Duncan Group LLC The et al v. Cimarex Energy Co

Filing 123

ORDER denying 83 MOTION to Strike Class Allegations And Brief In Support Thereof as specified in this Order. Signed by Judge Jodi W. Dishman on 3/21/2023. (nv)

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
THE DUNCAN GROUP, LLC,
on behalf of itself and
all others similarly situated,
Plaintiff,
v.
CIMAREX ENERGY CO.,
Defendant.

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Case No. CIV-18-00123-JD

ORDER
Before the Court is Defendant Cimarex Energy Co.’s (“Cimarex”) Motion to
Strike Class Allegations (“Motion to Strike”) [Doc. No. 83]. Plaintiff The Duncan Group,
LLC (“Duncan”) filed a Response [Doc. No. 87], to which Cimarex replied [Doc. No.
89].1 For the following reasons, the Court declines to strike the class allegations but will
take up the issues presented with the pending class certification motion.
Duncan, individually and on behalf of a class of others similarly situated, brings a
claim of breach of lease against Cimarex, alleging systematic underpayment of royalties
owed to the class (the lessors) by Cimarex (the lessee). Duncan claims that Cimarex
improperly deducts from royalty payments costs for midstream services to natural gas
and other constituents of the gas stream produced from wells in which putative class
members hold royalty interests. In the Complaint [Doc. No. 1], Duncan defines the
putative class as:

1

The Court uses ECF page numbering in this Order.

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All royalty owners in Oklahoma wells operated or leased by Cimarex
Energy Company that have produced gas or gas constituents (such as
residue gas, or natural gas liquids) from January 1, 2013 to present and
from which processing deductions have been taken from royalty. Excluded
from the Class are: (1) the Mineral Management Service (Indian tribes and
the United States); (2) Defendant, its 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 Defendant 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 processing costs from royalties; and (6) all royalty owners to the extent
their wells are both subject to the class action settlement in Chieftain
Royalty Co. v. QEP Energy, No. 5:11-cv-00212-R, and the well was
subsequently acquired by Defendant or any of its affiliates.
Id. ¶ 10. As the party seeking to maintain a class action, Duncan bears the burden
of proving compliance with Federal Rule of Civil Procedure 23. See Comcast
Corp. v. Behrend, 569 U.S. 27, 33 (2013) (“[A] party seeking to maintain a class
action must affirmatively demonstrate his compliance with Rule 23.”) (citation
omitted).
In the Motion to Strike, Cimarex contends that the Court should strike Duncan’s
class allegations under Rule 23(d)(1)(D) because the putative class identified in the
Complaint is unascertainable. Rule 23(d)(1)(D) authorizes the Court to issue an order
requiring “that the pleadings be amended to eliminate allegations about representation of
absent persons and that the action proceed accordingly.” According to Cimarex,

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“ascertainability” is a prerequisite to class certification that Duncan cannot satisfy based
on the class definition in the Complaint.2
The Tenth Circuit has not explicitly addressed an “ascertainability requirement,”
but it has indicated “the lack of identifiability” is a factor that may defeat Rule 23(b)(3)
class certification. Adler v. All Hours Plumbing Drain Cleaning 24-7-365 LLC, No. 2:21CV-00141, 2022 WL 15513196, at *10 (D. Utah Oct. 27, 2022) (citing Shook v. El Paso
Cnty., 386 F.3d 963, 972 (10th Cir. 2004)). Some district courts in the Tenth Circuit
“have applied a standard of ascertainability which requires: 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) (citing In re Cox Enterprises, Inc. Set-Top Cable Television Box Antitrust Litig.,
No. 12-ML-2048-C, 2014 WL 104964, at *2 (W.D. Okla. Jan. 9, 2014)). This standard
mirrors the tests for ascertainability adopted by the Third and Fourth Circuits. See Hayes
v. Wal-Mart Stores, Inc., 725 F.3d 349, 355 (3d Cir. 2013); EQT Prod. Co. v. Adair, 764
F.3d 347, 358 (4th Cir. 2014).
Many cases Cimarex points to take up ascertainability contemporaneously with
class certification, either upon review of a plaintiff’s motion for class certification or
upon appellate review of a district court’s order on such a motion. Indeed, this was the

2

As pointed out by Duncan, Cimarex’s Motion to Strike relies on, and challenges,
evidence at issue, and is not limited to attacking the face of the complaint. Response
[Doc. No. 87] at 6.
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posture of the cases most supportive of Cimarex’s position that the putative class here is
unascertainable because identifying the member royalty owners would be arduous,
complicated, individualized, and costly. See EQT Prod. Co., 764 F.3d at 352; McKnight
v. Linn Operating, Inc., No. CIV-10-30-R, 2016 WL 756541, at *1 (W.D. Okla. Feb. 25,
2016); Hicks v. Sw. Energy Co., 330 F.R.D. 183, 186 (E.D. Ark. 2018); Abraham v. WPX
Prod. Prods., LLC, 317 F.R.D. 169, 174 (D.N.M. 2016).
Rather than determining, at this time, whether the class proposed by Duncan meets
this apparent ascertainability requirement,3 given the posture and reliance on evidence
here, the Court elects to consider these arguments with Duncan’s Motion for Class
Certification [Doc. No. 68]. Thus, while the Court declines to strike the Complaint’s class
allegations, it will consider for resolution with its class certification analysis the parties’
positions presented in the briefing on the Motion to Strike. The Court anticipates further
addressing these issues at the hearing on the motion for class certification.
IT IS THEREFORE ORDERED that Cimarex’s Motion to Strike Class
Allegations [Doc. No. 83] is DENIED as specified in this Order.
IT IS SO ORDERED this 21st day of March 2023.

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At this time, the Court takes no position on whether ascertainability is a separate
requirement or is subsumed under other Rule 23 factors.
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