Consul Properties LLC et al v. Unit Petroleum Company

Filing 25

ORDER granting 18 Motion to Dismiss the Class Action Allegations, as more fully set out. Signed by Honorable David L. Russell on 2/2/16. (jw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
CONSUL PROPERTIES, LLC,
et al.,
Plaintiffs,
v.
UNIT PETROLEUM COMPANY,
Defendant.

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Case No. CIV-15-840-R

ORDER
Before the Court is Defendant’s motion to dismiss the class action allegations in
this case. Doc. No. 18. Defendant proffers its motion pursuant to Federal Rules of Civil
Procedure 23(d)(1)(D), 12(b)(1) and (6) or Rule 56, F.R.Civ.P. See id. Because this
Court can take judicial notice of pleadings in and decisions of the state court and may in
any event, consider evidence in a factual attack on its subject matter jurisdiction, see e.g.,
Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995), the Court decides this motion
pursuant to Rule 12(b)(1), F.R.Civ.P.
In Panola Independent School District No. 4. v. Unit Petroleum Co., 287 P.3d
1033 (Okla. Civ. App. 2012), cert. denied, (Okla. 2012), the district court had certified a
class of all royalty and unleased mineral owners whose minerals were included in drilling
and spacing units in Oklahoma where Unit Petroleum Company or any of its affiliates,
successors or assigns had the right to drill and produce gas. See Panola, 287 P.3d at
1035. On appeal, the Oklahoma Court of Civil Appeals reversed the certification order,
holding that the claims of the royalty owners who acquired their interest through leases

would require a multiplicity of subclasses, with a subclass for each lease type, to decide
claims for the underpayments of royalty interest. Defendant argues that because the class
in the Panola case was nearly identical to the putative class alleged in this case,1 issue
preclusion should apply to bar any class certification in this case. See Second Amended
Complaint at p. 4. To support its issue preclusion argument, Defendant cites to Rees v.
BP America Production Co., 211 P.3d 910 (Okla. Civ. App. 2008), cert. denied (Okla.
2009). In Rees, the Oklahoma Court of Civil Appeals held that an unnamed member of
the proposed class in Watts, wherein denial of class certification was fully and fairly
adjudicated and final, was bound by the court’s ruling denying class certification and
could not seek certification in a subsequent action of essentially the same nationwide
class. See Rees at 912. The Oklahoma Court of Civil Appeals did say that Plaintiff or
other putative class members could seek certification of a narrower class but the Plaintiff
only argued that his claim was narrower because he had deleted a fraud claim. The Court
is of the opinion that Plaintiff’s slight modification of the geographical distribution of
leases and the other modifications in the putative class, see note 1, supra, do not
sufficiently narrow the putative class in this case from the putative class in Panola
This Court must apply Oklahoma law of issue preclusion whenever courts of that
state would do so. See 28 U.S.C. § 1738. Accordingly, because Rees demonstrates that
Oklahoma would apply issue preclusion based on the denial of class certification in
Panola to the case now before this Court, this action is barred. Plaintiff argues that the

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 The putative class in this case differs only in the following respects: Owners of royalty interests having leases in
three of Oklahoma’s 77 counties are excluded. Forced pooled royalty owners are omitted. Only leases which
include the implied duty to market are included because owners whose leases explicitly negate the implied duty to
market are excluded. Overriding royalty interest owners are included.

2 

Supreme Court’s abrogation of In Re Bridgestone/Firestone, 333 F.3d 763 (7th Cir.
2003), a case cited in Rees, dictates a different outcome herein because in Smith v. Bayer
Corp., 54 U.S. 299, 131 S.Ct. 2368, 180 L.Ed.2d 341 (2011), the Supreme Court
unanimously held that the denial of class certification in one case does not preclude
absent class members of the failed putative class from pursuing the same claims in a
separate class action. However, Smith involved the question of whether issue preclusion
applied as a matter of federal law, which is not applicable in this case. Moreover, there is
an identity of interest between the named plaintiffs in Panola and the named Plaintiffs in
this case sufficient to constitute privity. But in any event, Oklahoma as a matter of state
law has clearly recognized non-mutual defensive collateral estoppel or issue preclusion to
apply in the circumstances of this case.
In accordance with the foregoing, Defendant’s motion to dismiss the class action
allegations is GRANTED pursuant to F.R.Civ.P. 12(b)(1).
IT IS SO ORDERED this 2nd day of February, 2016.

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