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BP Class Action Defense Cases-Rees v. BP America: Oklahoma State Court Affirms Dismissal Of Class Action Complaint Holding Plaintiff’s Class Action Barred Because He Was Absent Class Member Of Prior Class Action

Trial Court Order Denying Class Action Certification Barred Subsequent Class Action Filed by Absent Class Member of Prior Class Action Oklahoma State Court Holds, Otherwise “Plaintiffs [could] Continue Filing Broad Class Actions…Until a Trial Court Grants Class Certification, Rendering Ineffective the Previous Denials of Other Courts”

Plaintiff filed a putative class action in Oklahoma state court (LeFlore County) against BP America alleging “BP underpaid royalties by wrongfully charging marketing fees and costs of making the gas marketable, including costs for gathering, treatment, compression, and dehydration, to royalty owners.” Rees v. BP America Prod. Co., ___ F. 3d ___ (Okla.App. February 22, 2008) [Slip Opn., at 2]. The complaint purported to be a class action, brought on behalf of “all similarly situated persons and entities who have received royalty payments from [BP] on Gas Substances produced from the Red Oak-Norris Field.” Id. Defense attorneys moved to dismiss the class action on the ground that two other class actions were pending against BP alleging underpaid royalties (Watts and Chockley); alternatively, defense attorneys requested that the Rees class action litigation be stayed or transferred to the county in which the Watts class action was pending (Pittsburg County). Id. The basis for the defense motion was that the Watts class action purported to represent a class of royalty owners in several counties, including LeFlore, id., at 2-3. The Chockley class action also was defined broadly enough to arguably include plaintiff’s claims within its scope, id., at 3.

The plaintiffs in the Watts class action had moved the court to certify that litigation as a class action, but the trial court denied the motion. Rees, at 3. The Oklahoma Court of Civil Appeals affirmed the denial of class action treatment, and the Oklahoma Supreme Court denied certiorari. Id., at 3-4. The trial court in the Rees class action granted a stay, over plaintiff’s objection, pending the appellate court decision in Watts, id., at 3, and then granted BP’s motion to dismiss the Rees complaint, id., at 4. Specifically, “the trial court applied the principle of issue preclusion in ruling Rees, as an unnamed member of the proposed class in Watts, was bound by the decision in Watts denying class action certification.” Id. (citing In re Bridgestone/Firestone, Inc., Tires Products Liab. Litig., 333 F.3d 763 (7th Cir. 2003)).

Rees raised the following arguments: (1) an order denying class certification lacks the finality necessary to invoke issue preclusion, (2) an unnamed member of a proposed class denied certification is not a party to that litigation, and (3) the decision in Watts was not a decision on the same issues because Rees’ claims are only a subset of those in Watts and Chockley. Rees, at 5. Rees argued further that the trial court order dismissing his putative class action violated the due process of absent class members in Watts. Id. The appellate court disagreed. It explained that Bridgestone/Firestone “recognized the filing of multiple suits suggested that plaintiffs’ lawyers had adopted a strategy of filing in as many courts as necessary until a nationwide class was certified, thereby rendering insignificant all the no-certification decisions of other courts.” Id., at 6 (citing Bridgestone/Firestone). Bridgestone/Firestone held that “‘unnamed class members have the status of parties for many purposes and are bound by the decision whether or not the court otherwise would have had personal jurisdiction over them.’” Id. (quoting Bridgestone/Firestone, at 768). This was true even though the absent class members had not been provided an opportunity to opt out of the proposed class action. Id.

The court of appeal held that Bridgestone/Firestone is consistent with Oklahoma law. Rees, at 7 (citing Cities Serv. Co. v. Gulf Oil Corp., 980 P.2d 116, 126 (Okla. —-). The appellate court therefore held that “Rees, as an unnamed member of the proposed class in Watts, is bound by the Court’s ruling denying class certification to the proposed class,” id., at 7-8. As the Court explained at page 8, “Any other result would allow plaintiffs to continue filing broad class actions against BP until a trial court grants class certification, rendering ineffective the previous denials of other courts.” Id., at 8. Accordingly, it affirmed the trial court order dismissing Rees’ class action complaint, id., at 8-9.

NOTE: Defense attorneys moved to dismiss plaintiff’s appeal on the ground that he lacked standing because “it had determined Rees did not own a royalty interest in the Red Oak-Norris Field and therefore was not a member of the proposed class.” Rees, at 5. The appellate court denied this request because Rees alleged he did own such an interest and, for purposes of the motion to dismiss, that allegation had to be accepted as true. Id.

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