Combs v. Devon Energy Prod. Co.
| Decision Date | 27 December 2013 |
| Docket Number | No. 108,624.,108,624. |
| Citation | 303 P.3d 1278 |
| Parties | Jayson COMBS, Individually, and as Representative Party on Behalf of a Class of Surface Owners, Appellees, v. DEVON ENERGY PRODUCTION COMPANY, L.P., Appellant. |
| Court | Kansas Court of Appeals |
OPINION TEXT STARTS HERE
Appeal from Kearny District Court; Philip C. Vieux, Judge.
Stanford J. Smith, Jr., Marcia A. Wood, and W. Rick Griffin, of Martin, Pringle, Oliver, Wallace & Bauer, L.L.P., of Wichita, for appellant.
Lee Thompson and Deborah Thompson, of Thompson Law Firm, LLC, of Wichita, for appellees.
Before McANANY, P.J., ATCHESON and ARNOLD–BURGER, JJ.
Devon Energy Production Company, L.P. appeals from the district court's order certifying a class in this suit. Plaintiff Jason Combs, on behalf of himself and others, claims that Devon failed to provide a usable supply of free gas to leasehold residents for home use under the terms of oil and gas leases attached to their properties.
In the 1940's, Lester McCoy and C.W. Chapman entered into leases of their properties in Kearny County for oil and gas exploration and production. These leases are collectively referred to as the McCoy lease. Devon is the current lessee under the McCoy lease. Since 2001, Combs has owned and occupied a residence on the property subject to the McCoy lease.
The McCoy lease includes a provision that “[l]essor shall have the privilege at his own risk and expense of using gas from any gas well on said land for stoves and inside lights in the principal dwelling located on the leased premises by making his own connection thereto.” The parties refer to this as a “free gas clause.” Combs contends, and Devon does not dispute, that this lease provision runs with the land. Since Combs purchased the property, he has been obtaining free gas for his home under this provision.
In April 2010, Combs filed this action against Devon asserting that Devon improperly operated his lease by failing to provide uninterrupted gas service or by providing gas not usable by him. According to Combs, he has experienced reoccurring problems with his household appliances due to inadequate pressure in Devon's line and excessive moisture in the line that causes the line to freeze in winter.
Combs alleged in his petition that other owners of residences on Kansas real estate subject to Devon “free gas” leases have experienced similar problems. Thus, Combs sought to represent a class of similarly situated homeowners. Combs asked the district court for a class-based declaration that the free gas clause in his lease and similar clauses in other leases expressly or impliedly require Devon to furnish homeowners with “useable” gas of adequate quality and sufficient pressure to avoid service interruptions. He also requested injunctive relief to enjoin Devon from interfering with the flow of natural gas to these homes.
The district court stayed discovery on the merits of Combs' claims and directed the parties to conduct discovery on the propriety of class certification.
In December 2010, Combs filed his motion to certify the class. In support of his motion, Combs claimed that Devon had hundreds of Kansas leases that contained a free gas clause and that the leaseholds were scattered through at least six Kansas counties. Combs also contended that there was a common issue of law for all leaseholders as to whether Devon's free gas clauses obligated it to provide useable gas sufficient to operate the appliances and lighting in the residences without interruption. Combs asserted that his claims were typical of other prospective class members on the issue of Devon's alleged consistent failure to provide useable gas and that he and his counsel would vigorously represent the interests of the prospective class members.
Finally, Combs argued that class certification was appropriate under K.S.A.2012 Supp. 60–223(b). Combs claims that certification was appropriate under subsection (b)(2) because declaratory or injunctive relief would be an appropriate remedy for the proposed class as a whole. Combs also relied on K.S.A.2012 Supp. 60–223(b)(3), arguing that the “key” question for the class—whether Devon was obligated to provide useable gas under the leases—predominated over questions affecting only individual prospective class members.
Devon argued against class certification asserting there were a number of defects in Combs' proposed class action. Those defects can be summarized as follows:
• Combs failed to precisely define the proposed class.
• Combs was unable to satisfy the numerosity requirement of K.S.A.2012 Supp. 60–223(a)(1) based on the evidence supporting a potential class of less than 24 members.
• Combs failed to establish commonality, typically, and adequacy requirements under K.S.A.2012 Supp. 60–223(a)(2)–(4) and (b)(3) due to factual and legal variations in the terms of the leases and the nature of the legal issues.
• The prayer for relief required the court to issue an advisory opinion such that declaratory and injunctive relief was not appropriate under K.S.A.2012 Supp. 60–223(b)(2).
The district court granted Combs' motion and certified the class, with Combs as the class representative. The court adopted the law set forth in Combs' supporting brief and his proposed findings of fact and conclusions of law and found:
(1) There were potentially 24 different locations using house gas from Devon and as many as 174 Devon leases with domestic gas users.
(2) Devon leases with free gas clauses were located in multiple Kansas counties and the potential claimants, 175 in number, rendered joinder impractical.
(3) Various Devon leases contained similar free gas clauses creating a common issue as to whether the lessors/homeowners were entitled to declaratory and/or injunctive relief on the claim that the leases require Devon to provide useable gas and to assume any costs incurred in doing so.
(4) The typicality requirement was satisfied because Combs had problems obtaining usable gas for his home and multiple other surface owners also experienced problems relating to the quality or quantity of the free gas.
(5) The requirements of K.S.A. 60–223(b)(2) and (b)(3) had been met.
The court accepted the following definition by Combs of the proposed class:
“The resident owners of surface estates and associated rights and privileges in lands in Kansas burdened by oil and gas leases held or operated by Devon which such leases contain a covenant which obligates the lessee to extend to the lessor the privilege of using gas from any gas well on the land for person [ sic ] use in the principal dwelling located on the leased premises.”
Devon appealed, and further proceedings in the district court have been stayed pending resolution of this appeal.
K.S.A.2012 Supp. 60–223(a) establishes several prerequisites for class certification, which are characterized as (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation. Even though a court may later modify or decertify a class, this does not lessen the movant's burden of establishing the prerequisites for certification in the first instance. Dragon v. Vanguard Industries, Inc., 277 Kan. 776, 787, 89 P.3d 908 (2004) ( Dragon I ) (quoting General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 160, 102 S.Ct. 2364, 72 L.Ed.2d 740 [1982] ) (“This flexibility enhances the usefulness of the class-action device; actual, not presumed, conformance with [Federal Rule of Civil Procedure] 23(a) remains, however, indispensable.”).
Thus, Combs had the burden of establishing that all the prerequisites for class certification exist. Those include:
“(1) The class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.” K.S.A.2012 Supp. 60–223(a).
Numerosity and commonality focus on whether the characteristics of the prospective class and claims make representative litigation appropriate; that is, whether there are many parties who share common legal or factual questions. Typicality and adequacy of representation focus on the appropriateness of the class representative to pursue the proposed claims. 1 Newberg on Class Actions § 3:28, pp. 262–63 (5th ed.2011).
A proposed class representative who satisfies these four prerequisites in K.S.A.2012 Supp. 60–223(a) must also establish that the proposed class action is appropriate under one of the three standards set forth in K.S.A.2012 Supp. 60–223(b)(1)–(3). Dragon v. Vanguard Industries, 282 Kan. 349, 355, 144 P.3d 1279 (2006) ( Dragon II ). Here, the district court found that Combs satisfied subsections (b)(2) () and (b)(3) (common questions predominate over individual issues, and a class action is the superior method of adjudication).
Kansas courts have traditionally followed the federal courts' interpretation of the comparable Federal Rule of Civil Procedure 23. See Dragon I, 277 Kan. at 778. In determining the propriety of a class action under the federal rule, the question is not whether the plaintiff has stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 have been met. Anderson v. City of Albuquerque, 690 F.2d 796, 799 (10th Cir.1982).
In Kansas, the district court is not required to conduct a mini-trial with extensive fact-finding before ruling on the class certification issue. However, the district court must rigorously analyze the proffered evidence to determine whether class certification is appropriate. Critchfield Physical Therapy v. The Taranto Group, Inc., 293 Kan. 285, 293, 263 P.3d 767 (2011). That...
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