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Wheeler v. Exxon Mobil Corporation

United States District Court, D. Kansas

October 15, 2019

THOMAS E. WHEELER, and FITZGERALD FARMS, LLC; on behalf of themselves and all others similarly situated, Plaintiffs,
v.
EXXON MOBIL CORPORATION and EXXONMOBIL OIL CORPORATION, including affiliated predecessors and affiliated successors, Defendants.

          MEMORANDUM AND ORDER

          KATHRYN H. VRATIL UNITED STATES DISTRICT JUDGE.

         On April 2, 2019, Thomas E. Wheeler and Fitzgerald Farms, LLC, on behalf of themselves and all other persons similarly situated, filed suit against Exxon Mobil Corporation and ExxonMobil Oil Corporation, along with their affiliated predecessors and successors (collectively, “defendants”). Plaintiffs' Original Complaint - Class Action (Doc. #1). Plaintiffs allege that defendants knowingly underpaid royalties on natural gas, and bring claims for breach of lease (Count 1), breach of fiduciary duty (Count 2) and fraud, constructive fraud and deceit (Count 3). This matter is before the Court on defendants' Motion To Dismiss Plaintiffs' Original Complaint (Doc. #10) filed April 23, 2019. For reasons stated below, the Court sustains defendants' motion.

         Factual Background

         Highly summarized, plaintiffs' complaint alleges as follows:

         Thomas Wheeler owns royalty interests pursuant to an oil and gas lease in the Perry Rowe Unit located in Latimer County, Oklahoma, which Exxon Mobil Corporation[1] operates. Similarly, Fitzgerald Farms, LLC, owns royalty interests pursuant to an oil and gas lease in the Fitzgerald Unit located in Texas County, Oklahoma, which Exxon Mobil Corporation also operates. Defendants underpaid royalties on natural gas production to which plaintiffs were entitled. Defendants did so in a variety of ways, including taking improper deductions, not paying royalties on all constituents found in the gas and not paying royalties on the full volume of gas.

         Plaintiffs assert breach of lease (Count 1), breach of fiduciary duty (Count 2) and fraud, constructive fraud and deceit (Count 3). Plaintiffs seek to recover on their own behalf and on behalf of two putative classes. The first putative class (“the Class”) is a multi-state class that seeks to recover royalties associated with gas obtained from the leased premises. Plaintiffs define the Class as follows:

All last successors in interest to royalty owners in wells where Defendants (including their affiliated predecessors and affiliated successors) were the operator (or a working interest owner who marketed its share of gas and directly paid royalties to the royalty owners), payable under any lease that contains an express provision stating that royalty will be paid on gas used off the lease premises (Express Fuel Clause). These Class claims relate to royalty payments for gas and its constituents (such as residue gas, natural gas liquids, helium, nitrogen, or drip condensate).

Plaintiffs' Original Complaint - Class Action (Doc. #1) ¶ 13. The second putative class (“the Subclass”) consists of Oklahoma royalty interest owners who seek to recover underpaid royalties prior to April 30, 2002. Plaintiffs define the Subclass as follows:

All last successors in interest to royalty owners in Oklahoma wells where Defendants (including their affiliated predecessors and affiliated successors) were the operator (or a working interest owner who marketed its share of gas and directly paid royalties to the royalty owners) from inception to April 30, 2002. The Subclass claims relate to royalty payments for gas and its constituents (such as residue gas, natural gas liquids, helium, nitrogen, or drip condensate).

Id.

         On April 23, 2019, defendants filed their Motion To Dismiss Plaintiffs' Original Complaint (Doc. #10), seeking dismissal of all claims.[2] Specifically, defendants first argue that the Court should dismiss all claims against unidentified defendants and all claims that seek to hold named defendants liable for the actions of unidentified predecessors and successors. Second, defendants argue that the applicable statutes of limitation bar plaintiffs' claims. Third, defendants argue that the Court should dismiss plaintiffs' breach of lease claims (Count 1) because plaintiffs have not sufficiently alleged the existence of specific leases between them. Fourth, defendants assert that the Court should dismiss the breach of fiduciary claims (Count 2) because defendants do not owe such a duty under Oklahoma law. Finally, defendants argue that the Court should dismiss plaintiffs' fraud, constructive fraud and deceit claims (Count 3) because the complaint fails to satisfy the heightened pleading requirements under Fed.R.Civ.P. 9(b). Because the Court dismisses the complaint on other grounds, it does not address the statute of limitations issue.

         Legal Standards

         In ruling on a motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., the Court assumes as true all well-pleaded factual allegations and determines whether they plausibly give rise to an entitlement of relief. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual matter to state a claim which is plausible - and not merely conceivable - on its face. Id. at 679-80; Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To determine whether a complaint states a plausible claim for relief, the Court draws on its judicial experience and common sense. Iqbal, 556 U.S. at 679. Plaintiffs make a facially plausible claim when they plead factual content from which the Court can reasonably infer that defendants are liable for the misconduct alleged. Id. at 678. However, plaintiffs must show more than a sheer possibility that defendants have acted unlawfully - it is not enough to plead facts that are “merely consistent with” defendants' liability. Id. (quoting Twombly, 550 U.S. at 557). Where the well-pleaded facts do not permit the Court to infer more than the mere possibility of misconduct, the complaint has alleged - but has not “shown” - that the pleaders are entitled to relief. Id. at 679. The degree of specificity necessary to establish plausibility and fair notice depends on context; what constitutes fair notice under Fed.R.Civ.P. 8(a)(2) depends on the type of case. Robbins v. Okla., 519 F.3d 1242, 1248 (10th Cir. 2008).

         The Court need not accept as true those allegations which state only legal conclusions. See Iqbal, 556 U.S. at 678; Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991). Rather, plaintiffs bear the burden of framing their complaint with enough factual matter to suggest that they are entitled to relief; it is not enough to make threadbare recitals of a cause of action accompanied by conclusory statements. Twombly, 550 U.S. at 556. A pleading that offers labels and conclusions, a formulaic recitation ...


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