Lawsuit reform is a hot topic in Oklahoma. While much of the focus has been on legislative fixes, recent rulings from nation's highest court have dramatically changed the landscape for an often-misused aspect of our legal system: the class action lawsuit.
The last decade has seen significant numbers of class action lawsuits filed in and certified by Oklahoma courts, in particular against companies who operate oil and gas wells. The plaintiffs in those actions are typically mineral owners, recruited by class action attorneys, asserting claims that the well operator underpaid their royalties. Oklahoma courts have historically been quick to certify these types of cases as class actions.
But the U.S. Supreme Court's ruling earlier this year in Comcast Corp. v. Behrend, coupled with its landmark 2011 ruling in the Wal-Mart v. Dukes gender discrimination case, leaves no doubt that a new era in class action litigation has arrived. With these two cases, the court has emphasized the stringent requirements for establishing a class action.
In Wal-Mart, the court ruled that "commonality," a fundamental prerequisite in class action cases, must focus on whether a common answer to the central questions for all potential plaintiff class members exists. Absent a common answer to a question that drives the litigation certification of a class is improper.
In a class action challenging an energy company's royalty payments for Oklahoma wells, it is now not enough to say that the common question is whether the company is paying royalties properly to all of its mineral owners because the answer to that question could vary between royalty owners under the specific terms of his/her lease. The lack of a common answer should preclude courts from certifying a case as a class action - preventing a court from deciding the claims of a large group of mineral owners based on facts related to only a few.
Comcast, involving a dispute with a cable TV provider, reversed a class certification decision, emphasizing that the difficulty of calculating damages on a class-wide basis can preclude certification. In the past, some courts have decided that difficulties in calculating damages would not prevent certification of a case as a class action.
The rulings have already had an impact. The Tenth Circuit Court of Appeals recently vacated two federal district court decisions, including one in Oklahoma that had certified mineral owner claims. The Tenth Circuit directed that the class action requirements be more carefully analyzed given the recent changes in the law. Several Oklahoma federal courts have likewise denied certification in recent royalty class actions.
The Supreme Court's emphasis on certifying only those cases that truly meet the requirements of a class action will help to spare businesses the threat of coercive class action litigation that, in many cases, has padded the pockets of plaintiffs' attorneys while doing little to provide justice for the plaintiffs. This change should be a plus for Oklahoma's business climate.
Mia Vahlberg and Tammy Barrett regularly defend class action lawsuits as part of their commercial litigation practice with the law firm of GableGotwals, where they are both shareholders.
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Original Print Headline: Recent rulings may redefine class action
Business Viewpoint
As a young girl traveling in rural Oklahoma to visit well sites with my father, little did I know my path would come full circle and land me a job I love in the oil and gas industry.
At age 48, Armond Swift has sampled many professions with a jack-of-all-trades assortment of jobs through the years.
