United States District Court, N.D. Ohio, Eastern Division
DALE H. HENCEROTH, et al., Plaintiffs,
CHESAPEAKE EXPLORATION, L.L.C., Defendant.
MEMORANDUM OF OPINION AND ORDER [RESOLVING ECF NOS.
86 AND 105 ]
Y. Pearson, United States District Judge
matters are pending before the Court. The first is
Plaintiffs' Motion for Class Certification. ECF No.
86. Defendant responded with an Amended Opposition
(ECF No. 96), Plaintiffs replied (ECF No.
101), and Defendant rebutted (ECF No. 104). The
second is Defendant's Motion to Exclude Expert Testimony
of W.R. Harper, Jr. and Daniel T. Reineke. ECF No.
105. Plaintiffs are opposed. See ECF No. 110. A
hearing was conducted. See Transcript (ECF No.
following reasons, the Court grants Plaintiffs' Motion
for Class Certification, and denies Defendant's Motion to
Exclude Expert Testimony.
named Plaintiffs, Dale H. Henceroth and Marilyn S. Wendt,
along with eight others brought suit against Defendant
Chesapeake Exploration, L.L.C. (“CELLC”) for
breach of contract in this putative class action. ECF No.
18. Eight of the ten original proposed class
representatives were dismissed after Plaintiffs filed their
Second Amended Complaint (“SAC”). ECF No. 101
at PageID #: 7770.
is in the business of exploring and producing oil and gas,
collectively known as “hydrocarbons.” Plaintiffs
are landowners in Ohio who originally entered into oil and
gas leases with Anschutz Exploration Corporation
(“Anschutz”). CELLC later entered into a business
relationship with Plaintiffs after CELLC purchased
Anschutz's interests in these leases. Through these
leases, Plaintiffs agreed to lease the oil and gas rights to
their land to CELLC. In exchange, Plaintiffs received an
up-front bonus and are entitled to a percentage of the
revenues received from the sale of the hydrocarbons in the
form of royalty payments. The royalty payments are calculated
based on the terms of the lease. ECF No. 96 at PageID #:
7723. Plaintiffs allege that CELLC calculated the
royalties using the incorrect price as proscribed by the
terms of the leases. ECF No. 18 at PageID #: 312.
are 623 total leases at issue. The leases can be divided into
three groups. All leases have a royalty provision in the body
of the lease at Section 5(B) (“Section 5(B)”).
The first group (“Group One”) consists of 526
leases that are governed solely by Section 5(B). The second
group (“Group Two”) consists of 90 leases
containing an addendum with a governing royalty provision.
This royalty provision is commonly referred to in the oil and
gas industry as a “Market Enhancement Clause.”
The third group (“Group Three”) consists of seven
leases containing an addendum with a different royalty
provision. ECF No. 101 at PageID #: 7761. Named
Plaintiff Dale H. Henceroth's two leases are a part of
Group Two because they contain the Market Enhancement Clause.
ECF Nos. 86-3, 86-4. Named Plaintiff
Marilyn S. Wendt's lease is a part of Group One. ECF
move for class certification on a single claim---that CELLC
calculated the royalties using the incorrect price. ECF
No. 86. Defendant supported its opposition to
certification with the expert report of Kris Terry. ECF
No. 92-4. Consequently, Plaintiffs supported its reply
with the expert reports of W.R. Harper, Jr.
(“Harper”) and Daniel T. Reineke
(“Reineke”). ECF Nos. 102-1,
102-2. Defendant moves to exclude the testimony and
opinions of Harper and Reineke. ECF No. 105.
Standard of Review
principal purpose of class actions is to achieve efficiency
and economy of litigation with respect to both the parties
and the courts. See Gen. Tel. Co. v. Falcon, 457
U.S. 147, 159 (1982). Before certifying a class, the district
court must conduct a “rigorous analysis” of the
prerequisites of Fed. R. Civ. P. 23. Wal-Mart
Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011). A
district court has broad discretion in deciding whether to
certify a class, although it must exercise that discretion
within the framework of Rule 23. Beattie v.
CenturyTel, Inc., 511 F.3d 554, 55960 (6th Cir. 2007);
In re American Medical Systems, Inc., 75 F.3d 1069,
1079 (6th Cir. 1996).
23 does not require a district court, in deciding
whether to certify a class, to inquire into the merits of the
plaintiff's suit.” Beattie, 511 F.3d at
560. But in evaluating whether class certification is
appropriate, “it may be necessary for the court to
probe behind the pleadings, ” because the relevant
issues are often “enmeshed” within the legal and
factual considerations raised by the litigation.
Falcon, 457 U.S. at 160. The party seeking class
certification bears the burden of establishing that the
requisites are met. Alkire v. Irving, 330 F.3d 802,
820 (6th Cir. 2003).
admission of expert testimony is governed by Fed.R.Evid. 702
and 703. Rule 702 states that an expert witness must be
qualified “by knowledge, skill, experience, training,
or education” to testify. Fed. R. Evid. 702. A
district court “must determine whether the testimony
has ‘a reliable basis in the knowledge and experience
of [the relevant] discipline'” before the testimony
may be admitted. Kumho Tire Co., Ltd. v. Carmichael,
526 U.S. 137, 149 (1999) (quoting Daubert v. Merrell Dow
Pharm., Inc., 509 U.S. 579, 592 (1993) (alteration in
testimony of a qualified witness must be both relevant and
reliable. See Fed R. Evid. 702; Bradley v.
Ameristep, Inc., 800 F.3d 205, 208 (6th Cir. 2015);
United States v. Cunningham, 679 F.3d 355, 379-80
(6th Cir. 2012). Relevant testimony “will help the
trier of fact to understand the evidence or to determine a
fact in issue.” Fed R. Evid. 702 (a);
Daubert, 509 U.S. at 591; Cunningham, 679
F.3d at 380. Reliability depends on “whether the
reasoning or methodology underlying the testimony is
scientifically valid and [ ] whether that reasoning or
methodology properly can be applied to the facts in
issue.” Daubert, 509 U.S. at 592-93. The test
of reliability is “flexible, ” and “the law
grants a district court . . . broad latitude when it decides
how to determine reliability.” Kumho Tire,
Ltd., 526 U.S. at 141-42 (citing Gen. Elec. Co. v.
Joiner, 522 U.S. 136, 143 (1997)).
Motion for Class Certification
order to certify a class, a court must identify the purported
class and determine that the named plaintiffs are members of
the class; establish that the requirements of Fed. R.
Civ. P. 23(a) have been met; and determine that the case
may be certified pursuant to at least one of the
subcategories of Fed. R. Civ. P. 23(b).
reviewing a motion for class certification, a court must
first identify the purported “class” and
determine that the named plaintiffs are members of the class.
The class definition must specify “a particular group
at a particular time frame and location who were harmed in a
particular way” and define the class so that its
membership can be objectively ascertained. Edwards v.
McCormick, 196 F.R.D. 487, 491 (S.D. Ohio 2000).
“[T]he class definition must be sufficiently definite
so that it is administratively feasible for the court to
determine whether a particular individual is a member of the
proposed class.” Young v. Nationwide Mut. Ins.
Co., 693 F.3d 532, 537 (6th Cir. 2012) (quoting 5 James
W. Moore et al., Moore's Federal Practice §
23.21 (Matthew Bender 3d ed. 1997)) (internal quotation
seek to certify a class, defined as:
Every person except governmental entities who is, or has
been, a royalty owner under an oil and gas lease in which (1)
Anschutz Exploration Corporation is named as the lessee, (2)
the lease was assigned to or otherwise acquired by Chesapeake
Exploration, L.L.C., (3) the lease conveys rights to oil,
natural gas and natural gas liquids in Ohio, and (4) one or
more of these products was produced under the lease.
ECF No. 18 at PageID #: 349.
does not challenge Plaintiff's proposed class definition.
Both named Plaintiffs own royalties with oil and gas leases
that fall within the proposed class definition. ECF Nos.
86-3, 86-4, 86-5.
Rule 23(a) Prerequisites
class has been identified, plaintiffs must establish that the
requirements of Fed. R. Civ. P. 23(a) are met.
Rule 23(a) lists four requirements for the
certification of a class:
One or more members of a class may sue or be sued as
representative parties on behalf of all only if (1) the class
is so numerous that joinder of all members is impracticable,
(2) there are questions of law or fact common to the class,
(3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class, and (4) the
representative parties will fairly and adequately protect the
interests of the class.
Fed. R. Civ. P. 23(a). There is also an implied
requirement that the class members be ascertainable. See
Romberio v. UnumProvident Corp., 385 Fed.Appx. 423,
430-31 (6th Cir. 2009).
23(a)(1) requires that the class be “so numerous
that joinder of all members is impracticable.” The
Sixth Circuit has stated that, although “there is no
strict numerical test, ‘substantial' numbers
usually satisfy the numerosity requirement.” Daffin
v. Ford Motor Co., 458 F.3d 549, 552 (6th Cir. 2006).
According to Newberg's often-cited treatise, “a
class of 40 or more members raises a presumption of
impracticability of joinder based on numbers alone.”
1 William B. Rubenstein, Alba Conte and Herbert B.
Newberg, Newberg on Class Actions § 3:12 (5th ed.
highlight that Defendant produced 623 leases with the same
Section 5(B) provision. ECF No. 88 at PageID #: 7071. This is
a large and “substantial” number sufficient to
satisfy the numerosity requirement under Rule
23(a)(1). Defendant does not challenge Plaintiffs'
the large number of potential class members, as well as the
nature of the claims, Plaintiffs have ...