Kansas Court of Appeals Takes a Pass on Free Gas Class
In a thorough per curiam order, the Kansas Court of Appeals emphatically reversed the District Court’s order certifying a class of “free gas” users. In Combs v. Devon Energy Prod. Co., 2013 WL 3867981 (Kan. App. July 26, 2013), the Court of Appeals concluded that the District Court had abused its discretion in certifying a class consisting of resident owners of surface estates burdened with oil and gas leases held by Devon where the leases contained “free gas clauses”, ie. clauses entitling the lessor to connect to and draw from any gas well on the land for his or her own use free of charge. The class had sought a declaration that the free gas clauses in the leases obligated Devon to provide a usable supply of free gas, which it alleged Devon had failed to provide due to pressure and moisture issues. The District Court certified the class under both K.S.A. 60-223(a) and (b).
The Court of Appeals reversed on both numerosity and typicality, while also expressing grave doubts about adequacy, ascertainability, cohesiveness under (b)(2), and predominance and superiority under b(3). In the first place, the Court of Appeals found that the Plaintiffs had failed to establish the actual number of resident surface owners with free gas rights, and declined to speculate as to the number of new users who might join the class in the future. At most, the Court found that the Plaintiffs had established no more than 25 or fewer potential class members in one small geographic region, making joinder a practical alternative.
The Court of Appeals further rejected the District Court’s finding of typicality due to the potential conflict between the class representative as a surface owner only and those class members who may also own the mineral rights and have no interest in potentially reducing their own royalties in order to pay to make free gas more accessible.
The Court of Appeals specifically contrasted the facts of this case with those of another free gas user class certified by the federal court in Schell v. OXY USA, Inc., 2009 WL 2355792 (D. Kan. 2009), where the record established a class of over 300 persons who actually utilized free gas under the free gas clauses, and involved an “overt threat” to discontinue free gas to all users.