Box Elder Kids, LLC et al v. Anadarko E & P Onshore, LLC et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge William J. Martínez
Civil Action No. 20-cv-2352-WJM-SKC
BOX ELDER KIDS, LLC,
C C OPEN A, LLC, and
GUEST FAMILY TRUST, by its Trustee CONSTANCE F. GUEST, individually and on
behalf of themselves and all others similarly situated,
Plaintiffs,
v.
ANADARKO E & P ONSHORE, LLC,
ANADARKO LAND CORPORATION, and
KERR-MCGEE OIL AND GAS ONSHORE, LP,
Defendants.
ORDER DENYING MOTION UNDER FEDERAL RULE OF EVIDENCE 702
Plaintiffs Box Elder Kids, LLC (“Box Elder”), C C Open A, LLC (“CC Open A”),
and the Guest Family Trust, by its Trustee Constance F. Guest, individually and on
behalf of themselves and all others similarly situated (collectively, “Plaintiffs”) bring this
breach of contract lawsuit against Anadarko E & P Onshore, LLC, Anadarko Land
Corporation, and Kerr-McGee Oil and Gas Onshore, LP (collectively, “Defendants”),
alleging that Defendants failed to pay them the correct monetary amount pursuant to the
terms of their surface owner agreements (“SOAs”). (ECF No. 25.)
Before the Court is Plaintiffs’ Corrected Motion to Disqualify Expert Witness
Jaime Jost and to Exclude Expert Report (“Motion”) (ECF No. 118). Defendants filed a
response. (ECF No. 127.) For the reasons set forth below, the Motion is denied.
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I. BACKGROUND1
The Court assumes the parties’ familiarity with the facts of this case and limits
the background discussion below to those facts necessary to rule on the Motion.
In their briefing opposing Plaintiffs’ Corrected Motion for Class Certification and
Brief in Support (ECF No. 104), Defendants offer the expert opinions of oil and gas
attorney Jaime Jost.2 (See ECF No. 105.) Jost also prepared an expert report. (ECF
No. 105-2.)
Jost has been a practicing attorney in the oil and gas industry for 20 years and is
licensed in Colorado, Wyoming, and New Mexico. (Id. at 2.) Jost has represented oil
and gas operators in regulatory and litigation matters before state regulatory agencies in
Colorado, Wyoming, and New Mexico; the federal district courts of those same states;
and the United States Court of Appeals for the Tenth Circuit. (Id.) She has obtained
orders and authorizations from state and federal agencies for over ten thousand wells
and two thousand drilling and spacing units, and she has obtained over one thousand
statutory pooling orders in Colorado and Wyoming. (Id.) Jost has also become familiar
with the various agreements common in the oil and gas industry dealing with mineral
rights and proceeds payments. (Id.)
Defendants retained Jost to “review . . . Surface Owner Agreements, the class
1 All citations to docketed materials are to the page number in the CM/ECF header, which
sometimes differs from a document’s internal pagination.
2 Discovery in this action has been bifurcated into the certification stage and, if necessary, a
later merits stage. (ECF No. 37 at 20.) Counsel for Defendants confirmed via e-mail that, at
this stage of the litigation, Defendants have not decided whether they will endorse Jost as a
testifying witness at trial. Therefore, the Court considers the issues raised in the Motion as
pertaining to Jost’s expert qualifications solely within the context of Plaintiffs’ class certification
motion.
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definition, and to identify practical consequences, or considerations of the class
definition.” (ECF No. 118-1 at 3.) Jost’s report contains numerous opinions related to
these topics, which she described “at a high level” in her deposition as: (1) “the class
definition set forth in the First Amended Complaint is unclear [and] confusing”; (2) “the
Shaklee and Guest Surface Owner Agreements provide for alternative methods of
payment”; and (3) a construction of the SOAs that results in “a payment over two and a
half percent as required by the Surface Owners Agreement” would be “absurd.” (Id.)
Defendants rely on Jost’s opinions in opposing Plaintiffs’ class certification motion.
(ECF No. 105 at 7, 8 n.5, 15 n.18, 17 n.22, 19 n.27, 21.)
II. LEGAL STANDARD
A district court must act as “gatekeeper” in admitting or excluding expert
testimony. Bitler v. A.O. Smith Corp., 400 F.3d 1227, 1232 (10th Cir. 2004). Admission
of expert testimony is governed by Rule 702, which provides:
A witness who is qualified as an expert by knowledge, skill,
experience, training, or education may testify in the form of
an opinion or otherwise if: (a) the expert’s scientific,
technical, or other specialized knowledge will help the trier of
fact to understand the evidence or to determine a fact in
issue; (b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and
methods; and (d) the expert has reliably applied the
principles and methods to the facts of the case.
Fed. R. Evid. 702. The proponent of the expert testimony bears the burden of proving
the foundational requirements of Rule 702 by a preponderance of the evidence. United
States v. Nacchio, 555 F.3d 1234, 1241 (10th Cir. 2009) (en banc).
An expert’s proposed testimony also must be shown to be relevant and otherwise
admissible. See Adamscheck v. Am. Family Mut. Ins. Co., 818 F.3d 576, 588 n.7 (10th
Cir. 2016). To be relevant, expert testimony must “logically advanc[e] a material aspect
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of the case” and be “sufficiently tied to the facts of the case that it will aid the [finder of
fact] in resolving a factual dispute.” United States v. Garcia, 635 F.3d 472, 476 (10th
Cir. 2011) (alterations in original).
While an expert witness’s testimony must assist the finder of fact to be deemed
admissible, Fed. R. Evid. 702(a), it may not usurp the fact-finding function. See Specht
v. Jensen, 853 F.2d 805, 808 (10th Cir. 1988). The line between what is helpful and
what intrudes on the province of the finder of fact is not always clear, but “[a]n opinion is
not objectionable just because it embraces an ultimate issue.” Fed. R. Evid. 704.
Ultimately, “the rejection of expert testimony is the exception rather than the rule.” Fed.
R. Evid. 702 advisory committee’s note.
III. ANALYSIS
The Court observes that Jost’s opinions can be divided, at a general level, into
two categories: (1) opinions concerning standards and practices common to the oil and
gas industry; and (2) everything else.
A. Industry Standards and Practices
Plaintiffs’ argue that Jost is not qualified to “testify as an expert on matters
related to class certification” because she “does not have specialized experience or
training on SOAs necessary to form a reliable opinion[, n]or does she have any
specialized experience (admittedly no experience) in class actions.” (ECF No. 118 at 1,
4.) Plaintiffs emphasize that Jost’s career has focused on representing oil and gas
operators in the regulatory context rather than in making “specific determination[s] of oil
and gas interests to be paid.” (Id. at 4.) They also stress that Jost is not experienced
with “the specific breed of contract that are SOAs” or “the specialized procedural
mechanism that is Rule 23 class certification.” (Id. at 5.)
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Defendants respond that they offer Jost as an expert on “well spacing units for
multiple tracts of land and the allocation of oil and gas production and payments to
those lands,” not Rule 23. (ECF No. 127 at 1–2.) Defendants point to Jost’s two
decades of experience as an oil and gas attorney, including the thousands of wells and
drilling and spacing units she has gotten approved and statutory pooling orders she has
obtained; her knowledge of various types of agreements common in the industry; and
her knowledge of industry standards with respect to payment of proceeds and
unitization agreements. (Id. at 5.)
The Court agrees with Defendants that Jost has the requisite knowledge and
experience to offer expert opinions on factual issues relevant to class certification—
namely “industry custom and practice regarding oil and gas allocation, unitization,
production payments, surface ownership, and the applicable contractual agreements
that are all central issues to the putative class.” (Id.)
Plaintiffs argue Jost should not be qualified as an expert because the opinions
she offers are unreliable. In support, they argue Jost “profoundly misstates” their claims
in her report and that her mistaken “assumptions and resulting opinions are based on
Defendants’ obfuscation of Plaintiffs’ claims.” (ECF No. 118 at 7.) The Court interprets
this argument as an attack on the reliability of Jost’s methodology.
Defendants’ rejoinder leaves something to be desired, merely reiterating Jost’s
“reliable experience.” (ECF No. 127.) While the Court notes that the language
Defendants seem to reference concerns whether an expert’s opinions are “the product
of reliable principles and methods,” Fed. R. Evid. 702(c) (emphasis added), it also notes
that the Daubert factors codified in Rule 702 “do not constitute a definitive checklist or
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test.” Kumho Tire, 526 U.S. at 150 (emphasis in original). The Court’s “gatekeeping
inquiry must be tied to the facts of a particular case.” Id.
Defendants offer Jost based on her experience in the oil and gas industry and
her opinions concern the customs and practices of that industry. These are not the sort
of opinions to which a particular methodology is an obviously relevant consideration.
Plaintiffs’ argue Jost’s assumptions are wrong and therefore so are her opinions—
garbage in, garbage out. Not only is this argument undercut by Plaintiff’s “clarification”
of the class definition (apparently) partly in response to Jost’s opinions (ECF No. 127 at
9–10), the Court finds that it goes to the weight Jost’s opinions should be given, and not
to their reliability.
B. Jost’s Other Opinions
Plaintiffs’ final argument to exclude Jost’s opinions is that, even if they are valid
and reliable, they are irrelevant and do not assist the Court in determining whether the
purported class should be certified. (ECF No.118 at 8.) Plaintiffs take particular aim at
what they describe as the “crux” of Jost’s report: “that the class should not be certified
because it is not ascertainable and/or requires intensive, individualized inquiry of each
SOA at issue.” (Id.) These opinions, according to Plaintiffs, are legal conclusions
reserved for the Court. (Id. 8–11.) Defendants strenuously contest this characterization
of Jost’s opinions, insisting that she has “identified practical subject matter observations
about the class definition and the proposed class action topics” that will “assist this
Court in considering whether Plaintiffs have satisfied Rule 23.” (ECF No. 127 at 7.)
While it is permissible for an expert to testify to “ultimate issue[s],” Fed. R. Evid.
704, and Tenth Circuit law permits experts to “refer to the law in expressing their
opinion,” experts are still prohibited from usurping the function of the finder of fact.
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United States v. Schneider, 704 F.3d 1287, 1294 (10th Cir. 2013) (quoting United
States v. Bedford, 536 F.3d 1148, 1158 (10th Cir. 2008)) (internal quotation marks and
alteration omitted). One way that experts can do this is by overreliance on “specialized
legal term[s].” Id.; see also United States v. Richter, 796 F.3d 1173, 1198 (10th Cir.
2015). Commonality and typicality are legal terms of art, and expert opinions on
whether the legal standards of commonality and typicality are met in a particular case
are impermissible. See Abraham v. WPX Production Productions, LLC, 184 F. Supp.
1150, 1204 (D.N.M. 2016).
Plaintiffs highlight Jost’s apparent reliance on specialized legal terms in her
opinions contained in paragraphs 21 and 22 of her report. (ECF No. 118 at 10 n.42.)
Jost writes:
There is no part of this [absent class member identification] analysis that is
uniform, common, or typical between potential class member surface
owners because surface owner parcels and spacing units are not uniform;
they vary by well type, location, jurisdiction, formation or productive
reservoir, and individual unitization agreements and/or pooling orders. . . .
The analysis will not be uniform, common, or typical across severed surface
owners, or even among all surface owners that own separate parts of the
described premises in the same SOA.
(ECF No.105-2 at 17–18.) It is true that Jost uses the words “common” and “typical,”
but these opinions are not about commonality or typicality within the meaning of Rule
23(a). As the Court (and apparently Plaintiffs) understand them, these opinions concern
ascertainability—not commonality or typicality. (ECF No. 118 at 8–11.) The Court finds
that Jost uses the terms “common” and “typical” in their ordinary sense rather than as
terms of art in the context of Rule 23 jurisprudence. Jost does not opine that the class
members cannot be ascertained. Instead, she explains, based on her knowledge of
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and experience with the oil and gas industry, why a one-size-fits-all method for
identifying absent class members is flawed in her opinion.
The Court is sensitive to the fact that expert opinions carry with them an authority
that lay opinions do not. The Court, however, is trained in the law and can readily
distinguish between words used as legal terms of art and words used for their ordinary
meaning. Therefore, the Court finds that Jost’s opinions do not usurp the province of
this Court (as finder of fact with regard to the issue of class certification), and it further
finds that Plaintiffs’ arguments go to the weight—and not the admissibility—of Jost’s
expert opinions.
IV. CONCLUSION
For the reasons set forth above, the Court ORDERS that Plaintiffs’ Corrected
Motion to Disqualify Expert Witness Jaime Jost and to Exclude Expert Report (ECF No.
118) is DENIED.
Dated this 21st day of October, 2022.
BY THE COURT:
______________________
William J. Martínez
United States District Judge
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