Chevron USA, Inc. v. Vermilion Parish School Board

364 F.3d 607, 2004 WL 576179
CourtCourt of Appeals for the Fifth Circuit
DecidedMarch 24, 2004
DocketNo. 03-30602
StatusPublished
Cited by4 cases

This text of 364 F.3d 607 (Chevron USA, Inc. v. Vermilion Parish School Board) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chevron USA, Inc. v. Vermilion Parish School Board, 364 F.3d 607, 2004 WL 576179 (5th Cir. 2004).

Opinion

PER CURIAM:

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT TO THE SUPREME COURT OF LOUISIANA, PURSUANT TO RULE XII OF THE RULES OF THE SUPREME COURT OF LOUISIANA.

TO THE SUPREME COURT OF LOUISIANA AND THE HONORABLE JUSTICES THEREOF:

I. STYLE OF THE CASE

The style of the cases in which certification is made is Chevron U.S.A., Inc., Plaintiff-Counter DefendanU-Appellee, versus Vermilion Parish School Board, Defendant-Counter Claimant-Appellant; Texaco, Inc.; Texaco Exploration & Production, Inc., Plaintiffs-Counter Defendants-Ap-pellees, versus Vermilion Parish School Board, DefendanWCounter Claimant-Appellant; Amerada Hess Corp., Plaintiff-Counter Defendant-Appellee, versus Vermilion Parish School Board, Defendant Counter Claimant-Appellant; Union Oil Company of California, Plaintiff-Counter Defendant-Appellee, versus Vermilion Parish School Board, Defendant-Counter Claimant-Appellant; Mobil Oil Corp.; Mobil Oil Exploration & Producing Southeast, Inc., Plaintiff-Counter Defendant-Appel-lee, versus Vermilion Parish School Board, Defendant-Counter Claimant-Appellant; Exxon Mobil Corp., Plaintiff-Counter Defendant-Appellee, versus Marshall W. Gui-dry, Defendant-Counter Claimant-Appellant; and Exxon Mobil Corp., Plaintiff-Counter Defendant-Appellee, versus Vermilion Parish School Board, Defendant-Counter Claimant-Appellant. This case involves a determinative question of state law; federal jurisdiction is based solely on diversity of citizenship.

II. STATEMENT OF THE CASE

A. Background

In 1999, counsel for the Vermilion Parish School Board and counsel for Marshall W. Guidry (the “Royalty Owners”) sent individual demand letters to Chevron USA, Inc., Texaco, Inc., Amerada Hess Corporation, Union Oil Company of California, Mobil Oil Corporation, and Exxon Mobil Corporation (the “Oil Companies”) pursuant to Mineral Code Article 137. La. R.S. 31:137. The letters stated that they were sent on behalf of the Royalty Owners and “all similarly situated royalty owners — all royalty and overriding royalty owners to whom you pay gas royalties in Louisiana.” Both letters demanded payment of unpaid royalties due on natural gas liquids ( “NGLs”) the Oil Companies allegedly underpaid as [610]*610a result of using a “lease/plant split instead of the reasonable and actual costs of processing NGLs” and for “liquids that you pulled out of the gas stream and did not use to compute royalties at all.”

In 2000, counsel for the Royalty Owners again sent individual demand letters to the Oil Companies. Like the first letters, counsel stated that they were writing on behalf of the Royalty Owners and “all similarly situated royalty owners — all royalty and overriding royalty owners to whom you pay dry gas royalties on production in Louisiana.” The letters demanded payment of underpaid dry gas royalties as a result of the Oil Companies computing royalties “using prices that understated the price actually available in true arms length sales.” After each Oil Company responded to the demand letters, each filed a separate declaratory judgment action in federal court seeking a determination that it had no liability to the Royalty Owners. The Royalty Owners filed answers and also a counterclaim “individually and as representatives of a class of all others similarly situated” against each of the Oil Companies complaining of underpayment of royalties on NGLs and dry gas production. All cases were consolidated.

The putative class as defined would include all royalty and overriding royalty interest owners in all Louisiana mineral leases owned by the Oil Companies whose royalties have been computed using either of the two methods challenged by the Royalty Owners. The Royalty Owners concede that the class would number in the thousands.

The parties filed Cross Motions for Partial Summary Judgment on the issue of whether the demand letters written by counsel for the individual Royalty Owners to the Oil Companies satisfied the requirements of Louisiana’s Mineral Code for members of the putative class. The district court held that the demand letters were “legally insufficient to serve as written notice on behalf of unnamed royalty owners under Article 137 of the Louisiana Mineral Code.” Chevron USA, Inc. v. Vermillion Parish School Bd., 128 F.Supp.2d 961, 968 (W.D.La.2001). The district court based its decision first on the plain language of Article 137 which provides: “... if a mineral lessor seeks relief for the failure of his lessee to make timely or proper payment of royalties, he must give his lessee written notice of such failure as a prerequisite to a judicial demand for damages or dissolution of the lease.” The court found that “by its own terms, ‘He must give his lessee written notice’, the notice required by Article 137 must be individualized.” 128 F.Supp.2d 961, 967 (W.D.La.2001). The court explained that under the statutory scheme, after the Article 137 demand has been made, the lessee has 30 days to either pay the royalties due or respond in writing and state a reasonable cause for non-payment. La. Mineral Code Art. 138; La.R.S. 31:138. Only if the lessee fails to pay or provide a reasonable explanation for its failure to pay, does the dissolution of the lease become a possible remedy. Relying on the official comment to Articles 137-141, the court stated: “The device of notice is merely to inform the lessee he has not paid royalties deemed by the lessor to be due. The total effect of the articles is to provide an impetus to timely payment of royalties due, while giving lessees a reasonable way in which to avoid the harsh remedy of cancellation. It also affords the lessee an opportunity to evaluate a non-payment situation and to make a decision regarding whether the royalties allegedly due should be paid.”

After reviewing the case law from the intermediate Louisiana Courts of Appeals, the district court concluded that the decision of the Louisiana First Circuit Court of Appeals in Stoute v. Wagner & Brown, 637 So.2d 1199 (La.App. 1 Cir.1994), was cor[611]*611rect in its interpretation of Article 137, and distinguished another case from the Louisiana First Circuit, Lewis v. Texaco Exploration and Production Co., Inc., 698 So.2d 1001 (La.App. 1 Cir.1997).

The Royalty Owners appealed. This court dismissed the appeal for lack of jurisdiction because “the district court made no ruling that was binding on the appellants individually ... it merely ruled that the letters were insufficient as to claims on behalf of a putative class (royalty owners not named in the letters) that did not include the appellants.” Chevron USA, Inc. v. Vermilion Parish School Bd., 294 F.3d 716, 719-20 (5th Cir.2002).

On remand, the Royalty Owners filed requests for discovery to which the Oil Companies objected. The Oil Companies filed a Motion to Deny Class Certification and for Partial Summary Judgment seeking dismissal of the class claims. The district court granted the motions to deny class certification on the basis of its 2001 “ruling that the demand letters were not effective under Article 137 as to the putative class and the members of the putative class have no right of action under Article 137.” Because the district court denied class certification, it did not rule on the motion for partial summary judgment. The royalty owners then lodged this appeal.

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Cite This Page — Counsel Stack

Bluebook (online)
364 F.3d 607, 2004 WL 576179, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chevron-usa-inc-v-vermilion-parish-school-board-ca5-2004.