iAllred v. ReconTrust Co., N.A., 2019 U.S. App. LEXIS 29097 (10th Cir. Sept. 26, 2019)
Tenth Circuit reverses decision modifying cy pres component of class settlement.
As part of a class settlement, the parties created a cy pres fund to distribute unclaimed or non-distributable funds to the state of Utah for programs related to housing, housing loans, and homelessness. No class member opted out or objected to the settlement. Although the district court approved the class-member fund, it modified the cy pres fund, redirecting those funds from Utah to the federal government. The sole rationale the district court offered was notable, opining that the federal government “need[s] all the money [it] can get” and that “we’re not in the charity business.”
The Tenth Circuit rejected the modification, finding that the district court failed to adequately assess whether the parties’ agreement to a cy pres fund was fair, reasonable, and adequate. The panel expressly noted that “it appear[ed] that the district court may have rejected the very premise of a cy pres remedy, given [its] inclination to give the money to the United States for an economic reason and its opposition to the money being used for a charitable purpose.” Given that assessment, the panel vacated the underlying decision and remanded to the district court with instructions to conduct a proper cy pres analysis.
Naylor Farms, Inc. v. Chaparral Energy, LLC, 923 F.3d 779 (10th Cir. 2019)
Tenth Circuit concludes that variations in damage calculations did not preclude certification.
In a case alleging that the defendant, an oil and gas company, improperly distributed royalty payments to owners with interests in its oil and gas wells under various lease agreements, the Tenth Circuit considered whether class certification was barred by (1) lease-language variations and (2) the lack of a uniform payment methodology. The panel, applying an abuse of discretion standard, held that neither issue barred certification and that the district court had properly certified the class.
On the lease-language variation question, the defendant argued the district court erred by relying on a plaintiff-prepared chart categorizing lease language to determine the existence of commonality and predominance. The panel addressed this argument by first reiterating the Tenth Circuit’s previous suggestion that plaintiffs prepare such a chart to establish commonality. The panel noted the plaintiff in this case followed that suggestion and the district court “independently confirmed that the chart was generally accurate.” 923 F.3d at 796. Because the district court confirmed the accuracy of the chart and because the defendant failed to provide the panel with “any information that might call into question the district court’s assessment of the chart’s accuracy,” the panel concluded that the district court did not abuse its discretion. Id.
On the payment-methodology question, the defendant argued that the lack of a common methodology to calculate royalty payments made it impossible to certify the case consistent with Rule 23. The panel rejected this argument, explaining that, although the Tenth Circuit had previously “explained that the existence of a uniform payment methodology isn’t sufficient to establish predominance,” “nothing ... indicates the existence of such methodology is necessary to accomplish this task.” Id. at 798 (citing Wallace B. Roderick Revocable Living Tr. v. XTO Energy, Inc., 725 F.3d 1213, 1220 (10th Cir. 2013)). The panel then expressed its disagreement with the argument that “individual questions about damages defeat predominance,” on the ground that “material differences in damages determinations will only destroy predominance if those individualized issues will overwhelm questions common to the class,” and it saw “no indication” that would happen in this case. Id. (quoting Roderick, 725 F.3d at 1220) (internal quotation marks omitted; alteration incorporated).
