Abraham et al v. WPX Energy Production, LLC et al

Filing 272

MEMORANDUM OPINION AND ORDER by District Judge James O. Browning denying the Plaintiffs' Motion to Alter or Amend and to Reconsider Memorandum Opinion and Order [Doc. 252] 255 and the Plaintiffs' Second Motion for Class Certification 256 .

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
STEVEN J. ABRAHAM, and
H LIMITED PARTNERSHIP
on behalf of themselves and others
similarly situated,
Plaintiffs,
vs.

No. CIV 12-0917 JB/CG

WPX ENERGY PRODUCTION, LLC,
f/k/a WILLIAMS PRODUCTION COMPANY,
LLC; WILLIAMS FOUR CORNERS, LLC;
and WILLIAMS ENERGY RESOURCES,
LLC,
Defendants.
MEMORANDUM OPINION AND ORDER
THIS MATTER comes before the Court on: (i) the Plaintiffs’ Motion to Alter or Amend
and to Reconsider Memorandum Opinion and Order [Doc. 252], filed September 15, 2016 (Doc.
255)(“Motion to Amend”); and (ii) the Plaintiffs’ Second Motion for Class Certification, filed
September 15, 2016 (Doc. 256)(“Second Motion for Class Certification”). The Court held a
hearing on January 24, 2017. The primary issues are: (i) whether the Plaintiffs may raise a new
class definition not in the Fourth Amended Complaint, filed October 31, 2013 (Doc. 96-1); (ii) if
the Court required the Plaintiffs to amend their Complaint before proposing a new class
definition, whether rules 15(a) and 16(b)(4) bar such an amendment; (iii) whether the Plaintiffs
previously waived their new class definition by proposing and withdrawing an older one; (iv)
whether the new proposed class is ascertainable; (v) whether the new proposed class definition
creates commonality; and (vi) whether the new proposed class definition will allow common
issues to predominate over individual ones. The Court concludes that (i) the Plaintiffs may raise

a new class definition not in the operative complaint; (ii) even if the Plaintiffs could not do so,
rules 16(b)(4) and 15(a) would not bar the Plaintiffs from amending their complaint; (iii) the
Plaintiffs have not previously waived their new class definition; (iv) the proposed class definition
is ascertainable; (v) the proposed class definition does not create commonality; and (vi) common
issues would not predominate over individual ones. Accordingly, the Court denies the Motion to
Amend and the Second Motion for Class Certification.
FACTUAL BACKGROUND
Plaintiffs Steven J. Abraham and H Limited Partnership filed this class action in August
2012 to recover damages for gas royalty underpayments that Defendant WPX Energy Production
L.L.C.(“WPX Energy”) allegedly makes. Motion to Amend at 1. WPX Energy pays the
plaintiff royalty owners on a payment method called the keep-whole payment methodology. See
Motion to Amend at 1. This payment method “pays royalty on a well’s volume of produced
MMbtus (British Thermal Units) based on methane volume and omits royalty [payments] on the
value of [Natural Gas Liquids]” or NGLs. Motion to Amend at 2. The Plaintiffs’ major
contention is that this payment method does not pay them royalties on the value of refined
NGLs. See Motion to Amend at 1. Previously, the Plaintiffs moved the Court to certify them as
a class, which the Court denied. See Abraham v. WPX Production Productions, LLC, 317
F.R.D. 169, 175 (D.N.M. 2016)(Browning, J.)(“Abraham”). The Court denied the previous
motion for class certification for several reasons. First,
because the Plaintiffs’ class definition includes only those wells whose gas is or
has been processed at three specific processing plants, the Court cannot
adequately ascertain the class. Second, because the Plaintiffs’ class definition
includes only that gas that was processed for natural gas liquid extortion and
marketing, the Court must determine which gas was processed.
317 F.R.D. at 175. In other words, the Court held that the proposed class was not ascertainable.

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See 317 F.R.D. at 254.
The Court further concluded that “how the Defendants should have paid the Plaintiffs . . .
varies between leases” because of “textual variations among the leases.” 317 F.R.D. at 175. The
Court ruled that these factors destroyed two key requirements of class certification, commonality
and predominance. See Fed. R. Civ. P. 23(a)(2), (b)(3). The Court also held, however, that the
Plaintiffs met the other requirements for class certification. See Abraham, 317 F.R.D. at 175.
Because the Court ultimately denied the Motion, the Plaintiffs have now filed a Motion to
Amend and Second Motion for Class Certification.
PROCEDURAL BACKGROUND
The Court will outline the basic allegations and legal arguments underlying the Plaintiffs’
motions. The Court will also describe the Defendants’ responses to those arguments. Finally,
the Court will summarize the hearing on these motions.
1.

The Motion to Amend.

The Plaintiffs contend that the Court should alter or amend its opinion in Abraham based
on a new proposed class definition. See Motion to Amend at 5. Specifically, the Plaintiffs have
proposed the following new class definition:
The class consists of all present and former owners of royalty and overriding
royalty from August 2006 to the present whose instruments provide for payment
on “proceeds” or on “market value at the well” by WPX Energy Production LLC
and its corporate predecessors on production of natural gas from San Juan Basin
conventional formations and whose royalty and overriding royalty has been
calculated on a “keep-whole” method omitting payment on the value of the
processed natural gas liquids portion of the production.
The New Mexico subclass consists of present and former owners of royalty and
overriding royalty that burden WPX Energy Production LLC oil and gas leases
and wells in the San Juan Basin in New Mexico.
The Colorado subclass consists of present and former owners of royalty and
overriding royalty that burden WPX Energy Production LLC oil and gas leases
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and wells in the San Juan Basin in Colorado.
The Class membership excludes the United States of America in its own right and
as trustee for Indian tribes or Indian lessors and any other lessors for which an
agency of the Secretary of Interior administers royalties. The class excludes the
State Land Board of Colorado and the Commissioner of Public Lands of New
Mexico and oil and gas leases issues by either of those states. The class excludes
WPX Energy Production, LLC f/k/a Williams Production Company, LLC,
Williams Four Corners, LLC and Williams Energy Resources, LLC and their
predecessors, successors and affiliates.
Motion to Amend at 5-6. The Plaintiffs make several arguments why this class definition
improves upon the original one. First, the Plaintiffs contend that, unlike in the original class
definition, “the class members can be identified without regard to where their gas was processed,
or whether it was processed on the WFC system.” Motion to Amend at 6. The Plaintiffs assert,
“[t]he class includes owners who are paid on the keep-whole methodology regardless of the
circumstance of the gas processing.” Motion to Amend at 6. They assert that “WPX records
provide a database which can identify the class members.” Motion to Amend at 6.
Next, the Plaintiffs argue that “the amended class definition addresses many of the
Court’s concerns about commonality,” because, “[d]uring the relevant period, WPX has
uniformly paid royalty and overriding royalty to the members of the putative class on a keepwhole method for production gathered and processed by WFC . . . .” Motion to Amend at 7.
According to the Plaintiffs, this royalty payment system “calculates payment to class members
despite variables in gas flow delivery to processing plants and whether in given instances some
of the class wells’ gas stream may not be processed.” Motion to Amend at 7.
Regarding the issue of predominance, the Plaintiffs contend that “[c]ommon issues will
predominate where the class is limited to those owners paid on proceeds and market value of gas
at the well leases.” Motion to Amend at 9. Specifically, they argue that, under the new class
definition, “the Court must resolve the premier common issue, whether plaintiffs are entitled to
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royalty on processed NGLs, as to only two lease forms,” “proceeds” leases and “market value of
gas at the well” leases. Motion to Amend at 9-10. The Plaintiffs’ key contention is that, despite
the Court previously categorizing all of the leases at issue into eleven categories (plus another for
illegible leases), only two categories of leases exist under the Plaintiffs’ new class definition,
namely, “proceeds” leases and “market value” leases. Motion to Amend at 20; Abraham, 317
F.R.D. at 274-75. The Plaintiffs concede that the leases previously referenced as those in
Categories B and F are excluded from their new class definition. See Motion to Amend at 2021.1
Finally, the Plaintiffs assert that, given the new class definition, the Court should certify
the Plaintiffs’ claims for breach of the implied covenant to market. See Motion to Amend at 22.
Their contention is that “WPX does not market the NGLs for the benefit of the class under the
keep-whole methodology.” Motion to Amend at 22. The Plaintiffs argue that this conduct
breaches the implied covenant to market “as to all royalty owners who are entitled to processed
NGLs under their royalty provisions.” Motion to Amend at 22-23. According to the Plaintiffs,
the two categories of leases in their proposed class -- proceeds and market value leases -- “entitle
royalty owners to payment on processed NGLs.” Motion to Amend at 23.

The Plaintiffs

conclude that, because those two lease categories are allegedly entitled to payments on NGLs,
the implied covenant to market “applies to those two lease types across the board.” Motion to
Amend at 23.
Separately, the Plaintiffs contend that their claim for breach of the duty of good faith and
fair dealing is also certifiable. See Motion to Amend at 26. They argue that, because WPX
Energy has denied the class members payment on NGL royalties, WPX Energy has breached the
1

The Plaintiffs also note that the lone leases in categories D and E, respectively, “are
unknowns.” Motion to Amend at 22.
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duty of good faith and fair dealing.
In conclusion, the Plaintiffs ask the Court to amend its decision in Abraham to conclude
that the Plaintiffs’ new class definition satisfies all of the rule 23 class certification requirements,
and certify the case as a class action based on claims for breach of contract, breach of the duty of
good faith and fair dealing, and breach of the implied covenant to market. See Motion to Amend
at 27.
2. The Second Motion for Class Certification.
Much of the Second Motion for Class certification repeats arguments in the Motion to
Amend. It states the Plaintiffs’ new class definition and again contends that the new definition
meets the rule 23(a)(2) commonality requirement. See Second Motion for Class Certification at
2. It notes again that, “[t]he proposed class definition eliminates the processing issue and focuses
on those owners who are paid on the keep-whole methodology.” Second Motion for Class
Certification at 4.
The Second Motion for Class Certification also argues that the new class definition
satisfies the rule 23(b)(3) predominance requirement. See Second Motion for Class Certification
at 7. Specifically, the Plaintiffs contend that the question -- “are the class members entitled to be
paid on the value of processed NGLs” -- is answerable on a class-wide basis under the new class
definition. Second Motion for Class Certification at 7. After resolving that question, the
Plaintiffs argue that “[t]he only lease language inquiry required is: do proceeds (net and gross)
leases and market value at the well leases entitle the lessors to share in the value of processed
NGLs?” Second Motion for Class Certification at 8. The Plaintiffs argue that this question can
be answered on a class-wide basis. See Second Motion for Class Certification at 8-9.
The Plaintiffs then reassert their argument that the Court should certify their claims for

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beach of the implied covenant to market and the duty of good faith and fair dealing. See Second
Motion for Class Certification at 10. The Plaintiffs further reassert their argument that the Court
should certify their claim for civil conspiracy to breach their royalty agreements. See Second
Motion for Class Certification at 11.
Finally, the Plaintiffs conclude by asking the Court to certify the class based on the new
class definition, and to certify their claims for breach of contract, breach of the covenant of good
faith and fair dealing, breach of the implied covenant to market, and civil conspiracy. See
Second Motion for Class Certification at 13. The Plaintiffs also request that the Court appoint
the named Plaintiffs, Steve Abraham and H Limited, as class representatives, and appoint the
Gallegos Law Firm, P.C. as class counsel. See Second Motion for Class Certification at 13.
3.

The Response to the Plaintiffs’ Motion to Amend.

The Defendants2 respond to the Motion to Amend.

See Defendants’ Response in

Opposition to Plaintiffs’ Motion to Alter or Amend and to Reconsider Memorandum Opinion
and Order, filed November 2, 2016 (Doc. 260)(“Response to Motion 1”). The Defendants
briefly argue that the new class definition “does not constitute a material change in
circumstances and thus does not support relief under Rule 23(c)(1)(C).” Response to Motion 1 at
6.
Next, the Defendants assert that, “by pursuing and then abandoning the ‘keep-whole’
aspect of their new [class] definition, Plaintiffs waived it.” Response to Motion 1 at 6. The
Defendants argue that the Plaintiffs had previously offered a similar class definition, but later
“admitted that their proposed amendment was ‘inappropriate’ and voluntarily withdrew it.”
2

There are three Defendants in this case: (i) WPX Energy Production, LLC (“WPX
Energy”) formerly known as Williams Production, LLC; (ii) Williams Four Corners, LLC
(“WFC”); and (iii) Williams Energy Resources, LLC.

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Response to Motion 1 at 6-7 (quoting Plaintiffs’ Position on Defendants’ Motion to Determine
Class Certification Based on the Class Definition Contained in Plaintiffs’ Fourth Amended
Complaint, filed September 23, 2015 (Doc. 242). On these facts, the Defendants conclude that
the Plaintiffs waived the “keep-whole” aspect of the new class definition. Response to Motion 1
at 6-7.
The Defendants then contend that “custom and usage evidence supports the Court’s
Commonality and Predominance rulings.” Response to Motion 1 at 8. The Defendants note that,
in Abraham, “the Court correctly concluded that ‘the different industry custom and usage
evidence needed to identify each proposed class members’ royalty interest and determine how
they should be paid’ is not common, and cuts against predominance.” Response to Motion 1 at
9-10 (quoting Abraham, 317 F.R.D. at 273). The Defendants add that, “at a trial on the merits,
evidence of trade usages could potentially bind H Ltd, Mr. Abraham, [and others] to the meaning
within the oil and gas industry of disputed lease terms. Whether any of them would be bound
would be a question of fact as to each of them.” Response to Motion 1 at 11. The Defendants
make other arguments in support of the Court’s previous rulings regarding commonality and
predominance. See Response to Motion 1 at 12, 16, 17, 20, 22, 23. Most notably, however, the
Defendants assert that, “whether considering ‘proceeds’ or ‘market value’ leases, [nothing]
require[s] that royalty be paid on ‘processed gas.’” Response to Motion 1 at 27. Specifically,
the Defendants argue that the Court did not hold in Abraham that “proceeds” leases “require
royalty payment on processed gas, and hence, on the value of refined NGLs.” Response to
Motion 1 at 27 (emphasis in original). The Defendants refer to a footnote in Abraham in which
the court gave its “inclinations about what some of the royalty terms mean . . . ‘Proceeds’ . . .
forbids paying NGL royalty on a keep-whole basis.” Abraham, 317 F.R.D. at 275 n.82. The

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Defendants note that this statement was merely the Court’s “inclination” and not a holding.
Response to Motion 1 at 27. “In contrast to its ‘inclinations,’ the Court held . . . that Plaintiffs’
breach-of-contract claims “require an individualized inquiry.” Response to Motion 1 at 28
(citing Abraham, 317 F.R.D. at 263).
Finally, the Defendants argue that the “Plaintiffs’ implied duty to market and implied
duty of good faith and fair dealing claims do not satisfy commonality or predominance.”
Response to Motion 1 at 31. Regarding the implied duty to market, the Defendants note that the
Court held that, “‘[e]ven if a reasonably prudent operator would not have marketed the products
using the keep-whole scheme, the Plaintiffs suffer harm only if the keep-whole scheme deprived
them of their royalty interest.’” Response to Motion 1 at 31 (quoting Abraham, 317 F.R.D. at
265). “The duty to market,” the Court noted, “‘does not define the lessor’s royalty interest; the
lease’s royalty provision does that.”’ Response to Motion 1 at 31 (quoting Abraham, 317 F.R.D.
at 265).

“Thus, determining whether WPX breached the duty to market turns on an

individualized inquiry into whether a particular class member’s royalty instrument provides for
royalty on refined NGLs.” Response to Motion 1 at 31. On these facts, the Defendants conclude
that “the question whether WPX breached the duty to market is, as the Court held, not a common
one.” Response to Motion 1 at 32 (citing Abraham, 317 F.R.D. at 265-66).
Finally, the Defendants assert that the Court cannot certify the claim for breach of the
duty of good faith and fair dealing. See Response to Motion 1 at 32. The Defendants argue that
the Plantiffs “bald[ly] conclude[e] that WPX breached the duty by denying payment on the value
of refined NGLs . . . but they do not explain why this claim is a common one.” Response to
Motion 1 at 32. The Defendants conclude that the Court should deny the Motion. Response to
Motion 1 at 33.

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4.

The Response to the Plaintiffs’ Second Motion for Class Certification.

The Defendants respond to the Plaintiffs’ Second Motion for Class Certification. See
Defendants’ Response in Opposition to Plaintiffs’ Second Motion for Class Certification, filed
November 2, 2016 (Doc. 259)(“Response to Motion 2”).
arguments.

They make several procedural

First, the Defendants assert that “the Court must continue to determine class

certification based on the Definition contained in the operative complaint.” Response to Motion
2 at 3. Specifically, the Defendants contend that the “Plaintiffs are bound by the class definition
in the complaint and ‘absent an amended complaint [the Court] will not consider certification
beyond it.’” Response to Motion 2 at 3 (quoting Costelo v. Chertoff, 258 F.R.D. 600, 604-05 &
n.6 (C.D. Cal. 2009)(Selna, J.)). The Defendants contend that “courts will not permit plaintiffs
to change or expand their class definition through a motion to certify.” Response to Motion 2 at
3 (citing Phelps v. Parsons Tech. Support, Inc., 2010 WL 4386918, at *3 (S.D. Ind.
2010)(Magnus-Stinson, J.)). The Defendants conclude that, because the Plaintiffs have not
moved to amend their Complaint, the Court should not entertain the Plaintiffs’ Motions. See
Response to Motion 2 at 3.
Next, The Defendants argue that the Plaintiffs cannot obtain leave to amend their
Complaint, because “the deadline to Amend has passed, and Plaintiffs cannot show good cause
under Rule 16(b)(4).” Response to Motion 2 at 3. The Defendants argue that a key requirement
of the good-cause standard is “diligence” and that the Plaintiffs have not been diligent by
tendering “this new [class] definition nearly three years after they first learned of their
ascertainability problem and more than two years after the parties completed extensive discovery
and a multi-day hearing premised on the [original class] definition.” Response to Motion 2 at 7.
Additionally, the Defendants contend that, to amend a complaint, “a party seeking to

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amend must satisfy Rule 15(a), under which a court may deny an amendment for, among other
things, the moving party’s undue delay or the non-movant’s undue prejudice.” Response to
Motion 2 at 7 (citing Foman v. Davis, 371 U.S. 178, 182 (1962)(emphasis in original)). The
Defendants contend that both undue delay and undue prejudice are grounds for denying a motion
to amend a complaint here. See Response to Motion 2 at 7. The Defendants assert that the
Plaintiffs “offer no adequate explanation for their delay.” Response to Motion 2 at 8. Regarding
undue prejudice, they assert that the “Defendants have been litigating class certification under
the [original] class definition for over four years” and have relied on that definition, thus
prejudicing the Defendants. Response to Motion 2 at 8.
The Defendants next briefly reassert their waiver argument, before contending that “the
proposed new class definition does not constitute a material change in circumstances justifying
Plaintiffs’ request to alter or amend the class certification ruling.” Response to Motion 2 at 9.
Specifically, the Defendants contend that Rule 23(c)(1)(C) “is designed so that ‘a determination
once made can be altered or amended before the decision on the merits, if upon fuller
development of the facts, the original determination appears unsound.’” Response to Motion 2 at
9 (quoting Fed. R. Civ. P. 23 advisory committee notes to 1966 amendment). According to the
Defendants, a new class definition, offered to replace one the court found wanting, does not meet
this standard. See Response to Motion 2 at 10.
Next, the Defendants assert that the Plaintiffs’ new class definition “does not solve the
ascertainability problem.” Response to Motion 2 at 11. The Defendants argue that the new class
definition is not ascertainable, because
it is still tied to a demand for payment on processed NGLs. Although they have
eliminated the reference to the three processing plants, Plaintiffs have provided no
new evidence concerning processing. Because most gas is not processed, and
because Plaintiffs failed to prove whether or not other gas was processed, the
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problem of ascertaining whose gas was processed, and thus, who belongs in the
class, remains.
Response to Motion 2 at 12.
Additionally, the Defendants argue that the new class definition “does not supply
commonality.” Response to Motion 2 at 13. They argue that “the breach of lease claims and the
implied duty claims do not present a common question,” and that “the civil conspiracy claim is
derivative of the breach-of-contract claims, and it therefore does not supply a common issue.”
Response to Motion 2 at 13, 19.
Further, the Defendants assert that “the proposed new definition does not eliminate the
predominance of individual issues over any common ones.” Response to Motion 2 at 20.
Specifically, they posit that, despite the new class definition, “lease language variations will
continue to overwhelm any alleged common issue,” and that “industry custom and usage
evidence and other parol evidence will require individualized inquiries.” Response to Motion 2
at 20-21.
The

Defendants

additionally

argue

that

“damages

evidence

remains

highly

individualized.” Response to Motion 2 at 20. Specifically, “because Plaintiffs have not shown
they are entitled to extracted NGLs or actual amounts received by WPX under all royalty and
overriding royalty instruments at issue, determining liability and damages requires an
individualized inquiry that will differ by lease, well, and month.” Response to Motion 2 at 22.
Finally, the Defendants assert that “former royalty owners add individualized issues
concerning ownership of claims, which further defeats predominance.” Response to Motion 2 at
23. The Defendants contend that the new class definition contains former royalty owners, and
that “current royalty owners do not necessarily have the right to assert claims and recover
damages for royalties that were not paid to their predecessors-in-interest.” Response to Motion 2
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at 23. “Accordingly, determining whether a right of action was transferred, and thus, who owns
a claim for past underpayments -- the current or former owner -- will entail examinations of the
chain of title for each class member, and possibly extrinsic evidence.” Response to Motion 2 at
24. The Defendants thus conclude that the Court should deny the Motion. See Response to
Motion 2 at 24.
5.

The Reply to the First Response.

The Plaintiffs reply to the Defendants’ arguments. See Plaintiffs’ Reply to Defendants’
Response to Plaintiffs’ Motion to Alter or Amend and to Reconsider Memorandum Opinion and
Order, filed November 28, 2016 (Doc. 263)(“Reply 1”). First, the Plaintiffs re-assert that their
new class definition meets the commonality and predominance requirements. See Reply 1 at 1.
They re-assert that the leases at issue can be divided into two categories of “proceeds” leases and
“market value” leases, and that, at the very least, proceeds leases forbid paying NGL royalty on a
keep-whole basis. Reply 1 at 2-3 (citing Abraham, 317 F.R.D. at 275 n.82).
Next, the Plaintiffs argue that the class is ascertainable. See Reply 1 at 4. Specifically,
“defining the class by those who are paid on the keep-whole method identifies the persons
entitled to relief and who are bound by the judgment. It supplies a source of identification . . .
based on WPX’s records of past and current monthly remittances for royalty and overriding
royalty.” Reply 1 at 4.
Additionally, the Plaintiffs argue that, although the Court concluded ‘“the evidence
suggests ‘gas’ refers to the gas produced at the wellhead rather than the processed products,’”
there is no dispute “that the proceeds and market value leases entitle payment on ‘gas.’” Reply 1
at 7 (quoting Abraham, 317 F.R.D. at 263). “There are no sales at the wells. The proxy for sales
of gas at the well are proceeds achieved by sales of the gas components at the place and in the

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subdivide forms of the production found at the outlet of processing plants.” Reply 1 at 7-8.
The Plaintiffs also argue that “[c]onstruction of leases is to favor lessors,” specifically
that “between lessor and lessee construction of the lease shall be against the lessee and in favor
of the lessor.” Reply 1 at 10 (citing Greer v. Salmon, 1971-NMSC-002, 479 P.2d 294). This
rule exists, because “the lessors . . . are not familiar with oil-and-gas industry usage and the
leases are form contracts not ordinarily the product of meaningful negotiation.” Reply 1 at 11.
The Plaintiffs conclude by asking the Court to amend its decision denying class
certification. See Reply 1 at 12.
6.

The Reply to the Second Response.

The Plaintiffs reply to the Second Response. See Reply in Support of Plaintiffs’ Second
Motion for Class Certification, filed November 28, 2016 (Doc. 264)(“Reply 2”). First, the
Plaintiffs argue that their Second Motion is timely. See Reply 2 at 1. They contend that, “[u]ntil
the Court filed [Abraham] on August 16, 2016, the Plaintiffs reasonably believed that this case
would be certified. There was no reason for Plaintiffs to file additional motions addressed to the
certification issue until the Court announced its decision.” Reply 2 at 2. The Plaintiffs further
argue that “the Court has ample authority to consider the Second Motion.” Reply 2 at 3.
Specifically, they contend that “Rule 23 does not limit the class definition to a definition set forth
in the complaint. To the contrary, Rule 23 puts the responsibility for defining a class on the
Court. The class definition is ultimately determined by the Court, not the parties.” Reply 2 at 5
(citing Blair v. Transam Trucking, Inc., 2015 WL 5006076, at *3 (D. Kan. 2015)(Melgren, J.)).
Further, the Plaintiffs contend that “[t]he Tenth Circuit has never ruled that a district court is
limited to the class definition in the complaint.” Reply 2 at 5. The Plaintiffs argue: “The most
that can be said in support of WPX’s position is that district courts are split on the issue.” Reply

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2 at 6. The Plaintiffs add that, “[e]ven if the Court were inclined to narrowly view its authority
to consider a class definition in a motion for class certification different from that in the
operative complaint, the remedy should be to allow plaintiffs to amend their complaint.” Reply
2 at 7.
Next, the Plaintiffs assert that their new class definition cures the ascertainability
problem.

See Reply 2 at 7.

They reassert that royalty owners paid on the keep-whole

methodology are “readily ascertainable based on WPX’s own records.” Reply 2 at 7. The
Plaintiffs further contend that the new class definition establishes commonality and
predominance. See Reply 2 at 8. The Plaintiffs reassert their arguments that the new class
definition includes only owners paid under proceeds and market value leases, and that these
owners are similarly situated “for purposes of the case, subject only to minor variations in the
damage formula that would apply to each.” Reply 2 at 9.
Finally, the Plaintiffs re-argue that their implied covenant claims are also certifiable. See
Reply 2 at 12. Plaintiffs contend that WPX Energy has breached the implied covenant to market
and the breach of the duty of good faith and fair dealing, because “WPX does not fully market
the production for the class members, so [it] cannot establish that it has marketed to get the best
possible price.” Reply 2 at 12.
The Plaintiffs conclude by requesting that the Court grant their Second Motion and
certify the new class definition. See Reply 2 at 12.
7.

The Hearing.

The Court held a motion hearing on January 24, 2017.

See Transcript of Motion

Proceeding at 1:1 (taken January 24, 2017)(Court)(“Tr.”). The Plaintiffs began by stating “there
is no doubt that the class is financially injured by nonpayment of the royalty and overriding

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royalty on natural gas liquids produced from the leases to which are burdened by those royalty
interests, and that injury can only be remedied by a certified class action.” Tr. at 3:18-24
(Gallegos). Regarding the Defendants’ procedural challenges, the Plaintiffs argued that “[t]his is
not an issue about amending a complaint. We’re not changing or amending any causes of action
or claims or defense. A motion is the proper means to seek an order of the Court. The motion is
the proper way to come forward for class certification.” Tr. at 7:3-8 (Gallegos).
Turning to the ascertainability issue, the Plaintiffs argued that the new class is
ascertainable, because “[t]hose royalty owners and overriding royalty owners who are paid on a
keep-whole basis are parties that can be easily determined from the database of WPX.” Tr. at
10:16-18 (Gallegos). The Plaintiffs then pivoted to commonality, arguing that, under the new
class definition, “the issue in this case simply becomes, with everybody paid on the same basis,
on the keep-whole basis, are the parties injured by that, or are they not injured by that.” Tr. at
12:9-13 (Gallegos). The Plaintiffs continued arguing on commonality, asserting that all but a
few leases fit into one of two categories -- proceeds leases and market value leases. See Tr. at
23:7-12 (Gallegos). The Plaintiffs concluded by saying that
we believe that what has been brought before the Court regarding application of
the proceeds and market value leases, along with the definition of the proposed
description of the class, the three elements, the three issues that [argued] against
certification, set forth on page 2 of your opinion, have been satisfied; that there is
no longer a problem.
Tr. at 29:3-11 (Gallegos). The Defendants began their argument on the ascertainability issue.
See Tr. at 31:6-8 (Sheridan). Specifically, they asserted that in the Plaintiffs’ Reply, they
“challenged for the first time findings and conclusions that the Court made with respect to the -which gas from which leases was or was not processed. And he does so in a way that is in direct
conflict with the record in the case.” Tr. at 32:5-10 (Sheridan). “[T]he reason that this becomes

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significant is that if the gas was not processed, if it was sold without processing, then there
would be no proceeds from the sale of refined NGLs, no proceeds derived by either WFC or
WPX.” Tr. at 32:23-25, 33:1-2 (Sheridan). “So on the ascertainability question, the Court has to
ask itself: Have the plaintiffs proven which gas from which wells on which leases was processed
or not? Because if it wasn’t processed, then there is no royalty obligation under their new
definition.” Tr. at 36:9-14 (Sheridan). “[T]he Court’s findings and conclusions stand for the
proposition that a very substantial quantity of the WPX operated conventional production is not
processed. And their definition doesn’t cure that.” Tr. at 39:8-12 (Sheridan).
The Defendants then turned to their procedural arguments.

See Tr. at 40:12-13

(Sheridan). They argued that “a new class certification motion can effectively be nothing more
than a motion for reconsideration of the denial of the prior class certification motion,” meaning
that a court should apply the standards applicable to a motion for reconsideration when
considering a second motion for class certification. Tr. at 41:19-24. The Defendants argued that
the Plaintiffs’ Motions “do nothing more than raise issues that have already been raised, and then
advance arguments that they could have raised, but tactically and strategically elected not to.”
Tr. at 41:7-11 (Sheridan).
And if the Court’s standards for reconsideration mean anything, then they mean
that this motion must be denied, and they mean that this second motion for class
certification is nothing more than a rehash of the same issues that have been in the
case since they filed their motion for class certification in 2014.
Tr. at 53:11-17 (Sheridan). Turning to the proceeds issue, the Defendants argued that
[t]he Court did not, in footnote 82,3 nor anywhere else in the opinion that I can
find, render a holding, whether for purposes of class certification, or otherwise,
3

The referenced footnote reads:
The Court will, however, for the parties’ benefit, give its inclinations about what
some of the royalty terms mean, based on existing case law and the terms’ plain
meanings. “Proceeds,” generically, refers to the amount the Defendants receive
- 17 -

that a royalty on a keep-whole . . . contract, where the royalty owner does not own
an interest in the refined NGLs, nonetheless is required to be paid royalty as he
did.
Tr. at 55:23-25, 1-5 (Sheridan)(citing Abraham, 317 F.R.D. at 275 n.82).

Regarding

commonality, the Defendants posited: “I think that, without first considering the circumstances
surrounding the execution of those leases, when they were entered into, what was going on in the
industry . . . they may not necessarily mean the same thing. That becomes an individualized
inquiry.” Tr. at 64:4-10 (Sheridan).
Our argument with respect to custom and usage evidence supporting the Court’s
commonality and predominance ruling is uncontested. They rely on a canon of
construction that an agreement is to be construed against the drafter. And they
ignore, however, that that canon of construction applies only after the Court has
fully considered the extrinsic evidence.
Tr. at 66:12-19 (Sheridan). The Defendants concluded by saying: “I think this Court correctly
found that the Plaintiffs could not establish the requirements of commonality and predominance.
And nothing that they’ve said in their motion for reconsideration or second motion for class
certification changes the Court’s findings and conclusions in that respect.” Tr. at 70:5-10
(Sheridan).
The Court then asked the Defendants about the new class definition. See Tr. at 71:1-2
(Court). The Defendants asserted that there were several problems with the new class definition,
including the inclusion of former owners and overriding royalty owners. See Tr. at 71:5-8
(Sheridan).
_______________________________
from selling the hydrocarbons, and not any index or market price. ConocoPhillips
Co. v. Lyons, 2013-NMSC-009, ¶¶ 16, 24, 299 P.3d at 850, 852-53. This term
forbids paying NGL royalty on a keep-whole basis. “Net proceeds” permits postproduction cost deductions -- but not production-cost deductions -- in New
Mexico, ConocoPhillips Co. v. Lyons, 2013-NMSC-009, ¶¶ 16, 24, 299 P.3d at
850, 852-53. “Gross proceeds” forbids the deduction of costs. Rogers v.
Westerman Farm Co., 29 P.3d at 897.
Abraham, 317 F.R.D. at 275 n.82.
- 18 -

The Court then inquired as to the Defendants’ procedural arguments, asking how the
Defendants would be prejudiced if the court ruled on the new class definition. See Tr. at 74:1-10
(Court). The Defendants responded by saying:
The Plaintiffs in this case filed an initial motion for class certification . . .
sometime in 2013. It was withdrawn. They refiled a motion for class certification
in January of 2014 . . . [T]hey prepared and prosecuted their motion for class
certification at great time and expense to the defendants . . . [T]he burden of
discovery in these cases, as the Court knows, falls largely on the defendants.
Tr. at 77:13-23 (Sheridan). The Court also asked the Plaintiffs about prejudicing the Defendants
by ruling on the new class definition. See Tr. at 89:13-16 (Court). The Plaintiffs responded that
“we basically had a mini trial [--] five, six days of evidence . . . , I think every issue was
thoroughly tried at that hearing.” Tr. 90:20-25 (Gallegos).
LAW REGARDING MOTIONS TO RECONSIDER
Except where the Federal Rules of Civil Procedure specify, motions to reconsider fall
into three categories:
(i) a motion to reconsider filed within [twenty-eight] days of the entry of
judgment is treated as a motion to alter or amend the judgment under rule 59(e);
(ii) a motion to reconsider filed more than [twenty-eight] days after judgment is
considered a motion for relief from judgment under rule 60(b); and (iii) a motion
to reconsider any order that is not final is a general motion directed at the Court's
inherent power to reopen any interlocutory matter in its discretion. See Price v.
Philpot, 420 F.3d 1158, 1167 & n.9 (10th Cir. 2005).
Pedroza v. Lomas Auto Mall, Inc., 258 F.R.D. 453, 462 (D.N.M. 2009)(Browning, J.). See Price
v. Philpot, 420 F.3d at 1167; Computerized Thermal Imaging, Inc. v. Bloomberg. L.P., 312 F.3d
1292, 1296 (10th Cir. 2002).
1.

Motions for Reconsideration Under Rules 59(e) and 60(b).

Courts may treat motions for reconsideration as a rule 59(e) motion when the movant
files within twenty-eight days of a court’s entry of judgment. See Price v. Philpot, 420 F.3d at
1167 n.9. If the movant files outside that time period, courts should treat the motion as seeking
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relief from judgment under rule 60(b). See Price v. Philpot, 420 F.3d at 1167 n.9. “[A] motion
for reconsideration of the district court’s judgment, filed within [rule 59’s filing deadline],
postpones the notice of appeal’s effect until the motion is resolved.” Jones v. United States, 355
F. App’x 117, 121 (10th Cir. 2009)(unpublished). The time limit in rule 59(e) is now twentyeight days from the entry of a judgment. See Fed. R. Civ. P. 59(e).
Whether a motion for reconsideration should be considered a motion under rule 59 or rule
60 is not only a question of timing, but also “depends on the reasons expressed by the movant.”
Commonwealth Prop. Advocates, LLC v. Mortg. Elec. Registration Sys., Inc., 680 F.3d 1194,
1200 (10th Cir. 2011).

Where the motion “involves ‘reconsideration of matters properly

encompassed in a decision on the merits,’” a court considers the motion under rule 59(e). Phelps
v. Hamilton, 122 F.3d 1309, 1323-24 (10th Cir. 1997)(quoting Martinez v. Sullivan, 874 F.2d
751, 753 (10th Cir. 1989)). In other words, if the reconsideration motion seeks to alter the
district court’s substantive ruling, then it should be considered a rule 59 motion and be subject to
rule 59’s constraints. See Phelps v. Hamilton, 122 F.3d at 1324. In contrast, under rule 60,
[o]n motion and just terms, the court may relieve a party or its legal
representatives from a final judgment, order, or proceeding for the following
reasons:
(1)

mistake, inadvertence, surprise, or excusable neglect;

(2)
newly discovered evidence that, with reasonable diligence,
could not have been discovered in time to move for a new trial
under Rule 59(b);
(3)
fraud (whether previously called intrinsic or extrinsic),
misrepresentation, or misconduct by an opposing party;
(4)

the judgment is void;

(5)
the judgment has been satisfied, released or discharged; it is
based on an earlier judgment that has been reversed or vacated; or
applying it prospectively is no longer equitable; or
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(6)

any other reason that justifies relief.

Fed. R. Civ. P. 60(b). Neither a rule 59 nor a rule 60 motion for reconsideration
are appropriate vehicles to reargue an issue previously addressed by the court
when the motion merely advances new arguments, or supporting facts which were
available at the time of the original motion. . . . Grounds warranting a motion to
reconsider include (1) an intervening change in the controlling law, (2) new
evidence previously unavailable, and (3) the need to correct clear error or prevent
manifest injustice.
Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000). “[A] motion for
reconsideration is appropriate where the court has misapprehended the facts, a party’s position,
or the controlling law.” Servants of the Paraclete v. Does, 204 F.3d at 1012. A district court has
considerable discretion in ruling on a motion to reconsider. See Phelps v. Hamilton, 122 F.3d at
1324.
Rule 60 authorizes a district court to, “[o]n motion and just terms[,] . . . relieve a party or
its legal representative from a final judgment, order, or proceeding for the following reasons,”
including “any other reason that justifies relief.” Fed. R. Civ. P. 60(b). A court cannot enlarge
the time for filing a rule 59(e) motion. See Brock v. Citizens Bank of Clovis, 841 F.2d 344, 347
(10th Cir. 1988)(holding that district courts lack jurisdiction over untimely rule 59(e) motions);
Plant Oil Powered Diesel Fuel Sys., Inc. v. ExxonMobil Corp., No. 11-0103, 2012 WL 869000,
at *2 (D.N.M. Mar. 8, 2012)(Browning, J.)(“The Court may not extend the time period for timely
filing motions under Rule 59(e) . . . .”). “A motion under rule 59 that is filed more than 28 days
after entry of judgment may be treated as a Rule 60(b) motion for relief from judgment.” 12
JAMES WM. MOORE

ET AL.,

MOORE’S FEDERAL PRACTICE § 59.11[4][b], at 59-32 (3d ed.

2012)(citations omitted). Nevertheless, a court will not generally treat an untimely rule 59(e)
motion as a rule 60(b) motion when the party is seeking “‘reconsideration of matters properly

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encompassed in a decision on the merits’ contemplated by Rule 59(e).” Jennings v. Rivers, 394
F.3d 850, 854 (10th Cir. 2005).
Under some circumstances, parties can rely on rule 60(b)(1) for a mistake by their
attorney or when their attorney acted without their authority. See Yapp v. Excel Corp., 186 F.3d
1222, 1231 (10th Cir. 1999)(“Rule 60(b)(1) motions premised upon mistake are intended to
provide relief to a party . . . when the party has made an excusable litigation mistake or an
attorney has acted without authority . . . .”). Mistake in this context entails either acting without
the client’s consent or making a litigation mistake, such as failing to file or to comply with
deadlines. See Yapp v. Excel Corp., 186 F.3d at 1231. If the alleged incident entails a mistake,
then it must be excusable, meaning that the party was not at fault. See Pioneer Inv. Servs. v.
Brunswick Assocs. LP, 507 U.S. 380, 394 (1993); Cashner v. Freedom Stores, Inc., 98 F.3d 572,
577 (10th Cir. 1996)(“If the mistake alleged is a party’s litigation mistake, we have declined to
grant relief under Rule 60(b)(1) when the mistake was the result of a deliberate and counseled
decision by the party.”); Pelican Prod. Corp. v. Marino, 893 F.2d 1143, 1146 (10th Cir.
1990)(holding that attorney carelessness is not a basis for relief under rule 60(b)(1)).
Courts will not grant relief when the mistake of which the movant complains is the result
of an attorney’s deliberate litigation tactics. See Cashner v. Freedom Stores, Inc., 98 F.3d at 577.
This rule exists because a party
voluntarily chose [the] attorney as his representative in the action, and he cannot
now avoid the consequences of the acts or omissions of this freely selected agent.
Any other notion would be wholly inconsistent with our system of representative
litigation, in which each party is deemed bound by the acts of his lawyer agent
and is considered to have notice of all facts, notice of which can be charged upon
the attorney.
Pioneer Inv. Servs. v. Brunswick Assocs. LP, 507 U.S. at 397 (quoting Link v. Wabash R.R. Co.,
370 U.S. 626, 633-34 (1962))(internal quotation marks omitted). The Tenth Circuit has held that
- 22 -

there is nothing “novel” about “the harshness of penalizing [a client] for his attorney’s conduct,”
and has noted that those “who act through agents are customarily bound,” even though, when “an
attorney is poorly prepared to cross-examine an expert witness, the client suffers the
consequences.” Gripe v. City of Enid, Okla., 312 F.3d 1184, 1189 (10th Cir. 2002).
Rule 60(b)(6) is a “grand reservoir of equitable power to do justice in a particular case.”
Van Skiver v. United States, 952 F.2d 1241, 1244 (10th Cir. 1991)(internal quotation marks
omitted). “If the reasons offered for relief from judgment could be considered under one of the
more specific clauses of Rule 60(b)(1)-(5), those reasons will not justify relief under Rule
60(b)(6).” Moore, supra § 60.48[2], at 60-182. Accord Liljeberg v. Health Servs. Acquisition
Corp., 486 U.S. 847, 863 n.11 (1988)(“This logic, of course, extends beyond clause (1) and
suggests that clause (6) and clauses (1) through (5) are mutually exclusive.”). “The Rule does
not particularize the factors that justify relief, but we have previously noted that it provides
courts with authority ‘adequate to enable them to vacate judgments whenever such action is
appropriate to accomplish justice,’ while also cautioning that it should only be applied in
‘extraordinary circumstances.’” Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. at 863.
Generally, the situation must be one beyond the control of the party requesting relief
under rule 60(b)(6) to warrant relief. See Ackermann v. United States, 340 U.S. 193, 202
(1950)(“The comparison [of prior precedent] strikingly points up the difference between no
choice and choice; imprisonment and freedom of action; no trial and trial; no counsel and
counsel; no chance for negligence and inexcusable negligence. Subsection 6 of Rule 60(b) has
no application to the situation of petitioner.”). Legal error that provides a basis for relief under
rule 60(b)(6) must be extraordinary, as the Tenth Circuit discussed in Van Skiver v. United
States:

- 23 -

The kind of legal error that provides the extraordinary circumstances justifying
relief under Rule 60(b)(6) is illustrated by Pierce [v. Cook & Co., 518 F.2d 720,
722 (10th Cir. 1975)(en banc)]. In that case, this court granted relief under
60(b)(6) when there had been a post-judgment change in the law “arising out of
the same accident as that in which the plaintiffs . . . were injured.” Pierce v. Cook
& Co., 518 F.2d at 723. However, when the post-judgment change in the law did
not arise in a related case, we have held that “[a] change in the law or in the
judicial view of an established rule of law” does not justify relief under Rule
60(b)(6). Collins v. City of Wichita, 254 F.2d 837, 839 (10th Cir. 1958).
Van Skiver v. United States, 952 F.2d at 1244-45.
2.

Motions to Reconsider Interlocutory Orders.

Considerable confusion exists among the bar regarding the proper standard for a district
court to apply when ruling on a motion to reconsider one of its prior “interlocutory” or “interim”
orders, i.e., an order that a district court issues while the case is ongoing, as distinguished from a
final judgment. This confusion originates from the fact that the Federal Rules of Civil Procedure
do not mention motions to reconsider, let alone set forth a specific procedure for filing them or a
standard for analyzing them. A loose conflation in terminology in Servants of the Paraclete v.
Does, which refers to rule 59(e) motions -- “motion[s] to alter or amend a judgment” -- as
“motions to reconsider,”4 compounded that baseline confusion. Fed. R. Civ. P. 59(e) (emphasis
added); Servants of the Paraclete v. Does, 204 F.3d at 1005.

4

The Honorable Paul J. Kelly, Jr., United States Circuit Judge for the Tenth Circuit, who
authored Servants of the Paraclete v. Does, refers to rule 59(e) motions as “motions to
reconsider” several times throughout the opinion. E.g., 204 F.3d at 1005. He uses the term
“motion to reconsider” as an umbrella term that can encompass three distinct motions:
(i) motions to reconsider an interlocutory order, which no set standard governs, save that the
district court must decide them “before the entry of . . . judgment,” Fed. R. Civ. P. 54(b);
(ii) motions to reconsider a judgment made within twenty-eight days of the entry of judgment,
which the Servants of the Paraclete v. Does standard governs; and (iii) motions to reconsider a
judgment made more than twenty-eight days after the entry of judgment, which rule 60(b)
governs. There is arguably a fourth standard for motions to reconsider filed more than a year
after the entry of judgment, as three of the rule 60(b) grounds for relief expire at that point.
Much confusion could be avoided by using the term “motion to reconsider” exclusively
to refer to the first category, “motion to amend or alter the judgment” exclusively to refer to the
- 24 -

Final judgments are different from interlocutory orders.

See Fed. R. Civ. P. 54(a)

(“‘Judgment’ as used in these rules includes a decree and any order from which an appeal
lies.”)(emphasis added). In addition to ripening the case for appeal, see 28 U.S.C. § 1291 (“The
courts of appeals . . . shall have jurisdiction of appeals from all final decisions of the district
courts . . . .”), the entry of final judgment narrows the district court’s formerly plenary
jurisdiction over the case in three ways. First, for the first twenty-eight days after the entry of
judgment, when the court can entertain motions under rules 50(b), 52(b), 59, and 60, the district
court’s jurisdiction trumps that of the Court of Appeals. See Fed. R. App. P. 4(a)(4)(B). Even if
a party files a notice of appeal, the Court of Appeals will wait until after the district court has
ruled on the post-judgment motion to touch the case.

See Fed. R. App. P. 4(a)(4)(B).

Second, after twenty-eight days, when the court may consider motions under rule 60, if a party
has filed a notice of appeal, the Court of Appeals’ jurisdiction trumps the district court’s, and the
district court needs the Court of Appeals’ permission even to grant a rule 60 motion. Third, after
twenty-eight days, if no party has filed a notice of appeal, district courts may consider motions
under rule 60.
Final judgments implicate two important concerns militating against giving district courts
free reign to reconsider their judgments. First, when a case is not appealed, there is an interest in
finality. The parties and the lawyers expect to go home, quit obsessing about the dispute, and put
the case behind them, and the final judgment -- especially once the twenty-eight day window of
_______________________________
second category, and “motion for relief from judgment” exclusively to refer to the third category
(and arguable fourth category). These are the terms that the Federal Rules of Civil Procedure -and other Circuits -- use to describe (ii) and (iii). The Court agrees with Judge Kelly -- and all he
likely meant by using motion to reconsider as an umbrella term is -- that, if a party submits a
motion captioned as a “motion to reconsider” after an entry of final judgment, the court should
evaluate it under rule 59(e) or 60(b), as appropriate, rather than rejecting it as untimely or
inappropriate.
- 25 -

robust district court review and the thirty-day window of appeal have both closed -- is the
disposition upon which they are entitled to rely. Second, when a case is appealed, there is the
need for a clean jurisdictional handoff from the district court to the Court of Appeals. “[A]
federal district court and a federal court of appeals should not attempt to assert jurisdiction over a
case simultaneously,” as doing so produces a “danger [that] a district court and a court of appeals
w[ill] be simultaneously analyzing the same judgment.” Griggs v. Provident Consumer Discount
Co., 459 U.S. 56, 58-59 (1982).
The Court of Appeals needs a fixed record on which to base its decisions -- especially
given the collaborative nature of appellate decision making -- and working with a fixed record
requires getting some elbow room from the district court’s continued interference with the case.
The “touchstone document” for this jurisdictional handoff is the notice of appeal, and not the
final judgment, see Griggs v. Provident Consumer Discount Co., 459 U.S. at 58 (“The filing of a
notice of appeal is an event of jurisdictional significance -- it confers jurisdiction on the court of
appeals and divests the district court of its control over those aspects of the case involved in the
appeal.” (citations omitted)); Garcia v. Burlington N. R.R. Co., 818 F.2d 713, 721 (10th Cir.
1987)(“Filing a timely notice of appeal pursuant to Fed. R. App. P. 3 transfers the matter from
the district court to the court of appeals. The district court is thus divested of jurisdiction. Any
subsequent action by it is null and void.” (citations omitted)); Kirtland v. J. Ray McDermott &
Co., 568 F.2d 1166, 1170 (5th Cir. 1978)(“[I]t is the filing of the appeal, not the entering of a
final judgment, that divests the district court of jurisdiction.” (citations omitted)), but, because
the final judgment starts the parties’ thirty-day clock for filing a timely notice of appeal, the
Federal Rules and the Tenth Circuit have chosen to curtail the district court’s jurisdiction over
the case in the roughly month-long period of potentially overlapping trial- and appellate-court

- 26 -

jurisdiction that immediately follows the entry of final judgment, see Servants of the Paraclete v.
Does, 204 F.3d at 1009 (noting that post-final judgment motions at the district court level are
“not intended to be a substitute for direct appeal”).
Basically, rather than suddenly divesting the district court of all jurisdiction over the case
-- potentially resulting in the district court being unable to rectify easily fixable problems with
the final judgment before the case goes to the Tenth Circuit, or even requiring appeal of a case
that might otherwise not need to be appealed -- the Federal Rules set forth a jurisdiction phased
de-escalation process, wherein the district court goes from pre-final judgment plenary
jurisdiction, to limited review for the first twenty-eight days post-final judgment, and, finally, to
solely rule 60 review after twenty-eight days. In defining the “limited review” that rule 59(e)
allows a district court to conduct in the 28-day flux period, the Tenth Circuit, in Servants of the
Paraclete v. Does, incorporated traditional law-of-the-case grounds -- the same grounds that
inform whether a court should depart from an appellate court’s prior decision in the same case -into rule 59(e). See United States v. Alvarez, 142 F.3d 1243, 1247 (10th Cir. 1998)(departing
from the law-of-the-case doctrine in three exceptionally narrow circumstances: “(1) when the
evidence in a subsequent trial is substantially different; (2) when controlling authority has
subsequently made a contrary decision of the law applicable to such issues; or (3) when the
decision was clearly erroneous and would work a manifest injustice”)(citation omitted); Servants
of the Paraclete v. Does, 204 F.3d at 1012 (incorporating those grounds into rule 59(e)).
Neither of these concerns -- finality nor jurisdictional overlap -- is implicated when a
district court reconsiders one of its own interlocutory orders.

The Federal Rules do not

specifically mention motions to reconsider interlocutory orders, but rule 54(b) makes the
following open-ended proclamation about their mutability:

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When an action presents more than one claim for relief -- whether as a claim,
counterclaim, crossclaim, or third-party claim -- or when multiple parties are
involved, the court may direct entry of a final judgment as to one or more, but
fewer than all, claims or parties only if the court expressly determines that there is
no just reason for delay. Otherwise, any order or other decision, however
designated, that adjudicates fewer than all the claims or the rights and liabilities of
fewer than all the parties does not end the action as to any of the claims or parties
and may be revised at any time before the entry of a judgment adjudicating all the
claims and all the parties’ rights and liabilities.
Fed. R. Civ. P. 54(b) (emphases added). Rule 54(b) thus (i) provides that a district court can
freely reconsider its prior rulings; and (ii) puts no limit or governing standard on the district
court’s ability to do so, other than that it must do so “before the entry of judgment.” Fed. R. Civ.
P. 54(b).
The Tenth Circuit has not cabined district courts’ discretion beyond what rule 54(b)
provides: “[D]istrict courts generally remain free to reconsider their earlier interlocutory orders.”
Been v. O.K. Indus., 495 F.3d at 1225. In the Tenth Circuit, “law of the case doctrine has no
bearing on the revisiting of interlocutory orders, even when a case has been reassigned from one
judge to another.” Rimbert v. Eli Lilly & Co., 647 F.3d 1247, 1252 (10th Cir. 2011)(emphasis
added)(citing Been v. O.K. Indus., Inc., 495 F.3d at 1225). In this context, “the doctrine is
merely a ‘presumption, one whose strength varies with the circumstances.’” Been v. O.K.
Indus., Inc., 495 F.3d at 1225 (quoting Avitia v. Metro. Club of Chi., Inc., 49 F.3d 1219, 1227
(7th Cir. 1995)). In short, a district court can use whatever standard it wants to review a motion
to reconsider an interlocutory order. It can review the earlier ruling de novo and essentially
reanalyze the earlier motion from scratch, it can review the ruling de novo but limit its review, it
can require parties to establish one of the law-of-the-case grounds, or it can refuse to entertain
motions to reconsider altogether.

- 28 -

The best approach, in the Court’s eyes, is to analyze motions to reconsider differently
depending on three factors. Cf. Been v. O.K. Indus., Inc., 495 F.3d at 1225 (“[T]he doctrine is
merely a ‘presumption, one whose strength varies with the circumstances.’”)(citation omitted).
First, the Court should restrict its review of a motion to reconsider a prior ruling in proportion to
how thoroughly the earlier ruling addressed the specific findings or conclusions that the motion
to reconsider challenges. How “thoroughly” a point was addressed depends both on the amount
of time and energy the Court spent on it, and on the amount of time and energy the parties spent
on it -- in briefing and orally arguing the issue, but especially if they developed evidence on the
issue. A movant for reconsideration thus faces a steeper uphill challenge when the prior ruling
was on a criminal suppression motion, class certification motion, or preliminary injunction,5 than
when the prior ruling is, e.g., a short discovery ruling. The Court should also look, not to the
prior ruling’s overall thoroughness, but to the thoroughness with which the Court addressed the
exact point or points that the motion to reconsider challenges. A movant for reconsideration thus
faces an easier task when he or she files a targeted, narrow-in-scope motion asking the Court to
5

The Court typically makes findings of fact and conclusions of law in ruling on these
motions. At first glance, it appears that the Federal Rules of Civil Procedure set forth additional
standards -- beyond that which applies to other interlocutory orders -- for amending findings of
fact and conclusions of law:
Amended or Additional Findings. On a party’s motion filed no later than 28
days after the entry of judgment, the court may amend its findings -- or make
additional findings -- and may amend the judgment accordingly. The motion may
accompany a motion for a new trial under Rule 59.
Fed. R. Civ. P. 52(b). This rule appears to limit motions to reconsider orders with findings of
fact and conclusions of law to twenty-eight days. The rule’s use of the term “entry of judgment,”
its reference to rule 59, and its adoption of the same time period that applies to motions to alter
or amend a judgment, all lead the Court to conclude, however, that rule 52(b) -- and its 28-day
time limit -- does not apply to interlocutory orders. The time limit applies only to findings of
fact and conclusions of law supporting a case-ending judgment -- such as those entered after a
bench trial -- and to those giving rise to an interlocutory appeal that, if filed, divests the district
court of its jurisdiction -- such as those entered in support of a preliminary injunction.
- 29 -

reconsider a small, discrete portion of its prior ruling than when he or she files a broad motion to
reconsider that rehashes the same arguments from the first motion, and essentially asks the Court
to grant the movant a mulligan on its earlier failure to present persuasive argument and evidence.
Second, the Court should consider the case’s overall progress and posture, the motion for
reconsideration’s timeliness relative to the ruling it challenges, and any direct evidence the
parties may produce, and use those factors to assess the degree of reasonable reliance the
opposing party has placed in the Court’s prior ruling.

See 18B CHARLES ALAN WRIGHT,

ARTHUR R. MILLER, EDWARD H. COOPER, VIKRAM DAVID AMAR, RICHARD D. FREER, HELEN
HERSHKOFF, JOAN E. STEINMAN & CATHERINE T. STRUVE, FEDERAL PRACTICE & PROCEDURE
§ 4478.1, at 695-96 (2d ed. 2002)(“Stability becomes increasingly important as the proceeding
nears final disposition . . . . Reopening should be permitted, however, only on terms that protect
against reliance on the earlier ruling.”). For example, if a defendant (i) spends tens of thousands
of dollars removing legacy computer hardware from long-term storage; then (ii) obtains a
protective order in which the Court decides that the defendant need not produce the hardware in
discovery; then (iii) returns the hardware to long-term storage, sustaining thousands more in
expenses; and (iv) several months pass, then the plaintiffs should face a higher burden in moving
the Court to reconsider its prior ruling that they faced in fighting the motion for protective order
the first time.
Third, the Court should consider the Servants of the Paraclete v. Does grounds. The
Court should be more inclined to grant motions for reconsideration if the movant presents
(i) new controlling authority -- especially if the new authority overrules prior law or sets forth an
entirely new analytical framework; (ii) new evidence -- especially if the movant has a good
reason why the evidence was not presented the first time around; or (iii) a clear indication -- one

- 30 -

that manifests itself without the need for in-depth analysis or review of the facts -- that the Court
erred.
These three factors should influence the degree to which the Court restricts its review of a
prior ruling, but they do not necessarily mean that the Court should always apply a deferential
standard of review. The Court should pause before applying a standard of review to its own
interlocutory orders that is more deferential than the standard that the Court of Appeals will
apply to it, unless the Court concludes that the alleged error in the prior ruling was harmless, or
the party moving for reconsideration waived their right to appeal the alleged error by not raising
the appropriate argument. Even in circumstances where the Court concludes that it is insulated
from reversal on appeal, there are principled reasons for applying a de novo standard. After all,
if the Court was wrong in its earlier decision, then, generally speaking, it is unjust to maintain
that result -- although the Court should weigh this injustice against any injustice that would result
from upending the parties’ reliance on the earlier ruling, which is the balancing test that the three
factors above represent.
What the Court means by “restricting its review” is less about applying a deferential
standard of review -- although that may be appropriate in some circumstances -- and more about
reducing (i) the depth of the Court’s analysis the second time around -- thus conserving judicial
resources; and (ii) the impositions that relitigation of the prior ruling will impose on the party
opposing the motion for reconsideration. The Court should consider the time and expense that
the party opposing reconsideration spent in winning the earlier ruling, and should try to prevent
that party from having to bear the same impositions again.

Basically, even if the Court

ultimately analyzes a motion to reconsider under the same standard that it analyzed the motion
that produces the earlier ruling, it should analyze the motion in a different way -- one focused on

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reducing the litigation burdens of the party opposing reconsideration. For example, when a party
moves the Court for a preliminary injunction, standard practice is that the Court holds an
evidentiary hearing as a matter of course, regardless whether it looks as if the party has a good
chance of prevailing. If the party loses and the Court denies the injunction, however, and the
party moves for reconsideration, the party should not be entitled to the presumption of an
evidentiary hearing merely because he or she received that presumption the first time that the
Court considered the motion.
In light of these statements, it is perhaps better to characterize the increased burden that a
movant for reconsideration faces as one of production and not of persuasion. The Court analyzes
motions to reconsider by picking up where it left off in the prior ruling -- not by starting anew.
Parties opposing reconsideration can do the same, and they may stand on whatever evidence and
argument they used to win the earlier ruling. Movants for reconsideration, on the other hand,
carry the full burden of production: they must persuade the Court, using only the evidence and
argument they put before it, that it should change its prior ruling; they must do all of the legwork,
and not rely on the Court to do any supplemental fact-finding or legal research; and they must
convincingly refute both the counterarguments and evidence that the opposing party used to win
the prior ruling and any new arguments and evidence that the opposing party produces while
opposing the motion to reconsider. Unlike the motion that produced the prior ruling, a motion to
reconsider is not -- and is not supposed to be -- a fair fight procedurally. The deck is stacked
against a movant for reconsideration, and if such a movant hopes to prevail, he or she must have
not only a winning legal position, but the work ethic and tenacity to single-handedly lead the
Court to his or her way of thinking.

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LAW REGARDING A CLASS DEFINITION NOT IN THE OPERATIVE COMPLAINT
As an initial matter,
[d]istrict courts are split over whether to hold a plaintiff to the definition of a
class as set forth in the complaint. Compare Costelo v. Chertoff, 258 F.R.D.
600, 604 (C.D. Cal. 2009)(“The Court is bound to class definitions provided in
the complaint and, absent an amended complaint, will not consider certification
beyond.”); Berlowitz v. Nob Hill Masonic Mgmt., No. C-96-01241 MHP, 1996
WL 724776, at *2 (N.D. Cal. Dec.6, 1996)(“The court is bound by the class
definition provided in the complaint.”), with Savanna Group, Inc. v. Trynex,
Inc., No. 10 C 7995, 2013 WL 66181, at *2-3 (N.D. Ill. Jan. 4, 2013)(allowing
amendment during certification proceedings and noting “[t]hat this approach is
also consistent with Rule 23, which contemplated the amendment of a class
certification order prior to judgment”); Bridgeview Health Care Ctr. Ltd. v.
Clark, 09 C 5601, 2011 WL 4628744, at *2 (N.D. Ill. Sept. 30, 2011)(allowing
amendment during certification proceedings).
Grodzitsky v. Am. Honda Motor Co. Inc., No. 2:12-CV-01142-SVW, 2014 WL 718431, at *4
(C.D. Cal. Feb. 19, 2014)(Wilson, J.). The Tenth Circuit does not have a controlling opinion on
this point, although Tenth Circuit language exists that might suggest that a court need not hold a
plaintiff to the class definition in the operative complaint. See Carpenter v. Boeing Co., 456
F.3d 1183, 1187 (10th Cir. 2006)(“The district court can modify or amend its class-certification
determination at any time before final judgment in response to changing circumstances in the
case.”)(citing Fed. R. Civ. P. 23(c)(1)(C)); In re Integra Realty Res., Inc., 354 F.3d 1246, 1261
(10th Cir. 2004)(“Moreover, a trial court overseeing a class action retains the ability to monitor
the appropriateness of class certification throughout the proceedings and to modify or decertify a
class at any time before final judgment.”)(citing Fed. R. Civ. P. 23(c)(1)).
In litigation related to this case, this Court has noted:
Moreover, rule 23(c)(1)(C) authorizes courts to alter or amend orders granting or
denying class certification before final judgment. See Fed. R. Civ. P. 23(c)(1)(C).
The Court has “ample discretion to consider (or decline to consider) a revised
class certification motion after initial denial.” In re Initial Public Offering Sec.
Litig., 483 F.3d 70, 73 (2d Cir. 2007). Even after courts have denied a plaintiff’s
first attempt at class certification, courts allow plaintiffs to propose a refined class
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definition or different claims in an attempt to certify a different class than the one
originally proposed. See Pettco Enterprises, Inc. v. White, 162 F.R.D. 151, 156
(M.D. Ala. 1995)(Albritton, J.)(allowing the plaintiffs to attempt to certify a class,
even after the court had already denied certification once, and noting that the
plaintiffs’ new class definition changed the class and the claims). Courts of
Appeals have made clear that nothing “precludes the [plaintiffs] from returning to
the District Court to seek certification of a more modest class, as one to which the
Rule 23 criteria might be met.” In re Initial Public Offering Sec. Litig., 483 F.3d
70, 73 (2d Cir. 2006). The United States Court of Appeals for the Fifth Circuit
has “specifically invited” a district court to reconsider a denial of class
certification. Calderon v. Presidio Valley Farmers Ass’n, 863 F.2d 384, 389 (5th
Cir. 1989). The United States Court of Appeals for the Second Circuit has
similarly noted that a plaintiff could seek to certify a narrower class after the
Second Circuit upheld the district court’s denial of class certification. See In re
Initial Public Offering Sec. Litig., 483 F.3d at 73. The Second Circuit stated that
the district court “can be expected to give such a request full and fair
consideration.” In re Initial Public Offering Sec. Litig., 483 F.3d at 73. On
remand, the Honorable Shira A. Scheindlin, United States District Judge for the
Southern District of New York, “held that the revised class definition satisfied the
Rule 23 certification requirements” for purposes of a class settlement. In re Initial
Public Offering Sec. Litig., 2011 WL 2732563, at *3 (S.D.N.Y. July 8,
2011)(Scheindlin, J.). On the other hand, the plaintiffs need to be careful not to
turn a new class certification motion into a motion to reconsider, thereby asking
the Court to apply the standards applicable to motions to reconsider.
Anderson Living Tr. v. WPX Energy Prod., LLC, No. CIV 12-0040, 2016 WL 5376325, at *9
(D.N.M. Aug. 27, 2016)(Browning, J.)(“Anderson”). In summary, the Tenth Circuit has not
explicitly ruled on this issue, but other Courts of Appeals have at least implied that a court need
not hold a plaintiff to the class definition in the operative complaint. For these reasons, the Court
concludes that a plaintiff is not bound to the class definition in the operative complaint for
purposes of a second motion to certify a class. Class actions are hard work for the Court and the
parties; the Court and the parties need to conform the pleadings to the reality of discovery, a
lengthy class certification hearing, and the judicial resources expended in analyzing all of the
extensive evidence on record. Some flexibility -- not more formality -- is needed in crafting a
class action where one is warranted.

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LAW REGARDING WAIVER OF CLAIMS
The Tenth Circuit has noted, in the context of waiver on appeal, that, “if the theory was
intentionally relinquished or abandoned in the district court, we usually deem it waived and
refuse to consider it.”

Richision v. Ernest Group, Inc., 634 F.3d 1123, 1127 (10th Cir.

2011)(Gorsuch, J.). “Waiver occurs when a party deliberately considers an issue and makes an
intentional decision to forgo it.” United States v. Cruz-Rodriguez, 570 F.3d 1179, 1183 (10th
Cir. 2009). “We typically find waiver in cases where a party has invited the error that it now
seeks to challenge, or where a party attempts to reassert an argument that it previously raised and
abandoned below.” United States v. Zubia-Torres, 550 F.3d 1202, 1205 (10th Cir. 2008).
In United States v. Zubia-Torres, 550 F.3d at 1207, the Tenth Circuit illustrated the
waiver doctrine:
Similarly, in United States v. Gambino-Zavala, 539 F.3d 1221, 1227 (10th
Cir.2008), the court found waiver, not forfeiture, when defense counsel first
raised an issue and then affirmatively abandoned it. The defendant moved to
suppress certain evidence, which the government claimed had been found in plain
view. In a written pleading, the defendant argued that no facts were in dispute,
but during the suppression hearing challenged the evidentiary basis for the
government’s plain view argument. The prosecutor responded that he thought the
facts were undisputed but that the government could prove its position by
testimony. Defense counsel neither contested the prosecutor’s argument nor
insisted that the testimony be heard. Accordingly, this Court found waived, the
argument that the government had not proved that the contraband was in plain
view. Defense counsel obviously knew of the issue. By his action, the defendant
“affirmatively abandoned his challenge to the officers' testimony about the
contraband and waived any claim on appeal.
United States v. Zubia-Torres, 550 F.3d at 1207 (internal citation omitted).
LAW REGARDING MODIFICATION OF SCHEDULING ORDERS
“The District Court has wide discretion in its regulation of pretrial matters.” Si-Flo, Inc.
v. SFHC, Inc., 917 F.2d 1507, 1514 (10th Cir. 1990). Scheduling orders, however, “may be
modified only for good cause and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). Accord
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Street v. Curry Bd. of Cty. Comm’rs, No. CIV 06-0776 JB/KBM, 2008 WL 2397671, at *6
(D.N.M. Jan. 30, 2008)(Browning, J.). The advisory committee notes to rule 16 observe:
[T]he court may modify the schedule on a showing of good cause if it cannot
reasonably be met despite the diligence of the party seeking the extension. Since
the scheduling order is entered early in the litigation, this standard seems more
appropriate than a “manifest injustice” or “substantial hardship” test. Otherwise,
a fear that extensions will not be granted may encourage counsel to request the
longest possible periods for completing pleading, joinder, and discovery.
Fed. R. Civ. P. 16(b)(4) advisory committee’s note to 1983 amendment.
The Tenth Circuit has held that the concepts of good cause, excusable neglect, and
diligence are related. “The Tenth Circuit . . . has recognized the interrelation between ‘excusable
neglect’ and ‘good cause.’” Pulsecard, Inc. v. Discover Card Servs. Inc., 168 F.R.D. 295, 301
(D. Kan. 1996)(Rushfelt, J.)(citing In re Kirkland, 86 F.3d 172, 175 (10th Cir. 1996)). “Properly
construed, ‘good cause’ means that scheduling deadlines cannot be met despite a party’s diligent
efforts.” Street v. Curry Bd. of Cty. Comm’rs, 2008 WL 2397671, at *6. See Advanced Optics
Electronics, Inc. v. Robins, 769 F. Supp. 2d 1285, 1313 (D.N.M. 2010)(Browning, J.)(noting that
the “rule 16(b) good-cause inquiry focuses on the diligence of the party seeking [to] amend the
scheduling order.”). In In re Kirkland, the Tenth Circuit dealt with the definition of “good
cause” in the context of a predecessor to modern rule 4(m) of the Federal Rules of Civil
Procedure,6 and noted:

6

Rule 4(m) provides that

If a defendant is not served within 120 days after the complaint is filed, the court - on motion or on its own after notice to the plaintiff -- must dismiss the action
without prejudice against that defendant or order that service be made within a
specified time. But if the plaintiff shows good cause for the failure, the court
must extend the time for service for an appropriate period. This subdivision (m)
does not apply to service in a foreign country under Rule 4(f) or 4(j)(1).

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[W]ithout attempting a rigid or all-encompassing definition of ‘good cause,’ it
would appear to require at least as much as would be required to show excusable
neglect, as to which simple inadvertence or mistake of counsel or ignorance of the
rules usually does not suffice, and some showing of ‘good faith on the part of the
party seeking the enlargement and some reasonable basis for noncompliance
within the time specified’ is normally required.
86 F.3d at 175 (emphasis in original)(quoting Putnam v. Morris, 833 F.2d 903, 905 (10th Cir.
1987))(internal quotation marks omitted). The Tenth Circuit explained that Putnam v. Morris
“thus recognized that the two standards, although interrelated, are not identical and that ‘good
cause’ requires a greater showing than ‘excusable neglect.’” In re Kirkland, 86 F.3d at 175.
Where a party is diligent in its discovery efforts and nevertheless cannot comply with the
scheduling order, the Court has found good cause to modify the scheduling order if the
requesting party timely brings forward its request. In Advanced Optics Electronics, Inc. v.
Robins, the Court found that, where the defendant did not conduct discovery or make any goodfaith discovery requests, and where the defendant did not make efforts “diligent or otherwise” to
conduct discovery, the defendant did not, therefore, show good cause to modify the scheduling
order. 769 F.Supp.2d at 1313 n.8. In Street v. Curry Bd. Of Cty. Comm’rs, however, the Court
found that the plaintiff had “shown good cause for a delay in seeking leave to amend,” because
she “was diligent in pursuing discovery . . . [and] brought to the Court’s attention her
identification of an additional claim in a timely manner,” where she discovered the claim through
“documents provided in discovery.” 2008 WL 2397671, at *11. In Montoya v. Sheldon, No.
CIV 10-0360 JB/WDS, 2012 WL 5353493 (D.N.M. Oct. 7, 2012)(Browning, J.), the Court did
not find good cause to modify the scheduling order and reopen discovery, and refused to grant
_______________________________
Fed. R. Civ. P. 4(m). The Tenth Circuit in In re Kirkland interpreted rule 4(j), which was
substantially identical. See 86 F.3d at 174 (“Rule 4(j) requires the court to dismiss a proceeding
if service has not been made upon the defendant within 120 days after filing and the party
responsible for service cannot show good cause why it was not made.”).

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the plaintiffs’ request do so, where the plaintiffs’ excuse for not disclosing their expert before the
close of discovery was that they thought that the case would settle and they would thus not
require expert testimony. See 2012 WL 5353493, at *14. The Court noted:
The [plaintiffs] filed this case on April 15, 2010. Because [Plaintiff] D. Montoya
had seen the physician before that date, the fact that the [plaintiffs] are only now
bringing the physician forward as a newly identified expert witness, over two
years later, and over one and a half years after the deadline to disclose expert
witnesses, does not evidence circumstances in which the Court can find excusable
neglect nor good cause.
2012 WL 5353493, at *14.
In Scull v. Management & Training Corp., 2012 WL 1596962 (D.N.M. May 2,
2012)(Browning, J.), the Court denied a plaintiff’s request for an extension of time to name an
expert witness against a defendant. The plaintiff asserted that he had waited to name an expert
witness until a second defendant joined the case, but a scheduling order was in effect before the
second defendant entered the case. The Court concluded that the plaintiff should have known
that he would need to name an expert witness against the defendant already in the case. See
2012 WL 1596962, at *8. The Court determined that the plaintiff was seeking “relief from his
own disregard” for the deadline. 2012 WL 1596962, at *8. “Despite his knowledge that
[defendant] PNA had yet to enter the case, [plaintiff] Scull chose to allow the deadline to pass
without naming expert witnesses against [defendant] MTC.”

2012 WL 1596962, at *8.

Regarding the defendant who entered the case at a later date, however, the Court allowed the
plaintiff an extension of time to name an expert witness, because it “was not unreasonable for
Scull to expect a new deadline to name expert witnesses upon PNA’s entrance into the case
because he had not yet had the opportunity to engage in discovery against PNA as he had against
MTC.” 2012 WL 1596962, at *9. The Court also noted that not naming an expert witness “is a
high price to pay for missing a deadline that was arguably unrealistic when it was set,” as Scull
- 38 -

could not have determined the need for an expert witness until after PNA entered the case. 2012
WL 1596962, at *9.
In Stark-Romero v. National Railroad Passenger Co (AMTRAK), 275 F.R.D. 544
(D.N.M. 2011)(Browning, J.), the Court concluded that a lawyer had shown excusable neglect
when he missed a scheduling deadline because, soon after his son’s wedding, his father-in-law
developed a tumor in his chest, and the lawyer arranged his father-in-law’s medical care, and
only after the lawyer returned to his work did he realize that a deadline passed. See 275 F.R.D.
549-550. The Court noted that the lawyer could have avoided missing the deadline had he not
left his work until the last minute, just before his son’s wedding, but concluded that the lawyer
had demonstrated good faith and missed the deadline because of “life crises,” and not because of
his inadvertence.

275 F.R.D. 549-550.

In West v. New Mexico Taxation and Revenue

Department, No. CIV 09-0631 JB/CEG, 2010 WL 3834341 (D.N.M. July 29, 2010)(Browning,
J.), the Court allowed a plaintiff extended time to file a response to a defendant’s motion for
summary judgment, in part because of the difficulty that the plaintiff’s counsel experienced
attempting to obtain depositions with certain defense witnesses, and thus it was not her fault, and
in part because cross-motions on summary judgment are particularly helpful for the Court:
[C]ross-motions tend to narrow the factual issues that would proceed to trial and
promote reasonable settlements. In some cases, it allows the Court to determine
that there are no genuine issues for trial and thereby avoid the expenses associated
with trial. The Court prefers to reach the merits of motions for summary
judgment when possible.
2010 WL 3834341, at **4-5. On the other hand, in Liles v. Washington Tru Solutions, LLC, No.
CIV 06-854 JB/CEG, 2007 WL 2298440 (D.N.M. June 13, 2007)(Browning, J.), the Court
denied a plaintiff’s request for additional time to respond to a defendant’s motion for summary

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judgment, when the only rationale that the plaintiff provided was that its counsel’s “family and
medical emergencies” precluded the plaintiff from timely responding. 2007 WL 2298440, at *2.
LAW REGARDING AMENDING THE PLEADINGS BEFORE TRIAL
Rule 15(a) provides that a party may amend his or her pleading as a matter of right within
twenty-one days of serving it and within twenty-one days of the service of a response pleading.
See Fed. R. Civ. P. 15(a). Otherwise, the party must obtain the opposing parties’ consent or the
court’s leave -- which should be “freely give[n] . . . when justice so requires” -- to amend his or
her pleading. Rule 15(a) provides:
(a)

Amendments Before Trial.
(1)

Amending as a Matter of Course. A party may amend its
pleading once as a matter of course within:
(A)

21 days serving it, or

(B)

if the pleading is one to which a responsive
pleading is required, 21 days after service of
a responsive pleading or 21 days after
service of a motion under Rule 12(b), (e), or
(f), whichever is earlier.

(2)

Other Amendments. In all other cases, a party may
amend its pleading only with the opposing party’s written
consent or the court’s leave. The court should freely give
leave when justice so requires.

(3)

Time to Respond. Unless the court orders otherwise, any
required response to an amended pleading must be made
within the time remaining to respond to the original
pleading or within 14 days after service of the amended
pleading, whichever is later.

Fed. R. Civ. P. 15(a). Under rule 15(a), the court should freely grant leave to amend a pleading
where justice so requires. See In re Thornburg Mortg., Inc. Sec. Litig., 265 F.R.D. 571, 579-80
(D.N.M. 2010)(Browning, J.); Youell v. Russell, No. 04-1396, 2007 WL 709041, at *1-2

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(D.N.M. Feb. 14, 2007)(Browning, J.); Burleson v. ENMR-Plateau Tele. Co-op., No. 05-0073,
2005 WL 3664299, at *1-2 (D.N.M. Sept. 23, 2005)(Browning, J.). The Supreme Court of the
United States has stated that, in the absence of an apparent reason such as “undue delay, bad
faith or dilatory motive . . . repeated failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility
of amendment, etc.,” leave to amend should be freely given. Foman v. Davis, 371 U.S. 178, 182
(1962). Furthermore, the Tenth Circuit has held that district courts should grant a plaintiff leave
to amend when doing so would yield a meritorious claim. See Curley v. Perry, 246 F.3d 1278,
1284 (10th Cir. 2001). See also In re Thornburg Mortg., Inc. Sec. Litig., 265 F.R.D. at 579-80.
A court should deny leave to amend under rule 15(a), however, where the proposed
“amendment would be futile.” Jefferson Cty. Sch. Dist. v. Moody’s Investor’s Serv., 175 F.3d
848, 859 (10th Cir. 1999). See In re Thornburg Mortg., Inc. Sec. Litig., 265 F.R.D. at 579-80.
An amendment is “futile” if the pleading, “as amended, would be subject to dismissal.” In re
Thornburg Mortg., Inc. Sec. Litig., 265 F.R.D. at 579-80 (citing TV Commc’ns Network, Inc. v.
Turner Network Television, Inc., 964 F.2d 1022, 1028 (10th Cir. 1992)). A court may also deny
leave to amend “upon a showing of undue delay, undue prejudice to the opposing party, bad faith
or dilatory motive, [or] failure to cure deficiencies by amendments previously allowed.” In re
Thornburg Mortg., Inc. Sec. Litig., 265 F.R.D. at 579 (quoting Frank v. U.S. W., Inc., 3 F.3d
1357, 1365-66 (10th Cir. 1993)).
“The . . . Tenth Circuit has emphasized that ‘[t]he purpose of [rule 15(a)] is to provide
litigants the maximum opportunity for each claim to be decided on its merits rather than on
procedural niceties.’” B.T. ex rel. G.T. v. Santa Fe Pub. Sch., No. 05-1165, 2007 WL 1306814,

- 41 -

at *2 (D.N.M. March 12, 2007)(Browning, J.)(quoting Minter v. Prime Equip. Co., 451 F.3d
1196, 1204 (10th Cir. 2006)).
If a party seeks to amend his or her pleading after the time for seeking leave for pleading
amendments has passed under a scheduling order, then, in addition to meeting rule 15(a)(2)’s
requirements, he or she must satisfy rule 16(b)(4)’s good-cause requirement. See Gorsuch, Ltd.,
B.C. v. Wells Fargo Nat’l Bank Ass’n, 771 F.3d 1230, 1240 (10th Cir. 2014)(Matheson, J.)
(“After a scheduling order deadline, a party seeking leave to amend must demonstrate (1) good
cause for seeking modification under Fed. R. Civ. P. 16(b)(4) and (2) satisfaction of the Rule
15(a) standard.”). Rule 16(b)(4) states: “A schedule may be modified only for good cause and
with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). “In practice, this standard requires the
movant to show the ‘scheduling deadlines cannot be met despite [the movant’s] diligent
efforts.’” Gorsuch, Ltd., B.C. v. Wells Fargo Nat’l Bank Ass’n, 771 F.3d at 1240. The rule
“focuses on the diligence of the party seeking leave to modify the scheduling order to permit the
proposed amendment.” Advanced Optics Elecs., Inc. v. Robins, 769 F. Supp. 2d 1285, 1313
(D.N.M. 2010)(Browning, J.)(“Properly construed, ‘good cause’ means that scheduling deadlines
cannot be met despite a party’s diligent efforts.”). See Gerald v. Locksley, 849 F. Supp. 2d
1190, 1209-11 (D.N.M. 2011)(Browning, J.)(same).
The Court has previously stated that its rule 16(b) good-cause inquiry focuses on the
diligence of the party seeking to amend the scheduling order. See Walker v. THI of N.M. at
Hobbs Ctr., 262 F.R.D. 599, 602-03 (D.N.M. 2009)(Browning, J.); Guidance Endodontics, LLC
v. Dentsply Int’l, Inc., No. 08-1101, 2009 WL 3672505, at *2-3 (D.N.M. Sept. 29, 2009)
(Browning, J.); Trujillo v. Bd. of Educ. of the Albuquerque Pub. Sch., Nos. 02-1146 and 03-

- 42 -

1185, 2007 WL 2296955, at *3 (D.N.M. June 5, 2007)(Browning, J.). The United States District
Court for the District of South Carolina has stated:
Rule 16(b)’s “good cause” standard is much different than the more lenient
standard contained in Rule 15(a). Rule 16(b) does not focus on the bad faith of
the movant, or the prejudice to the opposing party. Rather, it focuses on the
diligence of the party seeking leave to modify the scheduling order to permit the
proposed amendment. Properly construed, “good cause” means that scheduling
deadlines cannot be met despite a party’s diligent efforts. In other words, this
court may “modify the schedule on a showing of good cause if [the deadline]
cannot be met despite the diligence of the party seeking the extension.”
Carelessness is not compatible with a finding of diligence and offers no reason for
a grant of relief.
Dilmar Oil Co., Inc. v. Federated Mut. Ins. Co., 986 F. Supp. 959, 980 (D.S.C. 1997)(Currie, J.)
(citations omitted), aff’d, 129 F.3d 116 (4th Cir. 1997). See Denmon v. Runyon, 151 F.R.D.
404, 407 (D. Kan. 1993)(O’Connor, J.)(affirming an order denying the plaintiff’s motion to
amend after the deadline which the scheduling order established had passed and stating that,
“[t]o establish ‘good cause,’ the party seeking to extend the deadline must establish that the
scheduling order’s deadline could not have been met with diligence”). Cf. SIL-FLO, Inc. v.
SFHC, Inc., 917 F.2d 1507, 1518-19 (10th Cir. 1990)(affirming, under rule 16(b), denial of a
motion to amend an answer to include a compulsory counterclaim filed three months after the
scheduling order deadline).
In In re Kirkland, 86 F.3d 172 (10th Cir. 1996), the Tenth Circuit dealt with the definition
of “good cause” in the context of rule 4(j).7 The Tenth Circuit noted:

7

The version of rule 4(j) that the Tenth Circuit discussed in In re Kirkland was the version
in effect after the 1983 amendments to rule 4(j). That version of rule 4(j) provided:
If a service of the summons and complaint is not made upon a defendant within
120 days after the filing of the complaint and the party on whose behalf such
service was required cannot show good cause why such service was not made
within that period, the action shall be dismissed as to that defendant without
prejudice upon the court’s own initiative with notice to such party or upon
- 43 -

[W]ithout attempting a rigid or all-encompassing definition of “good cause,” it
would appear to require at least as much as would be required to show excusable
neglect, as to which simple inadvertence or mistake of counsel or ignorance of the
rules usually does not suffice, and some showing of “good faith on the part of the
party seeking the enlargement and some reasonable basis for noncompliance
within the time specified” is normally required.
86 F.3d at 175 (emphasis omitted)(internal quotation marks omitted)(quoting Putnam v. Morris,
833 F.2d 903, 905 (10th Cir. 1987)). The Tenth Circuit explained that Putnam v. Morris “thus
recognized that the two standards, although interrelated, are not identical and that ‘good cause’
requires a greater showing than ‘excusable neglect.’” In re Kirkland, 86 F.3d at 175.
Other courts within the Tenth Circuit have held that “the ‘good cause’ standard primarily
considers the diligence of the party . . . seeking an extension[, who] must show that despite due
diligence it could not have reasonably met the scheduled deadlines.

Carelessness is not

compatible with a finding of diligence and offers no reason for a grant of relief.” Pulsecard, Inc.
v. Discover Card Servs. Inc., 168 F.R.D. 295, 301 (D. Kan.1996)(Rushfelt, M.J.)(alterations in
original)(internal quotation marks omitted). The Honorable Dale A. Kimball, United States
District Judge for the District of Utah, concluded that “good cause” existed to amend his
scheduling order when he decided to permit the plaintiff’s counsel to withdraw as counsel. Kee
v. Fifth Third Bank, No. CIV 06-0602 DAK/PMW, 2008 WL 183384, at *1 (D. Utah Jan. 17,
2008).

Judge Kimball reasoned: “[I]n light of the court’s decision to permit [counsel] to

withdraw . . . the court has determined that good cause exists for amending the existing
scheduling order.” Kee v. Fifth Third Bank, 2008 WL 183384, at *1.

_______________________________
motion. This subdivision shall not apply to service in a foreign country pursuant
to subdivision (i) of this rule.
Act of Feb. 26, 1983, Pub. L. No. 97-462, 96 Stat. 2527.
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RELEVANT LAW REGARDING CLASS CERTIFICATION UNDER RULE 23(b)(3).
Rule 23 sets forth the requirements for certifying a class action under the federal rules.
See Fed. R. Civ. P. 23. All classes must satisfy: (i) all the requirements of rule 23(a); and
(ii) one of the three sets of requirements under rule 23(b), where the three sets of requirements
correspond to the three categories of classes that a court may certify. See Fed. R. Civ. P. 23(a)(b). The plaintiff8 bears the burden of showing that the requirements are met, see Rex v. Owens
ex rel. Okla., 585 F.2d 432, 435 (10th Cir. 1978); Pueblo of Zuni v. United States, 243 F.R.D.
436, 444 (D.N.M. 2007)(Johnson, J.), but, in doubtful cases, class certification is favored, see
Esplin v. Hirschi, 402 F.2d 94, 101 (10th Cir. 1968)(“[T]he interests of justice require that in a
doubtful case, . . . any error, if there is to be one, should be committed in favor of allowing the
class action.”); Eisen v. Carlisle & Jacquelin, 391 F.2d 555, 563 (2d Cir. 1968)(“[W]e hold that
. . . rule [23] should be given a liberal rather than a restrictive interpretation, and that [denying
certification] is justified only by a clear showing to that effect . . . .”). In ruling on a class
certification motion, the Court need not accept either party’s representations, but must
independently find the relevant facts by a preponderance of the evidence.9 See Rutstein v. Avis

8

Technically, it is the party seeking certification, i.e., the movant, who bears the burden
of proof, and defendants may also move for class certification. See William B. Rubenstein,
Newberg on Class Actions § 7:20 (5th ed.). As a practical matter, however, motions for class
certification are made almost exclusively by plaintiffs.
9

As the Court has previously noted, Tenth Circuit precedent suggests that the Court must
show some level of deference to the Complaint’s factual allegations when ruling on a rule 23
motion: “The Court must accept a plaintiff’s substantive allegations as true,” but it “need not
blindly rely on conclusory allegations which parrot Rule 23,” and “may consider the legal and
factual issues presented by plaintiff’s complaints.” In re Thornburg Mortg., Inc. Sec. Litig., 912
F. Supp. 2d 1178, 1120 (D.N.M. 2012)(Browning, J.)(citing Shook v. El Paso Cty., 386 F.3d
963, 968 (10th Cir. 2004); J.B. v. Valdez, 186 F.3d 1280, 1290 n.7 (10th Cir. 1999); Eisen v.
Carlisle & Jacquelin, 417 U.S. 156, 178 (1974)). Since the Court’s statement in In re Thornburg
Mortgage, Inc. Securities Litigation, however, the Tenth Circuit issued an opinion stating that
district courts should apply a “strict burden of proof” to class certification issues. Wallace B.
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Rent-A-Car Sys., Inc., 211 F.3d 1228, 1234 (11th Cir. 2000)(“Going beyond the pleadings is
necessary, as a court must understand the claims, defenses, relevant facts, and applicable
substantive law in order to make a meaningful determination of the certification issues.”). “In
determining the propriety of a class action, the question is not whether the plaintiff or plaintiffs
have stated a cause of action or will prevail on the merits, but rather whether the requirements of
Rule 23 are met.” Anderson v. City of Albuquerque, 690 F.2d 796, 799 (10th Cir. 1982). See
Vallario v. Vandehey, 554 F.3d 1259, 1267 (10th Cir. 2009)(“We, of course, adhere to the
principle that class certification does not depend on the merits of a suit.”). Still, the Court must
conduct a rigorous analysis of the rule 23 requirements, even if the facts that the Court finds in
its analysis bear on the merits of the suit:
Rule 23 does not set forth a mere pleading standard. A party seeking class
certification must affirmatively demonstrate his compliance with the Rule -- that
is, he must be prepared to prove that there are in fact sufficiently numerous
parties, common questions of law or fact, etc. We recognized in [General
Telephone Co. of the Southwest v.] Falcon that “sometimes it may be necessary
for the court to probe behind the pleadings before coming to rest on the
certification question,” and that certification is proper only if “the trial court is
satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been
satisfied.
Actual, not presumed, conformance with Rule 23(a) remains
indispensable.” Frequently that “rigorous analysis” will entail some overlap with
the merits of the plaintiff’s underlying claim. That cannot be helped. The class
determination generally involves considerations that are enmeshed in the factual
and legal issues comprising the plaintiff’s cause of action. Nor is there anything
_______________________________
Roderick Revocable Living Trust v. XTO Energy, Inc., 725 F.3d 1213, 1218 (10th Cir. 2013).
This request is consistent with the general trend in the federal judiciary towards using an
ordinary preponderance standard to find facts at the class certification stage. See, e.g., Teamsters
Local 445 Freight Div. Pension Fund v. Bombardier, Inc., 546 F.3d 196, 202 (2d Cir. 2008); In
re Hydrogen Peroxide Litig., 552 F.3d 305, 318-20 (3d Cir. 2008); William B. Rubenstein,
Newberg on Class Actions § 7:21 (5th ed.)(tracing the shift in the case law from deferring to
plaintiffs’ representations to adopting an ordinary preponderance standard, and disclaiming the
Court’s statement from In re Thornburg Mortgage, Inc. Securities Litigation -- a statement that
earlier versions of the treatise espoused). Thus, although the Tenth Circuit has not yet explicitly
adopted the preponderance standard for fact-finding in class certification analyses, it most likely
will, and the Court will employ that standard here.
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unusual about that consequence: The necessity of touching aspects of the merits in
order to resolve preliminary matters, e.g., jurisdiction and venue, is a familiar
feature of litigation.
Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551-52 (2011)(Scalia, J.)(“Wal-Mart.”) In a
subsequent, seemingly contradictory admonition, however, the Supreme Court cautioned district
courts not to decide the case’s merits at the class certification stage:
Although we have cautioned that a court’s class-certification analysis must be
“rigorous” and may “entail some overlap with the merits of the plaintiff’s
underlying claim,” Rule 23 grants courts no license to engage in free-ranging
merits inquiries at the certification stage. Merits questions may be considered to
the extent -- but only to the extent -- that they are relevant to determining whether
the Rule 23 prerequisites for class certification are satisfied.
Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S. Ct. 1184, 1194-95 (2013)(Ginsburg, J.).
To reconcile these two directives, the Court will find facts for the purposes of class certification
by the preponderance of the evidence, but will allow the parties to challenge these findings
during the subsequent merits stage of this case. This approach is analogous to preliminary
injunction practice, and many circuits have endorsed it. See Abbott v. Lockheed Martin Corp.,
725 F.3d 803, 810 (7th Cir. 2013); In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 313
(3d Cir. 2008); Gariety v. Grant Thornton, LLP, 368 F.3d 356, 366 (4th Cir. 2004). Because of
the res judicata effect a class judgment has on absent parties, a court may not simply accept the
named parties’ stipulation that class certification is appropriate, but must conduct its own
independent rule 23 analysis. See Amchem Prods., Inc. v. Windsor, 521 U.S. at 620-22. In
taking evidence on the question of class certification, the Federal Rules of Evidence apply, albeit
in a relaxed fashion. See Anderson, 306 F.R.D. at 378 n.39.
1.

Rule 23(a).

All classes must satisfy the prerequisites of rule 23(a):

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(a)

Prerequisites. One or more members of a class may sue or be sued as
representative parties on behalf of all members only if:
(1)

the class is so numerous that joinder of all members is
impracticable;

(2)

there are questions of law or fact common to the class;

(3)

the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and

(4)

the representative parties will fairly and adequately protect
the interests of the class.

Fed. R. Civ. P. 23(a). “A party seeking to certify a class is required to show . . . that all the
requirements of [rule 23(a)] are clearly met.” Reed v. Bowen, 849 F.2d 1307, 1309 (10th Cir.
1988). “Although the party seeking to certify a class bears the burden of proving that all the
requirements of Rule 23 are met, the district court must engage in its own ‘rigorous analysis’ of
whether ‘the prerequisites of Rule 23(a) have been satisfied.’” Shook v. El Paso Cty., 386 F.3d
963, 968 (10th Cir. 2004)(quoting Gen. Tel. Co. of the S.W. v. Falcon, 457 U.S. 147, 161
(1982))(citing Reed v. Bowen, 849 F.2d at 1309). These four requirements are often referenced
as numerosity, commonality, typicality, and adequacy, respectively.

The commonality

requirement is particularly relevant to this case.
Rule 23(a)(2) requires that “there are questions of law or fact common to the class.” Fed.
R. Civ. P. 23(a)(2) (emphasis added). Even “factual differences in the claims of the individual
putative class members should not result in a denial of class certification where common
questions of law exist.” In re Intelcom Group Sec. Litig., 169 F.R.D. 142, 148 (D. Colo. 1996).
See Adamson v. Bowen, 855 F.2d 668, 676 (10th Cir. 1988)(“That the claims of individual
putative class members may differ factually should not preclude certification under Rule 23(b)(2)
of a claim seeking the application of a common policy.”); Lopez v. City of Santa Fe, 206 F.R.D.

- 48 -

285, 289 (D.N.M. 2002)(Vázquez, J.)(“Commonality requires only a single issue common to the
class, and the fact that ‘the claims of individual putative class members may differ factually
should not preclude certification under Rule 23(b)(2) of a claim seeking the application of a
common policy.” (citations omitted)). A single common question will suffice to satisfy rule
23(a)(2), but the question must be one “that is central to the validity of each one of the claims.”
Wal-Mart, 131 S. Ct. at 2551.
“The commonality requirement has been applied permissively in securities fraud
litigation.”

In re Initial Pub. Offering Sec. Litig., 227 F.R.D. 65, 87 (S.D.N.Y. 2004).

“Securities cases often involve allegations of common courses of fraudulent conduct, which can
be sufficient to satisfy the commonality requirement.” 5 Jerold S. Solovy, Ronald L. Marmer,
Timothy J. Chorvat & David M. Feinberg, Moore’s Federal Practice § 23.23[4][b], at 23-77 (3d
ed. 2004). “Where the facts as alleged show that Defendants’ course of conduct concealed
material information from an entire putative class, the commonality requirement is met.” In re
Oxford Health Plans, Inc. Sec. Litig., 191 F.R.D. 369, 374 (S.D.N.Y. 2000). Accord Initial Pub.
Offering, 227 F.R.D. at 87 (“In general, where putative class members have been injured by
similar material misrepresentations and omissions, the commonality requirement is satisfied.”).
The commonality requirement was widely perceived to lack teeth before the Supreme
Court’s decision in Wal-Mart, which grafted the following requirements onto rule 23(a)(2):
(i) that the common question is central to the validity of each claim that the proposed class
brings; and (ii) that the common question is capable of a common answer. See Wal-Mart, 131
S. Ct. at 2550-52. In that case, a proposed class of about 1.5 million current and former WalMart employees sought damages under Title VII for Wal-Mart’s alleged gender-based
discrimination. See 131 S. Ct. at 2547. Wal-Mart, however, had no centralized company-wide

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hiring or promotion policy, instead opting to leave personnel matters to the individual store
managers’ discretion. See 131 S. Ct. at 2547-48. The plaintiffs argued that, although no
discriminatory formal policy applied to all proposed class members, “a strong and uniform
‘corporate culture’ permits bias against women to infect, perhaps subconsciously, the
discretionary decisionmaking of each one of Wal-Mart’s thousands of managers -- thereby
making every [proposed class member] the victim of one common discriminatory practice.” 131
S. Ct. at 2548. The Supreme Court disagreed that such a theory constitutes a common question
under rule 23(a)(2).
The crux of this case is commonality -- the rule requiring a plaintiff to
show that “there are questions of law or fact common to the class.” Rule 23(a)(2).
That language is easy to misread, since “[a]ny competently crafted class
complaint literally raises common ‘questions.’” Nagareda, Class Certification in
the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 131-132 (2009). For
example: Do all of us plaintiffs indeed work for Wal-Mart? Do our managers
have discretion over pay? Is that an unlawful employment practice? What
remedies should we get? Reciting these questions is not sufficient to obtain class
certification. Commonality requires the plaintiff to demonstrate that the class
members “have suffered the same injury,” Falcon, 102 S. Ct. at 2364. This does
not mean merely that they have all suffered a violation of the same provision of
law. Title VII, for example, can be violated in many ways -- by intentional
discrimination, or by hiring and promotion criteria that result in disparate impact,
and by the use of these practices on the part of many different superiors in a single
company. Quite obviously, the mere claim by employees of the same company
that they have suffered a Title VII injury, or even a disparate-impact Title VII
injury, gives no cause to believe that all their claims can productively be litigated
at once. Their claims must depend upon a common contention -- for example, the
assertion of discriminatory bias on the part of the same supervisor. That common
contention, moreover, must be of such a nature that it is capable of classwide
resolution -- which means that determination of its truth or falsity will resolve an
issue that is central to the validity of each one of the claims in one stroke.
What matters to class certification . . . is not the raising of
common “questions” -- even in droves -- but, rather the capacity of
a classwide proceeding to generate common answers apt to drive
the resolution of the litigation. Dissimilarities within the proposed
class are what have the potential to impede the generation of
common answers.

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Wal-Mart, 131 S. Ct. at 2550-51 (emphasis in original)(quoting Nagareda, supra, at 132). In
EQT Production Co. v. Adair, 764 F.3d 347 (4th Cir. 2011), the United States Court of Appeals
for the Fourth Circuit stated:
We first review the aspects of the district court’s analysis that apply to all
five royalty underpayment classes.
At bottom, the district court believed that both the commonality and
predominance requirements of Rule 23 were satisfied by the same basic fact: the
defendants employed numerous uniform practices related to the calculation and
payment of CBM [coalbed methane gas] royalties. These common practices are
not irrelevant to Rule 23(b)’s predominance requirement. But we hold that the
district court abused its discretion by failing to consider the significance of this
common conduct to the broader litigation.
The district court identified numerous common royalty payment practices.
For example, it noted that EQT sells all of the CBM it produces in Virginia to an
affiliate, EQT Energy, and that “all royalty owners within the same field have
been paid royalties based on the same sales price for the CBM.” With respect to
CNX, it noted that CNX “has uniform policies and procedures which governed its
calculation of CBM revenues,” and that “it has deducted severance and license
taxes when calculating royalties since January 1, 2004.”
That the defendants engaged in numerous common practices may be
sufficient for commonality purposes. As noted above, the plaintiffs need only
demonstrate one common question of sufficient importance to satisfy Rule
23(a)(2).
764 F.3d at 366 (citations omitted).
In Wal-Mart, Justice Scalia stated: “Wal-Mart is entitled to individualized determinations
of each employee’s eligibility for backpay.” 131 S. Ct. at 2546. From this observation, he then
concluded:
Because the Rules Enabling Act forbids interpreting Rule 23 to “abridge, enlarge
or modify any substantive right,” 28 U.S.C. § 2072(b), a class cannot be certified
on the premise that Wal-Mart will not be entitled to litigate its statutory defenses
to individual claims. And because the necessity of that litigation will prevent
backpay from being “incidental” to the classwide injunction, respondents’ class
could not be certified even assuming, arguendo, that “incidental” monetary relief
can be awarded to a 23(b)(2) class.

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Wal-Mart, 131 S. Ct. at 2561. Thus, the common question or questions cannot be “incidental,”
nor can the plaintiff submit a long list of “incidental” questions or issues, and say that they
predominate over the real issues to be used.
2.

Rule 23(b).

Once the court concludes that the threshold requirements have been met, “it must then
examine whether the class falls within at least one of three categories of suits set forth in Rule
23(b).” Adamson v. Bowen, 855 F.2d at 675. See DG ex rel. Stricken v. Devaughn, 594 F.3d
1188, 1199 (10th Cir. 2010)(“In addition to satisfying Rule 23(a)’s requirements, the class must
also meet the requirements of one of the types of classes described in subsection (b) of Rule
23.”). Rule 23(b) provides that a class action is appropriate if the threshold requirements are
satisfied, and the case falls into one or more of three categories:
(b)

Types of Class Actions. A class action may be maintained if Rule 23(a)
is satisfied and if:
(1)

prosecuting separate actions by or against individual
putative class members would create a risk of:
(A)

(B)

(2)

inconsistent or varying adjudications with
respect to individual putative class members
that would establish incompatible standards
of conduct for the party opposing the class;
or
adjudications with respect to individual
putative class members that, as a practical
matter, would be dispositive of the interests
of the other members not parties to the
individual
adjudications
or
would
substantially impair or impede their ability
to protect their interests;

the party opposing the class has acted or refused to act on
grounds that apply generally to the class, so that final
injunctive relief or corresponding declaratory relief is
appropriate respecting the class as a whole; or
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(3)

the court finds that the questions of law or fact common to
putative class members predominate over any questions
affecting only individual members, and that a class action is
superior to other available methods for fairly and efficiently
adjudicating the controversy. The matters pertinent to
these findings include:
(A)

the putative class members’ interests in
individually controlling the prosecution or
defense of separate actions;

(B)

the extent and nature of any litigation
concerning the controversy already begun
by or against putative class members;

(C)

the desirability or undesirability of
concentrating the litigation of the claims in
the particular forum; and

(D)

the likely difficulties in managing a class
action.

Fed. R. Civ. P. 23(b). “Only one of rule 23(b)’s subdivisions must be satisfied to meet the classaction requirements.” Gonzales v. City of Albuquerque, No. CIV 09-0520 JB/RLP, 2010 WL
4053947, at *11 (D.N.M. Aug. 21, 2010)(Browning, J.)(citing Carpenter v. Boeing, Co., 456
F.3d 1183, 1187 (10th Cir. 2006)(stating that the district court must determine whether a suit
“falls within one of the categories of actions maintainable as class actions”)).
The three categories of class actions -- really four, as rule 23(b)(1) contains two
subcategories, known as (b)(1)(A) and (b)(1)(B) class actions -- are not of equal utility. Class
actions under (b)(1) can be certified only in very particular circumstances. Class actions under
(b)(2) are broadly available, but are only capable of seeking injunctive or declaratory relief, and
not damages. Far and away the most controversial class action category, (b)(3), can be brought
for class-wide damages, injunctive relief, declaratory relief, or any combination thereof. Class
actions under (b)(3) always require notice to all proposed class members of certification of the
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class, and those individuals must be given the opportunity to opt out if they so desire. See Fed.
R. Civ. P. 23(c)(2)(B); Phillips Petrol. Co. v. Shutts, 472 U.S. at 812 (“[W]e hold that due
process requires at a minimum that an absent plaintiff be provided with an opportunity to remove
himself from the class by executing and returning an ‘opt out’ or ‘request for exclusion’ form to
the court.”). The other class action categories, however, are ordinarily mandatory, and neither
notice nor opportunity to opt out needs to be given. See Fed. R. Civ. P. 23(c)(2)(B); Phillips
Petrol. Co. v. Shutts, 472 U.S. at 811 n.3 (limiting the constitutional requirement of an opt-out
notice “to those class actions which seek to bind known plaintiffs concerning claims wholly or
predominately for money judgments”). The Court will focus on the most important form of class
action, the (b)(3) damages class action.10

10

The Court will briefly address the other class-action types. Rule 23(b)(1) contains two
subcategories of class action, (b)(1)(A) actions and (b)(1)(B) actions; a class need satisfy the
requirements of only one to be certified. See Fed. R. Civ. P. 23(b)(1). Class actions under
(b)(1)(A) are designed to avoid the situation in which a defendant subject to suit by multiple
plaintiffs is ordered to undertake incompatible courses of conduct as a result of the noncentralized nature of the adjudication. See Fed. R. Civ. P. 23(b)(1)(A). “Incompatible” means
more than simply inconsistent. A situation in which, for example, a defendant was ordered to
pay $10,000.00 to a plaintiff in one case, was ordered to pay ten million dollars to another
plaintiff in an identical or similar case, and was found to not be at fault at all in yet another case,
may be inconsistent, but it does not create “incompatible standards of conduct for the party
opposing the class.” Fed. R. Civ. P. 23(b)(1)(A). Such alleged inconsistency is a normal and
expected part of the system of individualized adjudication used by the judiciary to apply a
uniform set of laws to varied factual settings. What (b)(1)(A) is designed to avoid is injunctive
or declaratory “whipsawing,” in which, e.g., one court orders a school district to close an
underperforming inner-city school and bus its students to suburban schools, and another court
orders the district to keep the school open and bus suburban students in to the school.
Class actions under (b)(1)(B) serve a similar role, but apply when varying adjudications
would result in practically -- rather than legally -- incompatible judgments. See Fed. R. Civ. P.
23(b)(1)(B). Rule (b)(1)(B) applies when the defendant has possession or control of a res -- a
pot of money or thing that constitutes the relief that the proposed class seeks -- and the relief
sought by all the individual members of the proposed class would more than exhaust the res. For
example, if a Ponzi scheme operator took ten billion dollars of investors’ money, and, upon law
enforcement’s discovery of the scheme, had only six billion dollars remaining, then the
individual investors’ claims to recover their rightful share would add up to four billion dollars
more than existed in the res. Thus, the court might certify a (b)(1)(B) class action to ensure that
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_______________________________
the custodian of the res does not pay out the entire res to the first investors to file suit, but,
instead, distributes the res fairly among all investors.
The two subcategories of (b)(1) class action have other things in common as well. Both
exist, in a sense, for the benefit of the defendant -- at least relative to (b)(2) and (b)(3) class
actions -- and are rarely brought, in part because plaintiffs have little incentive to bring them. In
the (b)(1)(B) example, each investor hopes to recover the full value of his or her investment, not
a 60% value, and thus is incentivized to file as an individual. In the (b)(1)(A) example, the
plaintiff seeking to close down the school (i) does not care about the inconsistent obligations of
the school district, and (ii) would rather not be joined in a class action with plaintiffs who want
to keep the school open. Last, (b)(1) class actions, along with (b)(2) class actions, are
mandatory: if certified, no person covered under the class definition may opt out of it or pursue
his or her own individual claim. As such, no notice needs to be given to the class members that
they are part of ongoing litigation, although the certifying court may elect to direct notice in
appropriate circumstances. See Fed. R. Civ. P. 23(c)(2)(A).
Class actions under (b)(2) provide for injunctive or declaratory relief when a defendant
has “acted or refused to act on grounds that apply generally to the class.” Fed. R. Civ. P.
23(b)(2).
The key to the (b)(2) class is “the indivisible nature of the injunctive or
declaratory remedy warranted -- the notion that the conduct is such that it can be
enjoined or declared unlawful only as to all of the class members or as to none of
them.” Nagareda, supra, at 132. In other words, Rule 23(b)(2) applies only when
a single injunction or declaratory judgment would provide relief to each member
of the class. It does not authorize class certification when each individual class
member would be entitled to a different injunction or declaratory judgment
against the defendant. Similarly, it does not authorize class certification when
each class member would be entitled to an individualized award of monetary
damages.
Wal-Mart, 131 S. Ct. at 2557 (emphasis in original). The (b)(2) class action was invented for the
purpose of facilitating civil rights suits, and much of its use is in that field today. See William B.
Rubenstein, Newberg on Class Actions § 4:26 (5th ed. 2017)(“Newberg”). The (b)(2) class
action allows civil rights litigants to advocate on behalf of all similarly situated individuals, such
as a disenfranchised black voter representing a class of all black voters within an
unconstitutionally drawn district or a jail inmate representing all inmates in an overcrowding
case. Anyone familiar with the nation’s seminal civil rights cases, however, knows that many of
them are not brought as class actions, which raises a question:
[W]hy would anyone ever bring one? . . . Th[is] inquiry is generated because if
an individual litigant pursues an individual case for injunctive relief and prevails,
she can generally get all of the remedy that she needs without going through the
hurdles of certifying a class. For example, to return to Brown v. Board of
Education, once Linda Brown prevailed on her race discrimination claim, her
remedy -- a desegregated school -- was hers to pursue. Although that remedy
would affect many other persons not a part of her litigation, hence making class
- 55 -

To satisfy rule 23(b)(3), the court must find “that the questions of law or fact common to
the members of the class predominate over any questions affecting only individual members, and
that a class action is superior to other available methods for the fair and efficient adjudication of
the controversy.” Fed. R. Civ. P. 23(b)(3) (emphases added). Rule 23(b)(3) provides that “[t]he
matters pertinent to these findings include”: (i) the class members’ interest in individually
controlling the prosecution or defense of separate actions; (ii) the extent and nature of any
litigation concerning the controversy already commenced by or against members of the class;
(iii) the desirability or undesirability of concentrating the litigation of the claims in the particular
_______________________________
certification appropriate, there is no requirement that to secure that remedy, she
had to file a class action.
Nonetheless, social change advocates tend to pursue class certification
under Rule 23(b)(2) for several reasons. First, and perhaps most importantly,
Linda Brown will likely graduate from school long before her case ends; if hers is
simply an individual action, it will become moot and risk dismissal. Class
certification, however, constitutes an exception to the mootness doctrine in certain
circumstances. Second, the scope of the plaintiff’s relief is likely augmented by
certifying a class. It is arguable that all that Linda Brown would have been able
to secure as a remedy for her individual claim was a desegregated school for
herself, not for students throughout the entire school district; there is some
relationship between the scope of the class and the scale of the remedy. Third, it
is often the case that the attorneys pursuing civil rights actions are doing so as
public interest lawyers paid by an organization like the NAACP Legal Defense
Fund or the American Civil Liberties Union (ACLU); they may therefore have a
financial incentive to pursue a class’s case rather than a series of individual cases
as they have limited resources, and the economies of scale may argue for a class
action suit. Most generally, many civil rights cases are brought as class suits
because the attorneys and clients pursuing them conceptualize their efforts in
group, not individual, terms. Thus, while an individual civil rights plaintiff might
be able to secure the relief that she seeks without a (b)(2) class, a series of factors
may encourage the pursuit of one.
Newberg § 4:26 (footnotes omitted). Like (b)(1) class actions, (b)(2) class actions are mandatory
-- individuals covered under the class definition may not opt out -- and do not require notice to
be given to the class. See Fed. R. Civ. P. 23(c)(2)(A).

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forum; and (iv) the difficulties likely to be encountered in the management of a class action.
Fed. R. Civ. P. 23(b)(3)(A)-(D).
Rule 23(b)(3)’s first requirement is that questions common to the class predominate over
those that are individualized. See Fed. R. Civ. P. 23(b)(3). A question is common when “the
same evidence will suffice for each member to make a prima facie showing,” Blades v.
Monsanto Co., 400 F.3d 562, 566 (8th Cir. 2005)(citing In re Visa Check/MasterMoney Antitrust
Litig., 208 F.3d 124, 136-40 (2d Cir. 2001)), or when the issue is “susceptible to generalized,
class-wide proof,” In re Nassau Cty. Strip Search Cases, 461 F.3d 219, 227 (2d Cir. 2006). A
question is individual when “the members of a proposed class will need to present evidence that
varies from member to member,” Blades v. Monsanto Co., 400 F.3d at 566. Although a case
need not present only common questions to merit certification, and the presence of some
individual questions does not destroy predominance, the rule 23(b)(3) predominance requirement
is much stricter than the rule 23(a)(1) commonality requirement: the latter requires only that a
common question or questions exist; the former requires that the common question or questions
predominate over the individual ones. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 62324; In re Thornburg Mortg., Inc. Sec. Litig., 912 F. Supp. 2d at 1225 (“The predominance
criterion of rule 23(b)(3) is ‘far more demanding’ than rule 23(a)(2)’s commonality
requirement.”). As the Tenth Circuit, addressing a Title VII claim, put it:
The myriad discriminatory acts that Plaintiffs allege (e.g., failure to promote,
failure to train, unequal pay, disrespectful treatment, etc.) each require
independent legal analysis, and similarly challenge the predominance requirement
of Rule 23(b)(3) if not also the commonality requirement of Rule 23(a).
....
Although we do not rest our decision upon Rule 23(a), cases that interpret
. . . the commonality requirement of Rule 23(a) illustrate the instant Plaintiffs’

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inability to satisfy Rule 23(b)(3)’s ‘far more demanding’ requirement that
common issues predominate.
Monreal v. Potter, 367 F.3d 1224, 1237 (10th Cir. 2004)(Ebel, J.)(footnote omitted).
The predominance question applies to both macro damages -- the total class damages -and to the micro damages -- the individual damages. In Comcast Corp. v. Behrend, 133 S. Ct.
1426 (2013), the Supreme Court held that it could not accept the regression model which the
plaintiffs’ expert had developed as evidence that damages were susceptible of measurement
across an entire class -- as rule 23(b)(3) requires. The plaintiffs argued four theories of antitrust
violations; one theory was that Comcast Corp.’s activities had an antitrust impact, because
Comcast Corp.’s activities reduced the level of competition from “overbuilders,” companies that
build competing cable networks in areas where an incumbent cable company already operates.
The district court found, among other things, that the damages resulting from overbuilderdeterrence impact could be calculated on a classwide basis. To establish such damages, the
plaintiffs relied solely on the testimony of Dr. James McClave.

Dr. McClave designed a

regression model which compared actual cable prices in the Philadelphia “Designated Market
Area” with hypothetical prices that would have prevailed but for Comcast Corp.’s allegedly
anticompetitive activities. The model calculated damages of $875,576,662.00 for the entire
class. As Dr. McClave acknowledged, however, the model did not isolate damages resulting
from any one theory of antitrust impact. The district court nonetheless certified the class.
The Court of Appeals for the Third Circuit affirmed the district court decision. The Third
Circuit concluded that the plaintiffs “provided a method to measure and quantify damages on a
classwide basis,” finding it unnecessary to decide “whether the methodology was a just and
reasonable inference or speculation.” 133 S. Ct. at 1433 (quoting 655 F.3d 182, 206 (3d Cir.
2011)). The Supreme Court granted certiorari on the question “[w]hether a district court may
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certify a class action without resolving whether the plaintiff class had introduced admissible
evidence, including expert testimony, to show that the case is susceptible to awarding damages
on a class-wide basis.” 133 S. Ct. at 24. Justice Scalia criticized the Third Circuit’s reluctance
to entertain arguments against the plaintiffs’ damages model “simply because those arguments
would also be pertinent to the merits determination . . . .” 133 S. Ct. at 1433. Justice Scalia said
that
it is clear that, under the proper standard for evaluating certification, respondents’
model falls far short of establishing that damages are capable of measurement on
a classwide basis. Without presenting another methodology, respondents cannot
show Rule 23(b)(3) predominance: Questions of individual damage calculations
will inevitably overwhelm questions common to the class.
133 S. Ct. at 1433. Justice Scalia stated that, under the Third Circuit’s logic, “at the classcertification stage, any method of measurement is acceptable so long as it can be applied
classwide, no matter how arbitrary the measurements may be. Such a proposition would reduce
rule 23(b)(3)’s predominance requirement to a nullity.”

133 S. Ct. at 1433 (emphasis in

original).
It is clear that Comcast Corp. v. Behrend applies to classwide damages. It is less clear
that Comcast Corp. v. Behrend’s language applies to the determination of individual damages.
There are three ways that the Court could deal with Comcast Corp. v. Behrend and the
determination of individual damage awards. First, the Court could decide that Comcast Corp. v.
Behrend applies only to classwide damages and is not controlling at all in the determination of
individual damages. Second, the Court could decide that everything that Justice Scalia said
about classwide damages also applies to the determination of individual damages. Third, the
Court could decide that Justice Scalia said some things relating to the determination of individual
damages, but not the same things that apply to classwide damages. As to the first option, while

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much could be said of limiting Justice Scalia’s opinion to classwide damages -- even from the
language of the opinion and from the wording of the question presented -- the Court is reluctant
to say that it has nothing to say that might be relevant to the determination of individual damages
awards. Some of Justice Scalia’s concerns about admissible evidence to determine damages -whether classwide or individual damage awards -- still seems relevant to whether damages are
classwide or individual. While Justice Scalia was not addressing the determination of individual
damage awards, some of what he said -- and how he said it -- causes the Court to be cautious in
determining a methodology for calculating individual damage awards. On the other hand, the
Court is not convinced that it should or even can apply Comcast Corp. v. Behrend’s language to
the individual determination of damages as it does to classwide damages. The dissent stated that
“[r]ecognition that individual damages calculations do not preclude class certification under Rule
23(b)(3) is well nigh universal.” 133 S. Ct. at 1437 (Ginsburg, J., dissenting). Justice Scalia did
not refute this proposition, and the Court has no reason to think the dissent’s statement -- which
is accurate -- does not remain good law. Accordingly, just because each plaintiff and class
member may get a different amount and there has to be a separate calculation of each plaintiff’s
damages does not defeat class certification.
What the Court thinks that Comcast Corp. v. Behrend says that is relevant to the
individual determination of damages is threefold. First, at the class certification stage, the Court
cannot ignore how individual damages, if any are appropriate, are to be decided. In other words,
the Court cannot ignore the possible complexities of the individual damages determinations in
making the predominance calculation. A class can have individual damage calculations, but the
Court has to look at the issues of individual damages calculations at the class certification stage.
Second, the methodology for all class members needs to be common or, if there are different

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methodologies for some plaintiffs and class members, the Court must take these differences into
account at the class certification stage in the predominance analysis. In other words, if the Court
is going to use different methodologies for different class members, it must decide: (i) whether
these differences create questions affecting only individual members; and (ii) whether these
individual questions predominate over the questions of law or fact common to the class. Third,
even if the methodology is common to the class, the Court must decide whether it will operate in
a consistent way for each individual class member. The law and methodology may be the same,
but when applied to the class, they may create issues for one class member or group of class
members that they do not create for other class members or groups. The predominance analysis
must identify precisely the common issues and uncommon issues that application of the class
methodology or methodologies raise, and then determine whether, in the total issue mix, the
common issues predominate over the individual ones.
A defendant’s desire to assert individual counterclaims11 does not typically defeat
predominance. See Phillips Petrol. Co. v. Shutts, 472 U.S. 797, 810 (1985); Allapattah Servs,
Inc. v. Exxon Corp., 333 F.3d 1248, 1260 (11th Cir. 2003). A defendant’s desire to assert
individual affirmative defenses also often does not defeat predominance, see Smilow v. Sw. Bell
Mobile Sys., Inc., 323 F.3d 32, 39 (1st Cir. 2003)(“Courts traditionally have been reluctant to
deny class action status under Rule 23(b)(3) simply because affirmative defenses may be
available against individual members.”), but this statement is less true after Wal-Mart.12 Other

11

Generally speaking, counterclaims, even common ones, are not permitted against absent
class members at all.
12

Limitations defenses are an especially common breed of affirmative defense.
Limitations defenses generally present common questions, rather than individual ones, because a
limitations defense’s merits rest on two facts: (i) the date on which the statute of limitations
accrued; and (ii) the date on which the action was filed. Fact (ii) is a common issue in virtually
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recurring individual issues present more serious challenges to predominance, such as: (i) the
prima facie element of reliance or due diligence in common-law fraud and other cases;13
_______________________________
every class action, because the entire class gets credit for the filing date of the class action
complaint. Fact (i) may not be truly common, but it might be, if, for example, the discovery rule
delays accrual of a statute of limitations until the cause of action is discovered, and all class
members’ causes of action are discovered at the same time, or if a single act by the defendant
breached contracts with all class members at once.
Even if the question is individual -- for example, if a class is defined as only
encompassing preexisting filed claims, or if the discovery rule might delay the accrual of the
statute for some class members but not others -- it still typically does not defeat predominance.
Although a necessity for individualized statute-of-limitations
determinations invariably weighs against class certification under Rule 23(b)(3),
we reject any per se rule that treats the presence of such issues as an automatic
disqualifier. In other words, the mere fact that such concerns may arise and may
affect different class members differently does not compel a finding that
individual issues predominate over common ones. As long as a sufficient
constellation of common issues binds class members together, variations in the
sources and application of statutes of limitations will not automatically foreclose
class certification under Rule 23(b)(3). Predominance under Rule 23(b)(3) cannot
be reduced to a mechanical, single-issue test.
Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 296 (1st Cir. 2000)(citing 5 James Wm.
Moore et al., Moore’s Federal Practice ¶ 23.46[3] (3d ed. 1999)). See Newberg § 4:57
(confirming that the above passage “reflects the law in most circuits” (footnote omitted)).
13

The advisory committee’s notes to rule 23 state that

a fraud perpetrated on numerous persons by the use of similar misrepresentations
may be an appealing situation for a class action, and it may remain so despite the
need, if liability is found, for separate determination of the damages suffered by
individuals within the class. On the other hand, although having some common
core, a fraud case may be unsuited for treatment as a class action if there was
material variation in the representations made or in the kinds or degrees of
reliance by the persons to whom they were addressed.
Fed. R. Civ. P. 23 advisory committee’s notes (citations omitted).
Despite the generalized concern about the individual nature of the
misrepresentations and/or reliance inquiry in fraud cases, there are at least three
recurring situations in which courts have found common issues predominant in
fraud cases: (1) those in which reliance is common across the class; (2) those in
which courts have excused a showing of individual reliance; and (3) those in
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(ii) differences in the applicable law in a multi-state, state law-based class actions,14 see Castano
v. Am. Tobacco Co., 84 F.3d 734, 741 (5th Cir. 1996); and (iii) the need to determine individual
_______________________________
which the underlying law does not require a showing of individual reliance.
Newberg § 4:58. Reliance may be a common issue when the same misrepresentation is made to
the entire class; some circuits have held that written misrepresentations may be common issues
while oral misrepresentations are presumed to be individualized. See, e.g., Moore v.
PaineWebber, Inc., 306 F.3d 1247, 1253 (2d Cir. 2002)(“[T]he Third, Fourth, Fifth, Sixth, and
Seventh Circuits . . . have held that oral misrepresentations are presumptively individualized.”);
In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 319 (3d Cir.
1998)(certifying class where alleged misrepresentations were written and uniform); Spencer v.
Hartford Fin. Servs. Grp., Inc., 256 F.R.D. 284, 297 (D. Conn. 2009)(certifying class where class
definition was narrowed to include only those who had received written communications from
defendant). The requirement that plaintiffs show reliance is most often presumed or excused in
so-called fraud-on-the-market securities cases, in which class members -- investors in the
defendant company -- are presumed to be rational, fully informed actors who use all of the
information available to the general public, but are also presumed to not possess insider
information.
We have found a rebuttable presumption of reliance in two different
circumstances. First, if there is an omission of a material fact by one with a duty
to disclose, the investor to whom the duty was owed need not provide specific
proof of reliance. Second, under the fraud-on-the-market doctrine, reliance is
presumed when the statements at issue become public. The public information is
reflected in the market price of the security. Then it can be assumed that an
investor who buys or sells stock at the market price relies upon the statement.
Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, 552 U.S. 148, 159 (2008)(citing Affiliated
Ute Citizens of Utah v. United States, 406 U.S. 128, 153 (1972); Basic Inc. v. Levinson, 485
U.S. 224, 245 (1988)).
14

In In re Bridgestone/Firestone, Inc., 288 F.3d 1012 (7th Cir. 2002), Judge Easterbrook,
in an opinion that predates Wal-Mart and Comcast, stated:
No class action is proper unless all litigants are governed by the same
legal rules. Otherwise the class cannot satisfy the commonality and superiority
requirements of Fed. R. Civ. P. 23(a), (b)(3). Yet state laws about theories such
as those presented by our plaintiffs differ, and such differences have led us to hold
that other warranty, fraud, or products-liability suits may not proceed as
nationwide classes
288 F.3d at 1015.
treatment:

Judge Easterbrook then discussed how variations in tires defeat class

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_______________________________
Because these claims must be adjudicated under the law of so many
jurisdictions, a single nationwide class is not manageable. Lest we soon see a
Rule 23(f) petition to review the certification of 50 state classes, we add that this
litigation is not manageable as a class action even on a statewide basis. About
20% of the Ford Explorers were shipped without Firestone tires. The Firestone
tires supplied with the majority of the vehicles were recalled at different times;
they may well have differed in their propensity to fail, and this would require subsubclassing among those owners of Ford Explorers with Firestone tires. Some of
the vehicles were resold and others have not been; the resales may have reflected
different discounts that could require vehicle-specific litigation. Plaintiffs
contend that many of the failures occurred because Ford and Firestone advised the
owners to underinflate their tires, leading them to overheat. Other factors also
affect heating; the failure rate (and hence the discount) may have been higher in
Arizona than in Alaska. Of those vehicles that have not yet been resold, some
will be resold in the future (by which time the tire replacements may have
alleviated or eliminated any discount) and some never will be resold. Owners
who wring the last possible mile out of their vehicles receive everything they paid
for and have claims that differ from owners who sold their Explorers to the
second-hand market during the height of the publicity in 2000. Some owners
drove their SUVs off the road over rugged terrain, while others never used the
“sport” or “utility” features; these differences also affect resale prices.
Firestone’s tires likewise exhibit variability; that’s why fewer than half of
those included in the tire class were recalled. The tire class includes many buyers
who used Firestone tires on vehicles other than Ford Explorers, and who therefore
were not advised to underinflate their tires.
....
When courts think of efficiency, they should think of market models rather
than central-planning models.
Our decision in Rhone-Poulenc Rorer made this point, and it is worth
reiterating: only “a decentralized process of multiple trials, involving different
juries, and different standards of liability, in different jurisdictions” (51 F.3d at
1299) will yield the information needed for accurate evaluation of mass tort
claims.
....
No matter what one makes of the decentralized approach as an original
matter, it is hard to adopt the central-planner model without violence not only to
Rule 23 but also to principles of federalism. Differences across states may be
costly for courts and litigants alike, but they are a fundamental aspect of our
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personal injury damages, which presents such a challenge to predominance that class
certification of mass tort claims is now exceedingly rare, see Amchem Prods., Inc. v. Windsor,
521 U.S. at 625. There is little uniform guidance on how to assess when common issues
predominate over individual ones, and the Court’s statements to this point have, obviously, done
more to disavow various tempting but fallacious rules than they have to set forth a usable
standard.
There is currently a split of authority between the United States Court of Appeals over
the proper way to analyze predominance -- with the United States Courts of Appeals for the
Seventh and Sixth Circuits on one side and the United States Courts of Appeals for the Third,
Tenth, and Eleventh Circuits on the other. The Honorable Richard A. Posner,15 United States
Circuit Judge for the Seventh Circuit, concludes that the predominance inquiry boils down to “a
question of efficiency.” Butler v. Sears, Roebuck & Co., 702 F.3d at 362. Judge Posner poses
the predominance question as: “Is it more efficient, in terms both of economy of judicial
_______________________________
federal republic and must not be overridden in a quest to clear the queue in court.
See BMW v. Gore, 517 U.S. [559, 568-73 (1996)]; Szabo[v. Bridgeport
Machines, Inc., 249 F.3d 672 (7th Cir. 2001)](reversing a nationwide warranty
class certification); Spence v. Glock, G.m.b.H., 227 F.3d 308 (5th Cir. 2000)
(reversing a nationwide tort class certification); Larry Kramer, Choice of Law in
Complex Litigation, 71 N.Y.U. L. Rev. 547, 579 (1996); Linda S. Mullenix, Mass
Tort Litigation and the Dilemma of Federalization, 44 DePaul L. Rev. 755, 781
(1995); Robert A. Sedler, The Complex Litigation Project’s Proposal for
Federally-Mandated Choice of Law in Mass Torts Cases: Another Assault on
State Sovereignty, 54 La. L .Rev. 1085 (1994). Tempting as it is to alter doctrine
in order to facilitate class treatment, judges must resist so that all parties’ legal
rights may be respected.
In re Bridgestone/Firestone, Inc., 288 F.3d at 1018-20.
15

Judge Posner is not only the most widely referenced legal authority alive -- he is the
most-cited legal scholar of all time. See Fred R. Shapiro, The Most-Cited Legal Scholars, 29
J. Legal Stud. 409, 424 (2000). Judge Posner retired from the Seventh Circuit, effective
September 2, 2017.

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resources and of the expense of litigation to the parties, to decide some issues on a class basis or
all issues in separate trials?” Butler v. Sears, Roebuck & Co., 702 F.3d at 362. In Butler v.
Sears, Roebuck & Co., the Seventh Circuit reversed a district court’s denial of certification of a
class of washing-machine owners who alleged that Sears’ washing machines were prone to
cultivate mold and affirmed the district court’s certification of the same class to pursue a claim
that the machines’ control units were defective. See 702 F.3d at 360-61. The Seventh Circuit
certified the class -- which spanned six states -- to pursue its mold claim under state breach-ofwarranty law:
A class action is the more efficient procedure for determining liability and
damages in a case such as this, involving a defect that may have imposed costs on
tens of thousands of consumers yet not a cost to any one of them large enough to
justify the expense of an individual suit. If necessary a determination of liability
could be followed by individual hearings to determine the damages sustained by
each class member (probably capped at the cost of replacing a defective washing
machine -- there doesn’t seem to be a claim that the odors caused an illness that
might support a claim for products liability as distinct from one for breach of
warranty). But probably the parties would agree on a schedule of damages based
on the cost of fixing or replacing class members’ mold-contaminated washing
machines. The class action procedure would be efficient not only in cost, but also
in efficacy, if we are right that the stakes in an individual case would be too small
to justify the expense of suing, in which event denial of class certification would
preclude any relief.
....
[T]he district court will want to consider whether to create different subclasses of
the control unit class for the different states. That should depend on whether there
are big enough differences among the relevant laws of those states to make it
impossible to draft a single, coherent set of jury instructions should the case ever
go to trial before a jury.
Butler v. Sears, Roebuck & Co., 702 F.3d at 362. Along with numerous other class actions
pending appeal before the Supreme Court, the Supreme Court vacated Butler v. Sears, Roebuck
& Co., and remanded it to the Seventh Circuit “for reconsideration in light of Comcast Corp. v.

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Behrend.” Butler v. Sears, Roebuck & Co., 727 F.3d at 797 (7th Cir. 2013). On reconsideration,
the Seventh Circuit reaffirmed its prior decision, again in an opinion written by Judge Posner:
Sears thinks that predominance is determined simply by counting noses:
that is, determining whether there are more common issues or more individual
issues, regardless of relative importance. That’s incorrect. An issue “central to
the validity of each one of the claims” in a class action, if it can be resolved “in
one stroke,” can justify class treatment. Wal-Mart, 131 S. Ct. at 2551. That was
said in the context of Rule 23(a)(2), the rule that provides that class actions are
permissible only when there are issues common to the members of the class (as of
course there are in this case). But predominance requires a qualitative assessment
too; it is not bean counting. In Amgen Inc. v. Connecticut Retirement Plans &
Trust Funds, 133 S. Ct. at 1196, the Court said that the requirement of
predominance is not satisfied if “individual questions . . . overwhelm questions
common to the class,” and in Amchem Products, Inc. v. Windsor, 521 U.S. 591,
623 (1997), it said that the “predominance inquiry tests whether proposed classes
are sufficiently cohesive to warrant adjudication by representation.” And in In re
Inter-Op Hip Prosthesis Liability Litigation, 204 F.R.D. 330, 345 (N.D. Ohio
2001), we read that “common issues need only predominate, not outnumber
individual issues.” . . .
As we noted in Carnegie v. Household Int’l., Inc., 376 F.3d 656, 661 (7th Cir.
2004), “the more claimants there are, the more likely a class action is to yield
substantial economies in litigation. It would hardly be an improvement to have in
lieu of this single class 17 million suits each seeking damages of $15 to $30. . . .
The realistic alternative to a class action is not 17 million individual suits, but
zero individual suits, as only a lunatic or a fanatic sues for $30” (emphasis in
original). The present case is less extreme: tens of thousands of class members,
each seeking damages of a few hundred dollars. But few members of such a
class, considering the costs and distraction of litigation, would think so meager a
prospect made suing worthwhile.
There is a single, central, common issue of liability: whether the Sears
washing machine was defective. Two separate defects are alleged, but remember
that this class action is really two class actions. In one the defect alleged involves
mold, in the other the control unit. Each defect is central to liability.
Complications arise from the design changes and from separate state warranty
laws, but can be handled by the creation of subclasses. See, e.g., Johnson v.
Meriter Health Services Employee Retirement Plan, 702 F.3d at 365 (10
subclasses).
Butler v. Sears, Roebuck & Co., 727 F.3d at 801-02(emphasis in original).16

16

In addition to articulating the Seventh Circuit’s construction of the predominance
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_______________________________
inquiry, Judge Posner addressed Comcast Corp. v. Behrend’s impact on the Seventh Circuit’s
case:
So how does the Supreme Court’s Comcast decision bear on the
rulings . . . in our first decision?
Comcast holds that a damages suit cannot be certified to proceed as a class
action unless the damages sought are the result of the class-wide injury that the
suit alleges. Comcast was an antitrust suit, and the Court said that “if [the
plaintiffs] prevail on their claims, they would be entitled only to damages
resulting from reduced overbuilder competition, since that is the only theory of
antitrust impact accepted for class-action treatment by the District Court. It
follows that a model purporting to serve as evidence of damages in this class
action must measure only those damages attributable to that theory. If the model
does not even attempt to do that, it cannot possibly establish that damages are
susceptible of measurement across the entire class for purposes of Rule 23(b)(3).”
“[A] methodology that identifies damages that are not the result of the wrong” is
an impermissible basis for calculating class-wide damages. Id. at 1434 (emphasis
added). “For all we know, cable subscribers in Gloucester County may have been
overcharged because of petitioners’ alleged elimination of satellite competition (a
theory of liability that is not capable of classwide proof ).” And on the next page
of its opinion the Court quotes approvingly from Federal Judicial Center,
Reference Manual on Scientific Evidence 432 (3d ed.2011), that “the first step in
a damages study is the translation of the legal theory of the harmful event into an
analysis of the economic impact of that event.” (emphasis the [Supreme]
Court’s). None of the parties had even challenged the district court’s ruling that
class certification required “that the damages resulting from . . . [the antitrust
violation] were measurable ‘on a class-wide basis’ through use of a ‘common
methodology.’”
Unlike the situation in Comcast, there is no possibility in this case that
damages could be attributed to acts of the defendants that are not challenged on a
class-wide basis; all members of the mold class attribute their damages to mold
and all members of the control-unit class to a defect in the control unit.
Sears argues that Comcast rejects the notion that efficiency is a proper
basis for class certification, and thus rejects our statement that “predominance” of
issues common to the entire class, a requirement of a damages class action under
Rule 23(b)(3), “is a question of efficiency.” But in support of its argument Sears
cites only the statement in the dissenting opinion in Comcast that “economies of
time and expense” favor class certification, -- a statement that the majority
opinion does not contradict. Sears is wrong to think that anything a dissenting
opinion approves of the majority must disapprove of.
Sears compares the design changes that may have affected the severity of
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The Sixth Circuit handled essentially the same case -- a class action against Sears for
defective washing machines -- in In re Whirlpool Corp. Front-Loading Washing Products
Liability Litigation, 678 F.3d 409 (6th Cir. 2012), and also elected to certify the mold-based
claim.17
[W]e have no difficulty affirming the district court’s finding that common
questions predominate over individual ones and that the class action mechanism is
the superior method to resolve these claims fairly and efficiently. This is
especially true since class members are not likely to file individual actions
because the cost of litigation would dwarf any potential recovery. See Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997)(finding that in drafting Rule
23(b)(3), “the Advisory Committee had dominantly in mind vindication of ‘the
rights of groups of people who individually would be without effective strength to
bring their opponents into court at all’ ”). Further, [as] the district court observed,
any class member who wishes to control his or her own litigation may opt out of
the class under Rule 23(b)(3)(A).
In re Whirlpool Corp. Front-Loading Washing Products Liability Litigation, 678 F.3d at 421
(citation omitted). That case was also vacated after Comcast Corp. v. Behrend, and, like the
_______________________________
the mold problem to the different antitrust liability theories in Comcast. But it
was not the existence of multiple theories in that case that precluded class
certification; it was the plaintiffs’ failure to base all the damages they sought on
the antitrust impact -- the injury -- of which the plaintiffs were complaining. In
contrast, any buyer of a Kenmore washing machine who experienced a mold
problem was harmed by a breach of warranty alleged in the complaint.
Furthermore and fundamentally, the district court in our case, unlike
Comcast, neither was asked to decide nor did decide whether to determine
damages on a class-wide basis. As we explained in McReynolds v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482, 491-92 (7th Cir. 2012), a
class action limited to determining liability on a class-wide basis, with separate
hearings to determine -- if liability is established -- the damages of individual
class members, or homogeneous groups of class members, is permitted by Rule
23(c)(4) and will often be the sensible way to proceed
Bulter v. Sears, Roebuck & Co., 727 F.3d at 799-800 (emphasis in Butler v. Sears, Roebuck &
Co. but not Comcast Corp. v. Behrend, except as noted)(citations omitted).
17

The Sixth Circuit’s class “did not involve the other claim in [the Seventh Circuit’s]
case, the control unit claim.” Butler v. Sears, Roebuck & Co., 727 F.3d at 802.
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Seventh Circuit, the Sixth Circuit reaffirmed its prior decision, fleshing out the predominance
inquiry in more detail than it had done in its prior opinion:
Whirlpool does not point to any “fatal dissimilarity” among the members
of the certified class that would render the class action mechanism unfair or
inefficient for decision-making. Instead, Whirlpool points to “a fatal similarity -[an alleged] failure of proof as to an element of the plaintiffs’ cause of action.”
That contention, the Supreme Court instructs, “is properly addressed at trial or in
a ruling on a summary-judgment motion. The allegation should not be resolved in
deciding whether to certify a proposed class.” Tracking the Supreme Court’s
reasoning, we conclude here that common questions predominate over any
individual ones. Simply put, this case comports with the “focus of the
predominance inquiry” -- it is “sufficiently cohesive to warrant adjudication by
representation.”
In re Whirlpool Corp. Front-Loading Washing Products Liability Litigation, 722 F.3d 838, (7th
Cir. 2013)(citations omitted). The Seventh Circuit and Sixth Circuit, thus, define predominance
in much the same way: if the district court can design a mechanism for trying the case that is fair
to the defendants and more efficient than individual litigation of the same dispute, then
predominance is satisfied. See Butler v. Sears, Roebuck & Co., 727 F.3d at 802. This styling of
the predominance inquiry is in keeping with that given, many years earlier, by a leading classaction treatise:
[A] court addressing predominance must determine whether the evidence about
the putative class representative’s circumstances and the opposing evidence from
the defense will enable a jury to make across-the-board “yes” or “no” factual
determinations that fairly resolve the claims of the entire class. Where the right to
recover for each class member would “turn . . . on facts particular to each
individual plaintiff," class treatment makes little sense. If the resolution of the
common issues devolves into an unmanageable variety of individual issues, then
the lack of increased efficiency will prohibit certification of the class.
The predominance and efficiency criteria are of course
intertwined. When there are predominant issues of law or fact,
resolution of those issues in one proceeding efficiently resolves
those issues with regard to all claimants in the class. When there
are no predominant issues of law or fact, however -- as in the
instant case -- class treatment would be either singularly
inefficient, as one court attempts to resolve diverse claims from
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around the country in its own courtroom, or unjust, as the various
factual and legal nuances of particular claims are lost in the press
to clear the lone court’s docket.
McLaughlin on Class Actions § 5:23 (11th ed. 2016)(emphases added)(omission in original)
(footnotes omitted).
Although the Seventh Circuit and the Sixth Circuit may agree about the definition of
predominance, the Third, Tenth, and Eleventh Circuits stake out a different test.
“Whether an issue predominates can only be determined after considering
what value the resolution of the class-wide issue will have in each class member’s
underlying cause of action.” Common issues of fact and law predominate if they
“‘ha[ve] a direct impact on every class member’s effort to establish liability’ that
is more substantial than the impact of individualized issues in resolving the claim
or claims of each class member.” If “after adjudication of the classwide issues,
plaintiffs must still introduce a great deal of individualized proof or argue a
number of individualized legal points to establish most or all of the elements of
their individual claims, [their] claims are not suitable for class certification under
Rule 23(b)(3).”
Sacred Heart Health Sys., Inc. v. Humana Military Healthcare Serv., Inc., 601 F.3d 1159, 1170
(11th Cir. 2010)(emphasis in original)(citations omitted).18 The Eleventh Circuit, however,

18

The Eleventh Circuit first adopted this test -- relying on district court decisions -- in
2004 in Klay v. Humana, Inc., 382 F.3d 1241 (11th Cir. 2004) and gave renewed articulations of
the test in 2009 in Vega v. T-Mobile USA, Inc., 564 F.3d 1256 (11th Cir. 2009) and in 2010 in
Sacred Heart Health Systems, Inc. v. Humana Healthcare Services, Inc. In each case, the
Eleventh Circuit made some reference to additionally adopting a Fifth Circuit rule-of-thumb test:
An alternate formulation of this test was offered in Alabama v. Blue Bird
Body Co., 573 F.2d 309 (5th Cir. 1978). In that case, we observed that if
common issues truly predominate over individualized issues in a lawsuit, then
“the addition or subtraction of any of the plaintiffs to or from the class [should
not] have a substantial effect on the substance or quantity of evidence offered.”
Put simply, if the addition of more plaintiffs to a class requires the presentation of
significant amounts of new evidence, that strongly suggests that individual issues
(made relevant only through the inclusion of these new class members) are
important. Alabama v. Blue Bird Body Co., 573 F.2d at 322 (“If such addition or
subtraction of plaintiffs does affect the substance or quantity of evidence offered,
then the necessary common question might not be present.”). If, on the other
hand, the addition of more plaintiffs leaves the quantum of evidence introduced
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imposes a different, more rigorous, second step: the district court’s trial plan must spend more
time adjudicating the common questions than it does adjudicating the individual questions. The
Eleventh Circuit’s test may not be the greatest -- the Court sees little reason why negative-value
cases that can be fairly and efficiently adjudicated via class action should not be certified19 -- but
_______________________________
by the plaintiffs as a whole relatively undisturbed, then common issues are likely
to predominate.
Klay v. Humana, Inc., 382 F.3d at 1255. See Sacred Heart Health Sys., Inc. v. Humana Military
Healthcare Serv., Inc., 601 F.3d at 1170 (“In practical terms, while ‘[i]t is not necessary that all
questions of fact or law be common,’ ‘the addition or subtraction of any of the plaintiffs to or
from the class [should not] have a substantial effect on the substance or quantity of evidence
offered.’”); Vega v. T-Mobile USA, Inc., 564 F.3d at 1270 (quoting the above portion of Klay v.
Humana, Inc.).
The Fifth Circuit, however, was not setting forth a test for when predominance is satisfied
so much as a test for when an issue is common versus individualized. The Fifth Circuit’s full
quote -- without the Eleventh Circuit’s alterations -- is:
We only point out that in a situation wherein one seeks to represent a nationwide
class in order to obtain redress for harm done from a nationwide conspiracy
consideration should be given to whether the addition or subtraction of any of the
plaintiffs to or from the class will have a substantial effect on the substance or
quantity of evidence offered. If such addition or subtraction of plaintiffs does
affect the substance or quantity of evidence offered, then the necessary common
question might not be present.
State of Alabama v. Blue Bird Body Co., Inc., 573 F.2d at 322 (emphasis added)(footnote
omitted).
19

In fairness to the Eleventh Circuit, Judge Posner’s test merges the predominance and
superiority inquiries -- effectively reading out predominance -- in negative-value cases. Thus,
the Eleventh Circuit’s test is truer to rule 23’s text than Judge Posner’s. “Predominate,” the word
that rule 23 uses, means “[t]o be of greater power, importance, or quantity; be most important or
outstanding.” The American Heritage Dictionary of the English Language 1032 (William Morris
ed., New College ed. 1976)(emphasis added). Rule 23’s text thus arguably suggests a direct
comparison of common and individual issues, and not -- as Judge Posner suggests -- an indirect
comparison that decides the predominance question on the basis of a fancy economic analysis.
There are, however, two other rule 23 provisions whose impact on predominance is not often
discussed: (i) the issue class-action clause, see Fed. R. Civ. P. 23(c)(4) (“When appropriate, an
action may be brought or maintained as a class action with respect to particular issues.”); and
(ii) the subclassification clause, see Fed. R. Civ. P. 23(c)(5) (“When appropriate, a class may be
divided into subclasses that are each treated as a class under this rule.”). These provisions are
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indeed unfortunate for those who wish to read rule 23 as containing the seeds of its own
destruction. Rule 23(c)(4) allows for adjudication of common issues, even if these issues do not
add up to a common claim. Rule 23(c)(5) allows for collective adjudication, even if it falls short
of being completely “classwide” adjudication. Judge Posner’s test explicitly admits of
subclasses and issue classes. Even if it had not allowed for these classes, their impact in Judge
Posner’s analysis would be obvious: the district court uses the tools of subclassification and issue
classification -- along with other management tools, such as polyfurcation -- to design a classaction management plan, and then decide whether the plan is more or less efficient than separate
trials.
The impact that these provisions have on the Eleventh Circuit’s approach is less clear.
The Eleventh Circuit’s best discussion of subclasses comes from Sacred Heart Health Systems,
Inc. v. Humana Military Healthcare Services, Inc.:
[W]e cannot accept the district court’s proposal to use subclasses corresponding
to the hospitals’ six categories of payment clauses. We recognize the long and
venerated practice of creating subclasses as a device to manage complex class
actions, but the six subclasses proposed here mask a staggering contractual
variety. The sixth proposed subclass -- a miscellaneous residue of numerous
payment clauses that are insusceptible of ready classification -- alone is fatal to
predominance. When this “potpourri” subclass, as Humana has termed it, is
broken down into its disparate component parts, the illusion of uniformity gives
way to nearly thirty subclasses.
Common sense tells us that “[t]he necessity of a large number of
subclasses may indicate that common questions do not predominate,” Manual for
Complex Litigation § 21.23 (4th ed. 2004); see also Harding v. Tambrands Inc.,
165 F.R.D. 623, 630 (D. Kan. 1996)(“The potential for numerous different
subclasses weighs against a finding of predominance of common issues.”). Here,
the necessary recourse to a “miscellaneous” subclass readily indicates the lack of
a predominant question.
Ultimately, after examining the many individualized payment clauses
contained in the network agreements, we perceive a “distinct possibility that there
was a breach of contract with some class members, but not with other class
members.” Subclasses are no answer to this problem, meaning that the efficiency
of a class action will be lost entirely unless the hospitals are allowed “to stitch
together the strongest contract case based on language from various [contracts],
with no necessary connection to their own contract rights. The hospitals,
however, may not lawfully “amalgamate” their disparate claims in the name of
convenience. The Rules Enabling Act, 28 U.S.C. § 2072 -- and due process -prevents the use of class actions from abridging the substantive rights of any
party. Yet, from the record before us, an abridgment of the defendant’s rights
seems the most likely result of class treatment. By glossing over the striking
differences in the material terms of the agreements, the district court created an
“unnecessarily high risk,” of such unlawful results, and thereby abused its
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_______________________________
discretion.
601 F.3d at 1176 (citations omitted). These statements imply that, but for the sixth “category” of
payment clauses -- really a catchall for all contracts that did not fit into one of the five real
categories -- the class would be certifiable. The only “abridgement of the defendant’s rights”
that the district court’s plan would produce would be the “‘amalgamat[ion]’” of different
contractual language into a single category -- the sixth category. 601 F.3d at 1176. That case,
thus, leaves open the question whether subclassification and issue certification can aid in
satisfying predominance, or if these techniques are separate from the predominance inquiry.
The Fifth Circuit staked out a clear answer to this question in its much-discussed Castano
v. American Tobacco Co. case, deciding the issue in a way one might expect:
Severing the defendants’ conduct from reliance under rule 23(c)(4) does
not save the class action. A district court cannot manufacture predominance
through the nimble use of subdivision (c)(4). The proper interpretation of the
interaction between subdivisions (b)(3) and (c)(4) is that a cause of action, as a
whole, must satisfy the predominance requirement of (b)(3) and that (c)(4) is a
housekeeping rule that allows courts to sever the common issues for a class trial.
Reading rule 23(c)(4) as allowing a court to sever issues until the remaining
common issue predominates over the remaining individual issues would
eviscerate the predominance requirement of rule 23(b)(3); the result would be
automatic certification in every case where there is a common issue, a result that
could not have been intended.
84 F.3d at 745 n.21 (citations omitted). This logic is hardly unassailable. Namely, the result of
reading rules 23(c)(4) and (c)(5) as bearing on the predominance inquiry would not be
“automatic certification in every case where there is a common issue,” because superiority must
still be satisfied. Castano v. American Tobacco Co., 84 F.3d at 745 n.21. If a proposed class
action is superior -- e.g., if it lacks the value to be brought on an individual basis -- and
individual issues can be pared away via rules 23(c)(4) and (c)(5) then it is not clear why
certification “could not have been intended” by the rule. Castano v. American Tobacco Co., 84
F.3d at 745 n.21. Moreover, it is a poor reading of the rule’s text. Presumably, even if rules
23(c)(4) and (c)(5) are mere “housekeeping rule[s],” they would still alleviate “likely difficulties
in managing a class action.” Castano v. American Tobacco Co., 84 F.3d at 745 n.21; Fed. R.
Civ. P. 23(b)(3)(D). Because rule 23 directs that “[t]he matters pertinent to these findings
[predominance and superiority] include: . . . the likely difficulties in managing a class action,”
the Court, if it were writing on a clear slate would think that rules 23(c)(4) and (c)(5) would play
a part in the predominance determination, Fed. R. Civ. P. 23(b)(3), and that this result thus
“could not have been intended.” Castano v. American Tobacco Co., 84 F.3d at 745 n.21.
The Fifth Circuit’s approach attracted the adherence of a revered jurist on the Fourth
Circuit -- although not the Fourth Circuit itself. The Honorable Paul V. Niemeyer, United States
Circuit Judge for the Fourth Circuit, endorsed the Fifth Circuit’s view in an opinion concurring
in part and dissenting in part from an opinion in which the Fourth Circuit adopted the opposing
view:
Despite the overwhelming predominance of these individualized issues
and claims over the common issue that the majority now certifies for class
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_______________________________
treatment, the majority has adopted an inventive approach to Rule 23 that allows
certification of a class where the predominance requirement of Rule 23(b)(3) is
admittedly unmet in the context of the case as a whole. According to the
majority, to require the certified issue in this case to predominate over the
individualized issues in the action as a whole ignores Rule 23(c)(4)(A), which it
appears to view as a fourth avenue for class certification, on equal footing with
Rules 23(b)(1), 23(b)(2), and 23(b)(3). In doing so, the majority glorifies Rule
23(c)(4)(A) -- a housekeeping rule that authorizes a court to certify for class
treatment “particular issues” in a case that otherwise satisfies Rule 23(a) and
23(b) -- with the effect of materially rewriting Rule 23 such that Rule 23(b)(3)’s
requirements no longer need be applied to “[a]n action,” see Fed. R. Civ. P. 23(b),
but rather to any single issue, no matter how small.
Not only does the majority’s approach expand Rule 23 beyond its intended
reach, but it also creates a direct conflict with the Fifth Circuit which has held:
A district court cannot manufacture predominance through the
nimble use of subdivision (c)(4). The proper interpretation of the
interaction between subdivisions (b)(3) and (c)(4) is that a cause of
action, as a whole, must satisfy the predominance requirement of
(b)(3) in that (c)(4) is a housekeeping rule that allows courts to
sever the common issues for a class trial.
Castano v. American Tobacco Co., 84 F.3d 734, 745 n.21 (5th Cir. 1996).
Gunnells v. Healthplan Servs., Inc., 348 F.3d at 446-47. Despite Judge Niemeyer’s concern with
creating a Circuit split, the Second Circuit, the Ninth Circuit, and, of course, the Seventh Circuit
have all held that subclasses can be used to satisfy predominance concerns since at least 2001,
two years before Gunnells v. Healthplan Services, Inc. See Zinser v. Accufix Research Inst., Inc.
253 F.3d at 1189-90, 1192 n.8. See Robinson v. Metro-North Commuter R.R., 267 F.3d 147,
167-69 (2d Cir. 2001); Jefferson v. Ingersoll Int’l Inc., 195 F.3d 894, 898 (7th Cir. 1999).
The Eleventh Circuit has refrained from taking a side on this question:
Some have been critical of the piecemeal certification of class action
status for claims within a case. See Gunnells v. Healthplan Servs., Inc., 348 F.3d
417, 446-47 (4th Cir. 2003)(Niemeyer, J., dissenting)(arguing that the
predominance requirement in Fed. R. Civ. P. 23(b) applies to the action as a
whole, not to individual subclasses or claims); Castano v. Am. Tobacco Co., 84
F.3d 734, 745 n. 21 (5th Cir. 1996)(“The proper interpretation of the interaction
between [Fed. R. Civ. P. 23] subdivisions (b)(3) and (c)(4) is that a cause of
action, as a whole, must satisfy the predominance requirement of (b)(3) and that
(c)(4) is a housekeeping rule that allows courts to sever the common issues for a
class trial.”). We did not directly address the propriety of such partial
certification in Klay.

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it is commendable in that it is a test that district courts can use, rather than yet another
meaningless recitation, see CGC Holding Co. LLC v. Broad & Cassel, 773 F.3d 1076 (10th Cir.
2014)(“[T]he predominance prong ‘asks whether the common, aggregation-enabling, issues in
the case are more prevalent or important than the non-common, aggregation defeating, individual
issues.” (quoting Newberg § 4:49)), circular axiom, see, e.g., Amchem Prods., Inc. v. Windsor,
521 U.S. at 623 (“The Rule 23(b)(3) predominance inquiry tests whether proposed classes are
sufficiently cohesive to warrant adjudication by representation.”), obvious guidepost, see Reed v.
Bowen, 849 F.2d at 1309 (“Each case must be decided on its own facts, on the basis of
‘practicalities and prudential considerations.’”), self-evident comparison, see Monreal v. Potter,
367 F.3d at 1237 (“[T]he predominance criterion of Rule 23(b)(3) [i]s ‘far more demanding’
tha[n] the Rule 23(a) commonality requirement[.]” (quoting Amchem Prods., Inc. v. Windsor,
521 U.S. at 623-24)), or worthless slogan, see Marcus v. BMW of N. Am., LLC, 687 F.3d at 600
(exhorting district courts to examine claims “‘through the prism’ of Rule 23(b)(3)”).

_______________________________
Borrero v. United Healthcare of N.Y., Inc., 610 F.3d 1296, 1310 n.5 (11th Cir. 2010)(alterations
in original). The Tenth Circuit also appears to have refrained from taking a side:
Plaintiffs urge us to consider a “hybrid” certification whereby the liability
stage might be certified for class treatment under Rule 23(b)(2) even if the
damages stage does not qualify for such treatment. See Robinson v. Metro-North
Commuter R.R., 267 F.3d 147, 167-69 (2d Cir. 2001). Compare Lemon v. Int’l
Union of Operating Engr’s, Local No. 139, AFL-CIO, 216 F.3d 577, 581 (7th Cir.
2000), and Jefferson v. Ingersoll Int’l Inc., 195 F.3d 894, 898 (7th Cir. 1999),
with Allison v. Citgo Petroleum Corp., 151 F.3d 402, 420-22 (5th Cir. 1998). We
do not need to rule on a hybrid possibility because in the instant case, the liability
stage does not satisfy either Rules 23(b)(2) or 23(b)(3). The district court’s ruling
that plaintiffs did not allege a sufficient policy, practice or pattern of
discrimination to warrant class treatment for liability determination is not an
abuse of discretion.
Monreal v. Potter, 367 F.3d at 1237 n.12 (Ebel, J.).
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The Tenth Circuit followed the Eleventh Circuit’s approach in CGC Holding Co., LLC v.
Broad and Cassel.
Predominance regularly presents the greatest obstacle to class
certification, especially in fraud cases. Accordingly, the issues disputed in this
case are not unusual. And given our obligation to ensure that the district court did
not err in conducting its rigorous analysis, we must characterize the issues in the
case as common or not, and then weigh which issues predominate. Here, that
task requires us to survey the elements of the class’s RICO claims to consider
(1) which of those elements are susceptible to generalized proof, and (2) whether
those that are so susceptible predominate over those that are not. Stated another
way, consideration of how the class intends to answer factual and legal questions
to prove its claim -- and the extent to which the evidence needed to do so is
common or individual -- will frequently entail some discussion of the claim itself.
In this context, it is worth reiterating that our review on appeal is limited.
For the purposes of class certification, our primary function is to ensure that the
requirements of Rule 23 are satisfied, not to make a determination on the merits
of the putative class’s claims. But it is impractical to construct “an impermeable
wall” that will prevent the merits from bleeding into the class certification
decision to some degree. So, although class certification does not depend on the
merits of the suit, “[e]valuation of many of the questions entering into
determination of class action questions is intimately involved with the merits of
the claims.”
With these legal principles in mind, “[c]onsidering whether ‘questions of
law or fact common to class members predominate’ begins, of course, with the
elements of the underlying cause of action.” For this limited purpose, we
consider the proposed class’s claim for a RICO conspiracy.
3.

Oil-and-Gas Class Actions.

Oil-and-gas wells are often drilled on land owned by entities or individuals other than the
oil company that performs the drilling. The landowners execute mineral leases or deeds with the
oil companies, dividing the estate up into a royalty interest, which the landowner-lessor owns,
and a working interest, which the oil company-lessee owns. The lessee builds wells on the
leased land and connects them to a gathering system -- a system of small pipelines that collect oil
and gas from a large number of wells in a region -- which then carries it to a plant for treatment
or processing. When the lessee sells the oil or gas, it then pays the lessors a fraction of the
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proceeds, known as a royalty, which effectively serves as “rent” for the use of the leased land.
Royalty owners sometimes contend that their lessees are underpaying their royalty, either by
deducting impermissible costs from the proceeds -- a lessee can typically deduct post-production
costs, but not production costs, from the sale proceeds before dividing off royalties -- or by
paying on an amount that does not reflect the true sale proceeds. The relationship between
lessors and lessee is fundamentally a contractual one, but there is also positive law -- case law
and statutes -- supplying default terms and contractual gap-fillers. Each lessor’s monthly royalty
is typically small and, thus, lessors have little practical recourse for royalty underpayment in
individual litigation. They will, instead, band together with other landowner-lessors with whom
a given oil company-lessor contracts -- often other lessors on a single gathering system or within
a region -- and sue the oil company via class action. These class actions have a prodigious
history in the state courts, where they were traditionally brought -- because oil-and-gas royalty
law is principally state law -- before CAFA’s passage. See, e.g., Phillips Petrol. Co. v. Shutts,
472 U.S. at 799. These actions present recurring issues, and, as certification reversals are both
more common20 and more instructive than affirmances, the Court will focus on cases where

20

Before rule 23(f)’s interlocutory-appeal provision was added, the Courts of Appeals
could only rule on class certification (i) after a final judgment issued in the case, which, given
the class actions’ high settlement rate, was rare; or (ii) by way of a writ of mandamus, in which
case the Courts of Appeals would not generally issue an opinion unless they granted the writ and
ordered decertification. See, e.g., In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995).
Even now, most circuits interpret rule 23(f) in such a way that they will only hear an
interlocutory appeal if it appears the certification decision was erroneous:
We apply a five-factor test to assess the appropriateness of granting a Rule
23(f) petition. The relevant factors are:
(1) whether the certification ruling is likely dispositive of the
litigation; (2) whether the district court’s certification decision
contains a substantial weakness; (3) whether the appeal will permit
the resolution of an unsettled legal question of general importance;
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appellate courts concluded that a proposed class failed to satisfy rule 23’s requirements. But see
Karen E. Kahle & Denielle M. Stritch, Grouping the Marcellus Payout: Use of Class Actions in
Royalty Litigation Concerning Post-Production Cost Deductions, 88 N.D. L. Rev. 699 (2012).
The Tenth Circuit’s only cases on rule 23(a) and (b)(3)’s application to oil-and-gas
royalty cases21 came in two companion cases issued on July 9, 2013, Roderick and Chieftain
_______________________________
(4) the nature and status of the litigation before the district court
(such as the presence of outstanding dispositive motions and the
status of discovery); and (5) the likelihood that future events will
make appellate review more or less appropriate.
We consider these factors on a holistic basis, but the court should grant the
petition, notwithstanding the other factors, “[w]here a district court’s certification
decision is manifestly erroneous and virtually certain to be reversed on appeal.”
EQT Prod. Co. v. Adair, 764 F.3d 347, 356-57 (4th Cir. 2014)(citations omitted). These
standards -- rule 23(f) and, formerly, the mandamus standard -- result in the Courts of Appeals
appearing to reverse a higher proportion of class certifications that they actually do. A district
court’s decision to certify a class or deny certification is reviewed for abuse of discretion. See
Vallario v. Vandehey, 554 F.3d 1259, 1264 (10th Cir. 2009).
21

Unsurprisingly, given that the Tenth Circuit’s geographic footprint encompasses such
oil-rich states as Oklahoma, New Mexico, and Colorado, the Tenth Circuit has dealt with a
number of other oil-and-gas royalty class actions, but those cases addressed questions other than
the front-end certification inquiry. See, e.g., Eatinger v. BP Am. Prod. Co., 528 F. App’x 859
(10th Cir. 2013)(unpublished)(McKay, J., joined by Kelly & Matheson, JJ.)(holding that the
execution of a class-action settlement mooted the appeal of royalty owners who had been
excluded from the class definition); Abraham v. BP Am. Prod. Co., 685 F.3d at 1196 (Kelly, J.,
joined by Murphy & Hartz, JJ.)(reversing, after a class-action trial, the district court’s decisions
to admit evidence of the defendant’s transition to a uniform same-as-fed payment methodology
and to grant judgment as a matter of law on two lease forms); Pelt v. Utah, 539 F.3d 1271 (10th
Cir. 2008)(Robinson, J., joined by Murphy & Lucero, JJ.)(holding that plaintiffs were not bound
by conclusions in a prior class action to which they were not parties); Elliott, 407 F.3d at 1091
(Murphy, J., joined by Seymour & McKay, JJ.)(making a number of substantive holdings and
ruling that an intervention was timely and proper); S. Ute Indian Tribe v. Amoco Prod. Co., 151
F.3d 1251 (10th Cir. 1998)(en banc)(Seymour, C.J.)(holding that Indian tribes that owned
mineral rights in coal also owned the rights to the accompanying coalbed methane), rev’d by 526
U.S. 865; Craig v. Champlin Petrol. Co., 435 F.2d 933, 939 (10th Cir. 1971)(overturning the
district court’s clearly erroneous factual finding that “a market exists for . . . gas in 1965 at the
contract price established in 1960”).
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Royalty Co. v. XTO Energy, Inc., 528 F. App’x 938 (10th Cir. 2013)(unpublished),22 which were
both written by the Honorable Paul J. Kelly, Jr.,23 United States Circuit Judge for the Tenth
Circuit, and joined by the Honorable Scott M. Matheson, Jr.,24 United States Circuit Judge for
the Tenth Circuit, and the Honorable Monroe G. McKay, Senior United States Circuit Judge for
the Tenth Circuit. In Roderick, a class of individuals owning interests in a total of roughly 650
leases and over 300 wells across ten well fields in Kansas brought a class action against XTO
Energy for breach of contract, unjust enrichment, and an accounting. See 725 F.3d at 1215. The
district court certified the class on the basis of a single common issue, “whether XTO’s uniform

22

Chieftain Royalty Co. v. XTO Energy, Inc. is an unpublished opinion, but the Court can
rely on an unpublished opinion to the extent its reasoned analysis is persuasive in the case before
it. See 10th Cir. R. 32.1(A), 28 U.S.C. (“Unpublished decisions are not precedential, but may be
cited for their persuasive value.”). The Tenth Circuit has stated:
In this circuit, unpublished orders are not binding precedent, . . . and we have
generally determined that citation to unpublished opinions is not favored.
However, if an unpublished opinion or order and judgment has persuasive value
with respect to a material issue in a case and would assist the court in its
disposition, we allow a citation to that decision.
United States v. Austin, 426 F.3d 1266, 1274 (10th Cir. 2005). The Court finds that Chieftain
Royalty Co. v. XTO Energy, Inc., as well as Skinner v. Uphoff, 175 F. App’x 255 (10th Cir.
2006), Baldauf v. Garoutte, 137 F. App’x 137 (10th Cir. 2005), Laboratory Corp. of America
Holdings v. Metabolite Laboratories, Inc., 410 F. App’x 151 (10th Cir. 2011), and In re Kahn,
133 F.3d 932 (10th Cir. 1998), all have persuasive value with respect to a material issue, and will
assist the Court in its disposition of this Memorandum Opinion and Order.
23

Judge Kelly is a subject-matter expert in oil-and-gas law, having practiced for many
years with one of New Mexico’s oldest firms, the vaunted Hinkle Firm, now Hinkle Shanor LLP,
in Roswell and Santa Fe, New Mexico, known for its representation of oil companies.
24

Westlaw lists the third member of the panel as being the Honorable Charles E.
Matheson, then-Chief United States Bankruptcy Judge for the District of Colorado. The Court
thinks it more likely that the Judge Matheson on the panel was the Tenth Circuit judge, because:
(i) the official published opinion states that the case is “[b]efore Kelly, McKay, and Matheson,
Circuit Judges”; and (ii) the Court does not believe that Article I judges can, or do, sit on federal
appellate panels.
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payment methodology breached the implied duty of marketability under Kansas law,” which the
district court deemed to predominate over individual issues. 725 F.3d at 1217. On appeal, the
Tenth Circuit decertified the class on two grounds.
First, the Tenth Circuit stated that the district court had failed to consider variations in
lease language at all, relying instead on the implied duty of marketability. See 725 F.3d at 1216.
This failure constituted an abuse of discretion, because the duty of marketability obtains only
“[a]bsent a contract providing to the contrary,” and, thus, can be negated by express lease
language. 725 F.3d at 1216 (alteration in original)(quoting Sternberger v. Marathon Oil Co., 894
P.2d 788, 800 (Kan. 1995)). The plaintiffs had not reviewed any of the class leases, and XTO
Energy reviewed only one-fifth of them, categorizing them by royalty type, “several of which
negate[d] the IDM [implied duty of marketability] completely or in part (i.e., by providing for
certain express deductions).” 725 F.3d at 1216. Second, the Tenth Circuit held that applying
Kansas’ implied duty to market requires determining the point at which gas from each well
becomes marketable, declaring that “[o]nce gas is in marketable condition, the IDM is satisfied -regardless of whether a market exists at that location . . . [and] gas may be marketable at the
well.” 725 F.3d at 1219 (emphasis in original). Importantly, the Tenth Circuit did not hold that
the class could not be certified, and, to the extent that the Court reads such things into judicial
opinions, it implied the opposite. Rather, it held that the district court’s inquiry -- and the form
in which it certified the class -- was inadequate, and gave the district court multiple leads for
conducting a new rule 23 analysis on remand.

See 725 F.3d at 1219 (“On remand, the

[plaintiffs] could, for example, create a chart classifying lease types, and although we express no
opinion as to the merits, the district court could decide that no lease type negates the IDM.”
(citing Foster v. Merit Energy Co., 282 F.R.D. 541, 551 n.12 (W.D. Okla. 2012))); id. at 1219

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(“On remand, the district court should consider whether and to what extent marketability affects
commonality.” (footnote omitted)).
In the unpublished companion case, Chieftain Royalty v. XTO Energy, Inc., the Tenth
Circuit applied Roderick’s holding to a much larger class action composed of lessors for 14,300
leases and 2,300 wells in Oklahoma. See 528 F. App’x at 940. Again, Judge Kelly noted that
“approximately 13,568 leases have yet to be examined by XTO Energy -- let alone by Chieftain
or the district court,” and that this omission was “particularly significant because unlike the
plaintiff in Roderick, Chieftain admits that some leases expressly abrogate -- and one even
negates -- the IDM.” 528 F. App’x at 942-43. Judge Kelly added one interesting elaboration on
the Roderick holding:
[T]he district court acknowledged the significance of lease language variations
when it stated that “the express terms of the various leases will necessarily have to
be evaluated . . . to determine whether the [IDM] has been abrogated.” However,
the district court decided the issue was “capable of resolution at the summary
judgment stage of this litigation.”
To be sure, the legal effect of lease language is a merits question that is
likely “capable of resolution at the summary judgment stage.” However, it is also
an issue that bears directly on Rule 23’s criteria. As the Supreme Court has
emphasized, “[e]valuation of many of the questions entering into determination of
class action questions is intimately involved with the merits of the claims.”
Therefore, the district court must address the lease language issue as it relates to
Rule 23 before certifying the class.
528 F. App’x at 942 (alteration in original)(emphasis in original)(citations omitted).
Other Circuits have also analyzed oil-and-gas royalty class actions, although, the Tenth
Circuit did not cite any of them in the companion cases discussed above. The Court suspects that
the Tenth Circuit did not want to rely too heavily on cases issued before Wal-Mart. One
influential case that discusses rule 23’s application to oil-and-gas royalty cases in the post-WalMart era is EQT Production Co. v. Adair. The Honorable Albert Diaz, United States Circuit

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Judge for the Fourth Circuit, joined by the Honorable J. Harvie Wilkinson III and Barbara M.
Keenan, United States Circuit Judges for the Fourth Circuit, vacated a district court’s
certification of five closely related oil-and-gas royalty class actions and remanded them for
further analysis. See 764 F.3d at 352. That case was primarily about mineral-rights ownership -namely, whether certain coal-rights owners also held title to the coalbed methane under the
leased premises -- but it also addressed royalty underpayments. See 764 F.3d at 347-365
(addressing the coalbed methane ownership issue). Judge Diaz pointed out three individual
issues that the district court failed to consider and that weighed against predominance. First, the
case addresses the issue of intra-class variations in lease language; the Fourth Circuit’s rationale
parallels the Tenth Circuit’s, going into more detail in some areas:
[T]he mere fact that the defendants engaged in uniform conduct is not, by itself,
sufficient to satisfy Rule 23(b)(3)’s more demanding predominance requirement.
The predominance inquiry focuses not only on the existence of common
questions, but also on how those questions relate to the controversy at the heart of
the litigation. Even a plethora of identical practices will not satisfy the
predominance requirement if the defendants’ common conduct has little bearing
on the central issue in the litigation -- in this case, whether the defendants
underpaid royalties. Absent such a relationship, there is no basis for concluding
that individual issues will not predominate.
We believe the district court placed an inordinate emphasis on the sheer
number of uniform practices without considering whether those practices are
relevant to assessing the defendants’ ultimate liability. Some of the common
practices that the district court identified -- e.g., the fact that EQT sold all of its
CBM into one of two interstate pipelines -- have little relevance to the validity of
the defendants’ royalty payment practices.
The district court did identify common practices that may be pertinent to
the predominance inquiry -- e.g., the fact that “EQT calculated all royalties based
on the same methodology.” But the district court’s analysis fell short because it
never analyzed why those common practices were sufficient to ensure that the
class members’ common issues would predominate over individual ones.
The defendants have highlighted a number of uncommon practices that
might cause individual issues to predominate. For example, EQT notes that it
calculates royalties in different ways for different class members, depending on
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where the CBM is produced. Its method of calculating royalties -- and the
deductions it applies -- have also changed over time. CNX submitted evidence
that it takes different deductions depending on where it sells the CBM, and that its
deduction calculations sometimes vary between and even within wells during
different time periods.
764 F.3d at 366-67 (citations omitted). These statements support the Court’s conclusion that the
predominance inquiry is neither a quantitative inquiry comparing the number of common
questions to the number of individual questions, nor a cursory inquiry asking whether the
defendants generally subjected the class members to the same factual treatment by the
defendants or whether their claims are subject to the same legal standard. Rather, it is a
manageability inquiry that requires the Court to determine whether common legal issues,
susceptible to common evidence, exist in the right places to try the case in a way that is fair to all
parties. Second, the Fourth Circuit pointed out that the district court would “likely need to
consider” course-of-performance evidence. 764 F.3d at 370-71. Third, it stated that “the district
court should reevaluate the implications of the defendants’ statute of limitations defense for Rule
23’s predominance requirement.” 764 F.3d at 371. The plaintiffs’ claims were facially timebarred, but they pled fraudulent concealment to toll the statute, and the Fourth Circuit held that,
“[a]lthough a defendant’s conduct is not irrelevant, attention must also be paid to the plaintiff’s
knowledge and actions,” and, “[i]n this context, a plaintiff’s knowledge typically requires
individual evidence.” 764 F.3d at 370.
After determining that the facts that oil-and-gas companies engaged in numerous
common practices may be sufficient for commonality purposes, the Fourth Circuit in EQT
Production Co. v. Adair made it clear that such common practices are not enough to satisfy the
predominance requirement:
But the mere fact that the defendants engaged in uniform conduct is not,
by itself, sufficient to satisfy Rule 23(b)(3)’s more demanding predominance
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requirement. The predominance inquiry focuses not only on the existence of
common questions, but also on how those questions relate to the controversy at
the heart of the litigation. See Amchem Prods., 521 U.S. at 623 (noting that the
predominance inquiry “trains on the legal or factual questions that qualify each
class member’s case as a genuine controversy”). Even a plethora of identical
practices will not satisfy the predominance requirement if the defendants’
common conduct has little bearing on the central issue in the litigation -- in this
case, whether the defendants underpaid royalties. Absent such a relationship,
there is no basis for concluding that individual issues will not predominate.
We believe the district court placed an inordinate emphasis on the sheer
number of uniform practices without considering whether those practices are
relevant to assessing the defendants’ ultimate liability. Some of the common
practices that the district court identified -- e.g., the fact that EQT sold all of its
CBM into one of two interstate pipelines -- have little relevance to the validity of
the defendants’ royalty payment practices.
The district court did identify common practices that may be pertinent to
the predominance inquiry -- e.g., the fact that “EQT calculated all royalties based
on the same methodology.” But the district court’s analysis fell short because it
never analyzed why those common practices were sufficient to ensure that the
class members’ common issues would predominate over individual ones.
The defendants have highlighted a number of uncommon practices that
might cause individual issues to predominate. For example, EQT notes that it
calculates royalties in different ways for different class members, depending on
where the CBM is produced. Its method of calculating royalties -- and the
deductions it applies -- have also changed over time. CNX submitted evidence
that it takes different deductions depending on where it sells the CBM, and that its
deduction calculations sometimes vary between and even within wells during
different time periods.
....
Although the district court recognized the problem of lease language
variation, it did not see it as a barrier to class certification in any of these cases.
In our view, however, these variable terms will make it difficult, if not
impossible, for a court to assess the validity of the defendants’ royalty payment
practices on a classwide basis.
....
Yet, as the defendants note, the district court failed to discuss course of
performance evidence entirely.
Second, the district court should reevaluate the implications of the
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defendants’ statute of limitations defense for Rule 23’s predominance
requirement.
764 F.3d at 366-68, 70 (footnote omitted)(citation omitted).
The Fourth Circuit, like the Tenth Circuit, never held that the five putative classes were
intractably or irredeemably uncertifiable -- just that the district court did not ask all the necessary
questions.25
We do not decide today whether the disparate practices identified by the
defendants are sufficient to defeat the predominance requirement. On remand, the
district court may well conclude that the defendants’ common conduct is
sufficient to ensure the predominance of common issues over individual ones.
But it was an abuse of discretion for the district court to focus only on the number
of common practices without considering the significance of the defendants’
disparate conduct in the broader litigation.
EQT Prod. Co. v. Adair, 764 F.3d at 367. The case is littered with instructions to the district
court for improving its rule 23 analysis on remand. See, e.g., EQT Prod. Co. v. Adair, 764 F.3d
at 367 (“We also remand for the district court to . . . consider how variations in the defendants’
royalty obligations to the class members implicate the commonality and predominance inquiries
in [certain of the five classes].”); 764 F.3d at 371 (“Where the proper balance lies in the
superiority analysis we leave to the district court on remand as part of its broader consideration
of the other Rule 23(b)(3) factors.”). In its conclusion, the Fourth Circuit summed up its
holding:
We ultimately hold that the district court’s analysis lacked the requisite
25

Unlike the Tenth Circuit, however, the Fourth Circuit implied that the case might be
doomed: “In our view, however, these variable [royalty] terms will make it difficult, if not
impossible, for a court to assess the validity of the defendants’ royalty payment practices on a
classwide basis.” EQT Prod. Co. v. Adair, 764 F.3d at 367-68. The Fourth Circuit left open the
possibility, however, that the classes might be certifiable: “On remand, after reviewing the leases
in this case, the plaintiffs may be able to show that there are a limited number of lease forms,
such that the validity of the defendants’ conduct can be assessed on a subclass basis.” 764 F.3d
at 369.
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rigor to ensure the requirements of Rule 23 were satisfied by any of the certified
classes. On remand, the district court may conclude that one or more subclasses
should be certified. It may also find that class certification should be denied
entirely. At this point, we only conclude that certification was premature.
We recognize that there are numerous CBM owners in Virginia who
haven’t received a penny of CBM royalties and others who may have gotten less
than their due. We are not unsympathetic to their plight.
But sympathy alone cannot justify certification under Rule 23. We
therefore vacate the district court’s grant of the plaintiffs’ motions for class
certification, and remand the case for further proceedings consistent with this
opinion
764 F.3d at 371.
ANALYSIS
The Court concludes that: (i) the Plaintiffs may raise a new class definition not in the
operative Complaint, because the Tenth Circuit has no controlling opinion, other Courts of
Appeals have indicated that such a practice is allowed, and such a practice is sound; (ii) even if
the Court bound the Plaintiffs to the class definition in the operative Complaint, rules 16(b)(4)
and 15(a) would not bar the Plaintiffs from amending their Complaint; (iii) the Plaintiffs have
not previously waived their new class definition even though they previously submitted and
withdrew a different class definition; (iv) the proposed class definition is ascertainable, because
the Plaintiffs have eliminated the gas processing problem; (v) the proposed class definition does
not create commonality because of differences in lease language; and (vi) those same differences
in lease language indicate that common issues would not predominate over individual issues.
Accordingly, the Court denies the Motion to Amend and the Second Motion for Class
Certification.

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I.

THE PLAINTIFFS MAY RAISE A NEW CLASS DEFINITION NOT IN THE
OPERATIVE COMPLAINT.
The Court concludes that the Plaintiffs need not rely on the class definition in their

operative Complaint. District Courts are split on this topic. Some courts have found that “[t]he
Court is bound to class definitions provided in the complaint and, absent an amended complaint,
will not consider certification beyond.” Costelo v. Chertoff, 258 F.R.D. at 604. Others have
allowed amendment during class certification proceedings and noted “[t]hat this approach is also
consistent with Rule 23, which contemplated the amendment of a class certification order prior
to judgment.” Savanna Group, Inc. v. Trynex, Inc., 2013 WL 66181, at *2-3.
The Tenth Circuit does not have a controlling opinion on this point, although Tenth
Circuit language exists that might suggest that a court need not hold a plaintiff to the class
definition in the operative complaint. See Carpenter v. Boeing Co., 456 F.3d at 1187 (“The
district court can modify or amend its class-certification determination at any time before final
judgment in response to changing circumstances in the case.”)(citing Fed. R. Civ. P.
23(c)(1)(C)); In re Integra Realty Res., Inc., 354 F.3d at 1261 (“Moreover, a trial court
overseeing a class action retains the ability to monitor the appropriateness of class certification
throughout the proceedings and to modify or decertify a class at any time before final
judgment.”)(citing Fed. R. Civ. P. 23(c)(1)).
Other Courts of Appeals have implied that the operative complaint does not bind the
plaintiff during class certification. The United States Court of Appeals for the Fifth Circuit has
“specifically invited” a district court to reconsider a denial of class certification. Calderon v.
Presidio Valley Farmers Ass’n, 863 F.2d at 389. The Second Circuit has similarly noted that a
plaintiff could seek to certify a narrower class after the United States Court of Appeals for the
Second Circuit upheld the district court’s denial of class certification. See In re Initial Public
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Offering Sec. Litig., 483 F.3d at 73. The Second Circuit stated that the district court “can be
expected to give such a request full and fair consideration.” 483 F.3d at 73.
In short, the Tenth Circuit has no controlling opinion on this issue, but other Courts of
Appeals have implied that a court need not bind the plaintiff to the class definition in the
operative complaint. The Court consequently concludes that the Plaintiffs may submit a new
class definition without amending their complaint. This rule is consistent with rule 23(c)(1)(C)
which explains that “an order that grants or denies class certification may be altered or amended
before final judgment.” Fed. R. Civ. P. 23(c)(1)(C).
II.

THE
PLAINTIFFS
COULD
AMEND
NOTWITHSTANDING RULES 16(B)(4) AND 15(A).

THEIR

COMPLAINT

Even if the operative Complaint bound the Plaintiffs to their original class definition, the
Court would grant leave to amend their complaint. If a party seeks to amend his or her pleading
after the time for seeking leave for pleading amendments has passed under a scheduling order,
then he or she must meet rule 15(a)(2)’s requirements and satisfy rule 16(b)(4)’s good-cause
requirement. See Gorsuch, Ltd., B.C. v. Wells Fargo Nat’l Bank Ass’n, 771 F.3d at 1240 (“After
a scheduling order deadline, a party seeking leave to amend must demonstrate (1) good cause for
seeking modification under Fed. R. Civ. P. 16(b)(4) and (2) satisfaction of the Rule 15(a)
standard.”). Rule 16(b)(4) states: “A schedule may be modified only for good cause and with the
judge’s consent.” Fed. R. Civ. P. 16(b)(4). “In practice, this standard requires the movant to
show the ‘scheduling deadlines cannot be met despite [the movant’s] diligent efforts.’” Gorsuch,
Ltd., B.C. v. Wells Fargo Nat’l Bank Ass’n, 771 F.3d at 1240.
Here, the Plaintiffs have been “diligent.” The Defendants argue that the “Plaintiffs tender
this new [class] definition nearly three years after they first learned of their ascertainability
problem and more than two years after the parties completed extensive discovery and a multi-day
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hearing premised on the [original class] definition.” Response to Motion 2 at 7. This statement,
however, leaves out the key fact that the Plaintiffs did not propose a new class definition until
after the Court announced Abraham. “Until the Court filed [Abraham] on August 16, 2016,
plaintiffs reasonably believed that this case would be certified.

There was no reason for

plaintiffs to file additional motions addressed to the certification issues until the Court
announced its decision.” Reply 2 at 2. In other words, rule 16(b)(4)’s “diligence” requirement
does not mean that plaintiffs must be clairvoyant and preemptively file a new class certification
motion. That the Plaintiffs did not propose a new class definition until after the Court rejected
the original one does not demonstrate lack of diligence.
Similarly, rule 15(a) would not prevent the Plaintiffs from hypothetically re-filing an
amended complaint. Rule 15(a) provides that a party may amend his or her pleading as a matter
of right within twenty-one days of serving it and within twenty-one days of the service of a
response pleading. See Fed. R. Civ. P. 15(a). Otherwise, the party must obtain the opposing
parties’ consent or the court’s leave -- which should be “freely give[n] . . . when justice so
requires” -- to amend his or her pleading. The Supreme Court has stated that, in the absence of
an apparent reason such as “undue delay, bad faith or dilatory motive . . . repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue
of allowance of the amendment, futility of amendment, etc.,” leave to amend should be freely
given. Foman v. Davis, 371 U.S. at 182.
Here, the Defendants object that the Plaintiffs have unduly delayed amending their class
definition, and that an amended class definition would unduly prejudice the defendants. See
Response to Motion 2 at 7. Neither of these allegations are correct. First, the same reasoning
described above regarding the rule 16(b)(4)’s “diligence” requirement applies to the Defendants’

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undue delay allegation. The Defendants protest that the Plaintiffs waited to submit a new class
definition until after the parties retained experts, briefed the original class definition, completed
discovery, and had a hearing. See Response to Motion 2 at 8. The Plaintiffs waited, however,
because the Court had yet to issue an opinion rejecting their original class definition before
submitting a new one. Like the rule 16(b)(4) diligence requirement, the rule 15(a) undue delay
defense does not require the Plaintiffs to predict how a court will rule on a pending motion.
Similarly, the Defendants would not suffer undue prejudice if the Court hypothetically
allowed an amended complaint. The Defendants argue that they “have been litigating this class
certification under the operative class definition for over four years . . . Defendants tailored their
arguments and evidence to that definition.” Response to Motion 2 at 8. “Now, after four years
of vigorous and expensive litigation culminating in the denial of their motion, Plaintiffs come
forward with a new class definition.” Response to Motion 2 at 8. The Defendants contend that
“[c]ompelling Defendants to re-litigate certification under this new definition would be
manifestly unfair.” Response to Motion 2 at 8-9. In other words, the Defendants are proposing a
rule saying that a plaintiff attempting to certify a class only gets one opportunity to do so if the
litigation is sufficiently long and expensive. No such rule exists or should exist. The Court
should try to get its decision right, and if the Court is convinced -- notwithstanding its earlier
determinations -- that a class action is the appropriate vehicle to litigate a set of claims, then the
Court should certify the class notwithstanding its earlier determinations. “Courts typically find
prejudice only when the amendment unfairly affects the defendants in terms of preparing their
defense to the amendment. Most often, this occurs when the amended claims arise out of a
subject matter different from what was set forth in the complaint and raise significant new
factual issues.” Minter v. Prime Equipment Co., 451 F.3d 1196, 1208 (10th Cir. 2006). Here,

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however, the Plaintiffs propose a new class definition based on the same “subject matter” and on
the same facts as in Abraham.
Further, the Fifth Circuit has “specifically invited” a district court to reconsider a denial
of class certification. Calderon v. Presidio Valley Farmers Ass’n, 863 F.2d at 389. The Second
Circuit has similarly noted that a plaintiff could seek to certify a narrower class after the Second
Circuit upheld the district court’s denial of class certification. See In re Initial Public Offering
Sec. Litig., 483 F.3d at 73. The Second Circuit stated that the district court “can be expected to
give such a request full and fair consideration.” 483 F.3d at 73. The suggestion that the
Plaintiffs should only get one opportunity to submit a class definition is therefore incorrect.
Accordingly, even if the Court required the Plaintiffs to amend their complaint, there would be
no undue delay, and the Defendants would not suffer undue prejudice.
III.

THE PLAINTIFFS DID NOT WAIVE THEIR NEW CLASS DEFINITION.
The Court concludes that the Plaintiffs did not waive their new class definition. The

Tenth Circuit has noted, in the context of waiver on appeal, that “if the theory was intentionally
relinquished or abandoned in the district court, we usually deem it waived and refuse to consider
it.”

Richision v. Ernest Group, Inc., 634 F.3d 1123, 1127 (10th Cir. 2011)(Gorsuch, J.).

“Waiver occurs when a party deliberately considers an issue and makes an intentional decision to
forgo it.” United States v. Cruz-Rodriguez, 570 F.3d 1179, 1183 (10th Cir. 2009).
The Defendants reference a proposal to change the class definition that the Plaintiffs
made during oral argument related to Abraham. See Response to Motion 1 at 6. Specifically,
the Plaintiffs stated at oral argument: “[W]e also propose that the class definition speak to the gas
and liquids processed at the various plants, or if not processed, the gas is or has been allocated
natural gas liquids . . . .” Response to Motion 1 at 6 (citing Abraham, 317 F.R.D. at

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216)(emphasis in original)). The Defendants allege that “the sole reason counsel offered [for this
class definition] mimics the current one,” in other words, mimics the current reason that the
Plaintiffs have offered their new class definition. Response to Motion 1 at 6. That reason,
according to the Defendants, is so that the class definition would “encompass all royalty and
overriding royalty owners injured by the defendants’ ‘keep-whole’ royalty payment
methodology.”

Response to Motion 1 at 6.

The Defendants conclude that, because the

Plaintiffs, at oral argument, proposed a class definition for the same reason that they propose the
new class definition at issue in this motion, and subsequently withdrew the former one, the
Plaintiffs have waived their new class definition. See Response to Motion 1 at 7.
This argument is incorrect. According to the Tenth Circuit, “[w]aiver occurs when a
party deliberately considers an issue and makes an intentional decision to forgo it.” United
States v. Cruz-Rodriguez, 570 F.3d at 1183. Here, the Plaintiffs submitted two different class
definitions, the one they orally submitted and withdrew, and the one presently at issue. That the
Plaintiffs submitted the former definition for the same reason that they submit the current one
does not change the fact that the two class definitions themselves are different. In other words,
the plaintiffs did not “deliberately consider[] an issue and make[] an intentional decision to forgo
it”; rather, the Plaintiffs submitted two issues, namely, two class definitions, for the Court to
consider, albeit for the same underlying reason. United States v. Cruz-Rodriguez, 570 F.3d at
1183. The Plaintiffs did not, therefore, waive their current class definition.
IV.

THE PROPOSED NEW CLASS IS ASCERTAINABLE.
The Court concludes that the new class definition solves the ascertainability problem.

Rule 23(c) requires the Court to “define the class and the class claims, issues, or defenses.” Fed.
R. Civ. P. 23(c)(1)(B). Specifically, the Court must include “a readily discernible, clear, and

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precise statement of the parameters defining the class or classes to be certified.” Wachtel v.
Guardian Life Ins. Co., 453 F.3d 179, 187 (3d Cir. 2006). Another “essential” prerequisite to a
rule 23(b)(3) class action is that the “class must be currently and readily ascertainable based on
objective criteria.” Marcus v. BMW of N. Am., LLC, 687 F.3d at 592-93. See EQT Prod. Co. v.
Adair, 764 F.3d at 358 (“A class cannot be certified unless a court can readily identify the class
members in reference to objective criteria.”).
A key reason why the original class is not ascertainable is:
The Plaintiffs did not identify by a preponderance of the evidence which leases’
gas is or has been processed at the named processing plants, and therefore, which
interests burdening leases and wells are part of the Plaintiffs’ proposed class. The
Plaintiffs assumed that, when a contract named a delivery point for the gas, the
gas would be processed at that plant. The Defendants demonstrated, however,
that a well’s contractual dedication to a particular plant does not determine
whether the well’s gas flows to that plant . . . Gas from a well may not flow to the
plant associated with the gathering system to which the well is connected.
Abraham, 317 F.R.D. at 255 (internal citations omitted). The new class definition solves this
processing problem. Unlike the old putative class, which the plaintiffs define based on “where
the oil or natural gas produced from the leases was delivered to [enumerated processing plants],”
the new class definition is based on people “whose royalty and overriding royalty has been
calculated on a ‘keep-whole’ method omitting payment on the value of the processed natural gas
liquids portion of the production.” Abraham, 317 F.R.D. at 184; Motion to Amend at 5. Under
the new class definition, “the class members can be identified without regard to where their gas
was processed.” Motion to Amend at 6. More important, “[t]he class is limited to those owners
who are paid on the keep whole methodology. WPX records provide a database which can
identify the class members. WPX records show which owners’ interests apply to production on
the WFC system and are paid on the keep-whole methodology.” Motion to Amend at 6. The
Defendants do not specifically deny that they have such records. See Response to Motion 2 at
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11-12. Instead, the Defendants protest that the new class definition is still “tied to a demand for
payment on processed NGLs.” Response to Motion 2 at 12. The keep-whole methodology
identifies, however, “those class members whose gas is processed.” Reply 2 at 7. Because the
Defendants appear to have records showing who they pay on the keep-whole methodology,
there is “a readily discernible, clear, and precise statement of the parameters defining the class
or classes to be certified.” Wachtel v. Guardian Life Ins. Co., 453 F.3d at 187. Accordingly, the
Court concludes that the new class definition is ascertainable.
V.

THE NEW CLASS DEFINITION DOES NOT MEET THE COMMONALITY
REQUIREMENT.
Rule 23(a)(2) requires that “there are questions of law or fact common to the class.” Fed.

R. Civ. P. 23(a)(2) (emphasis added). The commonality requirement was widely perceived to
lack teeth before the Supreme Court’s decision in Wal-Mart, which grafted the following
requirements onto rule 23(a)(2): (i) that the common question is central to the validity of each
claim that the proposed class brings; and (ii) that the common question is capable of a common
answer. See Wal-Mart, 131 S. Ct. at 2550-52. In Wal-Mart, Justice Scalia stated: “Wal-Mart is
entitled to individualized determinations of each employee’s eligibility for backpay.” 131 S. Ct.
at 2546. From this observation, he then concluded:
Because the Rules Enabling Act forbids interpreting Rule 23 to “abridge, enlarge
or modify any substantive right,” 28 U.S.C. § 2072(b), a class cannot be certified
on the premise that Wal-Mart will not be entitled to litigate its statutory defenses
to individual claims. And because the necessity of that litigation will prevent
backpay from being “incidental” to the classwide injunction, respondents’ class
could not be certified even assuming, arguendo, that “incidental” monetary relief
can be awarded to a 23(b)(2) class.
Wal-Mart, 131 S. Ct. at 2561. Thus, the common question or questions cannot be “incidental”
nor can the plaintiff submit a long list of “incidental” questions or issues, and say that they
predominate over the real issues to be used.
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Here, the Plaintiffs have moved the Court to certify claims for royalty underpayment,
breach of contract, breach of the duty of good faith and fair dealing, breach of the implied
covenant to market, and civil conspiracy See Motion to Amend at 27; Second Motion for Class
Certification at 13. The Court will address each claim in light of the commonality requirement.
1.

Both the Royalty-Underpayment Claim and Breach-of-Contract Claim Lack
Commonality.

Previously, the Court held that the underpayment and breach-of-contract claims did not
meet the commonality requirement. See Abraham, 317 F.R.D. at 260-61. The Court ruled,
regarding the keep-whole method, that “this uniform policy, which calculates and pays the class’
royalties without regard to variations in lease language, is a common issue.” Abraham, 317
F.R.D. at 260. However, “to determine whether royalty agreements require payment on all
production in the method that the Plaintiffs seek, the Court must ask the question as to each of
the different lease forms. The question, therefore, is not common to all proposed class members.”
Abraham, 317 F.R.D. at 261. Under the new class definition, the leases still have varying
language.
Category A consists of leases that pay royalty on the basis of “market value at the
well” or “market price at the well,” and includes 120 leases . . . Category C
includes leases that pay on “proceeds, as such,” and includes 210 leases.
Category D contains a lone lease that pays on “gross proceeds,” with no reference
to the well or mouth of the well, and no indication that it should be paid on net
proceeds. Category E also includes a single lease that pays on “net proceeds at
the well.” . . . Category G includes those leases that pay on the “market value at
the well of the gas sold or used, provided that on gas sold, the market value shall
not exceed the amount received for such gas computed at the mouth of the well,”
and contains 78 leases. Category H includes those leases that pay on “market
value at the well if sold or used to manufacture products,” after “deducting postproduction costs,” and includes 23 leases. Finally, category I consists of leases
that pay based on “gross proceeds received for gas sold, used off the premises or
in the manufacture of products therefrom, but in no event more than the actual
amount received,” and includes 34 leases.
Abraham, 317 F.R.D. at 274-75. The Plaintiffs urge that all of these leases can be primarily
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grouped into only two categories, namely, “proceeds” leases and “market value” leases. See
Motion to Amend at 20.

The Court concludes that this is an oversimplification of lease

language. First, the Plaintiffs actually propose three categories of leases and not two. The
Plaintiffs assert that “[t]he new class definition includes only those owners paid under proceeds
(gross and net) leases and market value leases . . . [G]ross proceeds owners are all similarly
situated. Net Proceeds owners are all similarly situated. Market value owners are all similarly
situated.” Reply 2 at 9. In other words, the three categories that the Plaintiffs actually propose
are gross proceeds, net proceeds, and market value leases.
The larger problem is, however, at the beginning of the new class definition. The
Plaintiffs state that “[t]he class consists of all present and former owners of royalty and
overriding royalty from August 2006 to the present . . . .” Motion to Amend at 5 (emphasis
added). There is an important distinction between royalty and overriding royalty instruments. As
the Court found, unlike many oil and gas leases, “[o]verriding royalty interests generally are not
created through the use of form contracts.” Abraham, 317 F.R.D. at 196. Instead, “[o]verriding
royalty interests often are created in individualized circumstances and business transactions, and
the agreements contain unique royalty valuation terms . . . . [T]here is no standardization in the
overriding royalty interest terms, because overriding royalty instruments are not generic like
leases.” 317 F.R.D. at 195. In related litigation, the Court, however, noted that it has “a list of
some of the textual provisions found in the class overriding royalties . . . . [T]he list contains far
more textual permutations than the eleven that exist for royalty instruments, and that list is
illustrative, not exhaustive, of all of the overriding royalty provisions among the class.”
Anderson Living Trust v. WPX Energy Production, LLC, 306 F.R.D. 312, 343 (D.N.M.
2015)(Browning, J.).

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Importantly, the Plaintiffs bear the burden of showing that they meet the class
certification requirements. See Rex v. Owens ex rel. Okla., 585 F.2d at 435. Here, the Plaintiffs
have not explained why the overriding royalty instruments in the putative class are substantively
the same as the leases. Considering that their new class definition specifically includes both
royalty and overriding royalty owners, and that variances in lease language was a key reason that
the Court denied class certification in Abraham, the Plaintiffs have not met their burden of
showing commonality.
Because of the distinction between royalty and overriding royalty instruments, the Court
cannot soundly say that the Plaintiffs have shown, by a preponderance of the evidence, that
common questions whether WPX Energy is underpaying the Plaintiffs or whether WPX Energy
breached the leases are capable of common answers. See Wal-Mart, 131 S. Ct. at 2550-52.
2.

The Implied Covenant to Market and Breach of the Duty of Good Faith and Fair
Dealing Claims Lack Commonality.
As previously explained, “the duty to market does not define the lessor’s royalty interest;

the lease’s royalty provision does that.” Abraham, 317 F.R.D. at 265. “To determine which
class members were entitled to be paid on the NGLs, however, the Court must examine each
lease.” Abraham, 317 F.R.D. at 265. “Accordingly, although the implied duty to market applies
in every class lease, to demonstrate that WPX Production violated that duty by failing to pay
royalties on NGLs, the Plaintiffs must establish the right to NGL payment under the various
lease forms.” Abraham, 317 F.R.D. at 265. Because the Court concludes that large variations in
the leases and overriding royalty instruments still exist, despite the new class definition, the
Court cannot soundly depart from its holding in Abraham that the common question whether
WPX Energy breached the implied covenant to market is capable of a common answer. See
Wal-Mart, 131 S. Ct. at 2550-52.
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For similar reasons, the Court cannot hold that the common question whether WPX
Energy breached the duty of good faith and fair dealing is capable of a common answer. See El
Paso Natural Gas Co. v. American Petrofina Co. of Texas, 733 S.W.2d 541, 550 (Tex. App. -Houston [1st Dist] 1986 )(stating that the duty to market in good faith “is based on the
assumption that the operator is marketing something that belongs to the royalty owners”).
3.

The Civil Conspiracy Claim Lacks Commonality.
Similarly, the Court cannot soundly conclude that the Plaintiffs’ civil conspiracy claim is

capable of a common answer. The “Plaintiffs allege that WPX and WFC engage in a conspiracy
to breach the class royalty and overriding royalty agreements.”

Second Motion for Class

Certification at 11. The Plaintiffs argue that, “based on the fact that royalty owners under
proceeds leases and market value leases are entitled to royalty on the value of the NGLs, the
Court should reinstate the conspiracy claim.” Second Motion for Class Certification at 11-12.
This allegation rests, however, on the premise that all of the lease and overriding royalty
instruments at issue can be grouped into the simple categories of “proceeds” and “market value”
leases. As explained above, the Court holds that the Plaintiffs have not met their burden of
demonstrating, by a preponderance of the evidence, that all of the instruments at issue in this
case can be grouped into these two categories, especially in the case of the overriding royalty
owners. For this reason, the Court cannot soundly conclude that this claim is one capable of a
common answer. See Wal-Mart, 131 S. Ct. at 2550-52.
VI.

UNDER THE NEW CLASS DEFINITION, COMMON ISSUES WILL NOT
PREDOMINATE.
The Court concludes that, based on the new class definition, common issues will not

predominate over individual ones. “Predominance regularly presents the greatest obstacle to
class certification.” CGC Holding Co. v. Broad and Cassel, 773 F.3d at 1087. As the Tenth
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Circuit has instructed, to determine predominance, the Court must “characterize the issues in the
case as common or not, and then weigh which issues predominate.” CGC Holding Co., LLC v.
Broad & Cassel, 773 F.3d at 1087 (emphasis in original). “The nature of the evidence that will
suffice to resolve a question determines whether the question is common or individual.” Seabron
v. Am. Family Mut. Ins. Co., 2013 WL 3713652, at *7 (citing In re Visa Check/Master Money
Antitrust Litig., 280 F.3d at 136-40). “If, to make a prima facie showing on a given question, the
members of the proposed class will need to present evidence that varies from member to
member, then it is an individual question.” Blades v. Monsanto Co., 400 F.3d at 566. See
Messner v. Northshore Univ. Healthsystem, 669 F.3d at 815.
In Abraham, the Court applied the 10th Circuit test and made the following
determinations:
The common evidence in this case includes: (i) evidence about the Defendants’
payment methodology, which is likely to be minimal; (ii) industry-custom-andusage evidence shedding light on the meaning of all of the class leases, which is
quasi-common; (iii) course-of-performance evidence, which is essentially the
same as (i); (iv) evidence about gathering and processing contracts in the San
Juan Basin; and (v) evidence about the relative NGL and residue gas prices during
the class period.
The individualized evidence in this case includes: (i) industry-custom-and-usage
evidence regarding the meaning of specific royalty provisions -- e.g., “proceeds,”
“market value,” “gross proceeds,” “net proceeds” -- which all class members do
not share; (ii) the various leases’ differing language; (iii) parol evidence
concerning negotiations and oral agreements contemporaneous to the execution of
certain class leases;26 (iv) evidence about which wells’ gas was processed; (v)
evidence regarding the extent to which the commingled wells contain Fruitland
coal gas or gas belonging to interests other than WPX Production; and (vi) the
individual damages evidence -- which includes analyses of which wells’ gas tends
to travel to which plants, various plants’ efficiency levels and bypass rates over
time, and what costs are attributable to which individual wells. Weighing the
individualized evidence against the common evidence, the Court will spend the
26

The Court doubts that much of this evidence exists, however, and assigns a low weight
to it in the predominance calculus.

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majority of its time hearing individualized evidence and adjudicating individual
questions.
Abraham, 317 F.R.D. at 270-271. Under the new class definition, individual issues (iv), (v), and
(vi) are eliminated. See Motion to Amend at 10. All of these issues involved how the Plaintiffs’
gas was processed. The key to the new class definition, however, is royalty owners “whose
royalty and overriding royalty has been calculated on a ‘keep-whole’ method omitting payment
on the value of the processed natural gas liquids portion of the production.” Motion to Amend at
5. Unlike the old class definition, which would have required the Court to spend significant time
“determining which wells’ gas is or has been delivered to processing plants for extraction and
marketing of natural gas liquids from the gas at [various processing plants],” the new definition
is no longer tied to any specific processing plants. Abraham, 317 F.R.D. at 272. The old
definition specifically involved natural gas that “was delivered to the Ignacio Processing Plant
. . . the Kutz Plant . . . or the Lybrook Plant.” Abraham, 317 F.R.D. at 184. A key problem with
this definition was that:
The Plaintiffs did not identify by a preponderance of the evidence which leases’
gas is or has been processed at the named processing plants, and therefore, which
interests burdening leases and wells are part of the Plaintiffs’ proposed class. The
Plaintiffs assumed that, when a contract named a delivery point for the gas, the
gas would be processed at that plant. The Defendants demonstrated, however,
that a well’s contractual dedication to a particular plant does not determine
whether the well’s gas flows to that plant . . . Gas from a well may not flow to the
plant associated with the gathering system to which the well is connected.
Abraham, 317 F.R.D. at 255 (internal citations omitted). The new class definition, however,
does not rely upon how or where gas is processed. Instead, the key to the class is WPX Energy’s
keep-whole payment method. The Court, therefore, concludes that the new class definition
eliminates individual issues (iv), (v), and (vi).
Individual issue (iii) is “parol evidence concerning negotiations and oral agreements

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contemporaneous to the execution of certain class leases.” Abraham, 317 F.R.D. at 270-271.
The Court noted, however, that it “doubts that much of this evidence exists . . . and assigns a low
weight to it in the predominance calculus.” Abraham, 317 F.R.D. at 271 n.77. The Defendants
have not given the Court any reason to depart from assigning parol evidence “low weight.” In
fact, the Defendants point out that the “Plaintiffs introduced no evidence of the circumstances
surrounding the execution of any lease, and they cite none in their motion.” Response to Motion
1 at 18. Because the Court has not seen any parol evidence concerning the leases’ execution, it
continues to assign individual issue (ii) low weight.
That leaves individual issues (i) and (ii). Individual issue (ii), “the various leases’
differing language,” is the most important. Abraham, 317 F.R.D. at 270-271. In Abraham, the
Court held that, under the original class definition, “given the lease language obligations and the
variations in state law, this class action could involve up to thirteen different legal standards for
the jury to apply, which would be manageable if the Court did not have to confront the
considerable number of other individualized issues already discussed.” Abraham, 317 F.R.D. at
275 (emphasis added). In other words, the Court was concerned that common issues would not
predominate. Under the new class definition, however, the Plaintiffs have conceded that what
the Court termed Category B and Category F leases would no longer be part of the class. Motion
to Amend at 20-21. Previously, the Court found, in the chart below, that up to 13 legal standards
may exist among the several categories of leases due to variations in Colorado and New Mexico
oil and gas law. See Abraham, 317 F.R.D. at 275.
New Mexico Leases

Colorado Leases

A

C

E

F

G

A

B

C

D

F

G

H

I

1

2

3

4

5

6

7

8

9

10

11

12

13

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Based on the Plaintiffs’ concessions regarding their new class definition, the Court
modifies the chart as follows:
Colorado Leases

New Mexico Leases
A

C

E

G

A

C

D

G

H

I

1

2

3

4

5

6

7

8

9

10

Because the Court held in Abraham that 13 legal standards would be manageable if it
were not for other individualized issues, and because the Court is satisfied that individual issues
(iv), (v), and (vi) are eliminated and individual (iii) is assigned “low weight,” the Court now
holds that up to 10 legal standards would be manageable. See Abraham, 317 F.R.D. at 275.
Finally, regarding individual issue (i), “industry-custom-and-usage evidence regarding
the meaning of specific royalty provisions,” the Court previously held that:
the evidence is common for all leases with the same language. Many of the leases
contain similar wording. The Court can therefore use common industry custom
evidence to prove what the lease language means. Nevertheless, the leases do not
all share the same language. Rather, they can be grouped into a number of
categories, each containing differing language. Because the language’s meaning
could materially differ between categories, the variations require individual
consideration, which cut against a predominance finding.
Abraham, 317 F.R.D. at 271. The Court notes that, by the Plaintiffs’ own admission, the new
class definition removes Category F leases in both New Mexico and Colorado, as well as
Category B leases, all of which are in Colorado. See Motion to Amend at 20-21. Because the
new class definition contains fewer categories, the issue of the lease language will be less
individualized.
Having characterized the issues, the Court must now weigh them to determine which

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issues will predominate. See CGC Holding Co., LLC v. Broad & Cassel, 773 F.3d at 1087.
First:
The common evidence in this case includes: (i) evidence about the Defendants’
payment methodology, which is likely to be minimal; (ii) industry-custom-andusage evidence shedding light on the meaning of all of the class leases, which is
quasi-common; (iii) course-of-performance evidence, which is essentially the
same as (i); (iv) evidence about gathering and processing contracts in the San
Juan Basin; and (v) evidence about the relative NGL and residue gas prices during
the class period.
Abraham, 317 F.R.D. at 270-271. Now, the individual evidence in this case includes, (i) less
industry and custom usage evidence regarding the meaning of specific royalty provisions than
under the old class definition, (ii) up to 10, as opposed to up to 13, possible legal standards
regarding variance in lease language, and (iii) low weight given to parol evidence regarding lease
negotiation and execution.

The evidence regarding lease language variation would likely

consume the most time at a trial.
Just as the variations in lease language prevent the Court from soundly concluding that
the new class definition satisfies the commonality requirement, those variations prevent the
Court from soundly concluding that common issues predominate over individual issues. The
Court will, consequently, deny class certification.
IT IS ORDERED that (i) the Plaintiffs’ Motion to Alter or Amend and to Reconsider
Memorandum Opinion and Order [Doc. 252], filed September 15, 2016 (Doc. 255), is denied;
and (ii) Plaintiffs’ Second Motion for Class Certification, filed September 15, 2016 (Doc. 256),
is denied.

________________________________
UNITED STATES DISTRICT JUDGE

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Counsel:
Jake Eugene Gallegos
Michael J. Condon
Gallegos Law Firm, P.C.
Santa Fe, New Mexico
Attorneys for the Plaintiffs
Sarah Gillett
Dustin L. Perry
Hall Estill Hardwick, P.C.
Tulsa, Oklahoma
--and-Christopher A. Chisman
Holland & Hart LLP
Denver, Colorado
--and-Mark F. Sheridan
Bradford C. Berge
Robert J. Sutphin
John C. Anderson
Elisa C. Dimas
Holland & Hart LLP
Santa Fe, New Mexico
Attorneys for the Defendants

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