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Stephens Production Co. v. Mainer

Supreme Court of Arkansas

April 18, 2019

STEPHENS PRODUCTION COMPANY APPELLANT
v.
BILL R. MAINER; PEGGY ANN MAINER; MARY HAMMOND LIVING TRUST; H.H. HAMMOND LIVING TRUST; BILLY RAY MAINER, JR.; DWIGHT EDWARD COLE; AND CYNTHIA ROSE COLE; INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED APPELLEES

          APPEAL FROM THE FRANKLIN COUNTY CIRCUIT COURT, SOUTHERN DISTRICT [NO. 24CCV-15-28] HONORABLE DENNIS CHARLES SUTTERFIELD, JUDGE.

          Conner & Winters, LLP, by: G. Alan Wooten and Michael D. Sutton, for appellant.

          Danielson Law Firm, PLLC, by: Erik P. Danielson, for appellees.

          ROBIN F. WYNNE, ASSOCIATE JUSTICE.

         Stephens Production Company appeals from an order of the Franklin County Circuit Court granting appellees' motion for class certification. Stephens contends that the trial court erred by granting the motion because the requirements of numerosity and superiority were not met. We affirm.

         Appellees own mineral interests in land located in Franklin County. Stephens has leases with appellees and others that permit it to explore, drill, produce, and sell hydrocarbons from the leased property. After Stephens suspended royalty payments, appellees filed a complaint in August 2015 alleging that the payments were suspended in an effort by Stephens to recoup improper deductions. The complaint asserted causes of action for (1) breach of contract; (2) violation of the prudent operator standard, Arkansas Code Annotated section 15-73-207 (Repl. 2009); (3) conversion; (4) violation of Arkansas Code Annotated sections 15-79-601 to -604; (5) fraud and deceit; and (6) violation of the Arkansas Deceptive Trade Practices Act.

         Appellees moved for class certification on March 19, 2018. The class sought to be certified was described as

[a]ll persons or entities who are, or were, royalty owners in wells producing natural gas from the Barton Production Unit in Franklin County, Arkansas where Stephens Production Company is or was the operator and/or working interest owner/lessee under oil and gas leases which contain the following lease language:
"Lessee shall pay Lessor one-eighth (or applicable royalty if amended) of the proceeds received by Lessee at the well for all gas (including substances contained in such gas) produced from the leased premises and sold by Lessee."
Exclusions: The following persons are excluded from the class:
The persons or entities excluded from the Class are: (a) all governmental entities, including federal, state and local governments and their respective agencies, departments, or instrumentalities; (b) the States and territories of the United States or any foreign states or territories; (c) the United States of America; (d) any persons or entities that Plaintiffs' counsel is, or may be, prohibited from representing under the Arkansas Rules of Professional Conduct, including Defendant's counsel, their firms, and members of their firms; and (j) members of the judiciary and their staff to whom this action is assigned.

         In their brief in support of the motion to certify, appellees alleged that the potential class numbered more than thirty-six members and "is so numerous and geographically dispersed that joinder of all members is impractical." They further alleged that a class-action suit was the superior method of resolving the dispute, as the central legal and factual issues presented are common to all members of the class. Appellant opposed the motion, contending that the requirements for class certification had not been met. Appellant asserted that the number of potential class members was too small to warrant certification. It also asserted that a class action was not superior to other methods for resolving the dispute because there existed no common questions of law and fact, and the potential class is too small for the time and expense involved in a class-action suit. After a hearing, the trial court entered an order granting appellees' motion and certifying the proposed class. This appeal followed.

         Appellant argues that certain requirements for certification of a class were not met here. The six requirements for class-action certification as stated in Rule 23 of the Arkansas Rules of Civil Procedure (2017) are (1) numerosity, (2) commonality, (3) typicality, (4) adequacy, (5) predominance, and (6) superiority. Diamante, LLC v. Dye, 2013 Ark. 501, at 2, 430 S.W.3d 710, 714. The proposed class must be susceptible to precise definition, and before a class can be certified under Rule 23, the class description must be sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member of the proposed class. See Van Buren Sch. Dist. v. Jones, 365 Ark. 610, 232 S.W.3d 444 (2006).

         The determination that the class-certification criteria have been satisfied is a matter within the broad discretion of the trial court, and this court will not reverse the trial court's decision absent an abuse of that discretion. ChartOne, Inc. v. Raglon, 373 Ark. 275, 283 S.W.3d 576 (2008). In reviewing a class-certification order, this court focuses on the evidence in the record to determine whether it supports the trial court's conclusion regarding certification. Id. Neither the trial court nor this court shall delve into the merits of the underlying claims when deciding whether the Rule 23 requirements have been met. Id. In this regard, "a trial court may not consider whether the ...


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