Black Hawk Oil Co. v. Exxon Corp.

1998 OK 70, 969 P.2d 337
CourtSupreme Court of Oklahoma
DecidedDecember 17, 1998
Docket88,868, 88,881
StatusPublished
Cited by40 cases

This text of 1998 OK 70 (Black Hawk Oil Co. v. Exxon Corp.) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Black Hawk Oil Co. v. Exxon Corp., 1998 OK 70, 969 P.2d 337 (Okla. 1998).

Opinion

OPINION

WATT, Justice.

¶ 1 Although these cases began as separate actions, and generated separate appeals, they were consolidated both in the trial court and here. Consequently we will treat them as if only one ease, and one appeal were before us.

¶2 Natural gas producers in Kingfisher County built the Dover-Hennessey Gas Products Plant in 1961 as a cooperative joint venture. The Plant was originally operated by Humble Oil Company, and later by Humble’s successor, defendant Exxon. The Plant started buying gas from producers in 1962 and extracting from it liquid propane, butane, ethane, and natural gasoline. The agreements these producers made were memorialized in contracts that are at issue in this appeal.

¶3 In order to extract by-products that the Plant produced from the gas, the Plant operator was required to compress the gas it received. Temperature and pressure changes in the gas as it moves through gas transmission lines, create oil mixed with water, called scrubber oil or slop oil. Slop oil is collected in devices called drips and scrubbers that are installed in the transmission lines. The Plant operator regularly collected and sold the slop oil but kept the money realized from its sale without accounting for it to the gas producers.

¶ 4 On May 17, 1993, plaintiff, Black Hawk Oil Company, brought a class action suit for itself and others similarly situated against Exxon Corporation, Oryx Energy-Company, and many others as defendants. Plaintiffs seek damages in both contract and tort for defendants’ failure to pay for the slop oil the Plant operators collected. Louis Dreyfus Natural Gas Corporation later became a party plaintiff in the action. Plaintiffs claim that then- contracts with defendants required defendants to pay for the slop oil. Plaintiffs also claim that defendants committed fraud by failing to account for the slop oil in the monthly statements of account defendants provided to plaintiffs and the other producers. Millions of dollars are at issue.

¶ 5 Black Hawk’s predecessor in interest to the properties at issue here was Toi'ch Energy Advisors, Inc., which is Black Hawk’s parent corporation. Torch hired Petroleum Management Systems, Inc. to audit the Plant, and on August 23,1989, Petroleum Management Systems issued an audit report that revealed, for the first time, that the Plant operators were not accounting to the producers for the proceeds from the sale of slop oil. In 1990, Torch transferred title to its subsidiary Black Hawk, and by October 1992 Black Hawk had sold all its interests in the properties at issue.

¶ 6 There are five basic forms of contract between producers and the Plant operators. There are minor valuations in the language of the contracts but all use the term “plant products.” All contracts were drafted by *341 Exxon’s predecessor, Humble Oil and Refining, Inc. Only four of the five forms of contract are involved in this action.

¶ 7 The trial court held a hearing over the course of five days in early 1996 on the issue of whether a class should be certified in the case. The trial court entered its order certifying the class under 12 O.S.1991 § 2023 on January 8, 1997. 1 The trial court designated Black Hawk and Louis Dreyfus as *342 class representatives and certified the following class:

All persons, whether natural persons, corporations, or other entities, who have sold natural gas either as casing head gas, gas well gas, or other hydrocarbons to defendant Exxon as the operator of the gas processing plant known as the Dover-Hennessey gas products plant in Kingfisher County, Oklahoma, pursuant to a “percent of proceeds” contract with Exxon or its 'predecessor. Class includes working interest owners and operators (such as Black Hawk). The class does not include those persons whose contracts with Exxon are well head purchase contracts.

¶ 8 The trial court’s order was appealable by right under 12 O.S.1996 Supp. § 993.A.6. 2 Two appeals from the order were taken, one by Exxon and several other defendants, and the other by Oryx. We consolidated the two appeals by minute order dated February 14, 1997.

ISSUE

¶ 9 The sole issue in this case is whether the trial court abused its discretion in certifying a class. We hold that the trial court did not abuse its discretion in certifying a class.

DISCUSSION

I. THE STANDARD OF REVIEW

¶ 10 Where, as is the ease here, the trial court has certified a class “it is clear that in order for appellant to succeed in [its] appeal it must demonstrate that the trial court abused its discretion in certifying [the] class action.” Shores v. First City Bank Corp., 1984 OK 67 ¶4, 689 P.2d 299, 301. Unless the record before us here indicates that the trial court has abused its discretion, we must affirm its decision to certify a class. Further, § 2023.C.l gives the trial court flexibility and discretion to modify, or even to set aside, its order of certification if later developments demonstrate a need to do so. Thus,

The pragmatically correct action, in the face of a close question as to certification, has been said to sustain certification because if it develops later during the course of the trial that the order is ill-advised, the order is always (prior to judgment on the merits,) subject to modification.

Perry v. Meek, 1980 OK 151 ¶ 19, 618 P.2d 934, 940.

II. FINDINGS REQUIRED FOR CERTIFICATION OF A CLASS

¶ 11 The requirements for certifying a class are set forth in § 2023, note 1, which *343 is identical to Rule 23 Federal Rules of Civil Procedure in all respects material to this appeal. We may look to federal authority in interpreting § 2023. Shores, 1984 OK at ¶ 5, 689 P.2d 299; Matoon v. City of Norman, 1981 OK 92 ¶ 8, 633 P.2d 735.

¶ 12 In order to maintain a class action, plaintiffs were required to demonstrate that the class met the four requirements set forth in Subsections 1 through 4 of § 2023.A, and one of three additional requirements contained in 2023.B. The trial court found that all requirements necessary to establish a right to the certification of a class were met.

¶ 13 Subsections 1 through 4 of § 2023.A, respectively, require (1) numerosity, i.e. the class is so numerous that the joinder of all members is impracticable; (2) commonality, i.e. there are questions of law or fact common to the class; (3) typicality, i.e.

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Bluebook (online)
1998 OK 70, 969 P.2d 337, Counsel Stack Legal Research, https://law.counselstack.com/opinion/black-hawk-oil-co-v-exxon-corp-okla-1998.