Nichols v. Chesapeake Operating LLC et al

Filing 87

ORDER re 78 plaintiff's motion for voluntary dismissal without prejudice, deeming proper dismissal on certain curative conditions and granting plaintiff leave to file a motion to withdraw his motion for voluntary dismissal by no later than fou r (4) days from the date of this order; In the event Plaintiff fails to file a motion to withdraw by that deadline, the Court will enter an order granting 78 Plaintiff's Motion for Voluntary Dismissal Without Prejudice upon the conditions described (as more fully set out). Signed by Honorable Patrick R Wyrick on 1/21/2020. (ks)

IN THE UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF OKLAHOMA
BILL G. NICHOLS, on behalf of
himself and others similarly situated,

)
)
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Plaintiff,
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vs.
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CHESAPEAKE OPERATING, LLC,
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and CHESAPEAKE EXPLORATION, )
LLC,
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Defendants.
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Case No. CIV-16-1073-PRW

ORDER
The named plaintiff in this putative class action, Bill G. Nichols, has filed a Motion
for Voluntary Dismissal Without Prejudice (Dkt. 78) pursuant to Fed. R. Civ. P. 41(a)(2).
Defendants Chesapeake Operating, LLC, and Chesapeake Exploration, LLC, do not
oppose dismissal, but request that the following conditions be imposed upon dismissal: (1)
Chesapeake is awarded its costs and attorney’s fees; (2) any subsequent refiling of the
present action by Plaintiff, individually or as a class representative, or by Plaintiff’s
counsel, must be brought in this Court; and (3) Plaintiff and Plaintiff’s counsel must destroy
all confidential materials produced by Chesapeake within ten (10) days of dismissal (Dkt.
81). As set forth more fully below, the motion is granted with certain curative conditions.
Applicable Law
Rule 41(a)(1) permits a plaintiff to voluntarily dismiss an action without a court
order either by filing a notice of dismissal prior to the opposing party putting a case at issue
through the filing of an answer or motion for summary judgment, or by filing a stipulation
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of dismissal signed by all parties. In all other circumstances, Rule 41(a)(2) applies; it
permits dismissal of an action only by court order and “on terms that the court considers
proper.” The requirement of court approval “is designed primarily to prevent voluntary
dismissals which unfairly affect the other side, and to permit the imposition of curative
conditions.”1 Whether approval should be given falls within the Court’s discretion.2
In deciding whether to grant a Rule 41(a)(2) motion to dismiss—regardless of
whether the requested dismissal is with or without prejudice—it is paramount to consider
“whether the opposing party will suffer prejudice in the light of the valid interests of the
parties.”3
Absent “legal prejudice” to the defendant, the district court normally
should grant such a dismissal. The parameters of what constitutes “legal
prejudice” are not entirely clear, but relevant factors the district court should
consider include: the opposing party’s effort and expense in preparing for
trial; excessive delay and lack of diligence on the part of the movant;
insufficient explanation for the need for a dismissal; and the present stage of
the litigation. Each factor need not be resolved in favor of the moving party
for dismissal to be appropriate, nor need each factor be resolved in favor of
the opposing party for denial of the motion to be proper.
The above list of factors is by no means exclusive. Any other relevant
factors should come into the district court’s equation. . . .
The district court should endeavor to insure substantial justice is
accorded to both parties. A court, therefore, must consider the equities not
1

Brown v. Baeke, 413 F.3d 1121, 1123 (10th Cir. 2005) (quoting Phillips USA, Inc. v.
Allflex USA, Inc., 77 F.3d 354, 357 (10th Cir. 1996)).
See id. (citing Am. Nat’l Bank & Trust Co. of Sapulpa v. Bic Corp., 931 F.2d 1411, 1412
(10th Cir. 1991)).
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County of Santa Fe v. Pub. Serv. Co. of N.M., 311 F.3d 1031, 1047 (10th Cir. 2002)
(applying the standard analysis in a case involving a motion to dismiss with prejudice);
Clark v. Tansy, 13 F.3d 1407, 1411 (10th Cir. 1993) (stating the general rule in the context
of a motion to dismiss without prejudice).
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only facing the defendant, but also those facing the plaintiff; a court’s refusal
to do so is a denial of a full and complete exercise of judicial discretion.4
Furthermore, in addressing what constitutes “legal prejudice,” the Tenth Circuit has
concluded that “[p]rejudice does not arise simply because a second action has been or may
be filed against the defendant,”5 or because of “the possibility that plaintiffs may gain a
tactical advantage by refiling in state court” or any other forum.6
Even if “legal prejudice” exists, however, the Court may still grant dismissal if the
imposition of “terms that the court considers proper” can alleviate the legal prejudice
experienced by the opposing party. “Conditions are designed to alleviate any prejudice a
defendant might otherwise suffer upon refiling of an action. The district court, however,
should impose only those conditions which will alleviate harm to the defendant.”7
Analysis
The Court finds that while the motion should be granted, curative conditions on
dismissal are necessary to ensure that substantial justice is afforded to all parties and to
alleviate the legal prejudice that Defendants will suffer upon dismissal. Defendants will
undoubtedly suffer legal prejudice upon dismissal—they has expended close to half a
million dollars in this and related case, Jerry Venable Revocable Family Trust v.

4

Ohlander v. Larson, 114 F.3d 1531, 1537 (10th Cir. 1997) (citations omitted).

Brown, 413 F.3d at 1124 (citing Am. Nat’l Bank & Trust Co. of Sapulpa, 931 F.2d at
1412).
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6

Am. Nat’l Bank & Trust Co. of Sapulpa, 931 F.2d at 1412.

7

Id. (citing Cross Westchester Dev. Corp. v. Chiulli, 887 F.2d 431, 432 (2d Cir. 1989);
McCants v. Ford Motor Co., 781 F.2d 855, 860 (11th Cir. 1986); LeCompte v. Mr. Chip,
Inc., 528 F.2d 601, 604–05 (5th Cir. 1976)).
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Chesapeake Operating, LLC, to date. The Court also views Plaintiff’s explanation for
dismissal—that it takes too much time and effort to litigate far away from home—as
insufficient, particularly in light of the concerns Defendants express that Plaintiff’s counsel
is forum shopping to its extreme financial detriment. And although this litigation has not
yet reached class certification, it has been dragging along for over three years. Needless to
say, the stage of litigation at which this case currently sits is not indicative of the massive
amount of time and effort Defendants have had to put into this case.
Due to the legal prejudice that Defendants will suffer upon dismissal, the Court
hereby deems proper dismissal on the following curative conditions:
(1)

In the event counsel for Plaintiff or Plaintiff files any suit seeking to
certify substantially the same class against Chesapeake Operating,
LLC, or Chesapeake Exploration, LLC, such suit shall be filed in the
U.S. District Court for the Western District of Oklahoma and assigned
to the Honorable Patrick R. Wyrick.

(2)

In the event such suit is filed, all discovery accomplished in this case
shall carry over to the new case.

(3)

In the event such suit is filed, Defendants will be permitted to file an
application for costs and attorney’s fees pursuant to Rule 41(d) of the
Federal Rules of Civil Procedure.

The Court finds that these conditions accord substantial justice to both parties based
on the equities facing both Plaintiff and Defendants.
Plaintiff’s counsel takes issue with this first condition because, in his view, it “would
constitute an impermissible restriction on Plaintiff’s counsel’s right to practice law and

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would raise ethical issues under the Rules of Professional Conduct.”8 But he only cites
rules that pertain to settlement agreements; the Rules of Professional Conduct in no way
limit the Court’s authority to impose dismissal conditions that it deems fair to the parties.
And here, this condition is fair—the history of this and other litigation involving Plaintiff’s
counsel demonstrates to the Court that he is engaging in forum shopping that has become
extremely prejudicial to Defendants. Again, Defendants have already spent close to half a
million dollars in a similar case and this very litigation. Requiring Plaintiff’s counsel to
bring a suit seeking to certify substantially the same class against Chesapeake in this Court
does not prevent him from practicing law.
This condition also does not impose a restriction on non-party royalty owners to
whom Chesapeake pays royalty. Plaintiff’s counsel argues that due to his extensive
experience litigating against Chesapeake, “it is reasonable for other royalty owners who
are concerned about possible underpayment of royalty to seek out Plaintiff’s counsel for a
possible action against Chesapeake . . . .”9 These non-parties, however, do not have to hire
Plaintiff’s counsel. He is not the only attorney capable of representing royalty owners
against Chesapeake. Thus, this restriction on Plaintiff’s counsel does not restrict all nonparties to this case, as they are under no obligation to hire Plaintiff’s counsel for
representation.

Pl.’s Reply to Def.’s Resp. to Mot. for Voluntary Dismissal Without Prejudice (Dkt. 84)
at 6.
8

9

Id. at 8.
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Finally, the Court finds that the protective order already in place should continue to
govern the destruction of confidential documents.
Accordingly, Plaintiff is given leave to file a motion to withdraw his motion for
voluntary dismissal by no later than four (4) days from the date of this order. In the event
Plaintiff fails to file a motion to withdraw by that deadline, the Court will enter an order
granting Plaintiff’s Motion for Voluntary Dismissal Without Prejudice (Dkt. 78) upon the
conditions described above.
IT IS SO ORDERED this 21st day of January, 2020.

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