Chesapeake Energy Corp. and several other defendants are in the middle of a fierce fight in an Oklahoma federal court with a large number of plaintiffs who are alleging the defendants engaged in business actions that stifled competition in the oil and gas sector and violated U.S. antitrust laws.
The litigation calls into question the fairness of the business techniques being used by some energy companies to persuade owners of mineral interests to enter into binding oil and gas leases.
On March 3, plaintiff Brian Thieme filed his original class action complaint on behalf of himself and other members of the class similarly situated. Thieme is a Colorado resident who owns mineral interests in Oklahoma. He entered into an oil and gas lease with Chesapeake Exploration in 2011.
The plaintiff alleges that the defendants Chesapeake Energy Corp., Chesapeake Exploration LLC (as successor by merger to Chesapeake Exploration LP), Sandridge Energy Corp., Tom L. Ward, and John Does 1-50 engaged in “a conspiracy to rig bids and depress the market for purchases of oil and natural gas leasehold interests and properties containing producing oil and natural gas wells.”
In her recent order in the case, U.S. District Judge Vicki Miles-LaGrange ruled in favor of consolidating 11 antitrust class action suits filed against the defendants and left open the possibility of future suits involving common questions of law and fact being consolidated with the current consolidated action, which is now known as “In re Anadarko Basin Oil and Gas Lease Antitrust Litigation.”
Based in Oklahoma City, Chesapeake Energy has Texas operations in Fort Worth and Carrizo Springs. Defendant SandRidge Energy also has its headquarters in Oklahoma City.
Warren T. Burns, founder and co-managing partner of the law firm of Burns Charest LLP, has been elected to membership in the American Law Institute.
Plaintiff Thieme is using the Dallas-based firm of Burns Charest in the case. Partners Warren Burns and Daniel Charest and associate Will Thompson are representing Thieme.
“From at least 2007 to 2012, Chesapeake, Sandridge, and their CEOs, hatched a plan to limit competition by fixing or rigging bids for oil and gas leases in Northwest Oklahoma and beyond,” Burns said. “Through frequent meetings and communications, the defendants decided who would win certain leases, often with one part of the other dropping out of negotiations. We believe this activity continued for years, and it resulted in royalty owners receiving less than competitive lease terms.”
Burns adds that rigging bids is a quintessential antitrust violation. When oil and gas operating companies agree not to compete, royalty owners suffer.
“Judge Miles-Lagrange’s order will permit this case to move forward efficiently and expeditiously,” Burns said. “We are currently working on a consolidated amended complaint that we will file within 45 days of the order. And we are engaging with the defendants on various issues in an effort to move forward.”
The next step in the case will be the appointment of a plaintiffs’ leadership team to ensure that the case is properly managed, according to Burns. Plaintiffs in nine of the suits on file moved the court last week to appoint Burns Charest, Susman Godfrey and Cohen Milstein as interim co-lead counsel.
“We are hopeful this case will not be long and protracted in part because based on public reports, we believe there is an ACPERA [the Antitrust Criminal Penalty Enhancement and Reform Act] amnesty applicant in this case and that it is likely Chesapeake,” Burns said. “If there is an amnesty applicant in this case, we expect them to come forward and provide material assistance to the civil plaintiffs as soon as possible.”
Thieme is also being represented by partners Douglas Wilguess and Heather Garrett in the Oklahoma City firm Wilguess & Garrett; member Isaac Diel in Overland, Kansas-based Sharp McQueen; Houston partner Terrell Oxford and New York partners William Carmody and Arun Subramanian in Susman Godfrey; partners Michael Kelly and Larry Lahman and of counsel Carol Lahman in Mitchell & Declerck, based in Enid, Oklahoma. None of the attorneys returned a call for comment.
Defendant Chesapeake Energy Corp. and its affiliates are being represented by partners Paul Taylor and Bradley Keller with the Seattle firm of Byrnes Keller Cromwell, and Timothy J. Bomhoff, a shareholder/director with the Oklahoma City firm of Mcafee & Taft. No one returned a call for comment.
Defendant Sandridge Energy is being represented by shareholders/directors Bryan King and Robert McCampbell, and associate Travis Jett with the Oklahoma City firm of Fellers Snider Blankenship Bailey & Tippens. McCampbell declined to comment.
Defendant Tom Ward is being represented in the case by George S. Corbyn Jr., a partner with the Oklahoma City firm of Corbyn Hampton Barghols Pierce. Corbyn did not return a call for comment.