United States District Court, N.D. Ohio, Eastern Division
MEMORANDUM OF OPINION AND ORDER [RESOLVING ECF NO.103
Y. PEARSON, UNITED STATES DISTRICT JUDGE.
is Plaintiffs' Motion for Class Certification (ECF
No. 103). The Court has been advised, having reviewed
the record, the parties' briefs and the applicable law.
For the reasons set forth below, the Court grants the motion
Zehentbauer Family Land LP (“Zehentbauer”);
Hanover Farms LP (“Hanover”); and Evelyn Frances
Young, Successor Trustee of The Robert Milton Young Trust
(“Young”) filed suit against Defendants
Chesapeake Exploration L.L.C. (“CELLC”),
Chesapeake Operating L.L.C., CHK Utica, L.L.C., Total E&P
USA, Inc. (“TEPUSA”), Pelican Energy L.L.C., and
Jamestown Resources L.L.C. See Class Action
Complaint (ECF No. 1-1) at PageID #: 14-43.
are in the business of oil and gas exploration and
production. Plaintiffs are landowners located throughout
eastern and southeastern Ohio who entered into oil and gas
lease agreements with Ohio Buckeye Energy LLC
(“Buckeye”) and CELLC. CELLC later merged with
Buckeye and acquired Buckeye's lease rights. CELLC then
leased those rights to the various defendants. Though the
leases changed hands, the obligations remained unchanged. ECF
No. 1-1 at PageID #: 20. Under these agreements, Defendants
obtained Plaintiffs' oil and gas rights in exchange for a
combination of fees and royalty payments of varying
percentages. ECF No. 1-1 at PageID #: 45, 67, 68, 90, 91,
127, 128. Plaintiffs allege that Defendants have improperly
reduced royalty payments by selling hydrocarbons with greater
sale price deductions than is allowable under the agreements.
ECF No. 1-1 at PageID #: 41.
split the leases into three subclasses or
“Groups” Group A, Group B, and Group C. ECF No.
101-1 at PageID #: 2723-25, ¶ 5. Royalty provisions
dictating payments for oil and gas products are common to
each lease in the proposed class, although the royalty
language varies among the subclasses. Group A's royalty
provisions both contain language governing the sale price and
royalty percentage, but the gas royalty provisions of the
subclass contain a definitional clause and a comparable sales
requirement (“CSR”) that the oil royalty
provision does not. The definitional clause outlines the
substances governed by the provision and the CSR governs
hydrocarbon sales to corporate affiliates. Both of Group
B's royalty provisions contain a CSR and the definitional
clause. And finally, Group C's provisions both have the
definitional clause, but no CSR. ECF 101-1 at PageID #: 2723,
and Hanover have lease agreements that are a part of Group A
and Young has an agreement in Group B. None of the named
plaintiffs, however, have leases in Group C.ECF No. 101-1 at
PageID #: 2723-25, ¶ 5. Plaintiffs have moved to merge
their claims and the claims of the other lessors into one
action based upon the common claim that Defendants improperly
reduced the royalties due. ECF No. 103 at PageID #: 3302.
Standard of Review
actions are the “exception” to the general rule
that parties litigate issues by and for themselves.
Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2550
(2011) (citation omitted). Indeed, class actions are only
appropriate when there are common questions with common
answers that “advance the litigation” towards
resolution. Sprague v. Gen. Motors Corp., 133 F.3d
388, 397 (6th Cir. 1998). Class certification is only proper
in cases when the Court finds, after a “rigorous
analysis, ” that the proposed class fulfills all the
requirements of Fed.R.Civ.P. 23. Dukes, 131 S.Ct. at 2551.
This analysis often requires at least a glance beyond the
pleadings as the relevant details are frequently intertwined
with the legal and factual considerations of the litigation.
Gen. Tel. Co. v. Falcon, 457 U.S. 147, 159 (1982).
Within this framework, district courts are given broad
discretion in determining whether class certification is
proper. Beattie v. CenturyTel, Inc., 511 F.3d 554,
559-60 (6th Cir. 2007). The party moving to certify the class
must demonstrate the propriety of a class action under
Rule 23. In re Am. Med. Sys., Inc., 75 F.3d
1069, 1079 (6th Cir. 1996).
order for class certification to be appropriate, the Court
must find that the moving party has shown the proposed class
to be well-defined by objective criteria, that each
requirement of Rule 23(a) has been satisfied, and that the
class meets one of the definitions listed under Rule 23(b).
certification is only appropriate when the proposed class is
limited by definite and objective criteria. Edwards v.
McCormick, 196 F.R.D. 487, 491 (S.D. Ohio 2000).
“Fail-safe” classes those for which the
definition only becomes fixed upon resolution on the merits
will not be certified. See Randleman v. Fidelity
Nat'l Title Ins. Co., 646 F.3d 347, 352 (6th
Cir.2011). The characteristics that dictate membership in the
class must be definite to ensure the class is
administratively feasible. Young v. Nationwide Mut. Ins.
Co., 693 F.3d 532, 537-38 (6th Cir. 2012) (citing
Crosby v. Soc. Sec. Admin., 796 F.2d 576, 580 (1st
Cir. 1986)). In this case the class moving to be certified
has been defined as:
All persons entitled to royalty payments from Chesapeake
Exploration, LLC, Chesapeake Operating, Inc., CHK Utica, LLC,
Total E&P USA, Inc., Pelican Energy, L.L.C., and/or
Jamestown Resources, L.L.C. at any time during the years of
2011 to the present under uniform oil and gas leases, known
generally as Gross Royalty Leases, (some originally entered
by Buckeye Exploration Corporation) which state that the
lessors royalty shall be the stated percentage of the gross
proceeds received by the lessee without any deductions except
for a pro-rata share of governmentally imposed taxes and
fees, in return for granting rights to produce oil, natural
gas, and the constituents thereof from real property located
in Ohio. Excepted from the foregoing class are persons who
have filed separate actions requesting the relief sought here
and those who have resolved claims requesting the relief
sought here. Further excepted from the class are any such
lessors employed or owned by any of the Defendants.
ECF No. 103 at PageID #: 3302.
do not challenge either the proposed class definition or that
each of the named Plaintiffs own “Gross Royalty
Leases” that fall within the stated definition. ECF
Nos. 72-5, 72-6, 72-7.
Rule 23(a) Prerequisites
addition to being well-defined, each class must meet the
requirements of Fed.R.Civ.P. 23(a). Rule 23(a) lists four
criteria that must be met for class certification to be
appropriate: numerosity, commonality, typicality, and
adequacy of representation. Additionally, there is a fifth
implied prerequisite of ascertainability created by the
listed requirements. 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.” Rule 23(a)(1)
calls for an examination of the specific facts of each case,
but there are no predetermined numbers or levels that denote
a sufficiently numerous class. Gen. Tel. Co. of the
Northwest v. Equal Emp. Opportunity Commission, 100
S.Ct. 1698, 1706 (1980). Although “there is no strict
numerical test, ” the Sixth Circuit has stated that a
class of “substantial” numbers is sufficient to
satisfy the requirement. Daffin v. Ford Motor Co.,
458 F.3d 549, 552 (6th Cir. 2006). There are no hard rules as
to what a “substantial” number is, but “a
class of 40 or more members raises a presumption of
impracticability.” 1 William B. Rubenstein, Alba
Conte and Herbert B. Newberg, Newberg on Class Actions
§ 3:12 (5th ed. 2017).
claim there are 295 leases and even more assignments in
question, ECF No. 103-1 at PageID #: 3313, and Defendants
state that there are only 272 leases that meet the membership
requirements. ECF No. 109-1 at PageID #: 3543. Determining
which number is correct is irrelevant at this point. The
parties seem to agree that the number is greater than 200 and
that is “substantial.” Defendants do not
challenge Plaintiffs' numerosity argument.
the size of the proposed class and the nature of the claims
the numerosity requirement is satisfied.
requires that there be “questions of law or fact common
to the class.” Rule 23(a)(2). A common issue for the
purposes of class certification is one “[t]hat
determination of its truth or falsity will resolve an issue
that is central to the validity of each one of the claims in
one stroke.” Dukes, 131 S.Ct. at 2551. The
commonality analysis ensures there is at least ...