THE TRIAL OF A PRIVATE ROYALTY LAWSUIT TO JUDGE AND JURY PLAINTIFF PERSPECTIVE
| Jurisdiction | United States |
(Dec 2008)
THE TRIAL OF A PRIVATE ROYALTY LAWSUIT TO JUDGE AND JURY PLAINTIFF PERSPECTIVE
Susman Godfrey LLP
Houston, Texas
H. Lee Godfrey is a partner in Susman Godfrey L.L.P., a law firm with offices in Houston, Dallas, Seattle, Los Angeles, and New York. He received his BA in 1966 from the University of Texas and his J.D. with honors in 1969 from the University of Texas School of Law. Mr. Godfrey has represented plaintiffs and defendants in complex litigation in the United States and internationally, including royalty owners in the Lease Oil antitrust litigation which charged oil companies with miscalculating royalties and settled for $194 million, Gulf Oil employees in a suit resulting in a judgment of over $270 million, Shell Oil shareholders in a Delaware suit resulting in a $120 million judgment, and the defense of four major motion picture studios in an antitrust case resulting in a take-nothing judgment. Mr. Godfrey was named among the top 15 American commercial trial lawyers in a survey by International Commercial Litigation magazine, which named Susman Godfrey L.L.P., as one of the 10 best US litigation firms. He has been named one of the top 10 Super Lawyers in Texas by Texas Monthly Magazine from 2003 through 2008. He was named one of the top three antitrust lawyers, one of the top four energy lawyers natural resources lawyers, and one of the top seven general commercial lawyers in Texas by Chambers USA 2006. In 2002 he received the Texas Law Review Association Leon Green Award. In 1999 he was named Barrister of the Year by the University of Texas Board of Advocates, and was selected as one of the top lawyers in Texas by the National Law Journal. He has been included in The International Who's Who of Business Lawyers since 2002 and The Best Lawyers in America since 1991. He is a frequent author and lecturer on a variety of legal topics.
INTRODUCTION
Essentially, trial of a private oil and gas royalty case is no different than trial of any other complex commercial matter. Strategies and trial tactics will depend on the specific facts of your case, the particular parties involved, and the forum within which you are located. Like general commercial litigation, the number of royalty cases actually tried is steadily decreasing. Cases are often settled, never reaching the finder of fact. Nonetheless, there are some issues that will reoccur frequently due to the nature of the litigation that pose some interesting issues specific to trial of royalty cases. This paper attempts to identify those issues and the solutions employed by counsel who have taken the private oil or gas royalty litigation to trial.
1. Using expert witnesses, demonstrative aids and technology.
a. Expert Witnesses
Oil and gas royalty cases often require information from decades before, making it difficult to find live lay witnesses. As a result, the use of expert witnesses is key. An industry standards expert who can opine to the meaning of particular terms, general practices or customs, and types of form leases commonly used during a certain time period is imperative. Because experts are so important to royalty litigation, counsel is best off choosing someone who has a tremendous amount of experience with royalty litigation. This is not a field where a new expert can cut his teeth.
Experts should be used in advance of trial to assist with discovery requests for electronic information. Generally, there are 5-10 key reports that are crucial to the damages expert's analysis. Identifying those reports at the outset can obviate the need for some unnecessary discovery. Moreover, those reports are often stored electronically by defendants. However, there are often fights over whether it should be produced electronically. Experts should be used when crafting discovery requests to aid in the production of electronic information.
b. Demonstrative Aids
Providing the jury with context for understanding the dispute requires sophisticated demonstrative aids. In cases involving a dispute over whether a company should have drilled, the jury will require an understanding of the geophysical information. Explaining seismic interpretation is not an easy task without a visual aid. Even in simpler cases, it is important to provide the jury some context for understanding the royalty dispute, e.g., how oil or gas is extracted from the ground and taken to market. An animated demonstration with an expert witness who can walk the jury through the demonstration is key.
Other powerful demonstrative evidence can be mined from the defendants' own company websites. Companies often have videos available on-line on how their business works. In addition, corporate ethics statements found on company websites can be powerful to show how the company failed to live up to the promises it made.
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c. Technology
The electronic presentation of evidence and demonstratives is the most effective tool in today's trial. The vast majority of today's judges and jurors use internet and email on a daily basis. As a result, juries and judges are accustomed to receiving information electronically. The following results from a study by Dan Gallipeau, Ph.D. of Dispute Dynamics, Inc., are instructive:
█ three-fourths of jurors polled agreed or strongly agreed that they were visual learners;
█ six out of ten jurors polled agreed or strongly agreed that they would give more credibility to and remember better the testimony of a witness that they saw on videotape than the testimony of a witness that they saw only in a written transcript;
█ two-thirds of jurors disagreed or strongly disagreed with the notation that a litigant that uses computer graphics and other technology at trial must be wealthy; and
█ almost two-thirds of jurors polled agreed or strongly agreed that if the judge allows a chart to be shown at trial it must be accurate.
Mark W. Bennett, U.S. District Judge Northern District of Iowa, "From the Bench: Welcome to the 21st Century Courtroom," Litigation, Volume 34, No. 4, Summer 2008, at 2. Accordingly, plaintiffs' lawyers should not shy away from technology for fear of losing their role as the "little guy" and should endeavor to use electronic presentation of evidence and demonstratives.
2. Solving challenges in the presentation of lay witnesses.
In some cases, you may be representing a large number of royalty owners. In one recent case, counsel represented 300 individual royalty owners. The question then becomes: how do you put on evidence you need to present without boring the jury and the court? The solution in one case was to work out an agreement with the other side to avoid the necessity of presenting all class plaintiffs; both sides agreed to a number of plaintiffs that each side wanted presented and then agreed and stipulated that the remaining owners were royalty owners with particular stakes.
In class actions, the only lay witnesses that plaintiffs will generally present are the class representatives. Most often, the class representatives are presented simply to state that they own the royalty, they expected to be treated fairly, but they were cheated. Sometimes, however, presenting this simple story can be challenging where the class representatives are unsophisticated witnesses who have never before testified. While any witness can be diligently prepared to take the stand, for some witnesses the easiest solution to this common challenge is a different questioning technique.
Traditionally, on direct, lawyers will ask open-ended questions. This traditional technique has the advantage of allowing the witness to develop his credibility by telling her story. The disadvantage is that it puts tremendous pressure on the witness to remember all the
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pertinent facts that the lawyer wants elicited and to persuade the jury. Sometimes, the better course, either in part or in whole of a direct examination of a lay witness who is not going to be a good sales person or story teller, is to employ a more controlled question approach, similar to cross-examination. A traditional approach to cross-examination is to control the witness by asking short questions that seek short answers, usually yes, no, or I don't know. On cross-examination, the lawyer does the work, building his argument fact by fact. Employing this strategy on direct allows the lawyer to make key portions of testimony particularly powerful. The following example from Judge Fine's book The How-to-Win Trial Manual shows the effectiveness of this direct examination technique:
Traditional Direct
Q: What was in the third paragraph of the memorandum?
A: I suggested to the president that the company take a serious look at increasing the nicotine levels in its cigarettes. More nicotine would mean more smokers, which would mean more sales and more profits.
Cross-Style Direct:
Q: Did you read the third paragraph of the memorandum?
A: Yes.
Q: What was the subject of the third paragraph?
A: Nicotine.
Q: What about nicotine was discussed?
A: The nicotine levels in cigarettes.
Q: Did the paragraph suggest that the nicotine levels be increased or decreased?
A: Increased.
Q: If the nicotine levels were increased, would that have any effect on anything?
A: Yes.
Q: What?
A: The number of smokers.
Q: Would increasing nicotine mean more smokers or fewer smokers?
A: More smokers.
Q: More smokers than if the nicotine levels were not increased?
A: Yes.
Q: Would this mean more or fewer sales?
A: More.
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Q: Would the increased profits be substantial or insubstantial?
A: Very substantial.
3. Simplifying complex issues and evidence.
Every successful plaintiff's case should include an easy-to-understand narrative. In oil and gas...
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