Devon Energy Settlement

Montana Land and Mineral Owners Association, Inc., et al., v. Devon Energy Corporation, et al., CV-05-30-H-DWM (D. Mont.)

Our firm and our co-counsel Goetz, Gallick & Baldwin, P.C., Mudd Nelson, P.C., and Christian, Samson, Jones & Chisolm, PLLC, represented a group of plaintiffs in a putative class action against Devon Energy Corporation. The plaintiffs are landowners in Montana who lease their mineral rights to Devon. They sued Devon Energy Corporation and several of its subsidiaries, alleging that Devon has a practice of illegally deducting hidden fees and charges from the amounts that they pay royalty owners for the production of natural gas. The complaint, which was filed in the United States District Court for the District of Montana in Great Falls, MT, alleged that Devon and its affiliates breached the contract between the parties, engaged in negligent misrepresentation and committed fraud. Devon denied that it acted unlawfully in any way.

After two years of active litigation, the parties, in recognition of the risk that existed for both plaintiffs and defendants, settled the matter on a classwide basis. The major terms of the settlement included: (1) a cash payment by Devon of $5,000,000 to the class (distributed on a pro rata basis) as compensation for past charges; (2) a promise that in the future, Devon will cease deducting charges for "gathering" or other operating costs from the class members' royalty checks and will limit its deductions to three charges (gathering compression fuel, regulated transportation costs and transportation compression fuel) that are specifically defined in the Settlement Agreement; and (3) a release by the class members of their claims against Devon.

The settlement class includes:

All individuals and entities who received royalty payments for the production of natural gas, but excluding condensate, from leases held by Devon Energy Production Company, L.P., or its parent, subsidiaries, affiliates or predecessors at any time from January 1, 1998 to December 31, 2006, excluding federal, tribal and state of Montana lessors and excluding all overriding royalty interests.

On August 22, 2007, the court held a final approval hearing and approved the settlement. The court issued the final approval order on August 24, 2007, certifying the settlement class, approving the terms of the settlement, awarding attorneys' fees and costs and approving the disbursement of the settlement amount to the class members.