THE TRIAL OF A PRIVATE ROYALTY LAWSUIT TO JUDGE AND JURY DEFENDANT PERSPECTIVE 1 PRACTICAL CONSIDERATIONS FOR DEFENDING A ROYALTY CASE

• Jurisdiction: United States

Private Oil & Gas Royalties: The Latest Trends in Litigation
(Dec 2008)
CHAPTER 5B
THE TRIAL OF A PRIVATE ROYALTY LAWSUIT TO JUDGE AND JURY DEFENDANT PERSPECTIVE 1 PRACTICAL CONSIDERATIONS FOR DEFENDING A ROYALTY CASE
Anthony J. Shaheen
Holland & Hart LLP
Denver, Colorado

Anthony Shaheen specializes in oil and gas, natural resources, and environmental law. He handles complex, multi-party litigation, both civil and criminal. For the past twenty years, his practice has emphasized natural resources litigation where he has represented oil and gas and coal companies in cases where the damages alleged exceeded hundreds of millions of dollars and forfeiture of a major operating coal mine. He has litigated and tried important oil and gas cases in the Rocky Mountain Region. He was lead trial counsel for 100 named oil company defendants and a defendant class of 3,000 royalty owners involving ownership of the coalbed methane underlying the Southern Ute Indian Reservation. The United States Supreme Court affirmed judgment in favor of the defendants and the class in 1999. He has also litigated and tried numerous other types of natural resources cases including those seeking damages for breach of contract, underpaid royalties, operational issues and environmental contamination. Mr. Shaheen's experience also includes personal injury and products liability litigation. He has represented automobile manufacturers and distributors, heavy equipment manufacturers, military contractors and pharmaceutical companies. He has defended and tried criminal cases, ranging from a criminal action brought for violation of the Resource Conservation and Recovery Act to first-degree murder. Mr. Shaheen has been listed in The Best Lawyers in America (natural resources litigation) since 1999. He is admitted to practice in the state of Colorado.

This paper will briefly address some of the issues/questions a company needs to consider before taking an oil and gas royalty case to trial.

IS YOUR HOUSE IN ORDER?

The most dangerous part of any oil and gas royalty lawsuit is not what you know, but what you do not know. With modern discovery, it is a virtual certainty that if the plaintiffs want to spend the time and money, they will uncover problems in your royalty accounting and payments that you did not even know existed. Regardless of the size or dollar amount, those problems will be used against you at trial. At a minimum, they will form the basis for an argument that you are incompetent or negligent. Worse, plaintiffs may be able to use them to argue you are crooked. The jury will not care either way. At some point, the jury simply stops listening to your explanations/excuses.

Thus, the first and most important question you need to ask before summarily rejecting the idea of settlement and rushing off to trial is this: "Is your house in order?" If not, any defense, however meritorious, will be compromised and...