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Smith v. Seeco, Inc.

United States Court of Appeals, Eighth Circuit

April 23, 2019

Connie Jean Smith, Individually and on behalf of all others similarly situated Plaintiff- Appellee
v.
SEECO, Inc., Now known as SWN Production (Arkansas), LLC; Desoto Gathering Company, LLC; Southwestern Energy Services Company; Southwestern Energy Company Defendants - Appellees
v.
Connie Arnett; Cecil Barnes, Jr.; Cecil Barnes, III; David Brown; Edward Bryant; Roy Bryant; Rob Cassell; Sally Cassell; Patricia Cates; Isaac Criswell; Jerry Donahue; James Duncan; Kim Carrell Gifford; John Gottsponer; Myrtle Gottsponer; Clemens Gottsponer; Thomas Gray; Karrie Gray; Robert Hall; James Harrison; John Hart; Kevin Holland; Hubert Isom; Joyce Isom; Floyd Jerrell; Sherry Jerrell; Brenda Sue Kay; Bennie Latimer; Junior Latimer; Megan Lockard; Dana Love; James Williams; Lucretia Williams; Dennis Cossey; Sandra Cossey; Michelle Gifford; Robert Lee; Juanita Boone; James Throneberry; Karen Throneberry; Wanda Liddell; Norma Bryant; Charles Noakes Movants - Appellants Connie Jean Smith, Individually and on behalf of all others similarly situated Plaintiff- Appellee
v.
SEECO, Inc., Now known as SWN Production (Arkansas), LLC; Desoto Gathering Company, LLC; Southwestern Energy Services Company; Southwestern Energy Company Defendants - Appellees
v.
Charter Land Co., LLC Movant - Appellant
v.
Connie Jean Smith, Individually and on behalf of all others similarly situated Plaintiff- Appellee
v.
SEECO, Inc., Now known as SWN Production (Arkansas), LLC; Desoto Gathering Company, LLC; Southwestern Energy Services Company; Southwestern Energy Company Defendants - Appellees
v.
Kimberly Wyborny; David Bird; Laurel Bird; Kenneth Brents Family Trust; Brents Holding Company, LLC; Dunaway Brothers Properties, LLC; Betty B. Dunaway Rev. Trust; Arthur Dunaway Rev Trust; Lonnie Wayne Harris; Thomas Hart; Hart of Arkansas Minerals, LLC; Paula Barton; Paula Barton Revocable Trust; Dorr B. Moore; Barbara Moore; Dorr B. Moore Jr. Trust; Barbara J. Smith; Ruth Ann Needels; Ruth Ann Needels Living Trust; Gary Goff; Verdain Grady; Glyva Jo Grady; Dana Walker; Julia Walker; Brinda Williams; Steven English; Thane Fleming; Nancy Fleming; Rex Harrison; Mary Harrison; Carol Howell; Gailon Howell; Marilynn Moore; Robert Owens; Faye Owens; Joseph Peacock; Eric Rice; William Rice; Theresa Tubbs; Jeannine Hill Thomas; David Michael Wood, Individually and as trustee of the Dickson/Wood Land Trust; Warren Christopher; Georgene Christopher; Warren Christopher, as representative of Mountain Aire East, Inc.; MWI, LLC; Melissa Ruth Christopher; Pamela C. Harmon Movants - Appellants Connie Jean Smith, Individually and on behalf of all others similarly situated Plaintiff- Appellee
v.
SEECO, Inc., Now known as SWN Production (Arkansas), LLC; Desoto Gathering Company, LLC; Southwestern Energy Services Company; Southwestern Energy Company Defendants - Appellees
v.
Connie Arnett; Cecil Barnes, Jr.; Cecil Barnes, III; James Booth; Lori Booth; David Brown; Edward Bryant; Roy Bryant; Kim Carrell Gifford; Roby Cassell; Sally Cassell; Patricia Cates; Isaac Criswell; Jerry Donahue; James Duncan; John Gottsponer; Myrtle Gottsponer; Clemens Gottsponer; Thomas Gray; Karri Gray; Robert Hall; James Harrison; John Hart; Kevin Holland; Hubert Isom; Joyce Isom; Floyd Jerrell; Sherry Jerrell; Kathy Johnston; Brenda Sue Kay; Bennie Latimer; Junior Latimer; Megan Lockard; Dana Love; James Williams; Lucretia Williams; Dennis Cossey; Sandra Cossey; Michelle Gifford; Robert Lee; Juanita Boone; James Throneberry; Karen Throneberry; Wanda Liddell; Norma Bryant; Charles Noakes Movants - Appellants

          Submitted: January 15, 2019

          Appeals from United States District Court for the Eastern District of Arkansas - Little Rock

          Before SMITH, Chief Judge, COLLOTON and ERICKSON, Circuit Judges.

          ERICKSON, CIRCUIT JUDGE.

         In this appeal four groups of prospective intervenors-the Arnett I, Arnett II, Charter Land Co. LLC, and Wyborny appellants-challenge the district court's[1]denials of their motions to intervene in a class action lawsuit by named plaintiff Connie Jean Smith against SEECO, Inc., et al.[2] They also challenge the district court's procedures for opting-out from the class. We affirm the district court's ruling that Charter Land's motion to intervene was untimely, and dismiss the remaining appeals for lack of jurisdiction.

         I. Background

         Connie Jean Smith filed a putative class action lawsuit against SEECO, Inc., et al., alleging underpayment of gas royalties.[3] The claims related to the rate of payment that SEECO and its subsidiaries had offered interest-holders in oil wells in the Fayetteville Shale formation. When Smith filed her lawsuit, two class actions on related claims were already pending in state court (referred to as "Snow" and "Stewmon"). The district court certified a class of all of SEECO's royalty owners (including owners within and outside of Arkansas) with leases containing the relevant lease language. The Smith class by definition covered all of the related state actions.

         The district court formulated a class-notice plan with specific opt-out procedures. To opt-out, a royalty owner had to send a letter to the class administrator postmarked within sixty days of the notice date stating the owner's desire to be excluded from the class. The court-approved opt-out plan required the letter to: (1) state the owner number, name, and address of the person or entity requesting exclusion, (2) identify by property name/number the well or wells in which the owner held a royalty for which they were requesting exclusion, and (3) contain a notarized signature by the individual or an officer of the entity requesting exclusion. Two hundred forty-eight royalty owners moved to intervene to challenge the court's opt-out procedures, including the Arnett appellants. The district court declined to rule on the motions until the class members had an opportunity to comply with the requirements in full. Most of the owners who signed the intervention motion chose to submit opt-out requests.

         On January 18, 2017, the district court denied the motions to intervene and to modify the opt-out procedures. The key concern underlying the district court's ruling on the opt-out procedures was a fear "that lawyers, rather than the class members themselves, may be making decisions, and extra protections must be in place to ensure the class members made the opt-out decision." This concern was bolstered by later experience. For example, the court received opt-out requests from different groups of lawyers purporting to represent the same royalty owner and interest. Additionally, the fact that some individuals owned multiple wells and some wells had multiple owners meant that the court felt the opt-out needed to require "owners to specify which properties/wells they wished excluded, rather than merely provide their name and/or only provide the well number." After all opt-out requests had been submitted, the court concluded that "the opt-out procedures were not overly burdensome, and ... in the aggregate, the process worked as expected." As relevant to this appeal, forty-five of the forty-six Arnett appellants (the forty-three appellants in Arnett I and two of the three additional appellants in Arnett II) failed to comply with the opt-out requirements and therefore remained in the class.

         The Arnett appellants asked this court for mandamus relief from the January 18, 2017, order. We denied the request on February 15, 2017. On March 30, 2017, the Arnett appellants filed a second motion to intervene. On May 24, 2017, the district court denied this second, duplicative motion.

         On May 18, 2017, the state court handling the Snow litigation approved a global settlement class covering all of the members of the Smith class. The state court preliminarily approved the settlement. At the time of the settlement the Smith case was fast approaching a firm trial date. The settlement provided that if the Smith trial began the settlement would be terminable. SEECO asked the district court to continue Smith's trial so that the settlement in Snow could be finalized. The district court denied the motion.

         Before trial began, Snow disclosed to the state court a fee-sharing agreement between Snow and Smith class counsel. Under the agreement Smith class counsel would receive only roughly one-third of the attorney's fees from any global settlement (with the other two-thirds going to Snow class counsel), but Smith counsel would keep all of the attorney's fees awarded after a successful trial. Snow counsel claimed the agreement was still in effect, creating a potential counsel-adequacy problem under Rule 23. Smith counsel asserted that the agreement was no longer in effect. As a result of the dispute, SEECO asked the federal district court to decertify the Smith class and remove class counsel.

         The district court denied the motion. The court concluded that class counsel's performance to that point had been "nothing short of impressive" and found that the evidence indicated that the fee-sharing agreement terminated long before the Smith class was certified. SEECO asked us for mandamus relief and a stay, seeking to protect the Snow settlement. We denied their request.

         As relevant to this appeal, the Wyborny appellants filed a similar motion echoing SEECO's class-adequacy concerns. The district court denied the motions. Similar arguments were made at trial, and again rejected. At the close of evidence, the district court noted that "[t]his was a well-tried case" and told ...


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