Wallace B. Roderick Revocable Living Trust v. XTO Energy, Inc.

Filing 323

MEMORANDUM AND ORDER granting 226 Motion to Consolidate Cases. Signed by Chief Judge J. Thomas Marten on 12/30/2014. (smg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
WALLACE B. RODERICK REVOCABLE
LIVING TRUST, Trustee Amanda
Roderick on behalf of itself
And John W. Fitzgerald, on
Behalf of himself and all
Others similarly situated,
Plaintiffs,
v.
Case No.12-1215-RDR/KGS
OXY USA INC.,
Defendant.
___________________________________
WALLACE B. RODERICK REVOCABLE
LIVING TRUST, Trustee Amanda
Roderick on behalf of itself
And all Others similarly
Situated,
Plaintiffs,
Case No. 08-1330–JTM/KMH
v.
XTO ENERGY, INC.,
Defendant.
___________________________________

MEMORANDUM AND ORDER
These cases are presently before the court on plaintiffs’ motions to transfer and
consolidate. Both cases arise out of the alleged underpayment of royalties to gas well
owners. Plaintiffs seek to consolidate these cases and transfer them to Judge J. Thomas
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Marten for purposes of discovery management and pretrial motions. As discussed
below, the motion is granted.
I. Background
Plaintiffs lease gas wells to defendants in exchange for royalty payments on oil
and gas products derived therefrom. Plaintiffs allege that defendants improperly
calculate the royalties paid to plaintiffs by, among other things, deducting costs of
making the gas marketable, deducting conservation fees, and basing royalties on
starting prices derived from sales to defendants’ affiliates. A dissertation of the
background is unnecessary because the parties are familiar with the allegations and
posture of each case.
II. Analysis
Rule 42(a) of the Federal Rules of Civil Procedure provides that, A[i]f actions
before the court involve a common question of law or fact, the court may . . . consolidate
the actions.@ FED. R. CIV. P. 42(a)(2). The decision whether to consolidate actions
involving common questions of law or fact is committed to the sound discretion of the
district court. Shump v. Balka, 574 F.2d 1341, 1344 (10th Cir. 1978). The purpose of Rule
42(a) is Ato give the court broad discretion to decide how cases on its docket are to be
tried so that the business of the court may be dispatched with expedition and economy
while providing justice to the parties.@ WRIGHT & MILLER, 9A FEDERAL PRACTICE &
PROCEDURE: CIVIL (THIRD) ' 2381 (2014). Therefore, the court will consider both judicial
economy and fairness to the parties in exercising its discretion under Rule 42(a). See
Harris v. IllinoisBCalifornia Express, Inc., 687 F.2d 1361, 1368 (10th Cir. 1982).
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Here, the cases share several issues of law. Both will require analysis of: whether
affiliate sales are proper starting prices under Kansas law for royalty payment, whether
the marketable condition rule applies, what processing fees are deductible under the
marketable condition rule, and whether a lessee can deduct conservation fees from
royalty payments.
These cases also share common questions of fact regarding: what royalty
deductions were made as to each lease, whether each lease is expressly exempt from the
marketable condition rule, whether defendants charged plaintiffs conservation fees, and
what royalties were paid on helium and other gas products. Further, both cases will
require a similar analytical framework to ultimately resolve marketable condition
liability by determining when or where gas products became marketable, and whether
any deductions for processing marketable products were warranted.
In the interest of efficiently resolving the cases in a consistent manner,
consolidation is warranted. The cases shall be consolidated and transferred to Judge J.
Thomas Marten for all remaining pretrial matters.
IT IS ACCORDINGLY ORDERED this 29th day of December, 2014, that plaintiffs’
motions to consolidate and transfer (Dkt. 152 in No. 12-1215-RDR and Dkt. 226 in No.
08-1330-JTM) are GRANTED.
s/ J. Thomas Marten
J. THOMAS MARTEN, JUDGE

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