[00:00:00] Speaker 04:
And our last case is Ryder versus Oxy.

[00:00:04] Speaker 04:
This is 25-31-42.

[00:00:35] Speaker 04:
Mr. Seeley, whenever you're ready, no rush.

[00:00:50] Speaker 04:
Are you going to quote the Ecclesiastes and Pete Seeger about it?

[00:00:54] Speaker 01:
Yes.

[00:00:55] Speaker 04:
Okay, good.

[00:00:59] Speaker 03:
Maybe revelation.

[00:01:01] Speaker 01:
David Seeley, may it please the Court, on behalf of the appellant royalty owners and the putative class.

[00:01:09] Speaker 01:
I'm going to try to reserve a few minutes for rebuttal of my eloquent opponent.

[00:01:15] Speaker 01:
This case arises from Merritt's deliberate failure to honor uniform limits on deductions from royalty payments for natural gas set forth in a previous class action settlement that Merritt inherited from OXIE.

[00:01:32] Speaker 01:
I'm sorry.

[00:01:40] Speaker 01:
Is that better, Your Honor?

[00:01:42] Speaker ?:
Yes.

[00:01:43] Speaker 01:
Do you want me to reintroduce myself?

[00:01:45] Speaker 01:
Yeah, why don't you start over?

[00:01:46] Speaker 01:
Okay, I will, Your Honor, thank you.

[00:01:50] Speaker 01:
May it please the Court, I'm David Seeley on behalf of the appellant royalty owners and the putative class.

[00:01:57] Speaker 01:
This case arises from Merritt's deliberate failure to honor the uniform limits

[00:02:02] Speaker 01:
on deductions from royalty payments for natural gas set forth in a previous class action settlement that Merritt inherited from OXIE, but which Merritt consciously decided to disregard.

[00:02:16] Speaker 01:
Thus, unlike most other class action royalty cases, this case does not involve a variety of differing provisions in hundreds or thousands of individual oil and gas leases.

[00:02:30] Speaker 01:
which can make class certification in those cases challenging.

[00:02:34] Speaker 01:
Instead, it involves a single common contract that clearly states that it is binding on OXIE successors and assigns and imposes clear limits on deductions from royalty payments.

[00:02:49] Speaker 01:
And because Merritt made, adopted, and followed a single uniform corporate policy decision, every single royalty payee defined in this class has been subjected to the very same type of deductions that are capped and prohibited by the settlement in the previous case called Littell.

[00:03:11] Speaker 01:
But we are here today because at the defendant's urging,

[00:03:17] Speaker 01:
The district court applied an incorrect standard for class certification and it misapplied and failed to rigorously analyze each Rule 23 factor individually and in light of the many admissions made by the defendants and their witnesses.

[00:03:34] Speaker 01:
Those admissions include

[00:03:36] Speaker 01:
During their negotiations for the sale of Oxy's leases and other assets, Oxy told Merritt about the Littell settlement and how and to whom it was paying royalties under that settlement.

[00:03:48] Speaker 01:
Merritt then made the deliberate choice not to honor the royalty payment terms of the settlement that Oxy had been fulfilling since 2008.

[00:03:56] Speaker 01:
Merritt did not tell the royalty owners that it inherited from Oxy.

[00:04:02] Speaker 01:
that it would start taking deductions that were capped and prohibited by the Littell settlement.

[00:04:07] Speaker 01:
But in an attempt to avoid liability here, defendants have resisted certification on the ground that they do not have sufficient information to identify

[00:04:17] Speaker 01:
and pay what is owed to members of the putative class who have been shortchanged by merits action and oxys inaction, even though the defendants have continually relied on their own records and business practices to do exactly that each and every month since those assets were sold.

[00:04:37] Speaker 01:
Defendants expert Angela Pasle identified 5,416 payees on Wells

[00:04:46] Speaker 01:
merit acquired from OXIE during the class period.

[00:04:51] Speaker 01:
Each of those payees has been regularly paid by merit, and 1,932 of them are original participating class members in the Littell case who are still receiving payments from merit, as they have for many years.

[00:05:08] Speaker 01:
Now, the expert didn't say that, though.

[00:05:12] Speaker 01:
No, she did not say that.

[00:05:14] Speaker 01:
Well, not in so many words, Your Honor.

[00:05:17] Speaker 01:
She said, these are people that Merritt has been paying, their payees, and these 1932

[00:05:25] Speaker 01:
are also original class members in the Lattell case.

[00:05:29] Speaker 04:
Because that 5,000 plus interest owners would have included, presumably, some of the interest owners and some of the couple hundred wells that were drilled in the Hugaton field after the sale from Oxvete of Merit.

[00:05:54] Speaker 04:
and after 2017, the beginning of your past.

[00:05:58] Speaker 01:
If I'm understanding your question, Your Honor, I think the simple answer is that the drilling of a new well doesn't change the ownership of the interest.

[00:06:08] Speaker 01:
Right.

[00:06:08] Speaker 01:
So it's still the same property.

[00:06:09] Speaker 04:
Right.

[00:06:10] Speaker 04:
So I understand that.

[00:06:11] Speaker 04:
It's the same property.

[00:06:13] Speaker 04:
But those, let's say, I'm one of those guys.

[00:06:21] Speaker 04:
And my interest is in one of those new wells

[00:06:24] Speaker 04:
that was going to be south of the, what is it, the Panama?

[00:06:28] Speaker 01:
Penoma.

[00:06:30] Speaker 01:
What is it?

[00:06:30] Speaker 01:
Penoma, Council Grove.

[00:06:32] Speaker 04:
Penoma, yeah, field.

[00:06:35] Speaker 04:
And so it was going to be below the ceiling that was going to be outside of the class.

[00:06:46] Speaker 01:
Your Honor, we would disagree with that.

[00:06:47] Speaker 01:
Nothing in the settlement agreement

[00:06:50] Speaker 01:
limits the royalty payment provisions to either existing wells or to wells of a certain depth.

[00:06:59] Speaker 04:
It encompasses all the wells and all the gas produced.

[00:07:03] Speaker 04:
So I did not get that from the brief, so this is helpful.

[00:07:07] Speaker 04:
So you're representing that the settlement agreement included interest owners that had an interest in the gas above and below

[00:07:18] Speaker 04:
that what you said, Panama... Panoma.

[00:07:22] Speaker 04:
Yes.

[00:07:24] Speaker 04:
We'll just call it the dividing line.

[00:07:27] Speaker 01:
I think at that time there were, I'm not aware of any wells that were drilled below the base of the panoma.

[00:07:34] Speaker 01:
I think those are the new wells that we're talking about.

[00:07:38] Speaker 01:
At the time of the Littell settlement, the production was in the

[00:07:42] Speaker 04:
Well, the question is what the settlement agreement said.

[00:07:45] Speaker 04:
Okay.

[00:07:46] Speaker 04:
I mean, the settlement agreement, you're representing that the settlement agreement included interest owners in oxy wells that were not segregated based on the depth of the gas that was being drilled.

[00:08:03] Speaker 01:
In the sense, Your Honor, that those are the same owners of the leaseholds on which those deeper wells or newer wells were drilled.

[00:08:13] Speaker 04:
Well, yeah, I guess it is probably my fault.

[00:08:17] Speaker 04:
I apologize for being unclear.

[00:08:19] Speaker 04:
No, no, no, don't apologize.

[00:08:20] Speaker 04:
I apologize to you.

[00:08:22] Speaker 04:
But I understand what you're saying is you have an interest in the field whether or not it was subject to an existing will or not.

[00:08:32] Speaker 04:
My question is if, let's say, this is the dividing line and the settlement agreement included interest owners

[00:08:41] Speaker 04:
And their only entitlement under the settlement agreement was for the drilling of gas that was, say, above that dividing line.

[00:08:54] Speaker 04:
And then the new gas wells drilled below that dividing line.

[00:08:59] Speaker 04:
Well, obviously, if I am one of those people and I acquire an interest in a new well in a field that was covered by the old settlement agreement but did not cover that gas,

[00:09:11] Speaker 04:
at the same depth that was encompassed in the settlement agreement, the interest owners of the new gas wells would not have been beneficiaries under the settlement agreement.

[00:09:26] Speaker 01:
Again, Your Honor, from the royalty owner perspective, the payment obligation goes to the leasehold.

[00:09:32] Speaker 01:
So any well drilled on the leasehold

[00:09:34] Speaker 01:
is subject to the royalty payment obligation.

[00:09:37] Speaker 01:
And the fact that it's a new well or a deeper well doesn't change that ownership.

[00:09:42] Speaker 01:
And I'm not aware of anyone who's attempted to change the royalty ownership based on the depth of the well.

[00:09:49] Speaker 00:
All right.

[00:09:49] Speaker 00:
Council, we have said that the district court in making an

[00:09:54] Speaker 00:
Its decision on certification has a fact-intensive duty to apply the Rule 23 factors.

[00:10:01] Speaker 00:
My understanding from the record in this case, though, that maybe part of the challenge the district court faced is that the putative class didn't marshal a lot of evidence.

[00:10:10] Speaker 00:
It didn't present any experts.

[00:10:12] Speaker 00:
There was no damages model that would have been helpful for predominance.

[00:10:16] Speaker 00:
And in fact, I think

[00:10:18] Speaker 00:
It may have been said in the response, it didn't take any depositions.

[00:10:22] Speaker 00:
So it seems to be a marshaling of evidence by one side, but not the other.

[00:10:25] Speaker 01:
Well, I guess the short answer to it, Your Honor, is our case is very simple.

[00:10:30] Speaker 01:
There's a single contract.

[00:10:31] Speaker 01:
It was breached uniformly across the board of all the payees who were Littell class settlement members or their successors and

[00:10:44] Speaker 01:
The records, including the check stubs, I guess I'd make one editorial comment here.

[00:10:50] Speaker 01:
If you're going to look at one thing in the record, look at the check stub because it makes it clear that OXIE has information about which well, which property, what the name of it is they're paying for.

[00:11:03] Speaker 01:
And it also makes it clear that they're treating all these payees who get these royalty checks as owners, because it says owner on the check.

[00:11:11] Speaker 00:
Well, but the district court didn't see it that simply, obviously.

[00:11:14] Speaker 00:
And I'm going to get to why you may think that was there.

[00:11:18] Speaker 00:
And I'm going to predict it's going to have something to do with administrative feasibility.

[00:11:22] Speaker 03:
Your position is that merit was paying royalties during the whole period that OXIE had previously paid.

[00:11:34] Speaker 03:
Except they were not following the agreement, the settlement agreement.

[00:11:41] Speaker 03:
It has nothing to do with new ownership coming in.

[00:11:43] Speaker 01:
Correct.

[00:11:43] Speaker 03:
That's correct, Your Honor.

[00:11:45] Speaker 03:
The same people that Oxy paid are being paid by merit.

[00:11:48] Speaker 01:
Right.

[00:11:49] Speaker 01:
Subject to subsequent transfers of the ownership.

[00:11:53] Speaker 01:
Which these defendants, Oxy first, vetted everybody that they decided to pay royalty to.

[00:12:00] Speaker 01:
They asked them for evidence of ownership.

[00:12:02] Speaker 01:
It may have been the party to an original lease.

[00:12:05] Speaker 01:
It may have been someone who inherited the royalty interest under a lease.

[00:12:09] Speaker 01:
And with that said, Merritt then had the opportunity to vet each and every subsequent royalty owner

[00:12:21] Speaker 01:
who presented themselves or who they were referred to, to ask them to provide their evidence of ownership, which Merith then considered, and they do this in their division order department, and Ms.

[00:12:34] Speaker 01:
Drennan ran, and they make the determination of whether that person has demonstrated ownership sufficient to be put in payee status.

[00:12:46] Speaker 01:
In other words, they don't get a dime until

[00:12:48] Speaker 01:
Merit is convinced that they are lawfully entitled to receive this money.

[00:12:54] Speaker 01:
They're not giving it to people off the streets.

[00:12:55] Speaker 01:
They're giving it to people who can show that they inherited it from Grandpa Joe or whatever.

[00:13:00] Speaker 01:
And that fact, we tried to let the district court know that, but the district court seemingly ignored it and the district court ignored these other admissions that the defendants have made.

[00:13:17] Speaker 01:
For example,

[00:13:21] Speaker 01:
Mary Drennan, who manages the division order department, admitted that her department is charged with handling issues that arise regarding ownership and that Merritt can only identify names of royalty payees that Merritt is currently paying or has paid royalties for production from lease properties and wells acquired from OXIE.

[00:13:48] Speaker 01:
So Merritt knows which leasehold properties and wells it acquired from OXIE and who it pays.

[00:13:55] Speaker 01:
And those properties and wells are named on those check stubs.

[00:13:59] Speaker 01:
And Merritt relied and followed OXIE's ownership information regarding the identity of the proper royalty payees, the royalty owners.

[00:14:09] Speaker 01:
And Merritt decided it was not necessary to corroborate that information.

[00:14:14] Speaker 01:
Ms.

[00:14:15] Speaker 01:
Drennan also admitted that if Merritt has any doubt

[00:14:18] Speaker 01:
about whether it has correct ownership information.

[00:14:22] Speaker 01:
It puts the proceeds in suspense until the issue is resolved.

[00:14:27] Speaker 01:
And once it resolves the issue, Merit places the correct payee into pay status, and they start making payments to them.

[00:14:37] Speaker 01:
But absent such doubt, Merit continues to pay them royalties because there is no legitimate question regarding ownership.

[00:14:46] Speaker 01:
There's no evidence that someone else owns the royalty interest.

[00:14:50] Speaker 01:
It's important to note, it's not the plaintiff's fault that Merritt made the deliberate decision to disregard the Littell Settlement and ignore its requirements.

[00:14:58] Speaker 01:
It's not the plaintiff's fault that Merritt chose not to keep track of which form of rural tuners were subject to the Littell Settlement.

[00:15:05] Speaker 01:
It is not plaintiff's fault that OXIE did not require Merritt to honor the Littell Settlement in order to ensure that the obligations to the participating class members and their successors were satisfied.

[00:15:18] Speaker 01:
It is not the plaintiff's fault that Merritt chose to keep inadequate, incomplete, and or disorganized records regarding leases, regarding ownership, and the improper deductions that it decided to take contrary to the Littell settlement.

[00:15:33] Speaker 01:
All of those things are the fault of the defendants themselves.

[00:15:37] Speaker 01:
But it is the defendants who are asking the courts to relieve them of the consequences of their own acts, omissions, and record keeping or lack thereof.

[00:15:47] Speaker 01:
The defendants have created a problem and then blamed that problem for why the class can't possibly be certified.

[00:15:54] Speaker 01:
And the district court's holding in this case is truly unprecedented.

[00:15:59] Speaker 01:
After three rounds of briefing, the defendants still have not cited a case other than one involving a dispute of ownership of coal and related gas.

[00:16:11] Speaker 01:
in which any court has held that a class of royalty owner payees could not be certified until their ownership was self-evident or easily established.

[00:16:20] Speaker 01:
There are no conventional gas cases doing what this judge did in holding that ownership must be proven in order to bring the class.

[00:16:31] Speaker 01:
The issue of ownership became the tail that wagged the dog, at least in the district court's view.

[00:16:36] Speaker 04:
You're 30 seconds over time, but I am going to let you wrap up.

[00:16:39] Speaker 01:
I would like to wrap up.

[00:16:40] Speaker 01:
You betcha.

[00:16:45] Speaker 01:
This is not a quiet title action.

[00:16:47] Speaker 01:
Even in a quiet title action, there must be an actual good faith dispute between competing interests, and the parties must present their evidence of ownership to the court.

[00:16:57] Speaker 01:
Here, there are no competing

[00:16:58] Speaker 01:
claims of ownership.

[00:16:59] Speaker 01:
Ownership is at very most a secondary issue that should not even arise unless and until there is good reason to doubt the defendant's own determinations that specific members of the proposed class are the owners of the royalty interest entitled to receive payment.

[00:17:16] Speaker 01:
And the Klein versus Sinoco case not only lays to rest the notion of administrative feasibility as the standard for ascertainability, it also

[00:17:26] Speaker 01:
provides a good roadmap of how the court should examine and scrutinize the defenses that these producers are using in case after case.

[00:17:39] Speaker 01:
In fact, there's even common counsel here.

[00:17:41] Speaker 04:
When I said wrap up, I didn't mean to start a new argument.

[00:17:44] Speaker 04:
I'm sorry.

[00:17:44] Speaker 04:
But I will let you truly wrap up now.

[00:17:48] Speaker 01:
OK.

[00:17:48] Speaker 01:
Yes, Your Honor.

[00:17:56] Speaker 01:
I guess what I would say in summary is that we are not trying to make these people payees or owners.

[00:18:03] Speaker 01:
They are already payees and owners.

[00:18:06] Speaker 01:
The defendants determined that.

[00:18:07] Speaker 01:
They made them payees after vetting them and considering their evidence of ownership.

[00:18:12] Speaker 01:
And for all these reasons and for the fact that the district court basically ignored all of the evidence in the form of the experts and Ms.

[00:18:24] Speaker 01:
Drennan,

[00:18:25] Speaker 01:
that was contrary to Merritt's position and belies Merritt's position, we would ask for reversal and remand with instructions to certify the class as defined in our motion for class certification.

[00:18:39] Speaker 04:
Thank you.

[00:18:41] Speaker 04:
Judge Kelly, do you have any questions?

[00:18:44] Speaker 04:
Thank you very much.

[00:18:45] Speaker 04:
Thank you, counsel.

[00:18:46] Speaker 04:
We'll hear from the appellate.

[00:18:57] Speaker 02:
Good morning.

[00:18:58] Speaker 02:
My name is Dan McClure.

[00:19:00] Speaker 02:
I'm here to argue on behalf of both Merit Energy and OXIE.

[00:19:04] Speaker 02:
You know, the cornerstone of this court's jurisprudence on class certification has always been that there is broad discretion in the trial court, the district court,

[00:19:15] Speaker 02:
And it shouldn't be disturbed unless there's a clear abuse of discretion.

[00:19:21] Speaker 02:
Here, that's the district court made a careful analysis, a rigorous analysis on a comprehensive record.

[00:19:28] Speaker 02:
Yes.

[00:19:29] Speaker 03:
Sure.

[00:19:32] Speaker 03:
Yes.

[00:19:43] Speaker 03:
And did they pay royalties to the people that actually said you have to pay royalties on those problems?

[00:19:57] Speaker 03:
Okay, so what is the issue about not knowing who the people are that you pay royalties to every month?

[00:20:05] Speaker 03:
You know who they are.

[00:20:07] Speaker 03:
You send them a check every month, and the question becomes, do you have to pay them the extra that resulted from oxycells?

[00:20:20] Speaker 03:
That's the only question.

[00:20:21] Speaker 03:
And you say that you don't really know who they are.

[00:20:25] Speaker 03:
But they're the same people you pay mortgages to every single month, 5,416 of them.

[00:20:34] Speaker 02:
Well, the short answer, Judge Kelly, is that the only persons of the 5,000 that we pay who have a right to sue for the breach of the settlement agreement

[00:20:49] Speaker 02:
are the ones who are either letele class members at the time in 2008 or they're direct successors in interest.

[00:20:58] Speaker 02:
If there are other acquisitions and other people being paid for other reasons on new wells, deeper wells, other acquisitions from other companies that include interest in those wells, those people don't have standing to sue for that breach of settlement agreement.

[00:21:18] Speaker 03:
Yes.

[00:21:25] Speaker 02:
Yes.

[00:21:26] Speaker 02:
We got that.

[00:21:27] Speaker 02:
I think what is unique about this case, though, is critical for the court to understand, is that we're not just talking about a standard royalty case where the class is whoever you've been paying, that's who you owe the duty to.

[00:21:42] Speaker 02:
Here, the duty, the cause of action for breach of the settlement agreement

[00:21:47] Speaker 02:
That's all this case is about is the breach of the settlement agreement.

[00:21:50] Speaker 02:
The only persons who can bring that claim are not just everybody we're paying right now, which are 5,000 plus actually, but the 2,000 or less possibly who had membership in that Littell class, even if you could identify who they were and their direct successors and interests.

[00:22:12] Speaker 02:
And what the record shows, and what the court relied upon in particular, is that we pay many people who were not Littell class members.

[00:22:21] Speaker 02:
More than 3,000 of the 5,000 are not on the class list that they sent to the court at all.

[00:22:29] Speaker 02:
So what about those 3,000?

[00:22:31] Speaker 03:
You know who they were.

[00:22:32] Speaker 02:
Yes?

[00:22:33] Speaker 03:
You know who the people are entitled to money.

[00:22:36] Speaker 02:
No, we don't.

[00:22:38] Speaker 03:
And you can suspend, you can put into suspense any that you have issues with.

[00:22:45] Speaker 02:
But I think.

[00:22:46] Speaker 03:
I don't know if you've been in the oil business for a long time.

[00:22:49] Speaker 03:
But I have been.

[00:22:51] Speaker 03:
And you can suspend them without any of your sayings of us if you have a doubt.

[00:22:58] Speaker 02:
Yes, if we have a doubt about the current ownership.

[00:23:01] Speaker 02:
But even those people who are currently entitled to be paid royalties,

[00:23:05] Speaker 02:
may not be people who have a right to sue for breach of the settlement agreement that was entered in 2008 because they weren't members of the Littell class or their direct successors and interests.

[00:23:15] Speaker 02:
When we acquire, drill a new well, we may have a new lease.

[00:23:20] Speaker 02:
We may have a new lease with the same people or different people.

[00:23:23] Speaker 02:
We acquired those wells from Oxy2.

[00:23:25] Speaker 02:
There's over 500 such wells.

[00:23:27] Speaker 02:
And those people don't necessarily have a right to sue

[00:23:31] Speaker 02:
for breach of that Littell Settlement Agreement.

[00:23:33] Speaker 02:
That's what's so unique here is the need to trace the title of the current 5,000 payees back to one of those original Littell class members.

[00:23:43] Speaker 02:
Because if they don't retrace, if they're not either a Littell class member or a successor in interest, that's the only people have a right to sue for breach of that settlement agreement.

[00:23:54] Speaker 02:
That's Section 2.4 to 2.6.

[00:23:57] Speaker 02:
of the settlement agreement.

[00:23:58] Speaker 02:
Not just everybody we happen to pay.

[00:24:00] Speaker 00:
Counsel, this argument you're making, you keep saying it's unique, but it doesn't sound very unique to me.

[00:24:04] Speaker 00:
I mean, we have cases where defendants are contesting class certification, basically making the same point you're making here, which is we're not able to ascertain who these people are without doing individual title searches.

[00:24:18] Speaker 00:
I've heard that argument before.

[00:24:20] Speaker 00:
Whether it's tied to the class settlement or it's tied to some type of ownership

[00:24:25] Speaker 00:
interest that originates in some title transfer at some point in the past.

[00:24:30] Speaker 00:
Again, that argument's fairly common.

[00:24:32] Speaker 00:
So you started by saying that certification decisions are really, there's a lot of deference given to the district court.

[00:24:41] Speaker 00:
And your supplemental brief says this.

[00:24:43] Speaker 00:
And I think that's right.

[00:24:45] Speaker 00:
But when Judge Rattle wrote her order here, her first point is to take on this argument you're making.

[00:24:53] Speaker 00:
And she says,

[00:24:55] Speaker 00:
Well, ascertainability.

[00:24:56] Speaker 00:
The 10th Circuit has said that that's something that I must consider.

[00:25:01] Speaker 00:
It has not provided guidance on what that means.

[00:25:04] Speaker 00:
And in fact, she looked to the 3rd Circuit, the 7th Circuit.

[00:25:08] Speaker 00:
You know where this is going.

[00:25:09] Speaker 00:
Of course, the 10th Circuit now has said what that means.

[00:25:13] Speaker 00:
And Judge Vrattle said it wasn't administratively feasible.

[00:25:18] Speaker 00:
Why shouldn't we say, well,

[00:25:20] Speaker 00:
We're going to give Judge Rattle a lot of deference here, but she has to use the right legal standard.

[00:25:28] Speaker 00:
Why shouldn't we remand for her to apply a decision that, again, she didn't have when she made her order and to see how she comes out at that point?

[00:25:37] Speaker 02:
Well, I believe that you can do that without sending it back to her.

[00:25:42] Speaker 02:
because the Sinoco case, which I know you wrote the opinion, Judge Frierico, did not say that a court could not deny a class based upon using this discretion to find that administrative feasibility made the class either not superior or not ascertainable.

[00:26:07] Speaker 02:
The Sinoco case did not overrule the Deval case

[00:26:13] Speaker 02:
which, or for that matter, the Evans v. BYU unpublished case just three years ago, which held that judges have the discretion to use that as a factor to deny class certification

[00:26:26] Speaker 02:
even if it's not a requirement that will trump it.

[00:26:29] Speaker 00:
Well, I would agree with you it didn't overrule DeVaul because it didn't have to.

[00:26:33] Speaker 00:
I mean, I think your supplemental brief, and I understand you have a motion for us to even grant you to file it, but I've read it and so I want to talk about it, relies pretty heavily on one sentence in DeVaul.

[00:26:47] Speaker 00:
But Deval doesn't even use the word ascertainability.

[00:26:51] Speaker 00:
I don't even think it cites to Rule 23.

[00:26:52] Speaker 00:
So I think you may be providing a lot of weight on one sentence in that opinion.

[00:26:57] Speaker 00:
But Klein cites Deval favorably.

[00:26:59] Speaker 00:
And I think we would agree that administrative feasibility is something that can be considered.

[00:27:04] Speaker 00:
But as you were just saying, is it allowed now post-Klein v. Sunico for the district court to say, well, it's not administratively feasible, therefore.

[00:27:14] Speaker 00:
I'm now going to apply that factor alone to deny a class certification under the numerosity factor.

[00:27:22] Speaker 02:
Well, as you say, Klein versus Sunoco did not overrule the Deval case.

[00:27:31] Speaker 02:
And it was certainly interpreted in the Evans versus BYU case as holding that administrative feasibility is a factor to consider when you determine ascertainability.

[00:27:43] Speaker 02:
And I think she did that.

[00:27:45] Speaker 02:
And her discretion and her extensive review of the record would support that exercise of discretion in denying a class certification.

[00:27:54] Speaker 02:
Sunoco, of course, entirely different factual and legal situation and was a full trial.

[00:28:00] Speaker 02:
And there you're merely affirming a grant of class certification.

[00:28:07] Speaker 02:
But keep in mind also that the same kind of facts

[00:28:11] Speaker 02:
that formed the basis of her ascertainability analysis, also strongly support the predominance finding.

[00:28:18] Speaker 02:
And she referred back to the title tracing problems when she was dealing with the predominance problems.

[00:28:26] Speaker 02:
And really, the court, after all, the district court, denied class certifications on multiple alternative grounds.

[00:28:35] Speaker 02:
Ascertainability, yes.

[00:28:37] Speaker 02:
Commonality, predominance.

[00:28:41] Speaker 02:
Typicality, adequacy, and superiority.

[00:28:45] Speaker 02:
This court can affirm on any of those grounds.

[00:28:48] Speaker 02:
And I would actually submit to you that the predominance argument, the predominance ground, is the easiest one to affirm on, on the record, which is extensive and which tracks what she said in her ascertainability's part of the opinion.

[00:29:02] Speaker 02:
And the court can affirm on that basis.

[00:29:05] Speaker 02:
To obtain reversal, after all, the plaintiff should have to show that her fact findings were clearly erroneous

[00:29:10] Speaker 02:
with respect to every one of those alternative grounds.

[00:29:14] Speaker 02:
For this court to reverse, even if you disagree with the court's analysis or question her analysis about ascertainability, can easily affirm on predominance grounds.

[00:29:27] Speaker 02:
And those predominance grounds are multiple.

[00:29:30] Speaker 02:
There's not just the title tracing issue.

[00:29:32] Speaker 02:
There's also the damages and underpayment issue.

[00:29:35] Speaker 00:
But the district court didn't even find any common questions to know whether they predominate at all.

[00:29:41] Speaker 00:
And so one of the arguments I heard your counterpart make about predominance was that really this is sort of the same common scheme or policy that was enacted now by merits.

[00:29:53] Speaker 00:
And of course, again, we talk about that in the Klein decision as well.

[00:29:56] Speaker 00:
So why should we view it that way?

[00:29:58] Speaker 02:
Well, it's only a common question for people who have a standing to sue for breach of the Seller Agreement.

[00:30:03] Speaker 02:
For people who weren't parties to the Seller Agreement or their direct successors in interest, it's not a common question.

[00:30:10] Speaker 02:
And that was what her thinking was on it.

[00:30:12] Speaker 02:
But I think it's easier to look at it in terms of predominance.

[00:30:15] Speaker 02:
There are huge problems with title tracing, with the acquisition of new wells, with units.

[00:30:21] Speaker 02:
I know Judge Kelly asked about, don't you know who you pay?

[00:30:24] Speaker 02:
Yes.

[00:30:25] Speaker 02:
But who we pay includes a whole lot of people who don't have standing to sue for breach of the settlement agreement.

[00:30:30] Speaker 04:
Can you address what the appellants have argued about these 200 other wells from your perspective?

[00:30:41] Speaker 04:
And in particular, I'm assimilating what the appellants have said with regard to your argument that at least some of the interest owners in the 200 or so

[00:30:53] Speaker 04:
additional wells were interest owners in gas that went below the Panama Council grow field.

[00:31:02] Speaker 04:
Now, as I understand their argument is, well, those will all be included in the Littell settlement agreement.

[00:31:12] Speaker 02:
Well, my quick response to that is to look at volume one, page 41, which is the definition of the Littell settlement class.

[00:31:21] Speaker 02:
The Littell settlement class were persons owning interests in lands burdened by leases owned by the defendant with respect to gas production from above the base of the Ponoma Council Grove field.

[00:31:38] Speaker 02:
All right?

[00:31:39] Speaker 02:
So if there's a new well, and the new well is deeper than that, a deeper well, as many, many of them were, and we're talking about 700 wells that have been drilled by Oxie and Merritt,

[00:31:50] Speaker 02:
since 2008.

[00:31:52] Speaker 02:
If those wells are deeper, then that person would not be a member of the Littell settlement class, and there'd be no breach of the settlement agreement.

[00:32:00] Speaker 02:
That's my answer to that.

[00:32:03] Speaker 02:
I hope that's clear.

[00:32:05] Speaker 02:
But there are unitization issues.

[00:32:08] Speaker 02:
Most of the people paid by merit now.

[00:32:11] Speaker 02:
We know who we pay, but we don't know that those 3,000 link back like an archaeological search

[00:32:18] Speaker 02:
to the people who have a standing to sue in the case.

[00:32:22] Speaker 02:
And under that circumstance, they deliberately made this class definition over broad, because their first class definition was defined as, in this case, persons who were Latell class members or their direct successors and interests, because that's all that anybody has a standing to sue under the agreement.

[00:32:43] Speaker 02:
We said, oh, there's all these title tracing issues, and there's all these other issues.

[00:32:46] Speaker 02:
There's new wells, et cetera.

[00:32:48] Speaker 02:
And they said, well, OK, then we'll just redo this class definition and say, well, it's anybody you pay.

[00:32:54] Speaker 02:
And as Judge Kelly says, we know who we pay.

[00:32:57] Speaker 02:
But trying to eliminate that ascertainability problem, they've created a huge predominance problem.

[00:33:04] Speaker 02:
And they don't have any record.

[00:33:05] Speaker 02:
They just say, this is such an easy case.

[00:33:07] Speaker 02:
We don't need to take any depositions.

[00:33:09] Speaker 02:
We don't need to present any evidence.

[00:33:11] Speaker 02:
We're not going to present any experts.

[00:33:13] Speaker 02:
We're just going to disparage what

[00:33:16] Speaker 02:
the vast and detailed and very direct record is that my client produced.

[00:33:21] Speaker 02:
And then they would cherry pick certain things from the record.

[00:33:24] Speaker 02:
Mr. Seeley read part of the sentence of Ms.

[00:33:28] Speaker 02:
Drennan's testimony, volume 2, page 201, that Merritt knows who it's currently paying royalties on wells acquired from oxy.

[00:33:37] Speaker 02:
He didn't read the rest of the sentence, though, which he said, but those royalty pays and those properties

[00:33:44] Speaker 02:
include some royalty payees and payments where merit's interest in the property well was not derived from the oxy acquisition, but from some other acquisition, direct leasing by merit or unleased or unknown mineral owners.

[00:34:00] Speaker 02:
Merit cannot identify or tie its royalty payees to specific royalty oil and gas lease interestments acquired from oxy.

[00:34:11] Speaker 02:
The royalty pays for production from wells acquired from Oxy may include more than just former Oxy royalty owners.

[00:34:18] Speaker 02:
And what we learned from Oxy, in which she said, is that Oxy didn't try to do that.

[00:34:23] Speaker 02:
They just paid everybody the same on this $0.15 cap across the board so that just who they're paying doesn't help us know who it was that was the entitled to be

[00:34:39] Speaker 02:
a claim for breach of contract under the settlement agreement.

[00:34:43] Speaker 02:
And the court carefully looked at that evidence.

[00:34:46] Speaker 02:
The record fully supports the denial of class certification on predominance grounds as well as the others that we've raised.

[00:34:54] Speaker 02:
And we respectfully submit that the court should defer to the judgment of the trial court.

[00:35:01] Speaker 02:
There were no clear error.

[00:35:02] Speaker 02:
There was no contrary evidence and a firm heard denial of class certification.

[00:35:08] Speaker 02:
Do you have any questions?

[00:35:12] Speaker 04:
No, thank you.

[00:35:13] Speaker 04:
Okay, I'm going to give you one minute.

[00:35:21] Speaker 01:
Thank you.

[00:35:21] Speaker 01:
Just a few brief points.

[00:35:23] Speaker 01:
Why is merit paying these people if they don't own the interest?

[00:35:27] Speaker 01:
No explanation.

[00:35:29] Speaker 01:
They've already determined they own the interest.

[00:35:31] Speaker 01:
Administrative feasibility, if it's not tied to numerosity,

[00:35:38] Speaker 01:
as it wasn't here, has no place in the analysis of the Rule 23A factors.

[00:35:44] Speaker 01:
It could only come into effect with respect to, I think the court and Klein suggested, the manageability component of superiority.

[00:35:56] Speaker 01:
And Klein makes it very clear that it is not to be a trump card.

[00:36:01] Speaker 01:
that it doesn't outweigh anything else.

[00:36:03] Speaker 01:
The other thing is that when you're looking at manageability, you have to consider, which the district court did not do,

[00:36:10] Speaker 01:
the role of discovery and summary judgment in identifying, are there really any issues about ownership?

[00:36:18] Speaker 01:
They haven't identified any individual payees that they say don't own their interest.

[00:36:23] Speaker 01:
They just say, well, it might be.

[00:36:24] Speaker 01:
We don't know for sure.

[00:36:26] Speaker 01:
We can never know with absolute certainty, because somebody might have assigned their interest yesterday.

[00:36:30] Speaker 01:
And we wouldn't know about it until that person who wants to be paid the royalty interest comes in and tells us.

[00:36:36] Speaker 01:
All of these things, Your Honor, the practicalities

[00:36:39] Speaker 01:
And the actual conduct of Merritt's business operations and how they vet payees by looking at evidence of ownership cannot just be set aside and ignored as the district court did.

[00:36:54] Speaker 01:
It has to be given credit.

[00:36:56] Speaker 01:
And it undermines Merritt's credibility when on their royalty statements they have information about which well this person is being paid from.

[00:37:08] Speaker 01:
paid for, what the name of that well is.

[00:37:11] Speaker 01:
They have information about the deductions that they've taken every month.

[00:37:21] Speaker 04:
You're now at two minutes, so you really need to read.

[00:37:23] Speaker 04:
All right.

[00:37:23] Speaker 01:
Thank you, Your Honor.

[00:37:24] Speaker 01:
I appreciate the patience of the Court and

[00:37:27] Speaker 01:
The last thing I'd say is that there is still no evidence that ownership is different, ownership of royalty interest is any different for a deep well than for an ordinary well.

[00:37:38] Speaker 01:
The lease generally runs to all debts.

[00:37:41] Speaker 01:
There's no evidence here of leases that are restricted and have different ownership at different debts.

[00:37:46] Speaker 01:
It's another red herring.

[00:37:48] Speaker 01:
We've tried to identify those in our brief and we ask the court to take that into consideration.

[00:37:53] Speaker 04:
Thank you.

[00:37:53] Speaker 04:
Thank you, counsel.

[00:37:54] Speaker 04:
Kevin, are there arguments tomorrow at 8.30?

[00:37:58] Speaker 04:
Okay.

[00:37:59] Speaker 04:
Thank you very much, Council.

[00:38:01] Speaker 04:
This matter is submitted.

[00:38:03] Speaker 04:
Again, I want to compliment Council for both sides.

[00:38:07] Speaker 04:
I thought both sides did an excellent argument in your briefing and today.