Cont'l Res. v. Wolla Oilfield Servs.

• Citation: 2022 OK 40
• Decision Date: 03 May 2022
• Docket Number: 120039
• Parties: CONTINENTAL RESOURCES, INC., Plaintiff, v. WOLLA OILFIELD SERVICES, LLC, Defendant.
• Court: Supreme Court of Oklahoma

2022 OK 40

CONTINENTAL RESOURCES, INC., Plaintiff, v. WOLLA OILFIELD SERVICES, LLC, Defendant.

No. 120039

Supreme Court of Oklahoma

May 3, 2022

UNPUBLISHED OPINION

CERTIFIED QUESTION FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA

Nicholas V. Merkley, GableGotwals, Oklahoma City, Oklahoma for Plaintiff.

Daniel G. Webber, Jr., Ryan Whaley, Coldiron Jantzen Peters &amp Webber, PLLC, Oklahoma City, Oklahoma, for Defendant.

COMBS J.

¶0 The United States District Court for the Western District of Oklahoma certified two questions of state law which have been addressed by this Court pursuant to the Revised Uniform Certification of Questions of Law Act, 20 O.S. 2021 §§ 1601-1611.

¶1 The United States District Court for the Western District of Oklahoma (certifying court) certified two questions of state law to this Court under the Revised Uniform Certification of Questions of Law Act, 20 O.S. 2021, §§ 1601-1611. ^[1] The questions certified are:

(1) Does the Oklahoma Consumer Protection Act apply to conduct that physically occurs outside the state of Oklahoma?

(2) Does the Oklahoma Consumer Protection Act apply to conduct where, even if the physical location is difficult to pinpoint, such actions or transactions have a material impact on, or material nexus to, a consumer in the state of Oklahoma?

I. CERTIFIED FACTS AND PROCEDURAL HISTORY

¶2 The underlying facts in this cause are set out in the certification order from the Western District. In answering a certified question, the Court does not presume facts outside those offered by the certification order. Howard v. Zimmer, Inc., 2013 OK 17, n.5, 299 P.3d 463, 465 n.5; In re Harris, 2002 OK 35, ¶4 n.5, 49 P.3d 710, 713 n.5; Jones v. Univ. of Cent. Okla., 1995 OK 138, ¶5, 910 P.2d 987, 989. Although this Court will neither add nor delete such facts, we may consider uncontested facts supported by the record. Howard, 2013 OK 17, n.5, 299 P.3d at 456 n.5; McQueen, Rains, & Tresch, LLP v. CITGO Petroleum Corp., 2008 OK 66, n.4, 195 P.3d 35, 38 n.4; In re Harris, 2002 OK 35, ¶4, 49 P.3d at 713. In the present matter, the certifying court has determined the facts relevant to understanding the certified questions because the parties do not agree on all the material facts. See 20 O.S. 2021, § 1604 ("B. If the parties cannot agree upon a statement of facts, the certifying court must determine the relevant facts and state them as part of its certification order.").

¶3 The matter concerns a dispute between Continental Resources, Inc. (Continental), an oil and gas producer headquartered in Oklahoma, and Wolla Oilfield Services, LLC (Wolla), a North Dakota limited liability company that operates as a hot oil ^[2] service provider in North Dakota. Continental alleges the parties entered into an agreement for Wolla to provide hot oil services at an hourly rate to Continental's wells in North Dakota. As part of the contract, Wolla agreed to submit its invoices through an "online billing system" and to bill accurately and comprehensively for work it performed. A whistleblower in Wolla's accounting department notified Continental about systematic overbilling in connection with this arrangement. Continental conducted an audit and concluded Wolla's employees were overbilling it for time worked and calculated the overbilling to be at least $2, 400, 000.00. Wolla denies these allegations.

¶4 On March 4, 2020, Continental sued Wolla in the United States District Court for the Western District of Oklahoma asserting, among other claims, a claim under the Oklahoma Consumer Protection Act (OCPA), 15 O.S. 2021, §§ 751 - 764. Wolla moved to dismiss, arguing that the transactions at issue (the alleged overbilling) occurred in North Dakota and that the OCPA does not have extraterritorial application, or, in the alternative, that a statute with such broad extraterritorial reach may implicate the dormant Commerce Clause of the U.S. Constitution. ^[3] Continental asserts the transactions at issue qualify as occurring in Oklahoma, both because Wolla sent electronic invoices to Continental's headquarters in Oklahoma and because an out-of-state entity that directs harmful conduct towards someone in a particular state may be held to account in that state. The certifying court denied the motion to dismiss on July 9, 2021, but entered a Certification of Constitutional Question (Certification) on September 17, 2021, and the same was filed in this Court on November 30, 2021.

¶5 The certifying court found that Wolla correctly observed an extraterritorial application of the OCPA would raise concerns about the Act's constitutionality under the federal constitution. It noted, the Oklahoma Supreme Court has never adopted a presumption against extraterritorial application and has not yet had occasion to decide the territorial reach of the OCPA. Unlike consumer protection statutes of some sister states, the OCPA does not explicitly limit its consumer protection to conduct occurring within the state. The matter was certified to this Court because it found there was no controlling decision of the appellate courts in Oklahoma. The certifying court did note in Harvell v. Goodyear Tire & Rubber Co., 2006 OK 24, ¶23, 164 P.3d 1028, 1037, that this Court, when reviewing the applicability of the Ohio Consumer Sales Practices Act, determined "the focus of the inquiry concerning application of such an Act to out-of-state consumers is whether the offending consumer transaction occurred within the state." The certifying court found that the Harvell opinion suggests this Court would limit the OCPA's reach to transactions occurring within Oklahoma.

II. PROCEDURE AND REQUIREMENTS FOR ANSWERING CERTIFIED QUESTIONS

¶6 Unresolved questions of law may be answered by this Court if certified questions are presented in accordance with the Revised Uniform Certification of Questions of Law Act, 20 O.S. 2021, §§ 1601-1611. Gov't Emps. Ins. Co. v. Quine, 2011 OK 88, ¶13, 264 P.3d 1245, 1248. This Court's examination of the certified question is confined to resolving questions of law, not facts. Russell v. Chase Inv. Servs. Corp., 2009 OK 22, ¶8, 212 P.3d 1178, 1181. In assessing whether a certified federal question of law should be answered by this Court, both factors mentioned in 20 O.S. 2021, § 1602 should be addressed: 1) Would the answer be dispositive of an issue in pending litigation in the certifying court? 2) Is there established and controlling law on the subject matter? Quine, 2011 OK 88, ¶13, 264 P.3d at 1248. Answering the certified questions here would be dispositive of a pending issue in the federal court, and there is no clear controlling precedent of this Court concerning the limits to the territorial reach of the OCPA. This Court also possesses discretionary authority to reformulate the question(s) certified. McQueen, Rains & Tresch, LLP, 2008 OK 66, ¶1 n.1, 195 P.3d at 37; Tyler v. Shelter Mut. Ins. Co., 2008 OK 9, ¶1 n.1, 184 P.3d 496, 496 n.1; McClure v. ConocoPhillips Co., 2006 OK 42, ¶1 n.1, 142 P.3d 390, 391 n.1. This authority is set out in 20 O.S. 2021, § 1602.1, which provides: "The Supreme Court of this state may reformulate a question of law certified to it."

III. ANALYSIS

¶7 The purpose of the OCPA is to prohibit unlawful practices and conduct made in connection with a consumer transaction. Consumer protection acts are meant to regulate commerce which is infected with deceptive or unconscionable practices and are not meant to be general regulations of "clean" commerce. See Brown v. Mkt. Dev., Inc., 322 N.E.2d 367, 374 (Ohio Ct. Com. Pl. 1974) cited in Harvell, 2006 OK 24, ¶23 n.43, 164 P.3d at 1037 n.43. Under the OCPA a "consumer transaction" is defined as:

[T]he advertising, offering for sale or purchase, sale, purchase, or distribution of any services or any property, tangible or intangible, real, personal, or mixed, or any other article, commodity, or thing of value wherever located, for purposes that are personal, household, or business oriented;

15 O.S. 2021, § 752 (2). A person violates the Act when they commit an unfair or deceptive trade practice in the course of the person's business. 15 O.S. 2021, § 753 (20). A "deceptive trade practice" is defined as:

[A] misrepresentation, omission or other practice that has deceived or could reasonably be expected to deceive or mislead a person to the detriment of that person. Such a practice may occur before, during or after a consumer transaction is entered into and may be written or oral;

15 O.S. 2021, § 752 (13) (emphasis added). From the very language of this definition it is clear that the focus of the inquiry concerning the application of the Act is on the offending conduct, which can occur "before, during or after a consumer transaction." However, it is not uncommon for the offending conduct to occur at the same time as the consumer transaction. In Harvell a customer was charged a deceptive shop fee at the time she brought her car in for repairs. We determined "in our view any unfair, deceptive or unconscionable conduct toward a consumer occurred where the transaction occurred--when a customer brought an automobile in for service to a service center and was charged a shop supply fee." Harvell, 2006 OK 24, ¶24, 164 P.3d at 1037. Both the consumer transaction and the offending conduct occurred in Oklahoma and therefore we found the Ohio Consumer Sales Practices Act was not applicable. Id. The reason we found the offending conduct occurred where the consumer transaction occurred was based on the particular facts of the case. We were not establishing a rule that the place where the consumer transaction occurs would always be deemed the place where the offending conduct occurs. Again, the focus is on the location of the offending...