Sagacity, Inc. et al v. Magnum Hunter Production, Inc. et al

Filing 117

ORDER by Magistrate Judge Gerald L. Jackson GRANTING Plaintiff's 45 Motion for Class Certification and Opening Brief in Support thereof. Defendants' 62 Motion to Strike Class Allegations is DENIED AS MOOT. Defen dants' 61 Motion to Strike Inadmissible Class Certification Evidence and Brief in Support and 91 Defendants' Motion to Strike Plaintiff's Newly Disclosed Experts M. Phyllis Bourque and William G. Foster and Brief in Support are hereby DENIED. (pmb, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA
SAGACITY, INC., on behalf of itself and )
all others similarly situated,
)
)
Plaintiff,
)
)
v.
)
)
MAGNUM HUNTER PRODUCTION, )
INC.; PRIZE ENERGY RESOURCES, )
LP; CIMAREX ENERGY COMPANY )
OF COLORADO,
)
)
Defendants.
)

Case No. CIV-17-101-GLJ

ORDER GRANTING MOTION TO CERTIFY CLASS
This matter comes before the Court on motion by Plaintiff Sagacity, Inc. for class
certification. As part of their response to this motion, Defendants have moved to strike
certain evidence and allegations, as well as a newly disclosed expert. For the reasons set
forth below, the Court finds that Plaintiff’s Motion for Class Certification and Opening
Brief in Support Thereof [Docket No. 45] is hereby GRANTED. Additionally, Defendants’
Motion to Strike Class Allegations [Docket No. 62] is DENIED AS MOOT, while
Defendants’ Motion to Strike Inadmissible Class Certification Evidence and Brief in
Support [Docket No. 61], and Defendants’ Motion to Strike Plaintiff’s Newly Disclosed
Experts M. Phyllis Bourque and William G. Foster and Brief in Support [Docket No. 91]
are hereby DENIED.

BACKGROUND/PROCEDURAL HISTORY
Plaintiff Sagacity, Inc. (“Sagacity” or “Plaintiff”) filed a class action petition in
Oklahoma State Court in Marshall County, Case No. 17-CJ-18, on February 23, 2017, and
Defendants removed it to this Court on March 21, 2017 [Docket Nos. 1-2]. Sagacity is an
Oklahoma Corporation that owns oil and/or gas wells in Marshall County, Oklahoma,
which is within the Eastern District of Oklahoma. Defendants Cimarex Energy Company
of Colorado, Inc. (“Cimarex”) and Magnum Hunter Production, Inc. (“Magnum Hunter”)
are Texas corporations with their principal place of business in Colorado. Defendant Prize
Energy Resources, L.P. (“Prize”) is organized under Delaware law, with its principal place
of business likewise in Colorado. Cimarex operates 32 wells and units in which Sagacity
holds a royalty interest, and while Cimarex holds no Oklahoma leases, it operates all of the
Oklahoma leases held by Prize and Magnum Hunter. See Docket No. 24, pp. 2-3, ¶¶ 4-6.
Individually and pursuant to Fed. R. Civ. P. 23(a), Sagacity originally asserted it
was acting as a representative of a class defined as:
All royalty owners in Oklahoma wells operated or leased by Prize Energy
Resources, L.P., Cimarex Energy Co. of Colorado, Inc., and/or Magnum
Hunter Production, Inc. that have produced gas or gas constituents (such as
residue gas or natural gas liquids) from January 1, 2013 to present.
Excluded from the Class are: (1) the Mineral Management Service (Indian
tribes and the United States); (2) Defendants, their affiliates, and employees,
officers and directors; (3) Any NYSE or NASDAQ listed company (and its
subsidiaries) engaged in oil and gas exploration, gathering, processing, or
marketing; (4) all royalty owners to the extent they have sued any of the
Defendants for underpayment of royalties from January 1, 2013 to the
present before this suit was filed; and (5) all royalty owners that expressly
authorized in their leases the deduction of process costs from royalties.
Docket No. 24, p. 4, ¶ 9.
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On August 19, 2019, Sagacity filed Plaintiff’s Motion for Class Certification and
Opening Brief in Support Thereof [Docket No. 45], which sets out one cause of action for
breach of the implied duty to market in the lease or Oklahoma Corporation Commission
(“OCC”) Force Pool Order issued after May 8, 2012 [Docket No. 24, p. 14, ¶¶ 34-39].
Following objections in Defendants’ Response to the Motion, Plaintiff submitted a revised
Class Definition in its reply:
All last successors in interest to royalty owners in Oklahoma wells operated
by Cimarex Energy Co. of Colorado, Inc. and leased by Magnum Hunter
Production, Inc. and/or Prize Energy Resources, L.P. that have produced gas
or gas constituents (such as residue gas or natural gas liquids) from January
1, 2013 to present.
Excluded from the Class are: (1) agencies, departments, or instrumentalities
of the United States of America; (2) Defendants, their affiliates, and
employees, officers and directors; (3) Any NYSE or NASDAQ listed
company (and its subsidiaries) engaged in oil and gas exploration, gathering,
processing, or marketing; (4) all royalty owners to the extent they have sued
any of the Defendants for underpayment of royalties from January 1, 2013 to
the present before this suit was filed; (5) all royalty owners that expressly
authorized in their leases the deduction of process costs from royalties; and
(6) all royalty owners to whom Defendants remitted pass-through payments
on behalf of non-operating working interest owners.
Docket No. 85, pp. 10-11. 1 After the Motion for Class Certification was fully briefed, U. S.
Magistrate Judge Kimberly E. West held a Class Certification hearing in this case on
September 29, 2020 [Docket Nos. 99, 101]. On July 14, 2023, this case was reassigned to
the undersigned U.S. Magistrate Judge [Docket No. 115].

1

The revised Class Definition was submitted in response to Defendant’s objections to the original
Class which has been adjusted to, inter alia, exclude the 53 non-operated wells in which
Defendants Magnum Hunter and/or Prize own a very small working interest and exclude all royalty
owners to whom Defendants remitted pass-through payments. See Docket No. 85, pp. 10-11.
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Also pending before the Court are Defendants’ Motion to Strike Inadmissible Class
Certification Evidence and Brief in Support [Docket No. 61], Defendants’ Motion to Strike
Class Allegations and Brief in Support Thereof [Docket No. 62], and Defendants’ Motion
to Strike Plaintiff’s Newly Disclosed Experts M. Phyllis Bourque and William G. Foster
and Brief in Support [Docket No. 91]. At the hearing, U.S. Magistrate Judge West found
that Defendants’ Motion to Strike Class Allegations [Docket No. 62] should be denied as
moot, noting that it was subsumed under the class certification hearing itself. See Docket
No. 101, pp. 115-116.

Having no reason to disturb the ruling made at the Class

Certification Hearing, the Court agrees and notes that Defendants’ Motion to Strike Class
Allegations and Brief in Support Thereof [Docket No. 62] is DENIED AS MOOT, as
determined previously by the Court. The Court addresses the remaining motions in turn.
Motion to Strike Barbara Frankland Declaration. First, Defendants’ Motion to
Strike Inadmissible Class Certification Evidence and Brief in Support [Docket No. 61] is
DENIED. Plaintiff’s Exhibit 2, attached to the Motion for Class Certification, contained a
declaration from attorney Barbara Frankland, along with a number of exhibits, including:
(i) Sagacity’s leases, (ii) a lease schedule, (iii) a lease summary, (iv) a manual lease
schedule, and (v) a manual lease summary. See Docket No. 45, Ex. 2. Defendants seek to
strike it.
Plaintiff is correct that “[t]he Court generally disfavors motions to strike, and it
especially disfavors them in this instance.” Wallace B. Roderick Revocable Living Tr. v.
XTO Energy, Inc., 2016 WL 2344561, at *1 (D. Kan. May 4, 2016). “The district court’s
class certification order, while important, is also preliminary: ‘An order that grants or
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denies class certification may be altered or amended before final judgment.’” Sali v.
Corona Reg’l Med. Ctr., 909 F.3d 996, 1004 (9th Cir. 2018) (quoting Fed. R. Civ. P.
23(c)(1)(C)). Furthermore, “[a] class certification hearing is not a hearing to decide the
admissibility of evidence, but whether the case should proceed as a class under [R]ule 23;
in that sense, it is more like a hearing under [R]ule 12(b)(6) or [R]ule 56 than one to
determine admissibility under the rules of evidence.” Zuniga v. Bernalillo Cnty., 319
F.R.D. 640, 659 n.5 (D.N.M. 2016). Although the Tenth Circuit has provided no direct
guidance, it appears that in class certification proceedings, “evidentiary rules need not be
strictly applied at the class certification stage.” Ammons v. La-Z-Boy, Inc., 2008 WL
5142186, at *12 (D. Utah Dec. 5, 2008) (collecting cases).
It is noted that “‘[a]t the summary judgment stage, evidence need not be submitted
in a form that would be admissible at trial,’ but ‘the content or substance of the evidence
must be admissible.’” Tesone v. Empire Mktg. Strategies, 942 F.3d 979, 999-1000 (10th
Cir. 2019) (quoting Argo v. Blue Cross & Blue Shield of Kan., Inc., 452 F.3d 1193, 1199
(10th Cir. 2006) (citations omitted); Brown v. Perez, 835 F.3d 1223, 1232 (10th Cir. 2016);
Fed. R. Civ. P. 56(c)(2) (“A party may object that the material cited to support or dispute
a fact cannot be presented in a form that would be admissible in evidence.”)). However,
the relationship between summary judgment and conditional certification are different in
that motions for class certification often occur, as in this case, much earlier in a case and
prior to completion of discovery. As such, “[r]equiring a plaintiff to present evidence in
favor of conditional certification that meets the standards in Rule 56 fails to take into
account that the plaintiff has not yet been afforded an opportunity, through discovery, to
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test fully the factual basis for his case. Second, motions for conditional certification, unlike
motions for summary judgment, do not seek the final disposition of a case on the merits.”
White v. MPW Indus. Servs., Inc., 236 F.R.D. 363, 368 (E.D. Tenn. 2006). See also Beltran
v. InterExchange, Inc., 2018 WL 1509258, at *4 (D. Colo. Mar. 27, 2018) (“Certification
decisions are generally made before the close of merits discovery, as is true in the instant
case, so there is bound to be some evidentiary uncertainty.”) (quotation omitted).
Importantly, “[t]he requirement is that the party submitting the evidence show that it will
be possible to put the information, the substance or content of the evidence, into an
admissible form.” Tesone, 942 F.3d at 999 n.15 (quotation omitted) (citing Fed. R. Civ. P.
56(c)(2) adv. comm. cmt. (“The burden is on the proponent to show that the material is
admissible as presented or to explain the admissible form that is anticipated.”)).
Defendants contend Ms. Frankland’s Exhibit 2, containing a declaration and the
attendant exhibits, should be stricken because (i) she cannot serve as both advocate and
witness, (ii) she cannot serve as an expert witness, (iii) her declaration impermissibly states
legal opinions and arguments, and (iii) portions of her declaration are not based on her
personal knowledge. Plaintiff contends that a motion to strike is inappropriate at this stage
of the case, and further notes that the preparation of the lease summary and manual lease
summary were done in an effort to comply with the Tenth Circuit’s instructions in Naylor
Farms, Inc. v. Chaparral Energy, LLC, that a chart is “precisely what a plaintiff should do
to establish commonality under these circumstances.” 923 F.3d 779, 795 (10th Cir. 2019)
(Naylor Farms II) (citing Wallace B. Roderick Revocable Living Tr. v. XTO Energy, Inc.,
725 F.3d 1213, 1219 (10th Cir. 2013); see also Rhea v. Apache Corp., 2021 WL 5507037,
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at *3 (E.D. Okla. July 30, 2021) (“The Federal Rules of Evidence specifically contemplate
the use of summaries and charts to prove the content of voluminous writings such as are
involved here. As a result, there is nothing necessarily improper or deficient by reason of
plaintiff’s reliance on summary charts[.]”) (citing Fed. R. Civ. P. 56(c)(4); Fed. R. Evid.
1006), reconsideration denied, 2021 WL 5507039 (E.D. Okla. Nov. 16, 2021).
Importantly, Defendants do not seriously challenge the substance of the lease
summaries. The Court has the expertise to distinguish between legal conclusions and
relevant factual information, and will not treat legal conclusions as established facts.
Additionally, the documents provided by Ms. Frankland will aid the Court in efficiently
assessing the relevant information at the class certification stage.

See Allbaugh v.

California Field Ironworkers Pension Tr., 2014 WL 2112934, at *7 (D. Nev. May 20,
2014) (“The Court has sufficient experience ignoring the legal conclusions of counsel and
not treating those conclusions as established facts.

Ms. Kroll does have personal

knowledge of the content of the documents produced by Defendants, and her representation
that notices have not been produced in discovery is more efficient than filing and asking
the Court to cull through 7,700 pages of discovery documents to demonstrate that same
point.

Plus, evidence considered for purposes of certification does not need to be

admissible.”); In re Fibrogen Sec. Litig., 2023 WL 5600077, at *2 (N.D. Cal. Aug. 29,
2023) (“[T]he Court will disregard the argument and read the declaration for its factual
content and authentication of the factual record.”) (citing, inter alia, Allbaugh, 2014 WL
2112934, at *7 (finding that even if declaration included legal conclusions, “the proper
remedy is not to disregard [the attorney’s] declaration wholesale,” as “[t]he [c]ourt has
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sufficient experience ignoring the legal conclusions of counsel and not treating those
conclusions as established facts.”).

Accordingly, Defendant’s Motion to Strike

Inadmissible Class Certification Evidence and Brief in Support [Docket No. 61], which
pertains to Ms. Barbara Frankland’s declaration, is denied. See, e.g., Larragoite v. Heitman
Properties of New Mexico, LLC, 2000 WL 36739574, at *4 (D.N.M. Sept. 15, 2000) (“In
considering the motion for class certification, the Court took note of the nature of Plaintiff’s
supporting exhibits and the information contained within the exhibits and weighed them
accordingly. Given that this case is in the early stage of litigation and the exhibits were
submitted in support of a motion for class certification, the Court finds that Defendants’
motions are not well taken at this time and will be denied.”).
Motion to Strike Experts. Second, Defendants’ Motion to Strike Plaintiff’s Newly
Disclosed Experts M. Phyllis Bourque and William G. Foster and Brief in Support [Docket
No. 91] is DENIED. Again, the Court notes that motions to strike are generally disfavored.
Roderick, 2016 WL 2344561, at *1 (“The Court generally disfavors motions to strike, and
it especially disfavors them in this instance.”). “The purpose of Rule 26(a)(2)’s expert
disclosure requirements is to eliminate surprise and provide the opposing party with
enough information regarding the expert’s opinions and methodology to prepare efficiently
for deposition, any pretrial motions and trial.” Cook v. Rockwell Int’l Corp., 580 F. Supp.
2d 1071, 1122 (D. Colo. 2006). “Rule 26(a)(2) also authorizes admission of rebuttal expert
testimony.” Duncan Grp., LLC v. Cimarex Energy Co., 2023 WL 3269699, at *4 (W.D.
Okla. Apr. 18, 2023) (citing Fed. R. Civ. P. 26(a)(2)(D)(ii)). “A party’s expert disclosures
must be made ‘at the times and in the sequence that the court orders.’” Id.at *3 (quoting
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Fed. R. Civ. P. 26(a)(2)(D)). This Court’s Sixth Amended Scheduling Order [Docket No.
70] required submission of the Class Certification Reply, to be filed with any rebuttal
evidence including rebuttal expert disclosure, by July 22, 2020. This deadline was met.
See Docket No. 85. 2 Plaintiff identified two additional experts as “rebuttal experts” M.
Phyllis Bourque, a petroleum engineer, and William G. Foster, an economist.

Id.

Defendants challenge Plaintiff’s identification of these two experts in the Reply [Docket
No. 85], contending that doing so is disfavored and “fundamentally unfair.” But Plaintiff’s
designation of these experts was done “at the time[] and in the sequence that the court
order[ed],” and such a timeliness challenge is unpersuasive.
“The Federal Rules specifically limit rebuttal expert testimony to evidence that is
‘intended solely to contradict or rebut evidence on the same subject matter identified by
another party’ in its expert disclosures. In re EpiPen (Epinephrine Injection, USP) Mktg.,
Sales Pracs. & Antitrust Litig., 2020 WL 1164869, at *14 (D. Kan. Mar. 10, 2020) (quoting
Fed. R. Civ. P. 26(a)(2)(D)(ii)). Furthermore, “[r]ebuttal expert reports are not the proper
place for presenting new arguments,” and they “cannot put forth their own theories; they
must restrict their testimony to attacking the theories offered by the adversary’s experts.”
Spring Creek Expl. & Prod. Co., LLC v. Hess Bakken Inv. II, LLC, 2016 WL 1597529, at
*3 (D. Colo. Apr. 21, 2016) (“Rebuttal expert reports necessitate a showing of facts
supporting the opposite conclusion of those at which the opposing party’s experts arrived

2

Plaintiff timely filed the Reply on July 22, 2020, which contained references to the rebuttal
experts. That same day, Plaintiff filed a motion for leave to file certain exhibits under seal, which,
due to the timing of the motion, was not granted until July 23, 2020. Docket Nos. 84, 86. Plaintiff
filed the sealed exhibits July 23, 2020. Docket Nos. 87-90.
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in their response reports.”) (quotations omitted). Put another way, “[a] court properly may
admit rebuttal evidence on a topic when a party opens the door to [that] topic. But generally,
courts will exclude use of a rebuttal expert to introduce evidence more properly a part of a
party's case-in-chief, especially if the alleged rebuttal expert is used to introduce new legal
theories. In re EpiPen, 2020 WL 1164869, at *14 (quotations omitted).
Defendants further challenge the admission of these experts’ opinions, 3 asserting
that: (1) their disclosure was improper and prejudicial because they did not get a chance
to respond, and (2) their reports are not proper rebuttal evidence because their opinions go
to the central issue as to when natural gas becomes a marketable product and whether such
issue is susceptible of common evidence. Defendants assert that their opinions should have
been disclosed as part of the case-in-chief. Furthermore, Defendants contend Bourque’s
opinion is intended to bolster and strengthen Plaintiff’s previously-designated expert
opinion from Daniel T. Reineke, and that Foster’s opinions contain new theories and
arguments related to marketability. Defendants contend Ms. Bourque opines on four
different non-rebuttal topics, and Mr. Reineke’s own rebuttal report should be considered
sufficient. Additionally, Defendants argue that Foster’s report “purports” to respond to
Defendants’ experts, but contains new theories and arguments that they believe should have
been part of the case-in-chief. For these reasons, Defendants request that both reports be
stricken. Plaintiff responds that the opinions are permissive rebuttals, which are both
thorough and incorporate ongoing discovery, and theorizes that this motion (and the other

3

Defendants are not challenging the experts’ qualification under Daubert v. Merrrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993).
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two motions to strike) are attempts at circumventing page limitations and briefing protocols
through the disfavored use of a motion to strike. Plaintiff contends they relied on Ms.
Bourque’s opinion to address issues regarding how the class gas was prepared for market,
but also to address arguments raised by Defendants that they had not had a chance to
address. Furthermore, Plaintiff contends they are not required to predict and anticipatorily
rebut every argument raised by Defendant.
The Court finds Defendants’ Motion to Strike these two rebuttal reports should be
denied. The two reports recite that their opinions are offered in rebuttal to the three experts
proffered by Defendants in their response to Plaintiff’s class certification motion. Both
reports cite Defendant’s expert opinions and give reasons for disagreeing with their
conclusions. Given that these experts were provided at the class certification stage and the
disfavored position of motions to strike, the Court finds they are useful to the thorough
resolution of the issues raised and demonstrate a more developed view of the scope of the
evidence to be presented at trial.
I.

STANDARD FOR CLASS CERTIFICATION

“‘The class action is an exception to the usual rule that litigation is conducted by
and on behalf of the individual named parties only.’” Roderick, 725 F.3d 1213, 1217 (10th
Cir. 2013) (quoting Wal–Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348 (2011) (internal
quotation omitted)). Fed. R. Civ. P. 23(a) sets out four prerequisites for a class action:
(1) the class is so numerous that joinder of all members is impracticable
[numerosity];
(2) there are questions of law or fact common to the class [commonality];
(3) the claims or defenses of the representative parties are typical of the
claims or defenses of the class [typicality]; and
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(4) the representative parties will fairly and adequately protect the interests
of the class [adequacy].
See also Kunneman Properties, LLC v. Marathon Oil Co., 2022 WL 1766925, at *9 (N.D.
Okla. Mar. 31, 2022) (citing CGC Holding Co. LLC v. Broad and Cassel, 773 F.3d 1076,
1086 (10th Cir. 2014)) (emphasis added). Additionally, “‘[t]he party must also satisfy
through evidentiary proof at least one of the provisions of Rule 23(b).’” Roderick, 725 F.3d
at 1217 (quoting Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013)). Here, Sagacity seeks
certification under Rule 23(b)(3), which additionally requires the Court “to find that:
(1) ‘questions of law or fact common to class members predominate over any questions
affecting only individual members,’ (predominance); and (2) ‘a class action is superior to
other available methods for fairly and efficiently adjudicating the controversy’
(superiority).” Id., 725 F.3d at 1217 (citing Fed. R. Civ. P. 23(b) (emphasis added)).
“[M]atters pertinent to these [23(b)(3)] findings include:
(A) the 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 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)(3).
A class action “may only be certified if the trial court is satisfied, after a rigorous
analysis, that the prerequisites of Rule 23(a) have been satisfied.” General Tel. Co. of Sw.
v. Falcon, 457 U.S. 147, 161 (1982). The Tenth Circuit states that this is “more than a
pleading standard,” Roderick, 725 F.3d at 1219 (citation omitted), and has characterized
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this as a “strict burden of proof,” Tabor v. Hilti, 703 F.3d 1206, 1228 (10th Cir. 2013), that
“demands a rigorous analysis.” Roderick, 725 F.3d at 1219 (quotation omitted). However,
“[a]lthough 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.”
Amgen Inc. v. Connecticut Ret. Plans & Tr. Funds, 568 U.S. 455, 465-466 (2013) (quoting
Wal–Mart, 564 U.S. at 351 (internal quotation marks omitted)); see also Harper v. C.R.
England, Inc., 746 Fed. Appx. 712, 721-22 (10th Cir. 2018) (“Brevity may be the soul of
wit, but it isn't the soul of rigorous analysis. Such a short discussion of class certification .
. . leaves us without a sufficient record to review.”). Consideration of the merits is therefore
permitted “only to the extent []that they are relevant to determining whether the Rule 23
prerequisites for class certification are satisfied.” Amgen, 568 U.S. at 466; see also DG ex
rel. Stricklin v. Devaughn, 594 F.3d 1188, 1194 (10th Cir. 2010) (“While the court should
not pass judgment on the merits of the case at the class certification stage, it must conduct
its own rigorous analysis, to ensure Rule 23’s requirements are met.”) (quotation omitted).
The Court thus proceeds to address with rigor the four factors in Rule 23(a), along with the
two additional factors in Rule 23(b)(2), delving into the merits only as necessary when the
merits are intertwined with the class-certification analysis.
“Plaintiff, of course, bears the burden of fulfilling all these requirements. When
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.” Hill v. Aspen Contracting, Inc., 2021 WL 2662296, at *2 (D.N.M. Feb. 22,
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2021) (citing Payne v. Tri-State CareFlight, LLC, 328 F.R.D. 601, 620 (D.N.M. 2018)).
“Therefore, 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 stages of this case. This approach is analogous to preliminary
injunction practice, and many circuits have endorsed it. In taking evidence on the question
of class certification, the Federal Rules of Evidence apply, albeit in a relaxed fashion.” Id.
at *2 (citations omitted).
II.

ANALYSIS

Under Oklahoma law, lessees like [Defendants] are subject to an implied
duty of marketability (IDM). The IDM imposes upon lessees “a duty to
provide a marketable product available to market.” Consistent with this duty,
lessees are generally precluded from passing along to royalty owners any
costs the lessees incur in making a product marketable. And because “raw or
unprocessed gas” must typically “undergo[ ] certain field processes”—such
as gathering, compressing, dehydrating, transporting, and producing
(GCDTP services)—to make the gas marketable, lessees generally bear the
costs associated with performing such services.
Naylor Farms II, 923 F.3d at 783 (quoting Mittelstaedt v. Santa Fe Minerals, Inc., 1998
OK 7, ¶¶ 12, 20-21, 954 P.2d 1203, 1205-1206, 1208). Since the 1998 Mittelstaedt
decision from the Oklahoma Supreme Court, “Oklahoma law [has been] clear that a lessee
has an implied duty to obtain a ‘marketable product,’ including the cost of preparing the
gas for market and getting the gas to the place of sale in marketable form.” Pummill v.
Hancock Expl. LLC, 2018 OK CIV APP 48, ¶ 26, 419 P.3d 1268, 1275 (citing Wood v.
TXO Prod. Corp., 1992 OK 100, ¶¶ 9-12, 854 P.2d 880, 882-883)); see also Strack v. Cont’l
Res., Inc., 2017 OK CIV APP 53, ¶ 30, 405 P.3d 131, 140 (“[U]nder Oklahoma law, lessees
have an implied duty of marketability, i.e., the lessee must bear the full cost of any services
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required to put gas in a marketable condition, except where a lease expressly allows
deductions for the costs.”) (citing Chieftain Royalty Co. v. XTO Energy, Inc., 528 Fed.
Appx. 938, 940 (10th Cir. 2013) (citing Wood, 1992 OK 100, ¶¶ 9-12, 854 P.2d at 882883)). In other words, “the lessee may not deduct from royalty payments the costs of
gathering, transportation, compression, dehydration, or blending if those costs are required
to create a marketable product, unless the lease provides otherwise.”

Id. (citing

Mittelstaedt, 1998 OK 7 at ¶¶ 20-22, 954 P.2d at 1208; Wood, 1992 OK 100 at ¶¶ 9-11,
854 P.2d at 882-883; TXO Prod. Corp. v. State ex rel. Comm'nrs of the Land Office
(“CLO”), 1994 OK 131, ¶¶ 11-17, 903 P.2d at 261-263); see also Chieftain, 528 Fed. Appx.
at 940 (“Under Oklahoma law, lessees have an implied duty of marketability (IDM).
Absent lease language negating the IDM or permitting certain deductions, the lessee must
bear the full cost of services undertaken to place gas in marketable condition, such as
gathering, compression, dehydration, treatment, and processing (‘GCDTP’ services).”)
(citing Wood, 1992 OK 100, ¶ 11, 854 P.2d at 882-883; Mittelstaedt, 1998 OK 7, ¶ 22, 954
P.2d at 1208). When examining Mittelstaedt, therefore, “two things are clear. First, when
unmarketable gas undergoes GCDTP services for purposes of transforming the
unmarketable gas into a marketable product, a lessee breaches the IDM by passing on to
royalty owners the cost of performing those GCDTP services. Second, when marketable
gas undergoes GCDTP services to enhance the value of gas that is already marketable, a
lessee may, under certain circumstance, allocate the cost of those services to royalty owners
without breaching the IDM.” Naylor Farms II, 923 F.3d at 791 (citing Mittelstaedt, 1998
OK 7, ¶¶ 2, 29-30, 954 P.2d at 1205, 1210).
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Sagacity contends that Defendants deduct royalties for Processing (but not
gathering, compression, dehydration, or treatment, or the fuel used for those activities) for
purposes of obtaining marketability, including fractionation (“T&F”) for natural gas
liquids (NGLs) and the percentages of products retained by third party processors. Id., pp.
3-4, ¶ 7. Sagacity asserts that deducting these royalties constitutes a breach of an IDM
arising under Oklahoma law. Certification here depends, in the broadest terms, on the
marketability of the gas at issue in this case and when such gas was sold into the market.
The proposed amended class includes 524 wells, potentially involving royalty
payments to over 3,000 royalty owners for their royalty interests in the Class Wells. The
class allegations indicate that the common questions of fact or law include one or more of
the following:
(a) Whether Plaintiff and the Class members are the beneficiaries of an implied
duty to market obligating Defendants to place the gas (and its constituents)
from Class Wells into Marketable Condition;
(b) Determining the point at which gas (and its constituents) that Defendants
produce becomes commercially marketable;
(i) Whether Marketable Condition for residue gas occurs at transmission
pipeline quality as Plaintiff contends or earlier; and,
(ii) Whether Marketable Condition for NGLs occurs at fractionation
quality as Plaintiff contends or earlier; and
(c) Whether Defendants deducted or allowed hired third parties to deduct (in
cash or in kind) amounts for placing the gas (and its constituents) into
Marketable Condition before paying royalty to Plaintiff and the Class
Members.
Docket No. 24, p. 5, ¶ 12. Sagacity therefore contends that Rule 23 class certification on
its single breach of lease claim as to the implied duty to market should be granted.
Defendants argue Plaintiff fails to satisfy Rule 23(a)’s requirements of commonality,
typicality, and adequacy, as well as Rule 23(b)’s requirements for predominance and
-16-

superiority. The Court considers each of the four Rule 23(a) requirements, as well as the
two Rule 23(b)(3) requirements, to determine if certification is appropriate given the
current legal landscape.

Although Defendants state in their briefing that they are

challenging all but the “numerosity” factor, the arguments largely center on or are
subsumed under the commonality/predominance factors, so the Court’s focus is largely on
those two factors, with particular attention paid to predominance. See, e.g., Amchem Prod.,
Inc. v. Windsor, 521 U.S. 591, 609 (1997) (“Rule 23(a)(2)’s ‘commonality’ requirement is
[generally] subsumed under, or superseded by, the more stringent Rule 23(b)(3)
requirement that questions common to the class ‘predominate over’ other questions.”).
A. Rule 23(a)(1) - Numerosity
“[T]here is no set formula to determine if the class is so numerous that it should be
so certified.” Trevizo v. Adams, 455 F.3d 1155, 1162 (10th Cir. 2006) (quotation omitted).
Defendants do not challenge the numerosity requirement, but the Court nevertheless finds
the numerosity prerequisite is met here, where there are over 2,000 leases at issue and
potentially over 3,000 putative class members. Mullen v. Treasure Chest Casino, LLC,
186 F.3d 620, 624 (5th Cir. 1999) (“Although the number of members in a proposed class
is not determinative of whether joinder is impracticable, the size of the class in this case—
100 to 150 members—is within the range that generally satisfies the numerosity
requirement.”) (citing, inter alia, 1 Newberg on Class Actions § 3.05, at 3-25 (3d ed.1992)
(suggesting that any class consisting of more than forty members “should raise a
presumption that joinder is impracticable”)). Cf. Shook v. El Paso Cnty., 386 F.3d 963,

-17-

972 (10th Cir. 2004) (“The district court erred by not specifically addressing the traditional
Rule 23 factors in denying class certification.”).
B. Rule 23(a)(3) - Typicality
To certify a class action, “the claims or defenses of the representative parties [must
be] typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). Typicality,
commonality, and adequacy all “tend to merge” in serving “as guideposts for determining
whether under the particular circumstances maintenance of a class action is economical
and whether the named plaintiff’s claim and the class claims are so interrelated that the
interests of the class members will be fairly and adequately protected in their absence.”
Wal-Mart, 564 U.S. at 349 n.5. “‘[D]iffering fact situations of class members do not defeat
typicality under Rule 23(a)(3) so long as the claims of the class representative and class
members are based on the same legal or remedial theory.’” Colorado Cross Disability
Coal. v. Abercrombie & Fitch Co., 765 F.3d 1205, 1216 (10th Cir. 2014) (quoting Adamson
v. Bowen, 855 F.2d 668, 676 (10th Cir. 1988)).
Plaintiff contends that this factor is met because every Class Member would have
the same legal theory, based on a breach of the IDM under Oklahoma law, and that the
legal claims of the representative are “typical of the claims . . . of the class.” Rule 23(a)(3).
“[T]ypicality exists where, as here, all class members are at risk of being subjected to the
same harmful practices, regardless of any class member’s individual circumstances.”
Devaughn, 594 F.3d at 1199. Defendants contend that individual inquiries as to royalty
payment obligations and damages precludes typicality. Additionally, Defendants contend
that questions as to when the gas from each Class Well becomes marketable likewise
-18-

precludes this factor, and that lease language variations regarding market value are fatal to
calculating damages in one stroke.
As discussed more fully below, the Court finds that although the Class
Representative and each potential Class Member, or individual leaseholder, has varying
circumstances, they all have the same common legal theory, i.e. their interests are not
“significantly antagonistic” to each other, and they are all “at risk of being subjected to the
same harmful practices, regardless of any class member’s individual circumstances.” Id.
at 1199 (“Due to the common risk of harm and the common underlying legal theory for
asserting that risk, the district court acted within its discretion to find that typicality was
satisfied.”). Typicality is therefore satisfied here. See also Hitch Enterprises, Inc. v. Key
Production Co. Inc., Texas County, Okla., CJ-2017-01, p. 4, ¶ 10 (Aug. 13, 2020)
(“Factually, the pleadings show that Plaintiff and the Class Members are pursuing the same
legal theory for decision of processing costs from January 1, 2013 to the present and doing
so under the same legal cause of action, breach of lease. Any factual differences about
lease language, gas quality, or gas contracts raised by defendant do not change the legal
theory or legal cause of action asserted and, thus, will not defeat typicality.”) (affirmed in
Case No. 119,052 (Okla. Civ. App. Dec. 30, 2022), cert. denied October 16, 2023).
C. Rule – 23(a)(4) - Adequacy of Representation
“Determining adequacy of representation turns on two questions: (1) whether
named plaintiffs and their counsel have any conflicts of interest with other class members
and (2) whether named plaintiffs and their counsel will vigorously prosecute the action on
behalf of the class.” In re Motor Fuel Temperature Sales Pracs. Litig., 292 F.R.D. 652,
-19-

671 (D. Kan. 2013) (citing East Tex. Motor Freight Sys., Inc. v. Rodriguez, 431 U.S. 395,
403 (1977)). Plaintiff asserts there are no apparent conflicts between the potential class
members and either the representative or the named Counsel. Additionally, they assert
they are qualified to prosecute the claims on behalf of Plaintiff and the proposed Class.
The Court further notes that Counsel has represented a similar Class and been found
adequate before. See, e.g., Hitch, Texas County, Okla., CJ-2017-01. The Court is satisfied
that Plaintiff and its counsel can “fairly and adequately protect the interests of the class.”
Fed. R. Civ. P. 23(a)(4). As (i) there is no apparent conflict, (ii) Plaintiff is both aware and
capable of acting as a class representative, and (iii) Plaintiff’s attorneys are qualified to
prosecute these claims, adequacy is met.
D. Rule 23(a)(2) - Commonality
Under this factor, Plaintiff must demonstrate that the class claims “depend upon a
common contention” that is “of such a nature that it is capable of classwide resolution,”
meaning “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.” Wal-Mart, 564 U.S. at 349-350. The
most important aspect of commonality is not “common questions,” but “the capacity of a
class-wide proceeding to generate common answers apt to drive the resolution of the
litigation.” Id. at 350 (quotation omitted). “[F]or purposes of Rule 23(a)(2), [e]ven a single
common question will do.” Id. at 359 (“We consider dissimilarities not in order to
determine (as Rule 23(b)(3) requires) whether common questions predominate, but in order
to determine (as Rule 23(a)(2) requires) whether there is [e]ven a single [common]
question.”) (quotation omitted). In further explanation, the Supreme Court has explained,
-20-

“[a]n individual question is one where members of a proposed class will need to present
evidence that varies from member to member, while a common question is one where the
same evidence will suffice for each member to make a prima facie showing [or] the issue
is susceptible to generalized, class-wide proof.” Tyson Foods, Inc. v. Bouaphakeo, 577
U.S. 442, 453 (2016) (quotations omitted). Important to this and every other factor, the
Court again notes that “[m]erits 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, 568 U.S. at 466.
Plaintiff identifies at least one common issue: whether Defendant breached the
IDM.

This one common question stems from and raises a number of additional,

interrelated questions, including: (i) whether the leases at issue in this case contain an IDM
obligating them to process natural gas into marketable products, (ii) whether the
leaseholders were indeed charged for the processing, and (iii) calculation of damages. All
of these questions center on and relate back to when the gas at issue in this case becomes
marketable. Plaintiff contends that none of the issues in this case will require individual
class members to testify, but that all issues will be addressed in a “battle of the experts”
following class certification. Defendants acknowledge the universe of arguments, but
contend that these questions are not susceptible of generalized proof or answers in “one
stroke” as required in Wal-Mart because of the number of various lease clauses at issue
and the varying types of treatment, including processing, required for each of the wells.
As stated above, “even a single common question will do.” Wal-Mart, 564 U.S. at
359 (internal quotations omitted), so the Court finds the commonality factor is generally
-21-

established. As previously noted, however, “Rule 23(a)(2)’s ‘commonality’ requirement
is [generally] subsumed under, or superseded by, the more stringent Rule 23(b)(3)
requirement that questions common to the class ‘predominate over’ other questions.”
Amchem, 521 U.S. at 609.

The “commonality” factor—and the related arguments

presented by Defendants—is thus more fully assessed below in the context of and in
combination with the predominance factor.
E. Rule 23(b)(3) - Predominance
Under Rule 23(b)(3), a class action may be certified if “[1] the court finds that the
questions of law or fact common to class members predominate over any questions
affecting only individual members [predominance], and [2] that a class action is superior
to other available methods [superiority][.]” (emphasis added). “Rule 23(b)(3) includes a
nonexhaustive list of factors pertinent to a court’s close look at the predominance and
superiority criteria,” Amchem, 521 U.S. at 615, such that “matters pertinent to these
findings” are:
(A)
(B)
(C)
(D)

the class members’ interests in individually controlling the prosecution or
defense of separate actions;
the extent and nature of any litigation concerning the controversy already begun
by or against class members;
the desirability or undesirability of concentrating the litigation of the claims in
the particular forum; and
the likely difficulties in managing a class action.

Rule 23(b)(3).
First, “[t]o satisfy Rule 23(b)(3), a plaintiff must show that common questions
subject to generalized, classwide proof predominate over individual questions.” Naylor
Farms II, 923 F.3d at 789 (quotation omitted); see also Tyson Foods, 577 U.S. at 453. The
-22-

predominance criterion is, while similar to the commonality discussion above, “even more
demanding.” Amchem, 521 U.S. at 623-624. “[P]redominance may be destroyed if
individualized issues will overwhelm those questions common to the class[.]” Roderick,
725 F.3d at 1220. “Put differently, the predominance prong asks whether the common,
aggregation-enabling, issues in the case are more prevalent or important than the noncommon, aggregation-defeating, individual issues.” In re SandRidge Energy, Inc. Sec.
Litig., 2019 WL 4752268, at *6 (W.D. Okla. Sept. 30, 2019) (quotation omitted). “Thus,
to determine whether a plaintiff can satisfy Rule 23(b)(3)’s predominance requirement, a
court must first characterize the issues in the case as common or not, and then weigh which
issues predominate.” Naylor Farms II, 923 F.3d at 789 (quotation omitted).
“Predominance is ordinarily satisfied when plaintiffs have alleged a common course of
conduct by the defendant.” Hill v. Kaiser-Francis Oil Co., 2010 WL 2474051, at *6 (W.D.
Okla. June 9, 2010), order corrected on reconsideration, 2010 WL 11451125 (W.D. Okla.
Aug. 5, 2010) (correcting class definition). As discussed above, the Court characterizes
the issues in this case as common; the remaining question is whether they predominate.
“Considering whether ‘questions of law or fact common to class members
predominate’ begins, of course, with the elements of the underlying cause of action.” Erica
P. John Fund, Inc. v. Halliburton Co., 563 U.S. 804, 809 (2011). Because Plaintiff’s claim
asserts that the common (and predominant) issue is whether Defendant breached the IDM,
the elements here are (i) duty, (ii) breach, and (iii) damages. See Hitch, Texas County,
Okla., CJ-2017-01, pp. 6-7. Plaintiff contends they set forth a prima facie showing for each
element. For each of these elements, Plaintiff asserts that no royalty members will testify
-23-

or present evidence, and the evidence will not vary from member to member but will be
susceptible of general, classwide proof. Defendants challenge each element, contending
that each requires individualized proof. The Court is mindful that “[t]he predominance
analysis is a pragmatic one. It is not a numerical test that identifies every issue in the suit
as suitable for either common or individual treatment and determines whether common
questions predominate by examining the resulting balance on the scale.” 2 Newberg and
Rubenstein on Class Actions § 4:51(5) (6th ed.)
Duty. The duty must arise from the presence of the IDM in each of the leases at
issue in this case. “Absent lease language negating the IDM or permitting certain
deductions, the lessee must bear the full cost of services undertaken to place gas in
marketable condition, such as gathering, compression, dehydration, treatment, and
processing (‘GCDTP’ services).” Chieftain, 528 Fed. Appx. at 940 (citing Mittelstaedt,
1998 OK 7, ¶¶ 20-22, 954 P.2d at 1208.
Both Tenth Circuit and Oklahoma precedent instructs that the best way to evaluate
the leases at this stage is to create a “class lease chart.” Naylor Farms II, 923 F.3d at 795
(“As the district court noted, Naylor Farms prepared a chart that ‘categorized’ the leases at
issue ‘by royalty[-]clause language.’ And we have previously indicated that this is precisely
what a plaintiff should do to establish commonality under these circumstances.”) (citing
Roderick, 725 F.3d at 1219 (“On remand, the Trust 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.”) (internal citations omitted)); see
also Rhea v. Apache Corp., 2021 WL 5507037, at *3 (E.D. Okla. July 30, 2021) (“The
-24-

Federal Rules of Evidence specifically contemplate the use of summaries and charts to
prove the content of voluminous writings such as are involved here. As a result, there is
nothing necessarily improper or deficient by reason of plaintiff’s reliance on summary
charts[.]”) (citing Fed. R. Civ. P. 56(c)(4); Fed. R. Evid. 1006), reconsideration denied,
2021 WL 5507039 (E.D. Okla. Nov. 16, 2021); Hitch, CJ-2017-1, pp. 8-9 (noting Plaintiff
prepared a “Lease Language Review” and citing Naylor Farms II favorably). It is
important that such summary captures every lease at issue, as failure to do so generally
results in denial of a motion to certify. See, e.g., Roderick, 725 F.3d at 1219 (vacating class
certification order in part because “there are roughly 430 leases [out of 650] which have
yet to be examined by the Trust or the district court.”); Chieftain, 528 Fed. Appx. at 942943 (vacating class certification order in part because “approximately 13,568 leases [out
of 14,300] have yet to be examined by XTO—let alone by Chieftain or the district court.”);
Naylor Farms, 2017 WL 187542, at *4 (W.D. Okla. Jan. 17, 2017) (Naylor Farms I) (“The
plaintiff in Apache analyzed, or based her argument on the analysis of, leases involved in
fourteen out of 1,200 sample wells.”) (citing Foster v. Apache Corp., 285 F.R.D. 632, 639,
642 (W.D. Okla. 2012)). However, the class lease summary chart does not have to prove
that the clauses are identical. See Naylor Farms I, 2017 WL 187542, at *4 (“Language in
the royalty clauses obviously does not have to be identical, otherwise a class could never
be certified.”). The nature of any summary chart is not to demonstrate that all items are
identical, but to show their relationships and similarities. The same applies here; a
summary lease chart is created so that the varying clauses can be compared and either
confirmed or challenged as to whether the language of each contains the IDM.
-25-

Plaintiff examined the 2,602 leases and classified them by lease type. See Docket
No. 48, Ex. 3 (labelled “Ex. 2-D”). In preparing the lease summary, Ms. Frankland
gathered and prepared a series of exhibits. The first exhibit contains a table of lease
language decided in Oklahoma royalty cases. See Docket No. 45, Ex. 6 (labelled “Ex. 2B”). Plaintiff also submitted exhibits containing leases with Sagacity, 4 Docket No. 45, Ex.
5 (labelled “Ex. 2-A”), as well as an example of an “Express Deduction” lease, Docket No.
48, Ex. 2 (labelled “Ex. 2-C”). Plaintiff then created a schedule of all 2,602 leases, with
information including, inter alia, the correlating Bates number and the “Royalty Clause
Addendum Key Identifier,” relevant to the summary (“Lease Schedule”). 5 Docket No. 48,
Ex. 3 (labelled “Ex. 2-D”). Defendants contend this analysis is insufficient, in part, because
Ms. Frankland’s review does not contain an analysis of casinghead gas royalty clauses, or
how the royalty obligations in the leases had been amended by § 287.1 unitization
agreements. In response to Defendants’ arguments, Plaintiff undertook an additional
analysis of the oil royalty clauses and asserts they do not negate the IDM, see Docket No.
85, Ex. 5, and further notes that Defendants provide no authority under the unitization
agreements permitting them to deduct midstream service costs or otherwise negate the
IDM.

4

Defendant points out that Ms. Frankland’s Ex. 2-A only discusses five of Sagacity’s 8 leases.
Plaintiff replies that all 8 leases are contained in the lease schedule and lease summary (Exs. 2-D
and 2-E, and all 8 leases contain the IDM.
5
Plaintiff also provided the Court with a disc containing a digital version of each lease, which the
Court used to generally confirm the accuracy of the schedule. Docket No. 85, Ex. 3 (“Ex-1-A”
Disc).
-26-

Based on the Lease Schedule, Plaintiff then created the lease summary, which
identified the Royalty Clause Addendum Key Identifier in numerical order, from the
greatest number of clauses for each lease type to the least, as well as a reference to a lease
example by Bates number, and the specific lease type/clause for each category. Docket
No. 48, Ex. 4 (labelled “Ex. 2-E”). Although Exhibits 2-D and 2-E are self-referencing,
neither is directly correlated to 2-B, the table of lease language. At the class certification
hearing, Plaintiff provided a lease summary similar to 2-E, with some slight variations and
the crucial addition of which Oklahoma cases were used to support the conclusion that the
various clauses did or did not contain the IDM (“Lease Summary”). 6 In the Lease
Summary, Plaintiff categorizes each Lease by type: (i) IDM lease, (ii) “Express Deduction”
(“ED”), (iii) “Express No Deduction” (“END”), (iv) Federal Government, and
(iii) illegible. Docket No. 48, Ex. 4 (labelled “Ex. 2-E”; Hr’g Ex. A). The Court reviewed
each of the above-mentioned exhibits and the relevant case law for purposes of Rule 23,
and finds that they are generally accurate and that, in particular, the Lease Summary
submitted at the class certification hearing (Hr’g Ex. A) is generally accurate. See
Chieftain, 528 Fed. Appx. at 942 (“[T]he district court must address the lease language
issue as it relates to Rule 23 before certifying the class.”) (citing Comcast, 569 U.S. at 3334 (citing Wal–Mart, 564 U.S. at 350-351)); see also Fed R. Civ. P. 23 advisory committee

6

It is unclear why this final chart was not made part of the extensive briefing and exhibits
submitted by Plaintiff originally, as it is the chart that connects the various information in a
cohesive format. Nor is it entirely clear that the chart was entered into evidence at the hearing.
Nonetheless, inasmuch as it was referred to by Plaintiff at the hearing, and Defendants raised no
objection, the Court considers it, and hereby refers to it as “Hr’g Ex. A.”
-27-

notes, 2003 Amendments (explaining that Rule 23(c)(1)(C)’s provision for conditional
class certification was deleted because “[a] court that is not satisfied that the requirements
of Rule 23 have been met should refuse certification”)).
Plaintiff identifies the relevant clause in each of the 2,602 leases, then deducts from
that number for class certification 436 leases as “Express Deduction” and 76 leases
involving the Federal Government. Based on Hr’g Ex. A, Plaintiff contends the remaining
2,090 leases are class leases as they either contain the IDM (2,071) as supported by
Oklahoma case law, are “Express No Deduction” leases (8), or are illegible (11).
Organized in another way, the total assessment of leases looks something like this:
A. 2,090 Proposed Class Leases 7
a. 2,071 IDM Leases:
i. 1,138 Mittelstaedt Leases
ii. 226 Wood Leases
iii. 378 CLO Leases
iv. 245 Pummill/Parrish Leases
v. 54 Whisenant Leases
vi. 23 Fankhouser Leases
vii. 7 “Flat” leases
b. 11 illegible leases
c. 8 Express No Deduction (END) Leases
B. 512 Proposed Excluded Leases:
a. 436 Express Deduction (ED) Leases
b. 76 Federal Government Leases
The Proposed Class Leases make up 80% of the total leases evaluated in this case.
And of the proposed class of 2,090 leases, Plaintiff asserts 83.3% (1,742) of those leases

7

Plaintiff’s Lease Summary submitted at the class certification hearing, Hr’g Ex A, tallied the
numbers with slight variations. There does not appear to be an error in the chart, so much as an
error in the attached calculations based on the chart. For example, Plaintiff represented that there
were 1,132 Mittelstaedt class leases, but a review of the chart reveals 1,138 were categorized as
such.
-28-

contain the IDM as decided by three Oklahoma Supreme Court cases:

Mittelstaedt v.

Santa Fe Minerals, Inc., 1998 OK 7, 954 P.2d 1203 (“Mittelstaedt”); Wood v. TXO Prod.
Corp., 1992 OK 100, 854 P.2d 880 (“Wood”); TXO Prod. Corp. v. State ex rel. Comm’nrs
of the Land Office, 1994 OK 131, 903 P.2d 259 (“CLO”) (collectively, “the Mittelstaedt
trilogy”). The language in these leases is not all identical, even in leases purportedly
supported by the same case; however, “[l]anguage in the royalty clauses obviously does
not have to be identical, otherwise a class could never be certified.” Naylor Farms I, 2017
WL 187542, at *4, 5 (“[T]he Oklahoma Supreme Court has concluded the particular
royalty clause language does not negate the IDM (or is consistent with the marketable
product rule)[.]”). An additional 11.7% are “Pummill” leases, purported to contain the
IDM. Plaintiff contends these leases containing language related to “gross proceeds,” or
proceeds, also contain the IDM, as previously found by the Oklahoma Court of Civil
appeals. Pummill, 2018 OK CIV APP 48, ¶ 4, 419 P.3d at 1270 (“Neither party to this
litigation contends the language difference [between a ‘gross proceeds’ royalty clause and
a ‘market price at the well’ clause] in the royalty clauses makes a difference when
determining the point at which gas produced under the leases is a ‘marketable product.’”),
cert. denied, Case No. 114,703 (May 21, 2018). Having examined the lease language, Ex.
2-E, Hr’g Ex. A, and the relevant case law, the Court finds the Mittelstaedt trilogy leases,
including Wood and CLO, as well as the Pummill leases, are sufficiently supported at this
stage.
This leaves 5% of the proposed class leases for further discussion. As to the 8 END
leases, the Court reviewed the Lease Summary for language and confirmed that they
-29-

specifically prohibit deduction for processing and as such fall within the class. See Hitch,
CJ-2017-01, p. 11 (“The royalty owners with END leases are within the Class.”).
For leases containing language pertaining to raw gas, Plaintiff cites Whisenant v.
Strat Land, 2018 OK CIV APP 65, 429 P.3d 703 (raw gas) (with additional citations to
Naylor Farms v. Anadarko OGC, 2009 WL 8572026 (W.D. Okla. Aug. 29, 2009) and Hill,
2010 WL 2474051) to support a finding that these leases contain the IDM. While Plaintiff
provides a full citation to these cases, as opposed to only providing a case number with no
additional citations for the Court to review the opinions as Plaintiff did in Naylor Farms I,
Plaintiff still points to no portion of any of these three cases supporting the argument that
the clauses cross-referenced to these cases contain the IDM. Indeed, Whisenant suggests
the opposite conclusion. See 429 P.3d at 709 & n.10 (noting it appeared to be a case-bycase, individualized question as to the relevant lease language) (citing Chieftain, 528 Fed.
App. at 941).
The same lack of clarity applies where Plaintiff characterizes the 23 leases as
“Fankhouser leases” as containing an IDM with lease language with royalties paid from
“net proceeds” or “net amount” or “net proceeds” for “gas sold.” While Fankhouser raises
the possibility that the IDM applies with these leases, Fankhouser v. XTO Energy, Inc.,
2012 WL 601415 (W.D. Okla. Feb. 23, 2012) (“[D]efendant argues that the implied duty
to market can be negated by lease language that requires royalties be paid on gas “at the
well”, “gas as such”, “raw gas”, “net proceeds” or “proceeds, less handling costs” of gas
sold. This argument, however, ignores the fact that the cases in which the implied duty to
market has been found had similar royalty clauses.”), such a perspective is not uniform
-30-

even in the Western District of Oklahoma. See Kunneman, 2022 WL 1766925, at *7 (“At
least one Oklahoma court has previously declined to overlook the potential legal
ramifications of ‘net proceeds’ versus ‘gross proceeds.’”) (citing Foster, 282 F.R.D. at 559
n.16 (“[N]othing in Oklahoma law as it may presently be ascertained tells us that
differences in lease language may so facilely be disregarded.”). Accordingly, the 23 leases
in the category of Fankhouser leases are excluded from the class.
Turning to the 7 “flat” leases (identified as clauses 1.38 (2 leases), 1.44 (1 lease),
1.46 (1 lease), 1.47 (1 lease), 1.51 (1 lease), 1.55 (1 lease)), Plaintiff does not provide
supporting argument or case law for these 7 leases, and they are therefore excluded. Cf.
Naylor Farms I, 2017 WL 187542, at *5 (“As for those cases, all plaintiffs provided was
the civil case number, which is insufficient for the court to locate and review the orders
pertaining to the royalty clauses.”). Finally, the Court turns to the 11 “illegible” leases. Of
those 11 leases, the Court has generally confirmed that 7 of them are generally categized
as truly “illegible,” as their leases and attendant terms are undiscernible to the human eye.
Because the terms are not knowable, the Court excludes them as by their nature they would
require individualized proof. As to the other 4 “illegible” clauses (“illegible-2” (containing
3 leases) and “illegible-3” (containing 1 lease)), Plaintiff cites, and the Court confirmed,
that the royalty/addenda language is clearly legible. The two “illegible-2” leases appear to
contain an END clause: “Exhibit A: 13. Lessor’s royalty shall not bear any part of the cost
or expense of production, separation, dehydration, compression, processing, treatment,
storage, or marketing of the oil or gas produced from the leased premises or lands pooled
therewith. Lessor’s royalty interest shall only be subject to Lessor’s pro rata share of
-31-

severance taxes/gross production taxes.” Hr’g Ex. A, “illegible-2.” The language for
“illegible-3” is less clear, and neither Hr’g Ex. A nor Plaintiff’s extensive briefing or
arguments provide support for this clause’s inclusion in the class. Accordingly, only the
two “illegible-2” clauses should remain in the class.
Defendants contend that the Lease Summary is inaccurate, but points to no
inaccuracies in fact, such as an example where Plaintiff inaccurately reported the language
contained in a specific lease. Rather, their arguments center on the number of variations
in the lease language and their contention that there is no uniform payment methodology.
Defendants correctly point out that there are approximately 70 different royalty clauses at
issue in this case. Again, however, “[l]anguage in the royalty clauses obviously does not
have to be identical[.]” Naylor Farms I, 2017 WL 187542, at *4. Defendant nevertheless
asserts that the Naylor Farms court only approved a class containing Mittelstaedt leases,
but the Court actually approved leases in the Mittelstaedt trilogy, 2017 WL 187542, at *5
(excluding language from leases listed only as Naylor Farms Inc. v. Anadarko OGC, cited
as No. 5:08-cv-00668-R (W.D. Okla. 2008) and Hill v. Kaiser-Francis Oil Co., cited as
No. 5:09-cv-000007-R (W.D. Okla. 2009)), because plaintiff in Naylor Farms I failed to
provide sufficient information for the Court to review the orders pertaining to the royalty
clauses). In this case Plaintiff provides sufficient information for the Court to review the
lease language not just pursuant to the Mittelstaedt trilogy, but also Pummill, Whisenant,
and Fankhouser as well.
Notably, the Court agrees that the Express Deduction Leases should be, and are,
excluded, both by their legal terms and by Exclusion 5 of the proposed Amended Class
-32-

Definition. 8 The same applies as to the Federal Government Leases, both by law and by
Exclusion 1 of the proposed Amended Class Definition.
According to the Oklahoma Court of Civil Appeals, if the language in the royalty
clauses offered by Plaintiff for class certification “do not negate the IDM and are consistent
with the marketable product rule . . . any remaining variations in lease language do not
defeat commonality or predominance.” Hitch, CJ-2017-1, pp. 12-13, ¶¶ 42, 44 (“The Class
Leases will establish Defendant’s duty to the royalty owners when the merits of the claims
are considered.”). The Court agrees with this persuasive authority, and finds Plaintiff thus
appropriately meets its burden of showing, for Rule 23 purposes, that each of the proposed
Class Leases contains the IDM and presents a common legal duty to the Class Members.
Naylor Farms II, 923 F.3d at 796 (“Perhaps these ‘facts’ [regarding distinctions between
the leases] will ultimately be relevant to the merits question of whether Chaparral breached
the IDM. Perhaps not. Either way, we fail to see how they might be relevant to the question
of whether, as a threshold matter, the class leases contain an IDM. And the chart was
designed to aid the district court in answering the latter question, not the former one.”)
(citing Roderick, 725 F.3d at 1218).
Plaintiff thus raises a prima facie case for the duty element of this claim.
Additionally, the construction of the leases at issue is a legal one, not a factual one, and
will not be subject to individualized issues of proof although they will appropriately be
considered as part of any summary judgment motion. In sum, the Court finds that the

8

As in Hitch, however, if “these royalty owners also have non-ED leases, i.e., END or IDM
leases[,] they remain members of the Class for those leases.” Case No. CJ-2017-01, p. 11, ¶ 34.
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following 1,997 leases fall within the class: (i) 1,138 Mittelstaedt leases, (ii) 226 Wood
leases, (iii) 378 CLO leases, (iv) 245 Pummill leases, (v) 8 END Leases, and (vi) the 2
“illegible-2” leases. The following 605 leases are excluded from the class: (i) 436 ED
leases, (ii) 76 Federal Government leases, (iii) 54 Whisenant leases, (iv) 23 Fankhouser
leases, (v) 7 “Flat leases, and (vi) the remaining 9 “illegible” leases. This is sufficient for
the duty element at this stage.
Breach. As in Naylor Farms II, to determine whether Defendants breached the
implied duty of marketability, “a jury will have to determine when the gas at issue became
marketable.” Naylor Farms II, 923 F.3d at 791. In other words, “the marketability question
turns not on whether the gas undergoes GCDTP services, but on whether the gas undergoes
GCDTP services ‘to become marketable.’” Id. at 792. However, “[t]he question of where
and when particular gas is marketable is not settled in Oklahoma. In addition, there is no
categorical rule with respect to when post-production costs may be considered for royalty
valuation.” Strack, 2017 OK CIV APP 53, ¶ 31, 405 P.3d at 140 (citing Mittelstaedt, 1998
OK 7, ¶ 2, 954 P.2d at 1205 (“in some cases a royalty interest may be burdened with postproduction costs, and in other cases it may not”)). “Regardless of when the gas becomes
marketable, however, it is clear that, under Oklahoma law, ‘[a]bsent lease language
negating the IDM or permitting certain deductions, the lessee must bear the full cost of
services undertaken to place gas in marketable condition.’”

Kunneman, 2022 WL

1766925, at *4 (quoting Chieftain, 528 Fed. Appx. at 940) (citing Mittelstaedt, 1998 OK
7, ¶ 18, 954 P.2d at 1208)); Strack, 2017 OK CIV APP 53, ¶ 30, 405 P.3d at 140 (“[U]nder
Oklahoma law, lessees have an implied duty of marketability, i.e., the lessee must bear the
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full cost of any services required to put gas in a marketable condition, except where a lease
expressly allows deductions for the costs.”); Whisenant, 2018 OK CIV APP 65, ¶ 13, 429
P.3d 703, 708 (same, citing Mittelstaedt).
The foundation for determining whether the IDM applies is grounded in the lease
terms, and the Court is mindful that the Oklahoma Supreme Court “has never been as
interested in drawing a hard line on when gas is ‘marketable’ as it has been in assuring that
royalty is paid according to the terms of the lease, and that royalty owners are not deprived
of the best deal that a producer can make.” Pummill, 2018 OK CIV APP 48, ¶ 41, 419
P.3d at 1279. “The key point of Mittelstaedt, in many ways, was its requirement that a
lessee must demonstrate to a questioning royalty owner that the terms of a lease are being
fulfilled.” Id., 2018 OK CIV APP 48, ¶ 42, 419 P.3d at 1279. The Oklahoma Supreme
Court instructs that “the lessor must bear a proportionate share of such costs if the lessee
can show (1) that the costs enhanced the value of an already marketable product, (2) that
such costs are reasonable, and (3) that actual royalty revenues increased in proportion with
the costs assessed against the nonworking interest.” Mittelstaedt, 1998 OK 7, ¶¶ 2, 30, 954
P.2d at 1205, 1210 (Indeed, “a royalty interest may bear post-production costs of
transporting, blending, compression, and dehydration, when the costs are reasonable, when
actual royalty revenues increase in proportion to the costs assessed against the royalty
interest, when the costs are associated with transforming an already marketable product
into an enhanced product, and when the lessee meets its burden of showing these facts.”)
(emphasis added).

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Although the Oklahoma Court of Civil Appeals found in Strack that a “highly
individualized and fact-intensive review of each Class Members’ claim would be necessary
to determine if Continental underpaid oil or gas royalties,” 2017 OK CIV APP 53, ¶¶ 32,
405 P.3d at 140, the Tenth Circuit noted in Naylor Farms II that “the Whisenant court
necessarily ‘left . . . open’ the possibility that, in some cases, a factfinder may be able to
determine when gas became marketable without undertaking an individualized inquiry into
the quality of that gas.” Naylor Farms II, 923 F.3d at 795 (citing Whisenant, 2018 OK
CIV APP 65, ¶ 14, 429 P.3d at 708.
In Naylor Farms II, the Tenth Circuit upheld the Northern District of Oklahoma’s
decision to certify a class, finding that the Plaintiff there had presented classwide evidence
in support of two specific factors on the issue of marketability:
First, the record contains classwide evidence indicating that Chaparral, like
the defendants in Pummill, elects to participate in the high-pressure-pipeline
market: according to Naylor Farms’ expert, this is where Chaparral’s gas is
actually ‘sold.’ Second, Naylor Farms’ expert opined that, as a classwide
matter, the gas at issue here—like the gas at issue in Pummill—was required
to undergo at least one GCDTP service before it could “reach” and be “sold
into” the pipeline market.
Naylor Farms II, 923 F.3d at 793-794 (“[T]he [Oklahoma Court of Civil Appeals
(“OCOCA”)] pointed out that the first ‘actual sale’ of the gas occurred not when the
defendants transferred the gas to a midstream processing company, but instead ‘at the
‘tailgate’ of the [processing] plants, where [the gas was] transferred into high-pressure
lines.’ And the OCOCA deduced from the location of this first ‘actual sale’ that ‘the market
in which’ the defendants ‘chose[] to participate’ was the pipeline market, not the wellhead
market. Second, the OCOCA noted that the gas had to undergo GCDTP services to make
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it ‘acceptable for delivery’ into the high-pressure pipelines.”) (quoting Pummill, 2018 OK
CIV APP 48, ¶¶ 37, 38, 410 P.3d at 1277-1278) (citing Wood, 1992 OK 100, ¶ 9, 854 P.2d
at 882 (explaining that IDM imposes “a duty to get the product to the place of sale in
marketable form” (emphasis added)). A similar class certification was recently upheld by
the Oklahoma Court of Civil Appeals and affirmed by the Oklahoma Supreme Court,
through denial of certiorari, in taking this same approach. See Hitch, CJ-2017-01, p. 18,
¶¶ 60-61 (“First, Hitch presented classwide evidence indicating that Kay, like the
Defendants in Pummill, elects to participate in the high-pressure-pipeline market. . . .
Second, Hitch’s expert opines that, as a classwide matter, the gas at issue here—like the
gas at issue in Pummill—was required to undergo GDCTP services to make it acceptable
for delivery into the pipeline market.”), affirmed in Hitch, OCOCA Case No. 119, 052, pp.
30-31, ¶¶ 47-48 (“The weight of the evidence in this record shows that individualized gasquality analysis at the wellhead is not necessary to resolve the marketability issue because
Key gathered and commingled all of the gas produced from the Class wells, including gas
it contends was marketable at the wellhead, before it was delivered to the midstream
companies for processing. As a result, whatever processing the midstream companies did,
they did the same processing on the commingled gas regardless of the unique
characteristics of the gas extracted from any individual Class well.”), cert. denied Oct. 16,
2023.
As the Tenth Circuit did in Naylor Farms II, and the Oklahoma Court of Civil
Appeals did more recently in Hitch, this Court relies on both Pummill and Whisenant and
will “disregard neither—in predicting how the [Oklahoma Supreme Court] would answer
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the marketability question before us in this appeal.” Naylor Farms II, 923 F.3d at 795
(internal quotations omitted) (predicting that the Oklahoma Supreme Court would hold
“that, under the facts of this case, a jury could determine when the gas at issue became
marketable without individually assessing the quality of that gas; instead, a jury could make
this determination based solely on expert testimony that all the gas at issue was required to
undergo at least one GCDTP service before it could ‘reach’ and be ‘sold into’ the pipeline
market.”) (citing Whisenant, 2018 OK CIV APP 65, ¶ 14, 429 P.3d at 708 (opining that the
Oklahoma Supreme Court has intentionally and wisely “left the issue [of marketability]
open to resolution on a case-by-case basis”); Pummill, 2018 OK CIV APP 48, ¶ 40, 419
P.3d at 1278 (indicating that in some cases, it may be possible to answer the marketability
question based on characteristics of relevant market, thus rendering individualized gasquality assessment unnecessary)).
Plaintiff contends that, even though the Class Leases do not authorize deductions
for processing, Defendants charged all royalty owners for processing that occurred.
Furthermore, Plaintiff’s expert, Mr. Reineke, submitted evidence, similar to the evidence
in Naylor Farms, that Defendants here participate in the high-pressure-pipeline market
because that is where the gas is sold under the gas contracts in this case. He asserts that
for both percentage-of-proceeds contracts (POP/POI) and fee-based gas contracts,
Defendants’ proceeds were calculated based on the price received on a published index or
actual sale basis at the intrastate or interstate pipeline, after one or more GCDTP, and that
Defendants chose to participate in the downstream markets (the high-pressure transmission
pipeline market for residue gas and the fractionated purity product markets for NGLs). Mr.
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Reineke’s report indicates that all class wells are connected to gathering systems that
connect to processing plants, and Plaintiff provided the Court with the plant data. Docket
No. 48, Sealed Ex. 25, pp. 1-2, 3-4 & Exs. 9-21 (“Ex. 2-J Plant Statements”). Mr. Reineke
further opines (offered in rebuttal) that, without processing, none of the gas can meet the
specifications for the high-pressure transmission pipeline. Docket No. 87, Sealed Ex. 2.
Additionally, he asserts that all the gas in this case “was required to undergo at least one
GCDTP service before it could ‘reach’ and be ‘sold into’ the pipeline market.” Naylor
Farms II, 923 F.3d at 794 (“like the gas at issue in Pummill”).
Defendants disagree, asserting that common proof cannot be used to answer the
question of marketability for over 500 wells in 17 counties and 47 different reservoirs.
Although the expert testimony in Naylor Farms was apparently unrebutted, here, as in
Hitch, Defendants provide opinions from experts that much of the gas is marketable at the
well prior to processing. Docket No. 63, Ex. 2, 3, 5. Compare Naylor Farms II, 923 F.3d
at 793-794 with Hitch, CJ-2017-01, p. 16, ¶¶ 54-56. Moreover, Defendants assert that the
gas flows into different transmission pipelines, which all have different standards; as a
result, gas often gets more processing than is necessary, resulting in more NGLs. Even
under the IDM, lessees may deduct for such extra processing. Naylor Farms II, 923 F.3d
at 791 (“[W]hen marketable gas undergoes GCDTP services to enhance the value of gas
that is already marketable, a lessee may, under certain circumstance, allocate the cost of
those services to royalty owners without breaching the IDM.”). Also, at issue is whether
costs for additional processing were reasonable, and Defendants contend resolution of this
question is not subject to common proof. Defendants assert this is fatal to class certification
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because these all require individualized determinations, and therefore provide three expert
reports detailing the various markets they participate in and what processing they undertake
to make it marketable.
Plaintiff replies that while the processing might be done for a margin of error, that
does not mean it is an enhanced value, and there is no extra payment for excess processing.
Additionally, Plaintiff asserts that, for purposes of class certification, they met their burden
by producing evidence and expert opinions that the intended market for the gas in this case
was the high-pressure transmission pipeline market.
The Court agrees Plaintiff met its burden for purposes of class certification. Plaintiff
provides classwide evidence as to the same two factors required in Naylor Farms II,
Pummill, and Hitch. Resolution of these issues thus remains for the trier of fact, and the
Court finds that this will be done based on expert testimony, and not based on
individualized testimony or testimony from any class member. As in these other cases,
here “a jury could determine when the gas at issue became marketable without individually
assessing the quality of that gas. Instead, a jury could make this determination based solely
on expert testimony that all the gas at issue was required to undergo GCDTP services
before it could be acceptable for delivery into the pipeline market.” Hitch, CJ-2017-01, p.
21, ¶ 67; see also Naylor Farms II, 923 F.3d at 795 (“And in light of Pummill and
Whisenant, we predict the OSC would answer that question by holding that, under the facts
of this case, a jury could determine when the gas at issue became marketable without
individually assessing the quality of that gas; instead, a jury could make this determination

-40-

based solely on expert testimony that all the gas at issue was required to undergo at least
one GCDTP service before it could ‘reach’ and be ‘sold into’ the pipeline market.”).
Damages. Finally, Defendants raise the issue of damages as a barrier to class
certification. While it is true that class certification has been denied when “material
differences in damages determinations will require individualized inquiries,” Roderick,
725 F.2d at 1220, “[t]he fact that damages may have to be ascertained on an individual
basis is not, standing alone, sufficient to defeat class certification. Instead, material
differences in damages determinations will only destroy predominance if those
“individualized issues will overwhelm . . . questions common to the class.” Naylor Farms
II, 923 F.3d at 798 (internal quotation omitted) (citing Menocal v. GEO Group, 882 F.3d
905, 922 (10th Cir. 2018); Roderick, 725 F.3d at 1220)).
As in Naylor Farms and Hitch, here Plaintiff provides expert opinion evidence
through Mr. Reineke that their “expert can determine damages on a classwide basis through
use of a model” “which allocates damages back to the royalty owners in each well
according to the volume and gas quality of each well.” Naylor Farms II, 923 F.3d at 798;
Hitch, CJ-2017-01, pp. 21-22, ¶ 68. Defendants object, asserting that any damages
calculations would be far too individualized due to the previously discussed individualized
questions regarding marketability. Defendants contend that, even if the standard of
marketability is the transmission pipeline quality residue gas, the questions are still too
individualized because the quality requirements for each pipeline varies. However, Mr.
Reineke states in his expert report that damages can be calculated and that he has done so
in other royalty underpayment cases. Docket No. 48, Ex. 25, pp. 5-6. He opines that he
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can either add back the royalties that were subtracted or determine the damages from
volume and gas quality shown in gas analysis and plant statements, and that such
calculations would be refined during the merits discovery stage. Id. This satisfies the
requirement of classwide evidence, rather than individualized, and is sufficient for
predominance. Hill, 2010 WL 2474051, at *6 (“The Court finds that Plaintiffs can prove
liability under their various claims with the exception of their fraud claims through
common proof in a single adjudication, and the liability issues predominate over
individualized damage determinations which, in the circumstances of this case, could be
accomplished by mathematical computations.”). As in Naylor Farms, the Court notes here
that the Court “can later divide the class into subclasses for purposes of determining
damages” as necessary. Naylor Farms II, 923 F.3d at 798 (citing Fed. R. Civ. P.
23(c)(1)(C), (c)(5); Roderick, 725 F.3d at 1220). See also 2 Newberg and Rubenstein on
Class Actions § 4:51(4) (6th ed.) (“The determination of which issues predominate should
not turn on the amount of time it will take to litigate the common or individual issues. The
predominance test does not involve a comparison of court time needed to adjudicate
common issues weighed against time needed to dispose of individual issues.”).
Rule 23(b)(3)(A)-(D). Returning to Rule 23(b)(3)(A)-(D), the Court finds that the
parties’ dispute largely centers on the first factor (Rule 23(b)(3)(A)), “the class members’
interests in individually controlling the prosecution or defense of separate actions.”
Although the parties have some discussion of issues of collateral estoppel arising out of
other cases where Cimarex is the Defendant, no party argues that those other cases are a
barrier to proceeding in this one (Rule 12(b)(3)(B)), nor do they devote any time expressing
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concerns as to this forum (Rule 12(b)(3)(C)). As discussed throughout, Defendants raise
numerous concerns that the issues in this case are far too individualized, making the
management of this case difficult (Rule 23(b)(3)(D)), but as addressed, the Court finds
those arguments unavailing.
F. Rule 23(b)(3) - Superiority
Courts are instructed to find whether “a class action is superior to other available
methods for failure and efficiently adjudicating the controversy.” Rule 23(b)(3). As noted
above, this factor also requires consideration of the list of four nonexhaustive factors
pertinent to the criteria set out in Rule 23(b)(3)(A)-(D). 9 “It is enough that class treatment
is superior because it will ‘achieve economies of time, effort, and expense, and promote
uniformity of decision as to persons similarly situated, without sacrificing procedural
fairness or bringing about other undesirable results.’” CGC Holding Co. v. Broad & Cassel,
773 F.3d 1076, 1096 (10th Cir. 2014) (quoting Amchem, 521 U.S. at 615).
Plaintiff asserts this requirement is met because (i) the Class Members do not have
individual interests in controlling the prosecution and the inefficiency that would result,
(ii) the number of putative Class Members is too large and the royalty interests too small
for prosecution of individual claims, (iii) there are no obstacles to class certification, and

“Although Rule 23(b)(3) states that these factors are pertinent to both superiority and
predominance, ‘most courts analyze [these factors] solely in determining whether a class suit will
be a superior method of litigation.’” Menocal, 882 F.3d at 915 n.3 (quoting 2 William B.
Rubenstein, Newberg on Class Actions § 4:64 (5th ed., Dec. 2017 update)). The Court has
considered the four factors as to both prongs in this case, out of an abundance of caution. See also
Fed. R. Civ. P. 23(b) advisory committee's note to the 1966 amendment (“The court is to consider
the interests of individual members of the class in controlling their own litigations and carrying
them on as they see fit.”).
9

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(iv) a class action is the superior method for a fair and efficient adjudication of the
controversy. “The policy at the very core of the class action mechanism is to overcome
the problem that small recoveries do not provide the incentive for any individual to bring
a solo action prosecuting his or her rights. A class action solves this problem by aggregating
the relatively paltry potential recoveries into something worth someone’s (usually an
attorney’s) labor.” Amchem, 521 U.S. at 617 (quotation omitted). Defendants’ arguments
do not specifically address this prong, but are rather raised generally as to the arguments
discussed above.
The Court finds that the amended proposed class meets the Rule 23(b)(3) superiority
requirement. The class members, as royalty owners, would likely have little interest in
controlling the prosecution or defense of separate actions, particularly given the number of
putative class members and in light of the reality that the individual royalty interests are
likely exponentially smaller than the cost of litigation itself. See Amchem, 521 U.S. at 617
(“[T]he 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.”) (quotation omitted); see also Rule 23(b)(3)(A). Furthermore, neither
party disputes the current forum for this litigation or suggests that they are already part of
other litigation regarding the same controvery, and there are no problems identified by the
parties that would render class action unmanageable here (Rule 23(b)(3)(B)-(D)). As such,
the scale of the case, the preference for uniformity of decision, and the continuing interests
of judicial economy support a finding that class certification is the superior method here.
See, e.g., Hill, 2010 WL 2474051, at *7 (“Putative class members, each of whose royalty
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interests may be quite small, would have little incentive to prosecute their claims
individually because their costs would likely exceed the value of their individual claims.
Thus, class treatment is a superior option here because ‘the alternatives are either no
recourse for thousands . . . to whom the courthouse would be out of bounds, or a
multiplicity and scattering of suits with the inefficient administration of litigation which
follows in its wake.’ . . . The superiority prong of Rule 23(b)(3) is clearly established in
this case.”) (quoting Green v. Wolfe Corp., 406 F.2d 291, 301 (2d. Cir. 1968)).
G. Ascertainability
Finally, many of Defendants’ arguments relate to the question of ascertainability.
“Notably, the Tenth Circuit Court of Appeals has not yet directly addressed whether, or to
what extent, ascertainability is a requirement for class certification.” Smith v. LifeVantage
Corp., 341 F.R.D. 82, 93 (D. Utah 2022). To what extent it becomes another element of
the class certification analysis is unknown, but it is clear that questions surrounding the
identifiability of a class will often arise in the context of numerosity and manageability,
particularly in the context of Rule 12(b)(3) with regard to relevant difficulties providing
notice to class members. Id. at 93 & n.75-78.
This Court has previously favored the approach set forth by the Western District of
Oklahoma: “first, that the class be defined with reference to objective criteria; and second,
a reliable and administratively feasible mechanism for determining whether putative class
members fall within the class definition.” Braver v. Northstar Alarm Servs., LLC, 329
F.R.D. 320, 334 (W.D. Okla. 2018) (cited favorably in Cline v. Sunoco, Inc. (R&M), 333
F.R.D. 676, 688 (E.D. Okla. 2019)). Here, both of those conditions appear to be met,
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despite Defendants’ protestations. The leases that set forth the “universe” of this case have
been identified, and it is clear which will be bound by any final judgment. Defendants
contend that ownership may not be clear from the leases, but this does not appear to be a
significant problem. See, e.g., Anderson Living Tr. v. Energen Res. Corp., 2020 WL
406365, at *3 (D.N.M. Jan. 24, 2020) (“The mechanics involved in finding a successive
owner (and there is no reason to believe all owners of the 153 leases are successive owners)
is not significant here, except to comment that the Court is not convinced the process would
be as burdensome as Energen claims it would be. The Court cannot help but wonder how
“complicated” Energen would find it to identify a successive lease owner in order to
recover an overpayment of royalty.”). The court can therefore ascertain the proposed class.
H. Determination
In sum, the Court finds that Plaintiff satisfied its burden under Rule 23(a) and
23(b)(3) establishing this case as a class action. Plaintiff’s motion for class certification
shall be granted, and the following class is certified, with the modifications to the
applicable lease list as discussed above:
All last successors in interest to royalty owners in Oklahoma wells operated
by Cimarex Energy Co. of Colorado, Inc. and leased by Magnum Hunter
Production, Inc. and/or Prize Energy Resources, L.P. that have produced gas
or gas constituents (such as residue gas or natural gas liquids) from January
1, 2013 to present.
Excluded from the Class are: (1) agencies, departments, or instrumentalities
of the United States of America; (2) Defendants, their affiliates, and
employees, officers and directors; (3) Any NYSE or NASDAQ listed
company (and its subsidiaries) engaged in oil and gas exploration, gathering,
processing, or marketing; (4) all royalty owners to the extent they have sued
any of the Defendants for underpayment of royalties from January 1, 2013 to
the present before this suit was filed; (5) all royalty owners that expressly
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authorized in their leases the deduction of process costs from royalties; and
(6) all royalty owners to whom Defendants remitted pass-through payments
on behalf of non-operating working interest owners.
CONCLUSION
Consequently, IT IS ORDERED that the Plaintiff’s Motion for Class Certification
and Opening Brief in Support Thereof [Docket No. 45] is hereby GRANTED. Plaintiff’s
counsel of record are appointed as counsel for the class. Because the Court has determined
that certification is appropriate under Fed.R.Civ.P. 23(b)(3), notice must be given to the
class members. The Court therefore directs the parties to confer and submit to the Court
within 28 days of the date of this order a notice to be served upon class members pursuant
to Fed.R.Civ.P. 23(c)(2)(B). If the parties are unable to agree on the text of the notice, they
shall jointly file Plaintiff’s proposed text interlineated with Defendants’ objections. Each
party may also submit a separate brief in support of its position, to be filed simultaneously
with the interlineated version of Plaintiff’s proposed notice. Such briefs may not exceed
ten (10) pages.
Furthermore, Defendants’ Motion to Strike Class Allegations and Brief in Support
Thereof [Docket No. 62], is hereby DENIED AS MOOT. Defendants’ Motion to Strike
Inadmissible Class Certification Evidence and Brief in Support [Docket No. 61], and
Defendants’ Motion to Strike Plaintiff’s Newly Disclosed Experts M. Phyllis Bourque and
William G. Foster and Brief in Support [Docket No. 91] are DENIED.
DATED this 8th day of November, 2023.
_____________________________________
GERALD L. JACKSON
UNITED STATES MAGISTRATE JUDGE
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