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Currents Trends in Class Action Procedure in Royalty Litigation

John F. Shepherd, Private Oil & Gas Royalties: The Latest Trends, Developments, and Challenges in Oil & Gas Royalty Litigation

Since the Rocky Mountain Mineral Law Foundation's original Special Institute on Private Oil & Gas Royalties in 2003, the filing of class action lawsuits by royalty owners has exploded. Some courts, particularly in Texas, have adopted a cautious approach to class certification, often denying certification. Other courts, particularly in Colorado, have been liberal in approving class actions. Since 2003, in fact, no Colorado trial court (state or federal) has denied certification of a royalty class action. And it is fair to say that, at least in the states like Colorado following the “marketable condition” rule, the trend has been in favor of class certification.

Focusing on royalty litigation in Colorado, this paper will review class certification decisions in recent years and identify the key issues in dispute. It will also address important class certification decisions in New Mexico and Oklahoma that are pending on appeal and could provide guidance on the outer bounds of royalty class actions. As will be seen, certification of a class action royalty case depends at least in part on applicable state royalty law. There are substantial differences in royalty law among the oil and gas producing states (for example, between Texas and Colorado). Not coincidentally, the states in which courts have been most likely to grant class certification are also the states where royalt