United States District Court, D. Kansas
THOMAS E. WHEELER, and FITZGERALD FARMS, LLC; on behalf of themselves and all others similarly situated, Plaintiffs,
EXXON MOBIL CORPORATION and EXXONMOBIL OIL CORPORATION, including affiliated predecessors and affiliated successors, Defendants.
MEMORANDUM AND ORDER
KATHRYN H. VRATIL UNITED STATES DISTRICT JUDGE.
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'
summarized, plaintiffs' complaint alleges as follows:
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 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
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).
April 23, 2019, defendants filed their Motion To Dismiss
Plaintiffs' Original Complaint (Doc. #10), seeking
dismissal of all claims. 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.
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).
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 ...