llows: the Royalty Owner's decimal interest of the amount real ized from the
wellhead sale plus the Royalty Owner's decimal interest of the difference between the amount
realized from the wellhead sale and the Royalty Value of the Gas and Gas Plant Products
determined under 4.1, 4.2, 4.6, and 4.7 had there not been a wellhead sale, but said difference
shall never exceed the Royalty Owner's decimal interest of $0.364 per MMBtu for said Gas from
said Class Lease.
Section 4.5. Reasonable Expenses. Expenses (i.e. fees, expenses and Fuel listed in
Section 4.2) shall be deemed reasonable if such expenses are incurred pursuant to an Arm'sLength Sale(s) or if incurred in a transaction that is not an Arm's-Length Sale, then they shall be
deemed reasonable provided they are comparable to the expenses ExxonMobil pays for similar
services or goods in the area under Arm's-Length Sales transactions.
Section 4.6. Exchanges, Deliveries In-Kind, and Other Dispositions.

For purposes

of computing Royalty Value of Gas and Gas Plant Products allocated to production from a Class
Lease, the amount received for of such Gas and Gas Plant Products that is transacted in an

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exchange, delivery in-kind (not including Fuel) or other similar disposition this Section 4.6 shall
apply:

a.

For such Gas and Gas Plant Products transacted in an Arm's-Length Sale,
the amount received shall be deemed to be the amounts determined
according to the Arm's-Length Sale (or exchange) agreement; or if no
value is provided in such Arm 's-Length Sale (or exchange) agreement,
then an amount equivalent to the amount that ExxonMobil could have
received for equivalent Gas and Gas Plant Products sold in an ArmsLength Sale at the place or plant nearest to the Class Well to which such
Gas and Gas Plant Products are allocated, net of amounts for the fees and
expenses incurred or that would have been incurred and that are described
in Section 4.2.

b.

For such Gas and Gas Plant Products exchanged, delivered in-kind (but
not including Fuel), sold or otherwise disposed of to an Affiliate then the
"amount received" attributed to such volumes so exchanged, delivered or
sold shall be equivalent to the amount that ExxonMobil could have
received for equivalent Gas Plant Products (whether or not actually
manufactured) if sold in an Arms-Length Sale at the place or plant nearest
to the Class Well to which such Gas Plant Products are allocated, net of
amounts for the fees and expenses incurred or that would have been
incurred and that are described in Section 4.2.

c.

For such Gas and Gas Plant Products transacted through an exchange,
delivery in-kind or like arrangement, (i) to an Affiliate or (ii) where there

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is no specific provision for determining such amounts in an Arms-Length
Sale agreement, then the amount received will be computed by imputing
first-of-month prices from published indexes (e.g., OPIS, Inside F.E.R.C.,
Gas Daily, etc.) which shall be deemed reasonable provided the index
rates or prices applied are for equivalent products transacted at points
nearest the place of production or manufacture.

Section 4.7.

Certain Expenses Not Deducted or Shared.

In computing the Royalty

Value for Gas and Gas Plant Products allocated to Class Wells and Class Leases, ExxonMobil
shall not share or deduct (a) Gathering Fees and Expenses, and (b) Conservation Fees currently
imposed only on an operator pursuant to K.S.A. 55-176(a), unless expressly authorized by
subsequent statutory amendment and any implementing regulation of the Kansas Corporation
Commission.

Section 4.8.

Severance and Other Taxes.

In computing and paying Royalties

to Class Members, ExxonMobil shall deduct, in the same manner as in the past, any severance or
other taxes, by whatever name, imposed by law upon all the mineral owners, including taxes
imposed upon produced Gas, that are remitted directly to the taxing authority by ExxonMobil.
Class Members shall pay and be liable for the share of taxes attributable to their respective
interests. ExxonMobil will adhere to any changes or clarifications of the severance or other tax
Jaw by statute, court decision, or administrative regulation so as to cease deducting any
severance or other taxes that are not owed or determined to not be owing by Class Members.

Section 4.9.
Agreement.

Leases and Other Instruments Modified to Conform to this

Each Current Royalty Owner stipulates and agrees that for the consideration

recited and paid under this Agreement, this Agreement constitutes an express contract and

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covenant that amends and modifies the Royalty Rights and Class Leases, and excludes the
existence or claimed existence of any implied covenant to the extent such implied covenant
would require Royalties to be computed and paid on Gas on a different basis than set out in this
Agreement.
Section 4.10. Recordable Memorandum of Amendment.

ExxonMobil

may

record in the official public records in the manner provided by law a memorandum of this
amendment and modification with respect to any and every Class Lease and may in its discretion
record the Judgment so that it appears in the chain of title records for each Class Lease.
Section 4.11. Contract for Future Payments.

In addition to the amendment and

modification of Class Leases, this Agreement shall constitute a binding contract expressly setting
forth the manner in which Royalties will be calculated and paid in the future for Gas severed
from the earth by Class Wells under Class Leases. This Agreement may not be modified or
revoked by any future division order or by any other means except by a separate writing
expressly referencing this Section 4, executed by both ExxonMobil and each Royalty Owner to
be affected thereby, and supported by adequate legal consideration. Each Class Member who
receives Royalties in the future, and each of their successors in interests, shall be deemed to have
accepted Royalties paid according to this Agreement in full satisfaction for Royalties owed on
Gas severed from the earth to which the Royalty payment is attributable.
Section 4.12. ExxonMobil's Interest.

This Settlement relates and extends only

to ExxonMobil's undivided ownership interest in the Class Leases. Therefore, in the event a
percentage portion of a Class Lease and the Jessee's interest thereunder was acquired by and
assigned to ExxonMobil and the remaining percentage portion thereof was acquired by and
assigned to a third party(ies) (i.e., a person or entity other than ExxonMobil), then this

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Settlement shall apply and be deemed to apply only to ExxonMobi l's percentage portion of the
Class Lease, and shall not apply or be deemed to apply to the third party's (or third parties')
percentage portion of the Class Lease. The Settlement does not apply to any obligation of a third
party to pay royalties for its own working interest share. Nothing in this Settlement Agreement
shall release or absolve any such third party from any obligations that it would otherwise have or
modify any such obligations in any way.
4.13.
Modified.

Class Leases and Other Instruments Remain In Full Force and Effect as
Except as expressly modified in this Agreement, the Class Leases and other

instruments, if any, affecting Royalty Rights of the Class Members shall remain in full force
and effect, and this Agreement shall not be deemed to otherwise amend the Class Leases of
Class Members.
Section 4.14. Ownership Decimals Unaffected.

The provisions of this Agreement do

not alter or amend the fractional share of ownership (i.e., decimal interest) in Royalty Rights held
by any Class Member as warranted to ExxonMobil in division orders previously executed or
effect any conveyance or transfer of Royalty Rights from one person to another. ExxonMobil
may continue to rely upon the statement of such interests in distributing Royalties in the same
manner in which it has in the past and nothing in this Agreement shall require ExxonMobil to
obtain new division orders from any Class Member as a condition to distributing Royalties
computed as provided in this Agreement. No division order or transfer order executed in the
future shall affect the provisions of this Section 4 prescribing the manner for calculation and
payment of Royalties absent an express agreement signed by both the then Current Royalty
Owner and Ex:xonMobil expressly referring to this Section 4 and supported by adequate legal
consideration, and all the provisions of this Section 4 shall be deemed a part of and controlling

27

with respect to any such division or transfer order.
Section 4.15. Acceptance and Ratification.

Each Current Royalty Owner shall

be deemed by operation of the Judgment to have accepted and ratified this Agreement and their
respective Class Leases. The endorsement, transfer, or presentment for payment of any
Distribution Check shall be deemed to be, and effective as, an execution of this Agreement just
as if inscribed directly upon this Agreement.
Section 4.16. Reliance by ExxonMobil.

It is understood and agreed that ExxonMobil

would not have entered this Agreement or provided the Settlement Fund under the Agreement
without obtaining the provisions herein which clarify the manner in which Royalties will be
calculated in the future. The Settlement Fund provides consideration for both the release of past
claims and the right to pay Royalties in the future in the manner provided in this Agreement.
Section 4.17. Successor Royalty Owners and Interests Bound.

The

specific

agreements and covenants contained herein concerning the Royalty Rights and the future
calculation and payment of Royalties touch and concern and run with the land. Each Current
Royalty Owner agrees that this Agreement shall be binding and be effective against each and all
of such Current Royalty Owner's assigns, heirs, legatees, devisees, and other successors in
interest.
5.

RELEASES AND COVENANTS NOT TO SUE
Section 5.1.

ExxonMobil Releasees Released.

Upon the Settlement and Judgment

becoming Final, and for the consideration provided for in this Agreement, each Class Member
shall be conclusively deemed to have and by operation of the Judgment adjudged to have fully,
fmally, and forever released, relinquished, and discharged the ExxonMobil Releasees, and each
of them, from any and all liability on or for any and all of the Released Claims. The Class

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