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Catron v. Colt Energy, Inc.

United States District Court, D. Kansas

December 17, 2014

RICHARD CATRON, individually, and on behalf of those similarly situated, Plaintiff,
COLT ENERGY, INC., et al., Defendants.


CARLOS MURGUIA, District Judge.

Plaintiff Richard Catron filed this case in the District Court of Wilson County, Kansas, individually and on behalf of those similarly situated. Plaintiff claims that defendants Colt Energy, Inc.; Layne Energy Resources, Inc.; and Layne Energy Operating, LLC violated law prohibiting restraint of trade in leasing minerals in Southeast Kansas. Specifically, plaintiff claims that defendants allocated markets instead of competing. Defendants removed the case to federal court, basing removal on the Class Action Fairness Act ("CAFA"), 28 U.S.C. ยง 1332(d)(2). The case is now before the court on Defendants' Motion to Dismiss Plaintiff's Second Amended Complaint (Doc. 50).

Defendants argue that they are entitled to dismissal of this case (or some claims) for five reasons: (1) plaintiff fails to show a plausible violation of the Kansas Restraint of Trade Act ("KRTA") under Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); (2) plaintiff is not entitled to the damages he seeks; (3) plaintiff is not entitled to any relief for his trespass claim; (4) defendants are exempt from liability because their business is under the supervision and control of the Kansas Corporation Commission ("KCC"); and (5) to the extent that plaintiff may pursue any claims, those claims are limited by the statute of limitations. The court addresses each of these arguments in turn.

I. Standard of Review

The court will grant a 12(b)(6) motion to dismiss only when the factual allegations fail to "state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570. Although the factual allegations need not be detailed, the claims must set forth entitlement to relief "through more than labels, conclusions and a formulaic recitation of the elements of a cause of action." In re Motor Fuel Temperature Sales Practices Litig., 534 F.Supp.2d 1214, 1216 (D. Kan. 2008). The allegations must contain facts sufficient to state a claim that is plausible, rather than merely conceivable. Id.

"All well-pleaded facts, as distinguished from conclusory allegations, must be taken as true." Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir. 1984); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The court construes any reasonable inferences from these facts in favor of the plaintiff. Tal v. Hogan, 453 F.3d 1244, 1252 (10th Cir. 2006). In reviewing the sufficiency of a complaint, the court determines whether the plaintiff is entitled to offer evidence to support his claims-not whether the plaintiff will ultimately prevail. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984).

II. Factual Allegations

The following facts are taken from plaintiff's Second Amended Complaint and viewed in the light most favorable to plaintiff.

Defendants began leasing mineral acres in southeast Kansas in the early- or mid-2000s. They produced oil and gas and paid royalties to land owners. But instead of competing for leases, defendants allocated the mineral leasing market. Around 2004 or 2005, defendants entered into an express agreement (an Area of Mutual Interest agreement, or "AMI agreement") to divide the southeast Kansas markets geographically. Each defendant would seek leases in a specific area, and they agreed that they would not compete for leases in the other's area. Further, each defendant transferred wells to each other that were located in the other's area.

Plaintiff alleges that defendants entered into the AMI agreement for these purposes: "to create or carry out restrictions on trade or commerce, or aids to commerce, or to carry out restrictions in the full and free pursuit of any business authorized or permitted by Kansas law." (Doc. 47 at 5.) This damaged plaintiff and other putative class members because they leased minerals in an uncompetitive market.

According to plaintiff, defendants' restraint of trade renders all leasing transactions void. Defendants therefore had no right to take minerals and were trespassers. Plaintiff seeks damages for all revenue taken from the leases. Plaintiff also seeks damages for trespass.

Finally, plaintiff alleges that the statute of limitations is tolled because defendants concealed their AMI agreement and the arrangement not to compete. Plaintiff and other putative class members could not have known of their cause of action.

III. Discussion

A. Plausibility ...

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