M.D. Mark, Inc. v. Kerr-McGee Corp.

565 F.3d 753, 178 Oil & Gas Rep. 229, 2009 U.S. App. LEXIS 10081, 2009 WL 1298691
CourtCourt of Appeals for the Tenth Circuit
DecidedMay 11, 2009
Docket08-1040, 08-1047, 08-1236
StatusPublished
Cited by159 cases

This text of 565 F.3d 753 (M.D. Mark, Inc. v. Kerr-McGee Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
M.D. Mark, Inc. v. Kerr-McGee Corp., 565 F.3d 753, 178 Oil & Gas Rep. 229, 2009 U.S. App. LEXIS 10081, 2009 WL 1298691 (10th Cir. 2009).

Opinion

BRISCOE, Circuit Judge.

Plaintiff M.D. Mark, Inc. (Mark) filed this action alleging that defendants Kerr-McGee Corporation (Kerr-McGee) and Oryx Energy Company breached the terms of seismic data license agreements and also misappropriated seismic data owned by Mark. Mark prevailed on its claims at trial and was awarded $25,266,381.00 in compensatory damages. *756 Kerr-McGee now appeals, attacking each aspect of the jury’s liability findings, as well as the amount of the damage award. Mark has filed two cross-appeals, the first of which challenges, on a provisional basis, three of the district court’s rulings at trial, and the second of which challenges the district court’s denial of its motion for attorney fees. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm the district court’s judgment in all respects.

I

PGI, Mark and the seismic data

In the 1970’s and 1980’s, a Texas-based company called Professional Geophysics, Inc. (PGI) developed, at substantial expense, a collection of geophysical information called seismic data. PGI in turn licensed that data, for a fee, to members of the oil and gas industry for exploration purposes. In 1991, PGI declared bankruptcy and Mark, a Texas-based company, purchased PGI’s database for $1.4 million, or approximately $53 per mile for approximately 26,000 miles of data. Mark then began, and continues to this day, to license that data.

Sun/Oryx

In the early 1980’s, the Sun Exploration & Production Company (Sun), a Delaware corporation headquartered in Houston, Texas, entered into a series of license agreements with PGI covering approximately 16,000 miles of seismic data. In December 1985, Sun created a subsidiary called Sun Operating Limited Partnership (SOLP) and transferred to it a group of assets, including the seismic data licensed from PGI. In doing so, however, Sun apparently did not transfer to SOLP any of the underlying license agreements. In May 1989, Sun changed its name to Oryx Energy Company (Oryx).

Kerr-McGee

Between 1984 and 1994, Kerr-McGee, an Oklahoma-based corporation, entered into a series of license agreements in its own name with PGI and Mark covering approximately 775 miles of seismic data. Kerr-McGee itself, however, did not engage in any oil or gas exploration. Instead, all such exploration was conducted by its subsidiaries, including Kerr-McGee Oil and Gas Corporation (KMOG).

Merger between Kerr-McGee and Oryx and subsequent changes

On October 14, 1998, Kerr-McGee and Oryx entered into a written agreement pursuant to which Oryx would merge into Kerr-McGee. That merger was approved by the companies’ shareholders on February 26, 1999.

Communications between Oryx/KerrMcGee and Mark re merger

On October 16, 1998, Mark, aware of the pending merger between Kerr-McGee and Oryx, sent a letter to Oryx reminding it that Oryx had licensed “certain PGI ... seismic data” and that “[t]hose licenses [we]re not transferable, as stated in the agreements.” App. at 1936. The letter went on to state:

However, M.D. Mark will allow the data to be transferred and licensed to Kerr-McGee upon the payment of a transfer fee and the execution of a current M.D. Mark license agreement. This offer to transfer the data is valid for thirty (30) days from the date of this letter. If, however, Kerr-McGee does not wish to transfer the data, then M.D. Mark is requesting the immediate return of its data within thirty (30) days.

Id. Oryx apparently responded to the letter by telephoning Mark and asking addi *757 tional questions about the proposed transfer fee. Id. at 1919.

On November 11, 1998, Marilyn Davies, the president of Mark, sent another letter to Oryx stating, in pertinent part:

As we discussed, M.D. Mark would authorize Kerr McGee to have access to this seismic data for about $200 per mile if all of the data was retained. The fee would go higher if Kerr McGee chose to retain only certain data sets instead of the entire volume. As you know, the current price for most of this data is $1200 per mile with discounts for volume deals. M.D. Mark’s fee is just about 10% of the current fee. With the authorization of access, M.D. Mark would require Kerr McGee to execute a new license agreement in its name agreeing to protect the data of M.D. Mark.
Since the actual consummation of the [merger] deal won’t take place until 1st Quarter 1999, M.D. Mark will extend its offer to transfer the data until thirty (30) days after the merger/consolidation/control change date.

Id.

No further response was received from Oryx until February 11, 1999, when Patricia Horsfall, Oryx’s manager of exploration, sent a letter (prepared for her by Kerr-McGee’s in-house attorney Carlos Salazar) to Mark stating, in pertinent part:

Contingent upon approval of the merger by the companies’ shareholders, your records will need to be changed to reflect the name change of the Licensee, under the referenced Seismic Data License Agreement(s), from Oryx Energy Company to Kerr-McGee Oil & Gas Corporation, a subsidiary of Kerr-McGee, located in Houston.

Id. at 1939.

On February 17, 1999, Davies sent a letter to Horsfall stating that “the PGI seismic [data] is not transferable, assignable, etc. and cannot be made available to Kerr-McGee without prior written approval from M.D. Mark and the payment of an authorization or transfer fee.” Id. at 1925 (emphasis in original). Davies’ letter further stated that, in the absence of such authorization or transfer fee, “the licenses of all PGI seismic data in Oryx’s possession w[ould] be automatically terminated” upon the closing of the merger, and all “data must be returned.” Id.

On March 26, 1999, Salazar, Kerr-McGee’s in-house counsel, sent a letter to Mark stating:

Please be advised that Kerr-McGee Corporation will not pay a transfer fee for any data subject to a license from PGI to Oryx Energy Company or any of its predecessors. We are in the process of packaging all data identified on our records as being subject to any such license and will be shipping it to you as soon as packaging is complete.

Id. at 1926.

On March 31, 1999, Davies acknowledged Salazar’s March 26, 1999 letter and requested that all data be “returned to [Mark’s] storage facilities” in Houston, Texas. Id. at 1927. Davies’ letter outlined all of the types of material that needed to be returned to Mark, and stated, in conclusion, “that any and all licenses to PGI seismic data re [sic] now terminated.” Id. at 1928.

Shortly thereafter, however, Kerr-McGee changed its position. On April 8, 1999, Salazar sent Mark a letter stating:

We have just been made aware of the decision of the appellate court in your case,

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
565 F.3d 753, 178 Oil & Gas Rep. 229, 2009 U.S. App. LEXIS 10081, 2009 WL 1298691, Counsel Stack Legal Research, https://law.counselstack.com/opinion/md-mark-inc-v-kerr-mcgee-corp-ca10-2009.