Chesapeake Energy is being accused of doing an “about-face” in its attempt to lump together more than 100 lawsuits alleging that it cheated royalty owners in the Barnett Shale out of millions of dollars.
Attorneys representing myriad clients including the city of Fort Worth, Tarrant County College and Union Pacific Railroad filed arguments in Austin this week against granting the cases multidistrict litigation status, which would consolidate the cases for pretrial arguments.
Ralph Duggins, the attorney representing Fort Worth, said Chesapeake’s request is a “complete about-face” after arguing against consolidation because the lawsuits concerned “unrelated land, unrelated leases, unrelated royalty interests, unrelated wells...”
Chesapeake Energy wants a panel of five judges in Austin to allow one judge to oversee the rapidly growing tangle of litigation alleging underpayment of royalties from its wells in the Barnett Shale in an effort to streamline the process in court.
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Chesapeake’s request for multidistrict litigation status, or MDL, states that the number of cases from Fort Worth attorney Dan McDonald alone could hit 400 — lawsuits naming about 40,000 plaintiffs — by the end of the year.
In the lawsuits filed by landowners and public entities, Chesapeake is accused of “self dealing” by shipping the gas to market through affiliate companies and then deducting excessive costs. Some landowners say they shouldn’t be paying for post-production costs at all.
Chesapeake has argued in legal filings that the procedures it uses to drill, market and sell the gas are acceptable and that it pays what is known as the “weighted average sales price” it gets from an unaffiliated third party less the actual post-production costs incurred in moving the gas.
In its filing with the state, Chesapeake is seeking to consolidate 97 cases representing 3,100 plaintiffs. But McDonald, who does not oppose consolidation and filed 73 of the cases considered in the request, continues to file additional lawuits.
After Chesapeake filed its request, the judicial panel issued a stay in all of the cases. Duggins has asked the court to lift that stay.
Chesapeake may be hoping that consolidation of the lawsuits will spur settlements. But attorneys opposing the MDL don’t want to be tossed in with McDonald’s dozens of cases.
“While it may make sense to transfer the McDonald Law Firm’s cases to a single pretrial court, transferring the Union Pacific case will result in delayed justice and an overshadowing of the other, equally important claims in the suit,” attorney James Key wrote.
Max B. Baker, 817-390-7714