On Friday, October 2, 2015, U.S. District Judge Malachy Mannion issued an Order Granting Certification of Settlement Class and Preliminarily Approving Class Settlement in the Demchak Partners Case. A copy of the Order is available here

For more information about the proposed Class Settlement in the Demchak Partners case, see the page titled "How Does the Proposed Class Settlement in the Demchak Partners Class Action Affect Me?" in the FAQ section of this website.

If you are a lessor party, or the successor-in-interest to a lessor party, to an oil and gas lease that (a) covers a leasehold in Pennsylvania, (b) contains a Market Enhancement Clause (as that term is defined in the Amended Settlement Agreement, and quoted in the Order), and (c) is or has been owned, in whole or in part, by Chesapeake as a lessee, then you fall within the definition of the Settlement Class for purposes of the proposed Class Settlement. This means that, if the Court grants final approval to the proposed Class Settlement, you will be bound by the terms of the proposed Class Settlement -- including the releases of claims given as part of the Amended Settlement Agreement -- unless you timely opt-out of the Settlement Class.  

​The Order states that "Any member of the Class who wishes to exclude himself or herself from the Class Settlement must postmark and mail the exclusion request to Lead Class Counsel and Defendant’s counsel at the addresses provided above [in the Order] no later than Thursday, December 17, 2015." 

The Order also requires the Claims Administrator to complete the mailing of Settlement Notices to members of the Settlement Class by November 2, 2015, establishes December 17, 2017 as the deadline for any member of the Class who wishes to object to or comment on the proposed Class Settlement, or object to Class Counsel's request for attorneys' fees and costs, to postmark and mail any such objections or comments to Class Counsel and the Court by December 17, 2015. The Court scheduled a hearing  to consider final approval of the proposed Class Settlement, and Class Counsel's request for attorneys' fees and costs, for February 2, 2016, and also set deadlines by which anyone who  wishes to appear and be heard and the hearing to postmark and mail notice of intention to do so by January 18, 2016.

If you hold royalty interests pursuant to a lease in which Chesapeake holds or previously held a working interest, and the lease contains a Market Enhancement Clause, the clock is now ticking; you have only until December 17 to evaluate the proposed Settlement and your potential alternatives, and to decide whether it is in your best interests to participate in, and be bound by the terms of, the proposed Settlement, to comment on or object to the proposed Settlement, or to opt-out of the proposed Settlement Class and separately pursue any claims and rights you may have.  

We welcome and invite inquiries from royalty interest owners seeking legal representation to assist them in understanding and evaluating the proposed Class Settlement and their alternatives and options. 

Chris Jones was interviewed by Marie Cusick of StateImpact Pennsylvania, a collaboration between public radio stations WITF and WHYY, as part of this story, which is running on public radio stations throughout the state. The story focuses on the increased scrutiny being given to deductions for post-production costs being taken from natural gas royalties received by the Pennsylvania Department of Conservation and Natural Resources (DCNR) and the Game Commission, and also discusses our federal RICO lawsuit.  

You can read or hear the story here. 

Good news for Chesapeake royalty owners. The Court issued a Memorandum opinion and Order on Tuesday, March 31, in The Suessenbach Family Limited Partnership v.  Access Midstream Partners, L.P., et al., No 3:14-cv-01197-MEM (M.D.Pa), a RICO case pending in the US District Court for the Middle District of Pennsylvania,  largely denying the motions to dismiss that had been filed by defendants Access Midstream Partners and Chesapeake Energy Corporation, and allowing the case to go forward.  A copy of the Memorandum opinion is available here.

It was great to meet and network with so many royalty owners, other attorneys, mineral managers, academics and government officials at the NARO PA Annual Meeting and Convention earlier this week in State College. Thank you to Jackie Root and the entire NARO team for a great event. We will definitely be back next year.

Tom and Taunya participated in the panel discussion on pending class and other litigation.

Tom also was interviewed on the David Madeira Show, 94.3 FM The Talker, which was being broadcast live from the convention. Here is a link to a podcast of the interview, which starts at about 19:27 (Dr. Terry Engelder of Penn State is interviewed earlier in the same podcast).

http://thedavidmadeirashow.com/2015/03/ep-693-hour-2-is-the-marcellus-shale-boom-over/

THANK YOU to all of the royalty owners who attended one of the six Town Hall Meetings we conducted this week in Ulster, New Albany, Springville, Mildred, Canton or Wysox, and to the facilities that hosted the events. It was great to see old and new faces and to have the opportunity to meet and speak with so many royalty owners.

We also will be attending and exhibiting at the NARO PA Annual Meeting and Convention this week, on Thursday, March 26 and Friday, March 27, in State College. Taunya and Tom also will be participating in a panel discussion on Thursday. Please stop by and say hello if you are attending.

Remember, we will be filing our next lawsuit shortly, so if you would like to be part of it, and to get your claim started sooner rather than letter, please get your signed contingent fee agreement, lease and royalty statements to us as soon as possible. If you have additional questions, or were not able to make the meetings, please visit our website and feel free to call our toll-free number (855) 338-0466 or contact us by e-mail to [email protected].

Join Us at a Town Hall Meeting

 Attending one of our upcoming Town Hall Meetings for Pennsylvania royalty owners is a great way to learn more about our approach. hear more about the pending federal action that we recently filed in federal court in Scranton, receive an overview and update as to the status of the various pending royalty class actions and class arbitrations, including details of the proposed settlement in the Demchak Partners class action, meet our litigation team in person, and get answers to any questions you may have. 

We invite you to attend one of our upcoming town hall meeting for Pennsylvania royalty interest owners:

 Wednesday, March 18:                                                    
10:00 am @ Ulster-Sheshequin Fire Hall,   
85 Rescue Street, Ulster 
2:00 pm @ New Albany Fire Hall, 
Main St, New Albany  
6:00 pm @ Elk Lake Jr/Sr High School, 
2380 Elk Lake School Rd, Springville   

Thursday, March 19:
10:00 am @ St. Francis Hall, Rt 487, Mildred
2:00 pm @ Rialto Theater, 14 E. Main St, Canton
6:00 pm @ Wysox Fire Hall, Lake Rd, Wysox

 There is no cost or obligation to attend, and no need to register in advance.

We also will be speaking, exhibiting and networking at several upcoming events hosted by The National Association of Royalty Owners – Pennsylvania Chapter – including a Town Hall scheduled for Thursday, March 12, at 6:30 p.m., at Black Walnut American Legion Post 510, Old Route 6, in Laceyville, and at the NARO PA Annual Meeting and Convention on March 26 and 27 at the Ramada Conference Center in State College. If you can’t make it to one of the Marcellus Royalty Action Town Hall Meetings, we hope to see you at one of the upcoming NARO PA events!

We are pleased to announce that the first Marcellus Royalty Action lawsuit has been filed in the U.S. District Court for the Middle District of Pennsylvania, in Scranton. A copy of the Complaint in A&B Campbell Family LLC, et al. v. Chesapeake Energy Corporation, et al., Case No. 3:15-cv-00340-MEM, is available here. A copy of the press release announcing the filing is available here.

The first action is on behalf of only those royalty interest owners whose rights and interests are based on leases originally signed with Anadarko E&P or T.S. Calkins, which do not contain arbitration clauses.

We also represent several hundred additional clients whose leases contain arbitration clauses. We are finalizing the complaints in the next actions, which will be filed on behalf of our clients who receive royalties under leases signed with Chesapeake Appalachia and other companies, which contain arbitration clauses.  The next complaints will include the same antitrust and RICO claims as the Campbell case. 

Counsel for the named plaintiffs in the Demchak Partners class action pending in federal court filed for preliminary court approval a proposed Amended Class Action Settlement Agreement on December 18.  A copy of the proposed settlement agreement is available here.  

Although the proposed settlement has not yet been even preliminarily approved by the court, and although it would not affect most of the royalty owners who have joined the Marcellus Royalty Action to date, it would affect some of our existing and prospective royalty owner clients, and we are getting questions about it already, so we thought it would be appropriate to address the subject here. 

The plaintiffs in the Demchak Partners filed a putative (meaning not yet certified) class action on behalf of themselves and other royalty owners whose leases govern Pennsylvania leaseholds and contain Market Enhancement Clauses, as defined in the agreement, alleging that Chesapeake took impermissible deductions for post-production costs in calculating their royalties, in violation of the terms of their leases.  Those royalty owners are referred to in the settlement agreement as Settlement Class Members.  If the Court gives its preliminary approval to the proposed settlement, then notice will be provided to members of the putative class by mail and publication, setting a deadline by which they will have to take steps to "opt-out" or exclude themselves from the Settlement Class.  A copy of the proposed form of Settlement Notice appears at the end of the proposed form of settlement agreement (available at link above).  

Royalty Owners whose leases contain Market Enhancement Clauses, but who do not timely take the required steps to opt-out of the Settlement Class, will automatically be included in the Settlement Class, and will be bound by the terms of the settlement, including the release of defined Settled Claims against Chesapeake and its affiliates.   If your lease does not contain a Market Enhancement Clause, then you are not a member of the proposed Settlement Class, and will not be affected by the proposed settlement.  The term "Market Enhancement Clause" is defined in Section 1.25 of the Amended Class Action Settlement Agreement, and examples of such clauses are provided in Section 4 of the proposed Settlement Notice.   

The leases of most of the royalty owners who have retained us to represent them in the Marcellus Royalty Action do not contain Market Enhancement Clauses.  As a result, they are not included in, and will not be affect by, the proposed settlement of the Demchak Partners case.  The leases of some of our clients, however, do contain Market Enhancement Clauses.  We will be separately notifying those clients to make sure they are aware of the proposed settlement, and will be scheduling a conference call in the near future to discuss the terms of the proposed settlement.

If your lease contains a Market Enhancement Clause and the proposed settlement is preliminarily approved by the Court, you will then have to decide whether it is in your best interests to remain part of the Settlement Class or to take steps to timely opt-out of the settlement and continue to pursue your claims through the Marcellus Royalty Action, or otherwise.  If any of our clients  whose leases contain Market Enhancement Clauses decide  to remain part of the Settlement Class in the Demchak Partners action, and become bound by a final settlement in that case, they will not be required to pay any separate legal fees or costs in the Marcellus Royalty Action.      

Several of our royalty owner clients already have contacted us and expressed their disapproval of the proposed settlement, and their intent to opt-out and continue to pursue their claims in the Marcellus Royalty Action.  Although we are naturally biased in favor of the approach we are taking in the Marcellus Royalty Action, which we believe will maximize the value of any settlement or judgment, and although it is in our self-interest for as many royalty owners as possible to remain part of (or join in) the Marcellus Royalty Action, each royalty owner will need to decide for himself or herself, if and when the time comes, whether it is in his or her best interests to participate in the settlement or to opt out.  At the same time, we strongly believe that the proposed Amended Class Action Settlement Agreement in the Demchak Partners case has serious flaws and shortcomings which prevent us from recommending it, in its present form, to those of our clients whose leases contain Market Enhancement Clauses.  

We will address our concerns about the proposed Demchak Settlement in further detail with our clients in one-on-one telephone calls, and in a conference call in the near future.   

In the meantime, we have prepared a short-form summary, available here comparing the basic monetary terms of the propose Amended Class Action Settlement Agreement with those of the original proposed Class Action Settlement Agreement that was filed in the Demchak Partners case on August 30, 2013, highlighting some of the material defined terms used in the agreement, and listing some of the questions that we have about the proposed settlement.  Our summary comparison does not address all of the material terms of the proposed settlement.  We encourage anyone whose lease contains a Market Enhancement Clause to read the full settlement agreement and Settlement Notice and to seek advice from counsel of your choice. 
 

  

Thank you to everyone who attended our town hall meetings yesterday in LeRoy and on Tuesday in Ulster, New Albany and Wyalusing. The response was encouraging. Based on the number of landowners who have signed-on and, more importantly, their total acreage in production, we have reached critical mass, and are continuing to sign-on additional landowners. We are finalizing the initial complaint now. if you would like to be part of the initial action (and by doing to start the trial-clock running on your claims), please sign and submit our Contingent Fee Agreement (copy available here), along with copies of your royalty statements, division orders, and any correspondence with Chesapeake or other gas companies, as soon as possible. 

We plan to hold additional town-hall meetings in early 2015, for those who not been able to attend one yet, and who would like an opportunity to meet us and learn more about our approach. In the meantime, if you have questions, or would like to be part of the initial complaint, please feel free to call our toll-free number, (855) 338-0466. We would be happy to schedule a conference call or an appointment to discuss your individual situation and issues. 

As those who have attended our town hall meetings for royalty owners know, we all owe a debt of gratitude to ProPublica, the independent, non-profit investigative journalism organization (www.propublica.org), and to Abrahm Lustgarten, the ProPublica writer who brought to light how Chesapeake solved the financial crisis that it faced from having incurred too much debt to finance its acquisition of leases  by effectively borrowing billions of dollars more, in a series of transactions structured "sales" of its gas gathering systems, all at the expense of its royalty owners.  

For those who have not yet read it, the article titled "Chesapeake Energy's $5 Billion Shuffle," published on March 13, 2014, available here, provides a good introduction as to why the Marcellus Royalty Action will be focusing on the abuse of monopoly pricing power and restraint of trade inherent in the terms and structure of the Chesapeake Midstream/Access Midstream transactions, and resulting gas gathering agreements. 

An earlier article by Lustgarten, "Unfair Share: How Oil and Gas Drillers Avoid Paying Royalties," published on August 13, 2013, available here, first focused attention on Chesapeake's royalty payment practices in Bradford County.

A more recent article by Lustgarten, "Chesapeake Energy Faces Subpoena On Royalty Payment Practices," published on November 14, 2014, available here, explains how years of complaints by Bradford County landowners and the ProPublica investigation have resulted in investigations of Chesapeake, and the issuance of subpoenas to Chesapeake by the U.S. Department of Justice and several states, as disclosed by Chesapeake Energy in its Form 10-Q report filed with the SEC on November 6, 2014. 

We highly recommend these articles to all Chesapeake royalty owners who have not yet read them.