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Looney v. Chesapeake Energy Corporation

United States District Court, W.D. Arkansas, Fort Smith Division

June 1, 2016

BILLY C. LOONEY; GOODWIN & HERMAN ASSOCIATES, LLC, an Arkansas limited liability company; and SILOAM MINERALS, LLC, an Arkansas limited liability company PLAINTIFFS
v.
CHESAPEAKE ENERGY CORPORATION, an Oklahoma corporation; CHESAPEAKE OPERATING, L.L.C., formerly doing business as CHESAPEAKE OPERATING, INC., an Oklahoma corporation; CHESAPEAKE EXPLORATION, LLC, an Oklahoma limited liability company; and CHESAPEAKE ENERGY MARKETING, L.L.C., formerly doing business as CHESAPEAKE ENERGY MARKETING, INC., an Oklahoma Corporation DEFENDANTS

          ORDER GRANTING CERTIFICATION OF SETTLEMENT CLASS AND PRELIMINARILY APPROVING CLASS ACTION SETTLEMENT AGREEMENT

          TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on Plaintiffs' unopposed Motion for Preliminary Approval of Class Settlement Agreement and Approval of Notice to Settlement Class Members (Doc. 36). On May 31, 2016, the Court held a hearing on the Motion, at which time it heard from the proposed class members and counsel for the parties. The Court then ruled from the bench, and granted the Motion. This Order contains more specific findings, and in the event of any conflict as compared to the bench ruling, this written Order shall control.

         The Court, having reviewed and considered the Motion, the Memorandum in Support of the Motion (Doc, 37), the Class Action Settlement Agreement (Doc. 36-1) ("Settlement Agreement"), the proposed Notice of Class Settlement (Doc. 36-2), and pertinent portions of the entire record in this litigation to date, finds as follows:

         1. Plaintiffs filed their original Complaint on June 3, 2015.[1] An Amended Complaint was filed on June 23, 2015. Plaintiffs' Amended Complaint alleges claims involving claims for breach of contract, breach of common law and statutory duties, violation of Ark. Code Ann. § 15-74-601, et seq., and § 15-74-701, et seq., violation of the Arkansas Deceptive Trade Practices Act, unjust enrichment, and accounting of royalties due and owing. Plaintiffs are seeking compensatory and statutory damages and injunctive relief. Plaintiffs' counsel and Defendants' counsel have engaged in exchanges of information for the purpose of clarifying the factual and legal issues, including class certification and the merits of Plaintiffs' claims, and have engaged in numerous discussions regarding the litigation and the possibility of a class settlement.

         2. The parties have negotiated a Class Action Settlement Agreement (Doc. 36-1), [2] which contemplates that Defendants will fully and completely satisfy any and all claims of class members by depositing in an interest-bearing escrow account a total Settlement Payment in the amount of $3, 250, 000. The parties agree that the costs of administering the settlement, class representative fees, and the attorney's fees and costs of Class Counsel will be deducted from the $3, 250, 000 total settlement payment. By entering into the Settlement Agreement, neither Plaintiffs nor Defendants make any admissions relating to the claims and defenses raised in this lawsuit.

         3. The Settlement Class, as defined in the Settlement Agreement, includes the following:

All non-excluded persons and entities who have, during the Class Period, received one or more gas royalty payments directly from Chesapeake under an Arkansas Lease, according to the business records maintained by Chesapeake.

         4. The Settlement Class excludes:

(i) Chesapeake and their respective predecessors, successors and affiliates; (ii) those persons or entities whose Owner Numbers are delineated on Exhibit F attached to the Class Settlement Agreement, all of whom have reached a resolution with Chesapeake or are presently litigating their claims outside of the Looney case, according to Chesapeake's records; (iii) those persons or entities whose Owner Numbers are delineated on Exhibit G attached to the Class Settlement Agreement, all of whom were members of the settlement class in Vanoven et at. v. Chesapeake Energy Corporation, et al., Case No. 4:10-cv-158-BSM (U.S.D.C. E.D. Ark.), according to Chesapeake's records; (iv) those persons or entities whose Owner Numbers are delineated on Exhibit H attached to the Class Settlement Agreement, all of whom have royalties that have escheated, according to Chesapeake's records; (v) the federal government; (vi) legally-recognized Indian Tribes; and (vii) any person who serves as a judge in this civil action and his/her spouse.

         5. The Settlement Agreement between the Settlement Class and the Defendants appears, upon preliminary review, to be fair, reasonable, and adequate.

         6. In determining that the proposed Settlement Agreement appears to be fair, reasonable and adequate, the Court has considered the following: (a) the proposed Settlement Agreement has been fairly and honestly negotiated; (b) sufficient questions of law and fact exist that make the outcome of a trial on the merits uncertain; (c) the value of the proposed Settlement Agreement is reasonable, given the possible outcome of protracted and expensive litigation; and (d) the parties and their attorneys, who are very experienced in class action royalty underpayment litigation, believe that the Settlement Agreement is fair and adequate, and recommend that the Settlement Agreement be preliminarily approved.

         7. The parties entered into the Settlement Agreement only after engaging in a meaningful exchange of information, and with full knowledge of the critical factual and legal issues. The Settlement Agreement is the product of non-collusive, arms-length bargaining.

         8. The Class Settlement avoids the time and expense of continuing this litigation for an indeterminate period of time, with attendant risks, costs, and delay for both sides.

         9. Class members will receive benefits from the Settlement Agreement, as Defendants have agreed to make a Settlement Payment to the benefit of the ...


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