Case 4:13-cv-00132-CSM Document 1 Filed 11/14/13 Page 1 of 9
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
NORTHWESTERN DIVISION
GARY SORENSON AND MARTHA
SORENSON, individually and for all those
similarly situated,
Plaintiffs,
v.
BURLINGTON RESOURCES OIL & GAS
COMPANY, L.P., a Delaware limited
partnership,
Defendant.
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CIVIL ACTION NO._______________
NOTICE OF REMOVAL
In accordance with 28 U.S.C. §§ 1441 and 1446, defendant Burlington Resources Oil &
Gas Company, L.P. (“Burlington”) files this Notice of Removal of Plaintiff’s civil action from
the Northwest Judicial District Court of McKenzie County, North Dakota to this Court based
upon diversity of citizenship under 28 U.S.C. § 1332(d) and the Class Action Fairness Act of
2005 (“CAFA”), as demonstrated below. The grounds in support of this Notice of Removal are
as follows:
I.
1.
THE STATE COURT ACTION, PARTIES, AND PLEADINGS
Plaintiffs Gary Sorenson and Martha Sorenson (“Plaintiffs”) filed a civil action on
behalf of themselves and a proposed class by filing a class action complaint against Burlington
on or about October 16, 2013, in the Northwest Judicial District Court of McKenzie County,
North Dakota, under Cause Number 27-2013-CV-00242 (the “State Court Action”). The State
Court Action is a civil action within the meaning of the Acts of Congress relating to the removal
of cases.
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2.
A true and correct copy of the State Court Civil Docket Sheet is attached hereto as
Exhibit A, and a true and correct copy of Plaintiffs’ Complaint is attached hereto as Exhibit B.
3.
Burlington was served with or otherwise received a copy of the Complaint on
October 17, 2013. A true and correct copy of the citation received by Burlington is attached
hereto as Exhibit C. Burlington has not yet filed an answer in the State Court Action, as the
period for Burlington to answer or otherwise respond has not yet expired.
4.
In the State Court Action, Plaintiffs allege claims individually and as a purported
class action to recover royalties attributable to natural gas flared from all North Dakota wells, to
the extent they are operated by Burlington and are classified as horizontal or horizontal re-entry
wells, for the six (6) year period prior to the filing of suit. Plaintiffs also seek a declaratory
judgment that they are entitled to royalties for future flared gas. Specifically, Plaintiffs seek such
royalties in the three scenarios described in paragraph 40 of the Complaint: (a) gas flared by
Burlington after the first year of production without an exemption permitting same; (b) gas flared
within the first year of production if certain maximum oil production rates are exceeded; and (c)
gas flared by Burlington in the first year even after Burlington has reported a given well as
connected to a gathering system and processing plant.
5.
Plaintiffs seek to recover for all of the proposed class’s royalty on the value of all
past and future flared gas in their fifth and sixth causes of action. The class is defined as all
persons or entities owning royalty interests in North Dakota for the above-described wells for
which such royalties have not been paid, while excluding Burlington and its affiliates,
governmental entities, Indian tribes, persons who have released their claims, working interest
owners, and the state court judge and his/her relatives. (Compl. ¶ 41.) Plaintiffs’ causes of action
Case 4:13-cv-00132-CSM Document 1 Filed 11/14/13 Page 3 of 9
include a claim for payment of royalties, a request for declaratory relief, a conversion claim, and
a waste claim, on behalf of both themselves and the proposed class.
II.
6.
TIMELY NOTICE, PURSUANT TO 28 U.S.C. § 1446(b)
This Notice of Removal is timely pursuant to 28 U.S.C. § 1446(b), because it is
filed prior to the expiration of thirty days after the date Burlington was served with or otherwise
received a copy of the Complaint.
III.
7.
APPROPRIATE REMOVAL FORUM
This Court is the United States District Court for the district and division where
the State Court Action is pending.
IV.
8.
JURISDICTIONAL BASIS
This Court has jurisdiction of the State Court Action pursuant to 28 U.S.C. §
1332(d), as amended by CAFA, because (i) this case is pleaded as a class action; (ii) there is
minimal diversity between the parties within the requirements of CAFA, (iii) the putative class
exceeds 100 people; and (iv) the amount in controversy is pleaded as exceeding $5,000,000,
excluding interest and costs. Removal to this Court and jurisdiction in this Court are proper, as
described in the paragraphs below.
9.
There is no question that the State Court Action is a purported class action.
(Compl. ¶¶ 1, 41.)
10.
In accordance with 28 U.S.C. § 1332(d)(2)(A), Plaintiffs and Burlington are
citizens of different states. Plaintiffs are citizens of North Dakota. (Compl. ¶ 1.) Burlington is a
resident of Delaware and Texas. (Compl. ¶ 2.) Burlington is a Delaware limited partnership with
its principal place of business in the Texas. Burlington’s sole general partner is BROG GP LLC,
and its sole limited partner is BROG LP LLC. Both BROG GP LLC and BROG LP LLC are
limited liability companies organized under the laws of Delaware with their principal places of
Case 4:13-cv-00132-CSM Document 1 Filed 11/14/13 Page 4 of 9
business in Texas. Burlington Resources Inc., a corporation organized under the laws of
Delaware, with its principal place of business in Texas, is the sole member of both BROG GP
LLC and BROG LP LLC. See Affidavit of Steven N. Clark (“Clark Affidavit”), attached hereto
as Exhibit D and incorporated by reference.
11.
In accordance with 28 U.S.C. § 1332(d)(5)(B), the number of members of the
proposed plaintiff class exceeds 100. The Complaint states that there are in excess of 100
royalty owners that would be part of the potential class. (Compl. ¶ 38.)
12.
In accordance with 28 U.S.C. § 1332(d)(2), the amount in controversy in the State
Court Action exceeds the sum of $5,000,000, exclusive of interest and costs. The claims
asserted in the complaint at the time of removal control the amount in controversy. Hargis v.
Access Capital Funding, LLC, 674 F.3d 783, 789 (8th Cir. 2012) (“[J]urisdiction is determined at
the time of removal.”). Here, the Complaint states that Plaintiffs, on behalf of the purported
class, seek compensatory damages and attorneys’ fees and costs allegedly caused by
Burlington’s flaring of gas. (Compl. pp. 26-27.) However, the Complaint does not specify the
dollars sought.
13.
A party seeking removal under CAFA must establish the amount in controversy
by a preponderance of the evidence. Raskas v. Johnson & Johnson, 719 F.3d 884, 887 (8th Cir.
2013). The removing party’s burden is a pleading requirement, not “a demand for proof.” Id. at
888.
Thus, in addition to the pleadings, a removing party may establish the amount in
controversy by its affidavits, declarations, or other documentation.
Id. (“The substantive
jurisdictional requirements of removal do not limit the types of evidence that may be used to
satisfy the preponderance of the evidence standard.
Defendants may introduce their own
affidavits, declarations, or other documentation—provided of course that removal is procedurally
Case 4:13-cv-00132-CSM Document 1 Filed 11/14/13 Page 5 of 9
proper.”) (quotation omitted). When determining the amount in controversy, “the question is not
whether the damages are greater than the requisite amount, but whether a fact finder might
legally conclude that they are.” Id. at 887 (emphasis in original) (quotation omitted). Where the
proponent of federal jurisdiction explains plausibly how the stakes exceed $5 million, then the
“case belongs in federal court unless it is legally impossible for the plaintiff to recover that
much.” Id. at 888.
14.
To demonstrate that the amount in controversy exceeds the statutory threshold,
the removing party “need not confess liability.” Hartis v. Chicago Title Ins. Co., 694 F.3d 935,
945 (8th Cir. 2012) (quotation omitted). The demonstration turns on what the Plaintiffs are
claiming, and not the likelihood that Plaintiffs will prevail.
Id.
Accordingly, although
Burlington has conducted a preliminary analysis of the amount in controversy to establish federal
jurisdiction, Burlington expressly denies the allegations of wrongdoing in the Complaint and
states that the claims asserted in the Complaint are without merit.
15.
Here, the allegations of the Complaint and Burlington’s preliminary analysis
show that the damages sought by Plaintiffs on behalf of the purported class exceed the statutory
threshold of $5 million. To estimate the amount claimed on behalf of the purported class,
Burlington followed the framework of Plaintiffs’ pleadings under N.D.C.C. § 38-08-06.4. See
Hargis, LLC, 674 F.3d at 789 (jurisdiction determined from operative complaint).
16.
The Complaint’s class definition incorporates the defined term “Flared Gas.”
(Compl. ¶ 41.) Paragraph 40 of the Complaint defines “Flared Gas” as follows:
the term “Flared Gas” means the following: Natural gas and
associated natural gas liquids in such natural gas flared during the
past six (6) years from each oil well in North Dakota operated by
Defendant classified by the Industrial Division as a “Horizontal” or
“Horizontal Re-entry” wellbore, for which at least one of the
following conditions applies:
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a. gas flared from a well one year after first production
without applying for and obtaining a flaring exemption as
provided for under subsection 6 of N.D.C.C. § 38-08-06.4
(the “North Dakota Anti-Flaring Statute”);
b. gas flared from a well within the first year of production
under an order issued by the Industrial Commission
limiting the maximum barrels of oil to be produced per day
until the well is connected to a gathering system and
processing plant, and despite that order, Defendant reported
to the NDIC that it exceeded that maximum oil production
allowable during at least part of the first year; or
c. gas flared within the first year of production even though
Defendant reported the well was physically connected to a
gathering system and processing plant.
17.
With respect to the gas described in paragraph 40(a), Plaintiffs allege royalty is
owed on all gas flared after one year from first production unless Burlington obtained an
exemption.
Burlington is not aware of any such exemptions applying to its production.
Accordingly, the amount in controversy described in 40(a) includes royalty payments on all gas
flared after the first year of production for the relevant wells.
18.
With respect to paragraph 40(b), the Complaint alleges that the wells in North
Dakota operated by Burlington “are or were operated with gas being flared in violation of
N.D.C.C. § 38-08-06.4 and the Industrial Commission’s orders on flaring within one year of first
production.” (Compl. ¶ 36.) Furthermore, Plaintiffs allege that if Burlington “fails to comply
with those rules and orders, it may not flare gas within the first year of production and avoid
paying royalties on that gas.” (Compl. ¶ 11.) Burlington disputes that it has violated North
Dakota law or the orders of the Industrial Commission. However, because the Complaint alleges
(1) that royalties on gas flared during the first year are owed when Industrial Commission orders
are violated and (2) that Burlington violated such orders, the controversy extends to all gas flared
during the first year after first production by Burlington. Read together, paragraphs 40(a) and (b)
Case 4:13-cv-00132-CSM Document 1 Filed 11/14/13 Page 7 of 9
effectively seek to place the royalty on all of Burlington’s flared gas for the relevant wells for the
last six years in controversy.
19.
Paragraph 40(c) addresses a subset of this total flared gas: gas flared during the
first year of production after the given well was reported as connected to a gas gathering system
and processing plant. When read together with subsection (a), this subset includes all gas flared
after the wells are connected to a gathering system and processing plant (during or after the first
year).
20.
Using this framework of the Plaintiffs’ allegations, Burlington calculated two
categories of damages claimed in the Complaint for the Plaintiff class for the relevant wells and
time period: (1) potential royalties on all gas flared (“Total Flared Royalties”), and (2) a subset
of this amount, potential royalties on gas flared after the connection of a well to a gathering
system and processing plant (“Post-connection Royalties”). The Total Flared Royalties and
Post-connection Royalties are each a product of the volume of gas, the price of gas, and
ownership percentage of the Plaintiff class. The calculation of these amounts is detailed in
Exhibit D, the Clark Affidavit and the attached supporting spreadsheet.
21.
As detailed in the Clark Affidavit, Burlington calculates its potential actual
damage exposure for the Total Flared Royalties as $5,784,321.47 and the Post-connection
Royalties as $4,578,957.51. Because Burlington’s accounting of its production data lags 30-60
days, and considering Plaintiffs’ claims for future royalties, Burlington also calculates that
additional royalties for future flared gas under the Plaintiffs’ theories would exceed another $2.3
million by the end of 2014. (Clark Aff. ¶ 11.) Thus, whether using the Total Flared Royalties or
even the subset of Post-connection Royalties, along with estimated future royalties, the base
amount in controversy clearly exceeds $5 million.
Case 4:13-cv-00132-CSM Document 1 Filed 11/14/13 Page 8 of 9
22.
Furthermore, as noted above, Plaintiffs have also pleaded claims individually and
on behalf of the class for common law waste, seeking “compensation, including that provided in
N.D.C.C. ¶ 32-17-22.” (Compl. ¶ 92.) Section 32-17-22 provides that in an action for waste,
“there may be judgment for treble damages….” Such statutory damages are properly considered
in determining the jurisdictional amount in controversy. Zunamon v. Brown, 418 F.2d 883, 887
n.5 (8th Cir. 1969). Although the base calculation alone is enough, this claim for treble damages
further satisfies the amount in controversy requirement.
23.
Finally, Plaintiff has requested an award of “reasonable attorneys’ fees as allowed
by law.” (Compl. p. 27.) Attorneys’ fees are another item to be considered in determining the
amount in controversy. Capital Indemnity Corp. v. Miles, 978 F.2d 437, 438 (8th Cir. 1992).
V.
24.
NOTICE FILED IN THE STATE COURT
Promptly after filing this Notice of Removal, written notice in the form attached
hereto as Exhibit E will be provided to Plaintiffs. A copy of such written notice also shall be
filed with the Northwest Judicial District Court of McKenzie County, North Dakota, in
accordance with 28 U.S.C. § 1446(d).
WHEREFORE, Defendant Burlington prays that the State Court Action be removed to
the United States District Court for the District of North Dakota.
Respectfully submitted,
CROWLEY FLECK PLLP
/s/ John W. Morrison
John W. Morrison (#03502)
Wade C. Mann (#05871)
400 East Broadway, Suite 600
P.O. Box 2798
Bismarck, ND 58502-2798
(701) 223-6585
[email protected]
[email protected]
Case 4:13-cv-00132-CSM Document 1 Filed 11/14/13 Page 9 of 9
Craig L. Stahl
Jeffrey T. Kuehnle
ANDREWS KURTH LLP
10001 Woodloch Forest Drive, Suite 200
The Woodlands, TX 77380
(713) 220-4834
[email protected]
ATTORNEYS FOR BURLINGTON
RESOURCES OIL & GAS COMPANY, L.P.
CERTIFICATE OF SERVICE
I hereby certify that on November 14, 2013, a true and correct copy of the above
document was filed electronically with the Clerk of Court through ECF and with the McKenzie
County Clerk of Court through Odyssey® system, and will be electronically served on the
following:
Derrick Braaten
Baumstark Braaten Law Partners
[email protected]
Lindsey Nieuwsma
Baumstark Braaten Law Partners
[email protected]
_/s/ John W. Morrison _________________
JOHN W. MORRISON
[email protected]