Henry Seeligson v. Devon Energy Production ( 2020 )

Case: 20-90011 Document: 00515418005 Page: 1 Date Filed: 05/15/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 15, 2020
No. 20-90011
Lyle W. Cayce
Clerk
HENRY SEELIGSON; JOHN M. SEELIGSON; SUZANNE SEELIGSON
NASH; SHERRI PILCHER,
Plaintiffs - Respondents
v.
DEVON ENERGY PRODUCTION COMPANY, L.P.,
Defendant - Petitioner
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:16-CV-82
Before HIGGINBOTHAM, SOUTHWICK, and WILLETT, Circuit Judges.
PER CURIAM:*
A putative class of natural gas royalty owners first sued Devon Energy
Production Company (“DEPCO”) in 2014, alleging that DEPCO “violat[ed] the
duty to market implied in the class members’ mineral leases” by colluding with
its affiliate Devon Gas Services to inflate the profits of their shared parent
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 20-90011
company at the expense of royalty owners. 1 The district court certified the
class, and DEPCO appealed. In February 2019, we reversed and remanded for
further proceedings on two issues: commonality and predominance. 2
As to commonality, we instructed the district court to receive and
evaluate “additional specific evidence” of the duty-to-market claim’s
susceptibility to classwide proof. 3 We also instructed the court to consider
whether Plaintiffs’ leases raised individual timeliness issues that would
preclude a finding of predominance. 4 On remand, the district court received
additional evidence and once again certified the class. DEPCO now seeks
permission to appeal the district court’s certification decision for a second
time. 5
Although courts of appeals possess “unfettered discretion” to authorize
the interlocutory appeal of a district court’s class-certification order, that
discretion is best exercised “when the certification decision turns on a novel or
unsettled question of law [or] is likely dispositive of the litigation.” 6 DEPCO
does not claim that either of those circumstances is present here. Moreover,
DEPCO’s objections to the district court’s order are unpersuasive. DEPCO
contends that the district court disregarded our directive to evaluate additional
evidence of commonality on remand; however, the record shows that the
district court considered several new export reports containing analyses,
opinions, and models on commonality.
1 Seeligson v. Devon Energy Prod. Co., L.P., 761 F. App’x 329, 331 (5th Cir. 2019)
(unpublished) (per curiam).
2 Id. at 339.
3 Id. at 337.
4 Id. at 338–39; see FED. R. CIV. P. 23(b)(3).
5 See FED. R. CIV. P. 23(f).
6 Microsoft Corp. v. Baker, 137 S. Ct. 1702, 1709, 1710 (2017) (internal quotation
marks omitted) (quoting FED. R. CIV. P. 23(f) Committee Note).
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As to predominance, DEPCO argues that the district court’s finding on
remand—that the discovery rule would resolve all timeliness issues one way
or the other for the entire class—is barred by Wagner & Brown, Ltd. v.
Horwood, a Texas Supreme Court case holding that the discovery rule
categorically “does not apply to claims of royalty underpayment.” 7 This is an
overstatement of the case. In fact, Wagner & Brown expressly rejected the
argument that “all claims for breach of oil and gas lease covenants are
categorically exempt from the discovery rule’s application.” 8 Rather, as several
subsequent cases have observed, the discovery rule does toll the statute of
limitations in royalty-underpayment cases where “the information to
determine a proper value” was not “available [to the plaintiffs] through
reasonable diligence.” 9 Here, the district court identified several factors that
call into question Plaintiffs’ ability to discover the alleged underpayments
before the statute of limitations had run. Whether those factors are actually
sufficient to invoke the protection of the discovery rule is a question to be
decided at the merits stage.
In short, the district court complied with this Court’s instructions on
remand and reconsidered its findings on both commonality and predominance.
Particularly given the fact that we have already addressed this class
7 See Wagner & Brown, 58 S.W.3d 732 (Tex. 2001). “The discovery rule is a limited
exception to the general rule that a cause of action accrues when a legal injury is incurred.”
Archer v. Tregellas, 566 S.W.3d 281, 290 (Tex. 2018) (internal quotation marks omitted).
Where “the nature of the injury is inherently undiscoverable and the evidence of injury is
objectively verifiable,” the discovery rule “defers accrual until the plaintiff knew or should
have known of the facts giving rise to the cause of action.” Id.
8 Wagner & Brown, 58 S.W.3d at 735.
9 Shoop v. Devon Energy Prod. Co., L.P., No. 3:10-cv-00650-P, 2013 WL 12251353, at
*19 (N.D. Tex. March 28, 2013); see also Archer, 566 S.W.3d at 291 (“[T]he discovery rule does
not apply to royalty owners’ claims of underpayment of royalties where readily accessible and
public available information would have revealed the underpayments.” (internal quotation
marks omitted) (emphasis added)); Shell Oil Co. v. Ross, 356 S.W.3d 924, 930 (Tex. 2011) (“In
Wagner & Brown, we held that the discovery rule did not apply to defer the accrual of royalty
owners’ claims for underpayments . . . because the royalty owners could have timely
discovered the underpayments through the exercise of due diligence.”).
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certification once, we are not inclined to postpone consideration of the merits
any further. DEPCO’s petition for permission to file a Rule 23(f) appeal is
denied.
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