Parrish et al v. Range Resources Corporation et al

Filing 35

ORDER denying 25 plaintiffs' Motion to Remand (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 4/1/2015. (ks)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
CHRIS PARRISH, JR. and
MARK PARRISH,
Plaintiffs,
vs.
RANGE RESOURCES CORPORATION;
RANGE RESOURCES MID CONTINENT,
LLC;
RANGE PRODUCTION COMPANY; and
RANGE PRODUCTION COMPANY, LLC,
Defendants.

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Case No. CIV-14-01283-M

ORDER
Before the Court is plaintiffs’ Motion to Remand and Brief in Support, filed January 23,
2015. On February 23, 2015, defendants filed a response, and on March 10, 2015, plaintiffs filed
their reply. Based upon the parties’ submissions, the Court makes its determination.
I.

Introduction
On October 17, 2014, plaintiffs, royalty owners of gas wells in Oklahoma, filed this

present class action against defendants.1 Plaintiffs allege that defendants systematically
underpaid royalty on gas produced from these Oklahoma wells by unlawfully deducting certain
fees from the royalty payments. On November 17, 2014, defendants removed this case alleging
jurisdiction under the Class Action Fairness Act (“CAFA”). Subsequently, plaintiffs filed this
motion to remand alleging the Court lacks subject matter jurisdiction.

1

Plaintiffs allege that the parties previously litigated these same issues in Drummond, et al. v.
Range, et al., Case No. CJ-2010-510 (Dist. Ct. Grady Cnty., Okla.) (2010), the Drummond case
was settled for $87.5 million, and despite the settlement, defendants continued their unlawful
practice of deducting certain fees from royalty payments.

II.

Discussion
Under CAFA, a United States district court may exercise original jurisdiction over a class

action if a party shows, “among other things, that ‘the matter in controversy exceed[] the sum or
value of $5,000,000, exclusive of interests and costs.’” Frederick v. Hartford Underwriters Ins.
Co., 683 F.3d 1242, 1245 (10th Cir. 2012) (quoting 28 U.S.C. § 1332(d)(2)).
The amount in controversy, in turn, is not “the amount the plaintiff will recover,”
but rather “an estimate of the amount that will be put at issue in the course of the
litigation.” McPhail v. Deere & Co., 529 F.3d 947, 956 (10th Cir. 2008); see also
Gibson v. Jeffers, 478 F.2d 216, 220 (10th Cir. 1973) (“The test to determine
amount in controversy is not the sum ultimately found to be due, but the sum
demanded in good faith.”).
Frederick, 683 F.3d at 1245. “[A] defendant seeking to remove under CAFA must show that the
amount in controversy exceeds $5,000,000 by a preponderance of the evidence.” Id. at 1246. A
removing party may make this showing in several ways, including:
by contentions, interrogatories or admissions in state court; by calculation from the
complaint's allegations[;] by reference to the plaintiff’s informal estimates or
settlement demands[;] or by introducing evidence, in the form of affidavits from
the defendant's employees or experts, about how much it would cost to satisfy the
plaintiff's demands. McPhail, 529 F.3d at 954 (10th Cir. 2008) (quoting Meridian
Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 541–42 (7th Cir. 2006)).
Frederick, 683 F.3d at 1247. Thus, the removing party is entitled to present its own estimate of
the stakes; it is not bound by the plaintiffs’ estimate in the complaint. Id. Further,
. . . a plaintiff’s attempt to limit damages in the complaint is not dispositive when
determining the amount in controversy. Regardless of the plaintiff’s pleadings,
federal jurisdiction is proper if a defendant proves jurisdictional facts by a
“preponderance of the evidence” such that the amount in controversy may exceed
$5,000,000. Once a defendant meets this burden, remand is appropriate only if the
plaintiff can establish that it is legally impossible to recover more than
$5,000,000.
Id. (internal footnote and citations omitted).

2

In the case at bar, plaintiffs assert that the Court lacks jurisdiction because: (1) CAFA’s
“the matter in controversy exceeds the sum or value of $5,000,000” requirement is not met, and
(2) this is not an interstate case of national importance2. Specifically, plaintiffs contend that,
among other things, in their Petition they specifically limited their damages to under five million
dollars; defendants’ expert did not conduct a full analysis and provides simply rough estimates3;
defendants improperly conflate their estimation of $5,539,498 in dispute by including damages
related to well leases that expressly allow the deduction of the fees at issue from the royalty
payments4; and defendants’ expert used “strange”, unclear, and other doubtful methods to reach
his estimation. Defendants respond that despite plaintiffs’ contentions, the evidence clearly
establishes the amount in controversy exceeds the five million dollars amount requirement.
Specifically, defendants assert that plaintiffs’ Petition does not make a distinction between leases
that allow for deduction of such fees and leases that do not. In addition, defendants assert that
even if such deduction were made thereby reducing the amount in controversy to $4,913,374.00

As plaintiffs concede in their briefs, the “interest of justice” exception does not apply in this
matter as defendants are not residents of Oklahoma. See 28 U.S.C. § 1332(d)(3). It appears
plaintiffs are merely asserting this case does not deserve a preference for removal under the
CAFA as defendants advocate. Having found CAFA’s jurisdictional requirements are met in this
case, and the fact defendants are not residents of Oklahoma, the Court denies plaintiffs’ request
to remand this case on this ground.
2

3

There are over four hundred wells involved in this case for each of the thirteen months (June
2013 through June 2014) at issue in this case. Defendants’ expert, Charles Evans, who also
served as defendants’ expert in the Drummond case, took data from key wells for September
2013, November 2013, May 2014 and June 2014 and he then extrapolated for other wells and
months. Using these methods, Mr. Evans determined that the amount at issue is $5,539,498.
4

Plaintiffs contend that they are not seeking damages for some of the wells that contain
provisions in their lease permitting deduction of the fees at issue from the royalty payments.
When taking these wells into account and excluding them from defendants’ estimated amount,
plaintiffs assert that the estimated amount in controversy is $4,913,374.00.
3

as plaintiffs suggest, when taking into account plaintiffs’ attorneys’ fees, interest, and
accounting, it would easily exceed the five million dollars amount in controversy requirement.5
Having carefully reviewed plaintiffs’ Petition, defendants’ notice of removal, and the
parties’ briefs, the Court finds that removal is proper because defendants have shown by a
preponderance of the evidence that the amount in controversy may exceed five million dollars. In
their Petition, plaintiffs allege that defendants underpaid royalty due to class members on
production of gas and its constituents from the Oklahoma wells by engaging in various improper
deductions and reduction from royalty payments including, but not limited to,
(1) deducting direct and indirect fees for marketing, gathering, compression,
dehydration, processing, treatment, and other similar services; (2) not paying
royalty on wellhead gas that was used off the lease premises or in the manufacture
of products; and (3) not paying royalty on condensate that dropped out of the gas
stream (hereinafter referred to as "Fees"). These Fees were incurred to transform raw
wellhead gas into marketable condition for sale.
Petition ¶ 13. Nowhere in their Petition do plaintiffs make a restriction that those well leases that
allow for such fee deductions from the royalty payments are excluded from their claims. The
amount plaintiffs will ultimately recover is not at issue, but rather an estimate of the amount that
may be at issue in the course of the litigation is controlling. After carefully reviewing plaintiffs’
allegations in their Petition and defendants’ notice of removal, the Court finds that defendants
have shown by a preponderance of the evidence that the amount in controversy in this case may
exceed five million dollars. Because plaintiffs have not shown that a recovery for that amount is
legally impossible, the Court finds that it has subject matter jurisdiction over this matter.6
Having found CAFA’s amount in controversy requirement has been met, the Court need not
address this assertion.
5

6

Plaintiffs also allege that defendants refused to provide sufficient discovery to allow plaintiffs
to accurately calculate the amount in controversy in this matter. Because this led to plaintiffs
having to obtain such information from third parties, plaintiffs move the Court to either compel
defendants to produce such documents or impose a presumption against defendants. Having
4

III.

Conclusion
Accordingly, for the reasons set forth above, the Court DENIES plaintiffs’ Motion to

Remand and Brief in Support [docket no. 25].
IT IS SO ORDERED this 1st day of April, 2015.

found that defendants have demonstrated by a preponderance of the evidence that the amount in
controversy may exceed five million dollars, the Court finds plaintiffs’ requests to be moot.
5