Devon Energy lost another round in its fight against a lawsuit brought by thousands in North Texas who claim they were cheated out of royalties.
A Dallas federal judge sided with Denton County property owners last month, when he allowed a class-action lawsuit against Devon to move forward. U.S. District Judge Ed Kinkeade granted the class-action status and affirmed that the benefits of litigating the case as a class action outweigh the costs of litigating thousands of individual cases.
Devon has appealed the decision, claiming that Kinkeade’s ruling would force the company to face an unfair situation.
“In certifying a class, the district court failed to conduct the mandatory rigorous analysis” and “made clearly erroneous findings of fact, and failed to properly apply Texas law,” according to court documents filed in late January. The court’s ruling exposes Devon “to potentially ruinous liability.”
The lawsuit claims that Devon Energy sold natural gas at a low price to its affiliate, Devon Gas Services and then deducted an “unreasonable and lucrative 17.5 percent processing fee” from the royalty checks. The lawsuit goes on to call the transactions a sham.