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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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United States Court of Appeals

Fifth Circuit

FILED

March 24, 2004

Charles R. Fulbruge III

Clerk

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

___________________________

No. 03-30602

___________________________

CHEVRON USA, INC.

Plaintiff - Counter Defendant - Appellee

v.

VERMILION PARISH SCHOOL BOARD

Defendant - Counter Claimant - Appellant

___________________________

TEXACO INC; TEXACO EXPLORATION & PRODUCTION, INC.

Plaintiffs - Counter Defendants - Appellees

v.

VERMILION PARISH SCHOOL BOARD

Defendant - Counter Claimant - Appellant

___________________________

AMERADA HESS CORP.

Plaintiff - Counter Defendant - Appellee

v.

VERMILION PARISH SCHOOL BOARD

Defendant - Counter Claimant - Appellant

___________________________

UNION OIL COMPANY OF CALIFORNIA

Plaintiff - Counter Defendant - Appellee

v.

VERMILION PARISH SCHOOL BOARD

Defendant - Counter Claimant - Appellant

___________________________

MOBIL OIL CORP; MOBIL OIL EXPLORATION & PRODUCING SOUTHEAST, INC.

 Case: 03-30602 Document: 0051608548 Page: 1 Date Filed: 03/24/2004
2

Plaintiff - Counter Defendant - Appellees

v.

VERMILION PARISH SCHOOL BOARD

Defendant - Counter Claimant - Appellant

___________________________

EXXON MOBIL CORP.

Plaintiff - Counter Defendant - Appellee

v.

MARSHALL W. GUIDRY

Defendant - Counter Claimant - Appellant

___________________________

EXXON MOBIL CORP.

Plaintiff - Counter Defendant - Appellee

v.

VERMILION PARISH SCHOOL BOARD

Defendant - Counter Claimant - Appellant

Appeal from the United States District Court 

for the Western District of Louisiana, Lafayette and Opelousas Division

Before DAVIS, BARKSDALE and PRADO, Circuit Judges.

PER CURIAM:

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE

FIFTH CIRCUIT TO THE SUPREME COURT OF LOUISIANA, PURSUANT TO RULE XII OF

THE RULES OF THE SUPREME COURT OF LOUISIANA. 

TO THE SUPREME COURT OF LOUISIANA AND THE HONORABLE JUSTICES

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3

THEREOF:

I. STYLE OF THE CASE

The style of the cases in which certification is made is Chevron U.S.A., Inc., Plaintiff -

Counter Defendant - Appellee, versus VermilionParish SchoolBoard, Defendant - Counter Claimant

- Appellant; Texaco, Inc.; Texaco Exploration & Production, Inc., Plaintiffs- Counter Defendants -

Appellees, versus Vermilion Parish School Board, Defendant - Counter Claimant - Appellant;

Amerada Hess Corp., Plaintiff - Counter Defendant - Appellee, versus Vermilion Parish School

Board, Defendant - Counter Claimant - Appellant; Union Oil Company of California, Plaintiff -

Counter Defendant - Appellee, versus VermilionParish SchoolBoard, Defendant - Counter Claimant

- Appellant; Mobil Oil Corp.; Mobil Oil Exploration & Producing Southeast, Inc.,

Plaintiff- Counter Defendant - Appellee, versus VermilionParishSchoolBoard, Defendant - Counter

Claimant - Appellant; Exxon Mobil Corp., Plaintiff- Counter Defendant - Appellee, versus Marshall

W. Guidry, Defendant - Counter Claimant - Appellant; and Exxon Mobil Corp., Plaintiff - Counter

Defendant - Appellee, versus Vermilion Parish School Board, Defendant - Counter Claimant -

Appellant. This case involves a determinative question of state law; federal jurisdiction is based solely

on diversity of citizenship. 

II. STATEMENT OF THE CASE

A. Background

In 1999, counselfor the Vermilion Parish School Board and counsel for Marshall W. Guidry

(the “RoyaltyOwners”)sent individualdemand lettersto Chevron USA, Inc., Texaco, Inc., Amerada

Hess Corporation, Union Oil Company of California, Mobil Oil Corporation, and Exxon Mobil

Corporation (the “Oil Companies”) pursuant to Mineral Code Article 137. La. R.S. 31:137. The

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letters stated that they were sent on behalf of the Royalty Owners and “all similarly situated royalty

owners- allroyalty and overriding royalty ownersto whomyou pay gasroyaltiesin Louisiana.” Both

letters demanded payment of unpaid royalties due on naturalgasliquids( “NGLs”) the OilCompanies

allegedly underpaid as a result of using a “lease/plant split instead of the reasonable and actual costs

of processing NGLs” and for “liquids that you pulled out of the gas stream and did not use to

compute royalties at all.” 

In 2000, counsel for the Royalty Owners again sent individual demand letters to the Oil

Companies. Like the first letters, counsel stated that they were writing on behalf of the Royalty

Owners and “allsimilarly situated royalty owners- allroyalty and overriding royalty ownersto whom

you pay dry gas royalties on production in Louisiana.” The letters demanded payment of underpaid

dry gas royalties as a result of the Oil Companies computing royalties “using prices that understated

the price actually available in true arms length sales.” After each Oil Company responded to

the demand letters, each filed a separate declaratory judgment action in federal court seeking a

determination that it had no liability to the Royalty Owners. The Royalty Owners filed answers and

also a counterclaim “individually and as representatives of a class of all others similarly situated”

against each of the Oil Companies complaining of underpayment of royalties on NGLs and dry gas

production. All cases were consolidated. 

The putative class as defined would include allroyalty and overriding royalty interest owners

in all Louisiana mineral leases owned by the Oil Companies whose royalties have been computed

using either of the two methods challenged by the Royalty Owners. The Royalty Owners concede

that the class would number in the thousands. 

The parties filed Cross Motions for Partial Summary Judgment on the issue of whether the

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demand letters written by counsel for the individual Royalty Owners to the Oil Companies satisfied

the requirements of Louisiana’s Mineral Code for members of the putative class. The district court

held that the demand letters were “legally insufficient to serve as written notice on behalf of unnamed

royalty owners under Article 137 of the Louisiana Mineral Code.” Chevron USA, Inc. v. Vermilion

Parish School Bd., 128 F.Supp.2d 961, 968 (W.D. La. 2001). The district court based its decision

first on the plain language of Article 137 which provides: “. . . if a mineral lessor seeks relief for the

failure of his lessee to make timely or proper payment of royalties, he must give his lessee written

notice ofsuch failure as a prerequisite to a judicial demand for damages or dissolution of the lease.”

The court found that “by its own terms, ‘He must give his lessee written notice’, the notice required

by Article 137 must be individualized.” 128 F. Supp.2d 961, 967 (W.D. La. 2001). The court

explained that under the statutory scheme, after the Article 137 demand has been made, the lessee

has 30 daysto either pay the royalties due or respond in writing and state a reasonable cause for nonpayment. La. Mineral Code Art. 138; La.R.S. 31:138. Only if the lessee fails to pay or provide a

reasonable explanation for its failure to pay, does the dissolution of the lease become a possible

remedy. Relying on the official comment to Articles 137-141, the court stated: “The device of notice

is merely to inform the lessee he has not paid royalt ies deemed by the lessor to be due. The total

effect of the articlesis to provide an impetus to timely payment of royalties due, while giving lessees

a reasonable way in which to avoid the harsh remedy of cancellation. It also affords the lessee an

opportunity to evaluate a non-payment situation and to make a decision regarding whether the

royalties allegedly due should be paid.”

After reviewing the case law from the intermediate Louisiana Courts of Appeals, the district

court concluded that the decision ofthe Louisiana First Circuit Court of Appealsin Stoute v. Wagner

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& Brown, 637 So.2d 1199 (La. App. 1 Cir. 1994), was correct in its interpretation of Article 137,

and distinguished another case from the Louisiana First Circuit, Lewis v. Texaco Exploration and

Production Co., Inc., 698 So.2d 1001 (La.App. 1 Cir. 1997). 

The Royalty Owners appealed. This court dismissed the appeal for lack of jurisdiction

because “the district court made no ruling that was binding on the appellantsindividually . . . it merely

ruled that the letters were insufficient as to claims on behalf of a putative class (royalty owners not

named in the letters) that did not include the appellants.” Chevron USA, Inc. v. Vermilion Parish

School Bd., 294 F.3d 716, 719-20 (5th Cir. 2002). 

On remand, the Royalty Owners filed requests for discovery to which the Oil Companies

objected. The Oil Companies filed a Motion to Deny Class Certification and for Partial Summary

Judgment seeking dismissal of the class claims. The district court granted the motions to deny class

certification on the basis of its 2001 “ruling that the demand letters were not effective under Article

137 as to the putative class and the members of the put ative class have no right of action under

Article 137.” Because the district court denied class certification, it did not rule on the motion for

partial summary judgment. The royalty owners then lodged this appeal.

B. Relevant Caselaw

The issue presented is whether the notice given in this case by counsel for a lessor on behalf

of a class of similarly situated royalty owners satisfies the requirements of Louisiana Mineral Code

Articles 137 to 141, requiring the lessor to give written notice of a lessee’s failure to make timely or

proper payment of royalties as a prerequisite to judicial demand for damages or dissolution of the

lease. No decisions of the Louisiana Supreme Court directly address this question. Decisions of

Louisiana Appellate Courts are conflicting. 

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In Stoute v. Wagner & Brown, 637 So.2d 1199 (La. App. 1 Cir. 1994), plaintiff mineral

lessors and royalty owners in the Moore-Sams Field in Pointe Coupee Parish sued the defendant

production companies on their own behalf and on behalf of all similarly situated persons to obtain

payment of royalties improperly withheld. The issue before the court was whether the class should

be certified. The trial court decided preliminarily that “only those royalty owners who have written

a demand for past royalties may sue their gas producers.” 637 So.2d at 1201. The Louisiana First

Circuit affirmed the district court’s denial of class certification because oflack of commonality (many

different contractsinvolved raising manydifferentrights,remedies and defenses) and because it would

not be more efficient to try the case as a class action (36% of the interests had filed suit separately).

Although the Stoute case did not expressly consider whether a class demand letter satisfies Article

137, it broadly approved the trial court’s opinion. “We are convinced that the reasons enunciated by

the [trial] court are correct and we affirm, adopting the trial court’s opinion as our own.” 

In Lewis v. Texaco Exploration and Production Co., Inc., 698 So.2d 1001 (La. App. 1 Cir.

1997), a divided panel addressed the issue more directly. In Lewis, plaintiff mineral lessors in the

Hollywood Field in Terrebonne Parish sought to certify a class for their action for royalties due on

take or pay settlements from the defendants. Five representative claimants had sent demand letters

pursuant to Article 137 on behalf of all Hollywood Field royalty owners. Defendant Texaco objected

on the basis that the Mineral Code did not allow class demand letters. Addressing whether the class

demand letter was sufficient to satisfy the requirements of Article 137, the panel majority stated:

The Mineral Code does not contain any specific guidelines as to the precise

requirements ofthe formalwritten demand set forth in LSA-R.S. 31:137, but requires

only that the lessor “give his lessee written notice ofsuch failure” to make timely and

proper payment of royalties. . . . Nowhere in the statute is there a requirement that a

notice be given by each and every mineral lessor individually. The use of the word

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“he” in LSA-R.S. 31:137 is not indicative of any legislative intent that each individual

lessor provide such notice. The use of the masculine term is equally applicable to the

feminine, and the use of the singular islikewise applicable to the plural. LSA-R.S. 1:7

and 8. 

698 So.2d at1009 (internal citations omitted). Judge Parro, in his dissent stated: “This statute [Art.

137] is clear and unambiguous. It requires that each lessor give written notice to his lessee based on

the individual contractualrelationship between the lessor and lessee. It does not authorize one lessor

to give notice on behalf of another unidentified or named lessor.”

In Duhe v. Texaco, Inc., 779 So.2d 1070 (La. App. 3 Cir. 2001), the Louisiana Third Circuit

accepted the Lewis panel majority’s analysis. In Duhe, the royalty owners claimed underpayment of

oil royalties by Texaco and its producing affiliate TEPI by valuing the amounts due the royalty

owners on self-dealing, low-priced transfers of their oil from TEPI to another Texaco subsidiary,

rather than at market value. The class consisted of approximately 7,000 oil and condensate royalty

owners in the State of Louisiana. As to the defendants’ assignment of error, that notice was

inadequate under Article 137, the court relied on the analysisin Lewis. The court stated that nothing

in the statute requiresthat notice be given by each mineral lessor individually. Rather, it is “sufficient

if the notice fully and completely notifies the lessee of the demands of the named plaintiffs, as well

as the intention of those named plaintiffsto demand royalty payments on behalf of a class of royalty

owners.” Id. at 1087.

Because the issue of the propriety of class notice under Article 137 of the Louisiana Mineral

Code is clearly a matter of Louisiana law and because there are conflicting rulings on this point by

the Louisiana Courts of Appeal with no ruling by the Louisiana Supreme Court, we hereby invoke

the certification privilege granted by Rule XII of the Louisiana Supreme Court Rules. 

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III. QUESTION CERTIFIED

We certify the following question to the Louisiana Supreme Court:

Whether the notice given in this case by counsel for a lessor on behalf of the putative

class satisfies the requirement of Articles 137-141 of the Louisiana Mineral Code,

requiring the lessor to give written notice of the lessee’s failure to make timely or

proper payment of royalties as a prerequisite to a judicial demand for damages or

dissolution of the lease. 

IV. CONCLUSION

We disclaim any intent that the Louisiana Supreme Court confine itsreply to the precise form

or scope of the legal question we certify. The answer provided by the Louisiana Supreme Court will

determine a dispositive issue in this case. We transfer to the Louisiana Supreme Court the record and

appellate briefs in this case with our certification. 

We CERTIFY the question stated to the Louisiana Supreme Court. 

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