Frey v. Amoco Production Co., Civ. A. No. 88-1622.

• Decision Date: 06 July 1990
• Docket Number: Civ. A. No. 88-1622.
• Citation: 741 F. Supp. 601
• Parties: Frederick J. FREY, et al. v. AMOCO PRODUCTION COMPANY.
• Court: U.S. District Court — Eastern District of Louisiana

741 F. Supp. 601

Frederick J. FREY, et al. v. AMOCO PRODUCTION COMPANY.

Civ. A. No. 88-1622.

United States District Court, E.D. Louisiana.

July 6, 1990.

William S. Strain, Frederick W. Ellis, David M. Ellison, Jr., Baton Rouge, La., for plaintiffs.

Frank J. Peragine, Clyde Mote, New Orleans, La., for defendant.

ROBERT F. COLLINS, District Judge.

Plaintiffs, Frederick J. Frey, et al., move the Court for final judgment against defendant, Amoco Production Company (Amoco). Plaintiffs seek a judgment finding that Amoco: (1) is subject to the Louisiana Public Records Law, La.R.S. 44:1 et seq; and (2) had a duty to provide Frey with a full accounting prior to this lawsuit. For the reasons given below, the Motion is DENIED.

I. PROCEDURAL HISTORY

The trial proceedings in this case were concluded on April 16, 1990 with the parties entering into the following stipulations:

(a) The parties reached a compromise settlement of plaintiffs' claim for alleged incorrect calculation of royalties covering the period April 18, 1985 through November 30, 1988. The incorrect calculation claim was the only monetary claim remaining in the case after the Court granted defendant's motion for involuntary dismissal following the close of plaintiffs' case in chief on March 6, 1990; and

(b) Plaintiffs' contention, that Amoco is subject to the Louisiana Public Records Act by virtue of its having been designated operator of the five gas units involved in this suit, was submitted to the Court for decision based on the briefs and documentary evidence introduced at trial; and

(c) Each side would bear its own costs.

Accordingly, the only remaining issues are whether Amoco is subject to the Louisiana Public Records Act and whether Amoco owed Frey a full accounting prior to this lawsuit.

II. PUBLIC RECORDS ACT

The purpose of the Public Records Act is to foster "the inherent right of the public to be reasonably informed as to the manner, basis, and reasons upon which government affairs are conducted," Trahan v. Larivee, 365 So.2d 294, 298 (La.App. 3rd Cir.1978), writ denied, 366 So.2d 564 (La.1979) (emphasis added). Plaintiffs argue that all of Amoco's business records should be subject to the public records statute for two reasons: (1) because Amoco is licensed by the state as a unit operator; and (2) because Amoco collects severance taxes on the minerals which are produced from the various units in which plaintiffs own an interest.

With respect to the first contention, plaintiffs' argument is that Amoco, as unit operator, is a "quasi-public official or agency" performing a governmental function of conservation. Amoco is a company that owns a working interest in units in the Morganza Field. It does so in a private capacity like other working interest owners. Its rights and obligations, vis-a-vis the other working interest owners, are governed by private contract, usually a joint operating agreement. In this case, there is no joint operating agreement. In the absence of a joint operating agreement, case law, rather than state statute, controls the working interest relationship. No rational distinction can be drawn between Amoco, as unit operator, and the other working interest owners for purposes of applying the Public Records Act.

Next, plaintiffs argue that because Amoco, pursuant to statute, collects severance taxes on the minerals which it produces, all of Amoco's records are subject to open disclosure under the Public Records Act's provision concerning receipt or payment of money by or under the authority of the constitution or the laws of the state. If this were the established interpretation of the Public Records statute, then all the business records of every retailer who collects state sales tax would also be public records. The Court finds that the fact that Amoco was named unit operator does not change its status.

The only reported Louisiana case in which a private corporation has been held to be subject to the Louisiana Public Records Act is Lewis v. Spurney, 456 So.2d 206 (La.App. 4th Cir.) writ denied, 457 So.2d 1183 and 458 So.2d 488. In that case, a non-profit corporation, the Louisiana World Exposition, Inc., had received $25 million under two state appropriations. The Court held that records of receipts and disbursement of those funds were deemed to be public records because they concerned the receipt or payment of money by or under the authority of the State constitution or laws, noting that "the public is entitled to see exactly where all this money has been spent." Id. at 208.

A reading of the definitions sections of La.R.S. 44:1 reveals that the legislature never intended for this statute to be used as a discovery tool by private litigants against a private corporation:

A. (1) As used in this Chapter, the phrase "public body" means any branch, department, office, agency, board, commission, district, governing authority, political subdivision, or any committee, subcommittee, advisory board, or task force thereof, or any other instrumentality of state, parish, or municipal government, including a public or quasi-public nonprofit corporation designated as an entity to perform a governmental or proprietary function.

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A. (3) As used in this Chapter, the word "custodian" means the public official or head of any public body having custody or control of a public record, or a representative specifically authorized by him to respond to requests to inspect any such public records.

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It is important to note that in Lewis v. Spurney, supra, only some records were deemed to be public records within the meaning of La.R.S. 44:1 et seq., and then only because the records belonged to a non-profit corporation receiving large grants from the State. This fact situation is not specifically addressed by statute. The State licensed production activities and tax collection functions of private corporations, such as Amoco, are absent from the definitions of La.R.S. 44:1(A)(1).

It is important to note the type of information that plaintiffs seek. Plaintiffs do not seek severance tax records from Amoco, nor do they seek data on production volumes. Plaintiffs could (and did in the case of production volumes) obtain such information from the State. Instead, plaintiffs seek unimpeded access to all of Amoco's financial records, records of Amoco's exploration and acquisition activities, and trade secrets. The information plaintiffs seek has no relationship to Amoco's status as a unit operator or to its collection of severance taxes, nor to the "manner, basis and reasons upon which governmental affairs are conducted." Trahan, 365 So.2d at 298.

In sum, the Court finds that there is no evidentiary basis or authority in law for holding that Amoco's business records are public records within the meaning of La. R.S. 44:1 et seq. Accordingly, plaintiffs' motion is DENIED.

III. AMOCO'S DUTY TO PROVIDE AN ACCOUNTING

Since the Pretrial Order failed to list Amoco's alleged duty to account as a contested issue of law, the issue is not properly before the Court. The Court notes that plaintiffs' proposed conclusions of law also do not include the contention that they are entitled to a full accounting prior to filing suit.

Although not properly before the Court, plaintiffs' contention will be addressed. Prior to plaintiffs' filing suit, Amoco furnished them with all the information required by statute, as well as with additional data they requested. Amoco provides this data to its royalty owners in accordance with La.R.S. 31:212.31, which sets forth the information which a mineral lessee must furnish to its royalty owners. La.R.S. 31:212.31 provides:

§ 212.31. Payment information to interest owners

A. As used in this Article:

(1) "Check stub" means the financial record attached to a check.

(2) "Division order" means a contract of sale to the purchaser of oil or gas directing the purchaser to make payment for the value of the products taken in the proportions set out in the division order, which division order is prepared by the purchaser on the basis of the ownership shown in the title opinion prepared after examination of the abstracts and which is executed by the operator, the royalty owners, and the other persons having an interest in the production.

(3) "Interest owner" means a person owning a royalty interest or a working interest in an oil or gas well or unit. B. Whenever payment is made for oil or gas production to an interest owner, whether pursuant to a division order, lease, servitude, or other agreement, all of the following information shall be included on the check stub or on an attachment to the form of payment, unless the information is otherwise provided on a regular basis:

(1) Lease identification number, if any, or reference to appropriate agreement with identification of the well or unit from which production is attributed.

(2) Month and year of sales or purchases included in the payment.

(3) Total barrels of crude oil or MCF of gas purchased.

(4) Owner's final realizable price per barrel or MCF.

(5) Total amount of severance and other production taxes, with the exception of windfall profit tax.

(6) Net value of total sales from the property after taxes are deducted.

(7) Interest owner's interest,

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