Royalty and Royalty Interests: Underpayment Court Jurisdiction, Procedure and Review: Class Certification

摘要

Plaintiffs filed this putative class action asserting that Chesapeake had underpaid its royalty owners by improperly using the netback methodology in computing its royalty payments. The putative class is broadly defined as "All royalty owners of Chesapeake Operating, Inc.... from Kansas wells where royalties have been paid by Chesapeake that have produced gas and/or gas constituents." There are three claims alleged, breach of lease, unjust enrichment and an accounting. In order to certify a class, plaintiffs must meet the requirements of Federal Rule of Civil Procedure 23. Under Rule 23(a) plaintiffs must show commonality, typicality, adequacy of representation and numerosity. The defendant did not challenge the numerosity requirement. The court concluded that the commonality requirement was met since the breach of lease claim is dependent upon the application of the implied covenant to market which is the same for all lessors. Likewise the court finds that the claims meet the typicality requirement which is not as stringent a standard as having identical claims would be. Finally, the court determined that putative class counsel did not have a conflict of interest and thus the adequacy of representation requirement was met. Rule 23(b) requires a finding that common questions of law or fact predominate over individual questions. The court concluded that each of the putative class member's claim contains common questions of law or fact. Thus, the court certified the class and appointed lead and co-counsel to act on behalf of the class.