IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 17-10320

HENRY SEELIGSON; JOHN M. SEELIGSON; SUZANNE SEELIGSON 

NASH; SHERRI PILCHER, 

 Plaintiffs - Appellees

v.

DEVON ENERGY PRODUCTION COMPANY, L.P., 

 Defendant - Appellant

Appeal from the United States District Court 

for the Northern District of Texas

USDC No. 3:16-CV-82

Before WIENER, GRAVES, and HO, Circuit Judges.

PER CURIAM:*

Plaintiffs-Appellees in this class action case (“Plaintiffs”) are royalty 

owners who allege that Defendant-Appellant, Devon Energy Production 

Company, L.P. (“DEPCO”), breached its royalty obligations by violating the

duty to market implied in the class members’ mineral leases. According to 

Plaintiffs, DEPCO breached this duty by selling the raw, unprocessed gas to 

its corporate affiliate at the wellheads at a price artificially reduced by an 

 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

October 16, 2018

Lyle W. Cayce

Clerk

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No. 17-10320

2

unreasonably high processing fee. Plaintiffs aver that DEPCO then passed this 

processing fee on to the royalty owners. 

Plaintiffs sought to certify a class comprising royalty owners who claim 

that their royalty payments were reduced by DEPCO’s pricing scheme. The 

district court held an evidentiary hearing, then certified the Class as follows:

All person or entities who, between January 1, 2008 and February 

28, 2014, (i) are or were royalty owners in Texas wells producing 

natural gas that was processed through the Bridgeport Gas 

Processing Plant by Devon Gas Services, LP (“DGS”); (ii) received 

royalties from Devon Production Company, L.P. (“DEPCO”) on 

such gas; and (iii) had oil and gas leases that were on one of the 

[specific forms] . . . (“The Class Lease Forms”).1

DEPCO now appeals the district court’s certification decision.

I. FACTS AND PROCEEDINGS

Plaintiffs are royalty owners of natural gas wells operated by DEPCO in 

the Barnett Shale gas field. DEPCO is an oil and gas exploration and 

production company that is the lessee under numerous natural gas well leases. 

Several thousand of the wells that DEPCO operates in the Barnett Shale are 

serviced by the Bridgeport Rich Gathering System (the “Bridgeport System”), 

a series of horizontal pipelines that gather natural gas from individual wells 

and transport it to the Bridgeport Gas Processing Plant (the “Bridgeport 

Plant”). During the period of class claims, the Bridgeport System and 

Bridgeport Plant were owned and operated by Devon Gas Services (“DGS”). In 

turn, DEPCO and DGS are both wholly-owned subsidiaries of Devon Energy 

Corporation.

A. DEPCO sells gas to DGS

During all relevant times, DEPCO sold all the natural gas that it 

produced from wells in the Bridgeport System to DGS under a 2005 Gas 

 

1 The court also indicated several persons or entities excluded from the Class.

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Purchase and Processing Agreement (the “GPPA”). Under the terms of the 

GPPA, DEPCO sold “wet” natural gas from the wells to DGS (1) at the 

wellheads, (2) for a purchase price of “82.5% of the published industry index 

value of the residue [“dry”] gas and natural gas liquids (“NGLs”).” DGS then 

transported the wet gas from the individual wells, through the Bridgeport 

System, to the Bridgeport Plant, where the wet gas was processed into (1)

NGLs and (2) dry residue gas. DGS then sold the processed dry residue gas to 

third parties. 

The parties characterize this transaction in different ways. DEPCO says 

that it transferred ownership of the gas to DGS at the moment of sale at the 

wellhead. DEPCO claims that, because it no longer owned the gas when it was 

transported through the Bridgeport System and processed at the Bridgeport 

Plant, it did not charge Plaintiffs a “processing fee”; neither was it the seller of

the NGLs or the residue gas. 

According to Plaintiffs, however, these “sales” were sham transactions, 

as DEPCO and DGS are closely related subsidiaries of the same corporate 

parent, and DGS never transferred funds to DEPCO in payment for the gas. 

Plaintiffs contend that DEPCO did not actually “sell” the gas to DGS at the 

wellhead, but transported the gas to the Bridgeport Plant, where DGS 

“charged” DEPCO a 17.5% processing fee—a percentage far greater than the 

market rate for processing. Plaintiffs further contend that this processing fee 

was passed on to the royalty owners by DEPCO’s artificial lowering of the 

purchase price at the wellhead by 17.5%, uniformly using this methodology for 

every well within the Bridgeport System. Plaintiffs insist that all royalty 

owners thus received lower payments as a result of DEPCO’s purely internal 

pricing scheme. 

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B. Implied Duty to Market in Class Leases

Each Plaintiff’s royalty interest was memorialized on one of nine 

standard oil and gas lease forms (the “Class Lease Forms”). Plaintiffs claim

that all Class Lease Forms are “proceeds” leases, in which royalty payments 

are based on the net proceeds, viz., the amount realized by the lessee—here, 

DEPCO—when the gas is sold at the well.2 According to Plaintiffs, when a

mineral lease does not contain any provision regarding a duty to market, Texas 

law implies a duty to market. This duty requires producers like DEPCO to act 

in good faith to obtain “the best price reasonably attainable.” Plaintiffs argue 

that DEPCO breached the implied duty to market when it artificially lowered 

the price of the natural gas that it sold to DGS at the wellhead. Plaintiffs 

contend that because (1) all of the Class Lease Forms are deemed to include 

such an implied duty to market, and (2) DEPCO used a uniform pricing

methodology to artificially lower the wellhead price and the resulting royalty 

payments, all class members have “identical duty-to-market claims.”

DEPCO maintains, however, that some of the Class Leases are not 

subject to an implied duty to market. It claims that the district court did not 

examine the Class Leases and only assumed that each of them was subject to

an implied duty to market. According to DEPCO, three of the named Plaintiffs’ 

nine leases were modified to change the lessee’s marketing duty, so that the 

implied duty to market does not apply to each of the named Plaintiff’s leases, 

much less to each of the 4,143 Class Leases. 

 

2 As discussed more fully below, Plaintiffs submitted expert testimony from an 

“industry veteran” who reviewed more than 10,000 DEPCO leases. He identified 4,143 Leases 

on the nine Class Lease Forms which did not include any modifications or addenda that

would modify the duty to market. Based on this evidence, the district court limited the Class 

Leases to these 4,143 documents. 

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C. District Court Decision

Plaintiffs originally filed this suit in the Eastern District of Texas, 

alleging that DEPCO improperly calculated and intentionally underpaid 

royalties to Plaintiffs for gas that was processed through the Bridgeport Plant.3

That court scheduled a day-long class certification hearing to receive evidence 

on the certification issue. Shortly before the date scheduled for that hearing, 

however, DEPCO filed an emergency motion to stay the proceedings pending

resolution of its motion to transfer venue.4 The hearing was stayed and the 

case was eventually transferred to the Northern District of Texas, where 

Plaintiffs’ motion for class certification was eventually denied.5 Plaintiffs then 

filed a motion for reconsideration. Their motion requested an opportunity to 

present evidence in support of certification, and the district court held a class 

certification evidentiary hearing. After reviewing the additional evidence, 

including “over one hundred exhibits, sizeable deposition designations, and the 

testimony of four live witnesses[,]” the district court granted Plaintiffs’ motion 

and certified the class. DEPCO timely appealed. 

II. LAW AND ANALYSIS

A. Standard of Review

We review a district court’s class certification for abuse of discretion.6

Abuse of discretion occurs only when all reasonable persons would reject the 

view of the district court.7 “Implicit in this deferential standard is a recognition 

of the essentially factual basis of the certification inquiry and of the district 

 

3 These claims include gas that was processed at the Bridgeport Plant from January 

1, 2008 until October 24, 2014.

4 The motion to stay was subsequently granted by a panel of this court. See No. 17-

90002, Henry Seeligson, et al v. Devon Energy Production Co. LP. 5 See ECF TX ND 3:16-CV-82, 139.

6 Regents of Univ. of Cal. v. Credit Suisse First Bos. (USA), Inc., 482 F.3d 372, 380 (5th 

Cir. 2007).

7 Union Asset Mgmt. Holding A.G. v. Dell, Inc., 669 F.3d 632, 638 (5th Cir. 2012).

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court’s inherent power to manage and control pending litigation.”8 We review 

de novo, however, whether the district court applied the correct legal 

standard.9

B. Federal Rule of Civil Procedure 23 Requirements

“[T]o maintain a class action, the class sought to be represented must be 

adequately defined and clearly ascertainable.”10 This requirement is an 

implied prerequisite of Rule 23.11 “However, the court need not know the 

identity of each class member before certification; ascertainability requires 

only that the court be able to identify class members at some stage of the 

proceeding.”12 If the proposed class is ascertainable, the party seeking 

certification must also comply with Federal Rule of Civil Procedure 23.13 That 

party must first satisfy Rule 23(a)’s requirements of numerosity, commonality, 

typicality, and adequacy of representation.14 If successful, that party must 

then satisfy the provisions of one of Rule 23(b)’s three subsections.15 In this 

case, Plaintiffs rely on Rule 23(b)(3), “which requires that questions of law or 

fact common to the class predominate over questions affecting only individual 

members, and that a class action is superior to other available methods for the 

fair and efficient adjudication of the controversy.”16 “The Rule 23(b)(3) 

predominance inquiry tests whether proposed classes are sufficiently cohesive 

 

8 In re Monumental Life Ins. Co., 365 F.3d 408, 414 (5th Cir. 2004) (quoting Allison v. 

Citgo Petroleum Corp., 151 F.3d 402, 408 (5th Cir. 1998)).

9 Maldonado v. Ochsner Clinic Found., 493 F.3d 521, 523 (5th Cir. 2007).

10 Union Asset Mgmt. Holding, 669 F.3d at 639 (quoting DeBremaecker v. Short, 433 

F.2d 733, 734 (5th Cir. 1970) (per curiam)).

11 John v. Nat’l Sec. Fire & Cas. Co., 501 F.3d 443, 445 (5th Cir. 2007). 

12 Frey v. First Nat. Bank Sw., 602 F. App’x 164, 168 (5th Cir. 2015) (unpublished) 

(quoting William B. Rubenstein, NEWBERG ON CLASS ACTIONS § 3:3 (5th ed. 2011)).

13 FED. R. CIV. P. 23.

14 FED. R. CIV. P. 23(a).

15 FED. R. CIV. P. 23(b).

16 Ahmad v. Old Republic Nat’l Title Ins., 690 F.3d 698, 702 (5th Cir. 2012) (citing 

FED. R. CIV. P. 23(b)).

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to warrant adjudication by representation.”17 Plaintiffs have the burden of 

showing that Rule 23’s requirements are met.18

i. Ascertainability

The district court did not abuse its discretion in determining that the 

class of royalty owners was ascertainable. DEPCO relied on precedent from the 

Third Circuit to claim that the Plaintiffs had to demonstrate “by a 

preponderance of the evidence, that the class is ‘currently and readily 

ascertainable based on objective criteria.’”19 But, this court has not adopted 

that heightened standard. Instead, a party need only demonstrate—“at some 

stage of the proceeding”20—that the class is “adequately defined and clearly 

ascertainable.”21 Here, both DEPCO and the public records provide sufficient 

objective criteria from which to identify class members.22 We conclude that the 

district court did not abuse its discretion in finding that the class is 

ascertainable. 

ii. Commonality

The parties do not dispute the district court’s rulings regarding 

numerosity, typicality, or adequacy of representation; however, DEPCO does 

 

17 Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997).

18 Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350–51 (2011). 19 Carrera v. Bayer Corp., 727 F.3d 300, 306 (3d Cir. 2013) (quoting Marcus v. BMW 

of N. Am., LLC, 687 F.3d 583, 593 (3d Cir. 2012)).

20 Frey, 602 F. App’x at 168 (quoting William B. Rubenstein, NEWBERG ON CLASS

ACTIONS § 3:3 (5th ed. 2011)).

21 Union Asset Mgmt. Holding, 669 F.3d at 639 (quoting DeBremaecker, 433 F.2d at

734).

22 DEPCO claims that it does not record ownership by lease and does not have 

complete records on past ownership. It contends that Plaintiffs’ proposed alternative—

reviewing property and title records—is not administratively feasible and therefore fails to 

satisfy Rule 23’s ascertainability requirements. We are not convinced. Before any individual 

class member can recover, he must demonstrate that he was entitled to receive royalty 

payments. “However, . . . ‘the possibility that some [claimants] may fail to prevail on their 

individual claims will not defeat class membership’ on the basis of the ascertainability 

requirement.” In re Deepwater Horizon, 739 F.3d 790, 821 (5th Cir. 2014).

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challenge that court’s ruling on commonality. To satisfy Rule 23’s commonality 

requirement, Plaintiffs had to demonstrate that there are questions of law or 

fact common to the class.23 A common question “must be of such a nature that 

it is capable of classwide resolution—which means that determination of its 

truth or falsity will resolve an issue that is central to the validity of each one 

of the claims in one stroke.”24 This requirement “can be satisfied by an instance 

of the defendant’s injurious conduct, even when the resulting injurious

effects—the damages—are diverse.”25

The district court determined that the answers to two common questions 

would determine whether DEPCO violated the implied duty to market: (1) “Did 

the 82.5% value sale of residue gas and NGLs violate DEPCO’s duty to market 

owed to royalty owners?” and (2) “Did DEPCO violate its duty to market owed 

to royalty owners by failing to recover profits from DGS for gas sales DGS made 

to third parties?”

DEPCO contends that these questions are based on incorrect application 

of Texas law and erroneous factual findings, leading the district court to abuse

its discretion in concluding that the proposed class satisfies Rule 23(a)’s 

commonality requirement. If these questions are not common to the class, or if 

they are based on incorrect legal conclusions or factual findings, class 

certification was an abuse of discretion.26

a. Duty to Market

DEPCO insists that the district court abused its discretion when it

determined that each of the Class Leases imposed the same marketing duty

 

23 FED. R. CIV. P. 23(a).

24 Wal-Mart Stores, Inc., 564 U.S. at 350. 25 Deepwater Horizon, 739 F.3d at 810–11.

26 Regents of Univ. of Cal., 482 F.3d at 380 (“Where a district court premises its legal 

analysis on an erroneous understanding of governing law, it has abused its discretion.”).

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without reviewing every individual lease and any “ancillary documents” that

might have modified DEPCO’s duty to market the gas. Relying on Dvorin v. 

Chesapeake Exploration, DEPCO contends that, under Texas law, the district

court was required to review every Class Lease, as well as any ancillary 

documents, before determining that all the Class Leases imposed the same 

duty to market. 

The district court in Dvorin determined that the leases of the proposed 

class members were insufficient to demonstrate that the claims could be 

resolved with a “common answer.”27 The court explained that, even though the 

“specific portions of the royalty provisions . . . are substantially the same, the 

court is required to review the contracts as a whole.”28 Once the court reviewed 

the entire document, it was clear that the contracts varied regarding “the point 

of sale,” and “cost at the well.”29 Some even contained clauses that limited 

royalty payments based on the price Chesapeake paid for its share of 

production.30 The Dvorin court held that, because other terms of the contract 

modified the royalty clauses, the class members’ claims could not be resolved 

with a common answer. 

There is no evidence that such differences exist here. Dvorin did not hold 

that a court must locate every potential ancillary document before determining 

that a group of leases imposed the same duty. There, the plain language of the 

contracts varied so much that it was not possible to reach a “common answer” 

to the plaintiffs’ claims. Here, in comparison, the court determined that “none 

of the nine lease forms contain language that modifies the implied covenant to 

 

27 Dvorin v. Chesapeake Expl., LLC, No. 3:12-CV-3728-G, 2013 WL 6003433, at *6 

(N.D. Tex. Nov. 13, 2013). 28 Id. 29 Id. 30 Id.

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market.”31 Defendants have not provided any ancillary documents that modify 

the duty to market in the Class Leases.32 In fact, even six months after the 

district court certified a class based on 4,143 individual leases, DEPCO’s expert 

challenged only five of them. 

DEPCO also claims that three of the Class Lease Forms contain express 

marketing clauses and therefore cannot include the implied duty to market. 

Those clauses state that DEPCO must “use reasonable diligence to produce, 

utilize, or market the minerals.” DEPCO is correct that this language

precludes the implied duty to market; however, it does not necessarily impose 

a different marketing duty on DEPCO. Neither DEPCO nor Plaintiffs cite any 

case that stands for the proposition that an express duty to market requires 

either the same or a different marketing duty than the implied duty to market. 

In Bowden v. Phillips Petroleum Co., the Texas Supreme Court evaluated a 

similar situation, yet declined to state a categorical rule on this issue.33 There, 

the plaintiffs claimed that a group of proceeds leases, some with both express 

marketing clauses and, others with the implied duty to market, imposed the 

same duty. The court explained that it could be possible that express and 

implied duties to market may not “in practice require different conduct.”34

Here, the express marketing clause in three of the Class Leases Forms 

imposes a duty to use “reasonable diligence,” which is virtually identical to the 

implied duty to act as a “reasonably prudent operator.”35 Given this close 

 

31 See Seeligson v. Devon Energy Prod. Co., L.P., No. 3:16-CV-00082-K, 2017 WL 

68013, at *17 (N.D. Tex. Jan. 6, 2017). 32 During the certification hearing, Plaintiffs presented testimony from an industry 

expert who led a team in reviewing more than 10,000 leases received from DEPCO. The 

expert testified that any leases which had exhibits or addenda that modified the duty to 

market were excluded from the class.

33 247 S.W.3d 690, 701 (Tex. 2008).

34 Id.

35 See Amoco Prod. Co. v. Alexander, 622 S.W.2d 563, 567–68 (Tex. 1981).

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similarity and the fact that Texas law acknowledges that express marketing 

clauses might impose the same duty as the implied duty to market, the district 

court did not abuse its discretion in holding that DEPCO owed all class 

members the same duty, under either the express marketing clause or the 

implied duty to market.36

Owing a uniform duty, however, is not necessarily sufficient to establish 

commonality. The duty DEPCO owed to the royalty owners was “an obligation 

to obtain the best current price reasonably available.”37 In Bowden v. Phillips 

Petroleum, the Supreme Court of Texas explained that even if a gas producer 

owed “an identical duty to market” to a group of royalty owners, the jury would

still need to determine “the price a reasonably prudent operator would have 

received at the wellhead.”38 The Bowden court explained that “variations in 

well locations, quality of production, and field regulations, among other factors, 

will require the jury to conduct a well-by-well analysis . . . unless the class offers 

particular evidence that the gas price at the wells can be evaluated classwide.”39

Plaintiffs argue that such a well-by-well analysis is not necessary here

because DEPCO used a uniform pricing structure for every well in the 

Bridgeport System. Plaintiffs contend that they do not need to adduce evidence 

of a higher available price at each wellhead, but only evidence that DEPCO 

could have processed the gas at a fee lower than the 17.5% it paid DGS. After 

reviewing the parties’ motions and evidence, and hearing extensive testimony 

regarding the Class Leases, the district court determined that DEPCO used a 

classwide pricing structure determined by the uniform processing fee, so that

 

36 This determination falls squarely within the “district court’s inherent power to 

manage and control pending litigation.” See Monumental Life Ins. Co., 365 F.3d at 414

(quoting Allison, 151 F.3d at 408).

37 Union Pac. Res. Grp., Inc. v. Hankins, 111 S.W.3d 69, 72 (Tex. 2003). 38 Bowden, 247 S.W.3d at 701.

39 Id. at 701–02 (emphasis added).

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the gas price at the wells could be evaluated classwide.40 In light of the 

“essentially factual basis of the certification inquiry and of the district court’s 

inherent power to manage and control pending litigation,”41 we are convinced

that the district court did not abuse its discretion in ruling that Plaintiffs could 

demonstrate that DEPCO breached its implied duty to market by basing its 

price on a higher processing fee than the fee that a “reasonably prudent 

operator would have received at the wellhead.”42 This issue is precisely the 

type of common question “that determination of its truth or falsity will resolve 

an issue that is central to the validity of each one of the claims in one stroke.”43

b. Duty to recover downstream profits

The second question the district court found common to all class 

members was, “Did DEPCO violate its duty to market owed to royalty owners 

by failing to recover profits from DGS for gas sales DGS made to third parties?” 

Later in the order, the district court framed this issue as whether DEPCO 

breached its duty “by not following its own policy to recoup the profits DGS 

made on subsequent gas sales.” At no point, however, did the district court 

 

40 See Bowden, 247 S.W.3d at 701. 41 Monumental Life Ins. Co., 365 F.3d at 414 (quoting Allison, 151 F.3d at 408).

42 See Bowden, 247 S.W.3d at 701. As discussed more fully below, the district court 

made the factual determination that the price was determined based on the processing fee 

DGS charged DEPCO. This factual finding is reviewed for clear error. See Energy Mgmt. 

Corp. v. City of Shreveport, 467 F.3d 471, 479 (5th Cir. 2006). Furthermore, given the limit 

on conducting “merits inquiries” at this stage in the litigation, and the deference granted to 

the district court’s factual findings, that court did not abuse its discretion in determining that 

whether DEPCO breached its duty to Plaintiffs was a common question capable of classwide 

resolution. See Deepwater Horizon, 739 F.3d at 810 (quoting Wal-Mart Stores, Inc., 564 U.S. 

at 350) (citations omitted) (holding that an issue is capable of classwide resolution when the 

“determination of its truth or falsity will resolve an issue that is central to the validity of each 

one of the claims in one stroke.”).

43 Wal-Mart Stores, Inc., 564 U.S. at 350.

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explain why the implied duty to market includes a duty to recoup profits made 

on downstream gas sales.44

DEPCO insists that neither the Class Leases nor the implied duty to 

market imposed a duty to recoup downstream profits; and Plaintiffs do not 

address this alleged duty in their brief. At best, Plaintiffs aver that DEPCO

policies instructed that “DGS may not make profit at the expense of [DEPCO 

by] ... sell[ing] gas to third parties at higher prices than the transfer price 

under the GPPA.”45 The district court did not provide any legal basis for 

imposing a duty to recover downstream profits on DEPCO, so it abused its 

discretion when it determined that this was a common question which could 

support class certification. 

Fifth Circuit law, however, recognizes that even one common question 

may be sufficient to support commonality.46 Here, the district court determined 

that the driving question behind this class litigation would be whether DEPCO 

artificially lowered the wellhead price, in violation of the implied duty to 

market. Texas law is clear that, to determine whether DEPCO has breached 

the implied duty to market, the court must “focus[] on the behavior of the lessee 

rather than on evidence of other sales.”47 Because DEPCO’s behavior presents 

“at least one contention that is central to the validity of each class member’s 

 

44 The court did not expressly find that DEPCO’s sales to DGS were a sham, but, based 

on the way it phrased the second common question, it certainly seems to imply that the sale 

was a sham. The validity of this possible conclusion, however, is not currently before this

panel.

45 Plaintiffs do not assert that they have standing to enforce these internal guidelines, 

but contend that standing is a merits question which should not be resolved at this stage of 

the litigation. 

46 See Deepwater Horizon, 739 F.3d at 810.

47 Hankins, 111 S.W.3d at 71.

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claims[,]” the district court did not abuse its discretion in ruling that 

commonality was satisfied.48

iii. Predominance 

Federal Rule of Civil Procedure 23(b)(3) requires the court to determine 

whether “the questions of law or fact common to class members predominate 

over any questions affecting only individual members.”49 This “entails 

identifying the substantive issues that will control the outcome, assessing 

which issues will predominate, and then determining whether the issues are 

common to the class, a process that ultimately prevents the class from 

degenerating into a series of individual trials.”50 Absent this analysis, “it [is] 

impossible for the court to know whether the common issues would be a 

 

48 Id. While it is uncommon to find commonality based on a single issue, we are 

mindful that commonality and predominance should be evaluated by “weighing, not counting, 

issues.” See In re Oil Spill by Oil Rig Deepwater Horizon in Gulf of Mexico, on Apr. 20, 2010, 

910 F. Supp. 2d 891, 912 (E.D. La. 2012), aff’d sub nom. In re Deepwater Horizon, 739 F.3d 

790 (5th Cir. 2014). Given that whether DEPCO breached its duty to market will constitute 

a substantial portion of the litigation, this single issue is sufficient to support the district 

court’s commonality finding. 

DEPCO argues that the district court abused its discretion because it based the 

purported common question in this case on erroneous factual findings regarding the type of 

leases involved in this case. The parties agree that DEPCO sold natural, unprocessed gas to 

DGS at the wellhead pursuant to a proceeds lease. In characterizing the transaction as a 

sale of “residue gas and natural gas liquids,” the district court incorrectly described a market 

value lease, rather than a proceeds lease. See Seeligson, 2017 WL 68013, at *2. In its analysis, 

however, the court described the sale of natural gas at the wellhead and treated the leases 

as proceeds leases, triggering the implied duty to market. See Seeligson, 2017 WL 68013, at 

*15–16. Because it applied the correct analysis and ultimately described the complicated 

transaction accurately, the district court’s initial misstatements regarding the type of gas 

sold at the wellhead were harmless error.

DEPCO also contends that the district court “implied” that affiliate sales should be 

held to a higher duty to market than non-affiliate sales. This contention seems to be based 

solely on the fact that the district court included the word “affiliate” in its description of the 

issues in this case. Nothing in the district court’s opinion indicates that it sought to hold 

DEPCO to a higher standard because it sold the gas to its corporate affiliate. DEPCO’s 

contention on this issue is without merit.

49 FED. R. CIV. P. 23(b)(3).

50 Gene And Gene LLC v. BioPay LLC, 541 F.3d 318, 326 (5th Cir. 2008) (quoting Bell 

Atl. Corp. v. AT&T Corp., 339 F.3d 294, 302 (5th Cir. 2003)).

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‘significant’ portion of the individual trials . . . much less whether the common 

issues predominate.”51

DEPCO insists that each lease raises individual issues regarding tolling 

and the applicable statute of limitations, precluding predominance. DEPCO 

explains that the class certification order includes two categories of claims that 

are time barred: (1) claims that DEPCO breached the implied duty to market 

when it entered the GPPA in 2005; and (2) claims that DEPCO breached this 

duty beginning on January 1, 2008, when it failed to recoup profits on DGS’s 

downstream sales. Plaintiffs counter that the limitations periods were tolled 

by the discovery rule and fraudulent concealment. DEPCO responds to this by 

stating that the determination whether the limitation periods were tolled will 

require “thousands” of mini-trials. DEPCO raised these potential individual 

issues in the district court, but in its certification order, the court did not 

discuss how limitations and tolling questions might affect predominance. 

Despite the potential for individual questions based on DEPCO’s statute 

of limitations defense, the district court did not mention the role, if any, the

tolling or limitations issues would play in this class action litigation. To

establish predominance, the district court must identify “the substantive 

issues that will control the outcome, assess[] which issues will predominate, 

and then determin[e] whether the issues are common to the class.”52 Absent 

this analysis, “it [is] impossible for the court to know whether the common 

issues would be a ‘significant’ portion of the individual trials . . . much less 

whether the common issues predominate.”53 The district court did not consider 

the statute of limitations and tolling questions in its predominance analysis, 

 

51 Madison v. Chalmette Ref., L.L.C., 637 F.3d 551, 557 (5th Cir. 2011).

52 Bell Atl., 339 F.3d at 301.

53 Madison, 637 F.3d at 557.

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No. 17-10320

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so it abused its discretion when it determined that common questions would 

predominate over individual issues and certified the class.54

III. CONCLUSION

The district court did not abuse its discretion in concluding that 

Plaintiffs satisfied Federal Rule of Civil Procedure 23’s commonality 

requirement. Because the court failed to address whether the applicable 

statute of limitations and potential tolling questions would raise individual 

issues, it abused its discretion in certifying the class as written. We therefore 

REVERSE and REMAND for further proceedings consistent with this opinion. 

 

54 See id. (“By failing to adequately analyze and balance the common issues against 

the individualized issues, the district court abused its discretion in determining that common 

issues predominated and in certifying the class.”).

 Case: 17-10320 Document: 00514683594 Page: 16 Date Filed: 10/16/2018