Connie Jean Smith v. SEECO, Inc.

In this appeal four groups of prospective intervenors—the Arnett I, Arnett II, Charter Land Co. LLC, and Wyborny appellants—challenge the district court’s1denials of their motions to intervene in a class action lawsuit by named plaintiffConnie Jean Smith against SEECO, Inc., et al.2 They also challenge the districtcourt’s procedures for opting-out from the class. We affirm the district court’s rulingthat Charter Land’s motion to intervene was untimely, and dismiss the remainingappeals for lack of jurisdiction.

1The Honorable Brian S. Miller, Chief Judge, United States District Court for

the Eastern District of Arkansas.

2Arnett I is comprised of forty-three individuals, while Arnett II is comprised

of those forty-three individuals plus an additional three individuals.

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I.Background

Connie Jean Smith filed a putative class action lawsuit against SEECO, Inc.,et al., alleging underpayment of gas royalties.3 The claims related to the rate ofpayment that SEECO and its subsidiaries had offered interest-holders in oil wells inthe Fayetteville Shale formation. When Smith filed her lawsuit, two class actions onrelated claims were already pending in state court (referred to as “Snow” and“Stewmon”). The district court certified a class of all of SEECO’s royalty owners(including owners within and outside of Arkansas) with leases containing the relevantlease language. The Smith class by definition covered all of the related state actions.

The district court formulated a class-notice plan with specific opt-outprocedures. To opt-out, a royalty owner had to send a letter to the class administratorpostmarked within sixty days of the notice date stating the owner’s desire to beexcluded from the class. The court-approved opt-out plan required the letter to: (1)state the owner number, name, and address of the person or entity requestingexclusion, (2) identify by property name/number the well or wells in which the ownerheld a royalty for which they were requesting exclusion, and (3) contain a notarizedsignature by the individual or an officer of the entity requesting exclusion. Twohundred forty-eight royalty owners moved to intervene to challenge the court’sopt-out procedures, including the Arnett appellants. The district court declined torule on the motions until the class members had an opportunity to comply with therequirements in full. Most of the owners who signed the intervention motion choseto submit opt-out requests.

On January 18, 2017, the district court denied the motions to intervene and tomodify the opt-out procedures. The key concern underlying the district court’s ruling

3The facts of the merits dispute in this case are recounted in full in Connie Jean

Smith v. SEECO, Inc., et al, No. 17-3636.

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on the opt-out procedures was a fear “that lawyers, rather than the class membersthemselves, may be making decisions, and extra protections must be in place toensure the class members made the opt-out decision.” This concern was bolstered bylater experience. For example, the court received opt-out requests from differentgroups of lawyers purporting to represent the same royalty owner and interest. Additionally, the fact that some individuals owned multiple wells and some wells hadmultiple owners meant that the court felt the opt-out needed to require “owners tospecify which properties/wells they wished excluded, rather than merely provide theirname and/or only provide the well number.” After all opt-out requests had beensubmitted, the court concluded that “the opt-out procedures were not overlyburdensome, and . . . in the aggregate, the process worked as expected.” As relevantto this appeal, forty-five of the forty-six Arnett appellants (the forty-three appellantsin Arnett I and two of the three additional appellants in Arnett II) failed to complywith the opt-out requirements and therefore remained in the class.

The Arnett appellants asked this court for mandamus relief from the January18, 2017, order. We denied the request on February 15, 2017. On March 30, 2017,the Arnett appellants filed a second motion to intervene. On May 24, 2017, thedistrict court denied this second, duplicative motion.

On May 18, 2017, the state court handling the Snow litigation approved aglobal settlement class covering all of the members of the Smith class. The statecourt preliminarily approved the settlement. At the time of the settlement the Smithcase was fast approaching a firm trial date. The settlement provided that if the Smithtrial began the settlement would be terminable. SEECO asked the district court tocontinue Smith’s trial so that the settlement in Snow could be finalized. The districtcourt denied the motion.

Before trial began, Snow disclosed to the state court a fee-sharing agreementbetween Snow and Smith class counsel. Under the agreement Smith class counsel

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would receive only roughly one-third of the attorney’s fees from any globalsettlement (with the other two-thirds going to Snow class counsel), but Smith counselwould keep all of the attorney’s fees awarded after a successful trial. Snow counselclaimed the agreement was still in effect, creating a potential counsel-adequacyproblem under Rule 23. Smith counsel asserted that the agreement was no longer ineffect. As a result of the dispute, SEECO asked the federal district court to decertifythe Smith class and remove class counsel.

The district court denied the motion. The court concluded that class counsel’s

performance to that point had been “nothing short of impressive” and found that theevidence indicated that the fee-sharing agreement terminated long before the Smithclass was certified. SEECO asked us for mandamus relief and a stay, seeking toprotect the Snow settlement. We denied their request.

As relevant to this appeal, the Wyborny appellants filed a similar motionechoing SEECO’s class-adequacy concerns. The district court denied the motions. Similar arguments were made at trial, and again rejected. At the close of evidence,the district court noted that “[t]his was a well-tried case” and told Smith that hercounsel “did a great job.” Nevertheless, SEECO prevailed.

After the jury had returned its verdict and the day before the district courtentered judgment, another royalty owner, Charter Land Company, moved to intervene

for the purpose of challenging class counsel’s adequacy. Charter Land’s motionraised substantially the same arguments that SEECO and the Wyborny appellants hadraised before trial. The district court denied the motion as untimely, explaining that Charter Land was not permitted to wait to see how the trial turned out, then seek toundermine class adequacy.

The attempted-intervenors now appeal, claiming the district court abused itsdiscretion in denying their motions to intervene and in fashioning the opt-out

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procedures. SEECO asserts we lack jurisdiction over the Wyborny appeal and bothArnett appeals, as they filed their notices of appeal well past the 30-day deadlinefollowing the denial of their motions to intervene. SEECO also asks us to affirm thedistrict court’s denial of Charter Land’s motion to intervene as untimelygamesmanship.

II. Discussion

A. Timeliness of Notice of Appeal

The statutory notice-of-appeal deadline is jurisdictional. See Bowles v.Russell, 551 U.S. 205, 214 (2007) (“[T]he timely filing of a notice of appeal in a civilcase is a jurisdictional requirement.”); EPA v. City of Green Forest, Ark., 921 F.2d1394, 1401 (8th Cir. 1990) (citing United States v. Metropolitan Dist. Comm’n, 865F.2d 2, 4 (1st Cir. 1989)) (“[A]n appellate court lacks jurisdiction over an untimelyappeal . . . .”). “We must resolve outstanding questions of jurisdiction beforeproceeding to analyze the merits.” Arnold v. Wood, 238 F.3d 992, 994 (8th Cir.2001) (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94–95 (1998))(holding that we must consider the statutory notice-of-appeal timeliness requirementbefore addressing the merits of a case).

“It is well-settled that an order denying a motion to intervene as of right is afinal appealable order.” City of Green Forest, 921 F.2d at 1401 (citations omitted).In order for an appellate court to exercise jurisdiction over the attempted-intervenors’appeals, the attempted-intervenors must have appealed within 30 days after the denialof their motions to intervene.

We lack jurisdiction over the Arnett I appellants because their appeals were notfiled within 30 days of the district court’s order denying intervention. The Arnett Iappellants had 30 days from the denial of their motion to intervene on January 18,

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2017, to file their notice of appeal. See 28 U.S.C. § 2107(a). They instead asked thiscourt for mandamus relief (denied February 15, 2017) then refiled a second motionto intervene on March 30, 2017. Their second motion, like the first, containedarguments regarding why the appellants should not have to comply with the districtcourt’s opt-out procedures. On May 24, 2017, the district court denied their second,duplicative motion. The denial of a second motion to intervene covering the samegrounds as the first motion to intervene does not reset the clock for purposes of anappeal; holding otherwise would defeat the statutory timeliness requirement. Thattheir eventual notice of appeal was filed within 30 days of the denial of their secondmotion does not preserve our jurisdiction, as the Arnett I appellants have notidentified a material way in which the second motion was distinguishable from thefirst. See City of Green Forest, 921 F.2d at 1401 (explaining that “changedcircumstances” would allow an appeal from a second motion to intervene); cf. Smithv. SEECO, Inc., 865 F.3d 1021, 1026 (8th Cir. 2017) (“Nothing in our decisionallows a putative intervenor to bring successive appeals from successive denials whena single motion to intervene could have raised all of the putative intervenor’s interestsat one time without delay.”).

We likewise lack jurisdiction over the Arnett II appellants. Their notice ofappeal—filed on November 6, 2017—indicated that they were appealing the districtcourt’s January 18, 2017, order. Because “an order denying a motion to intervene asof right is a final appealable order,” the Arnett II appellants were not allowed to waitto bring their appeal.4 See City of Green Forest, 921 F.2d at 1401.

The Arnett II appellants argue against this conclusion by suggesting that the exception identified by the Supreme Court in Devlin v. Scardelletti, 536 U.S. 1

4One of the Arnett II appellants, Kathy Johnston, appears to have had her optout

request accepted by the district court. As a result, she was excluded from the

class. We therefore would also dismiss her claims on grounds of Article III standing

because she was not negatively affected by the district court’s rulings.

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(2002), allows for their appeal. In Devlin the Supreme Court held that “nonnamedclass members . . . who have objected in a timely manner to approval of [a] settlementat the fairness hearing have the power to bring an appeal without first intervening,”despite the ordinary rule that only parties to a lawsuit are able to appeal an adversejudgment. Id. at 14. We have previously suggested that Devlin’s rule is limited tothe circumstances at issue in that case. See Huyer v. Van de Voorde, 847 F.3d 983,986 n.3 (8th Cir. 2017) (quoting In re Gen. Am. Life Ins. Co. Sales Practices Litig.,302 F.3d 799, 800 (8th Cir. 2002)) (explaining that we have expressed doubt thatDevlin “applies to an opt-out class action” at all); P.A.C.E. v. Sch. Dist. of KansasCity, 312 F.3d 341, 343 (8th Cir. 2002) (holding that Devlin was “not on point” whenreviewing denial of motion to decertify a class since Devlin involved a final orderapproving settlement of a case). Devlin’s holding has no application where, as here,the attempted-intervenors received a final (and therefore immediately appealable)order denying their motion to intervene.

Finally, we lack jurisdiction over the Wyborny appellants. The Wybornyappellants’ notice of appeal identified orders entered on “June 2, 2017, January 18,2017, and March 21, 2017.” The Wyborny appellants did not file their notice ofappeal until July 21, 2017—well after the date to appeal even the June 2, 2017, order. To the extent that the Wyborny appellants attempt to rely on Devlin to support thetimeliness of their motion, they are unsuccessful for the same reasons as the ArnettII appellants. We therefore dismiss the Arnett and Wyborny appeals for having failedto comply with the jurisdictional requirement that they be filed within 30 days of afinal appealable order.

B.Timeliness

“When a district court denies a motion to intervene based on untimeliness. . . we review that decision for abuse of discretion.” In re Uponor, Inc., F1807Plumbing Fittings Prod. Liab. Litig., 716 F.3d 1057, 1065 (8th Cir. 2013) (citing

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ACLU of Minn. v. Tarek ibn Ziyad Acad., 643 F.3d 1088, 1093 (8th Cir. 2011)). Acourt “abuses its discretion when it ‘rests its conclusion on clearly erroneous factualfindings or erroneous legal conclusions.’” Id. (quoting Oglala Sioux Tribe v. C&WEnters., Inc., 542 F.3d 224, 229 (8th Cir. 2008)). If timely, however, we evaluatewhether a party is entitled to intervene as a matter of right de novo. Id. (citing MilleLacs Band of Chippewa Indians v. Minnesota, 989 F.2d 994, 998 (8th Cir. 1993)).

“To determine whether a motion to intervene is timely, we have instructeddistrict courts to consider ‘(1) the extent the litigation has progressed at the time ofthe motion to intervene; (2) the prospective intervenor’s knowledge of the litigation;(3) the reason for the delay in seeking intervention; and (4) whether the delay inseeking intervention may prejudice the existing parties.’” Id. (citing ACLU of Minn.,643 F.3d at 1094). “Motions to intervene should be construed ‘liberally ... in favorof the proposed intervenors,’ but ‘[a]t the same time, a district court’s exercise ofdiscretion under the rule should not lightly be overturned.’” Id. at 1065–66(alterations in original) (citing United States v. Ritchie Special Credit Invs., Ltd., 620F.3d 824, 831 (8th Cir. 2010)). The district court did not abuse its discretion inconcluding that Charter Land filed an untimely appeal where it merely repeatedarguments already advanced by other attempted intervenors after the class wasunsuccessful at trial. While Charter Land insists that it acted diligently upon learningof the purported fee-sharing agreement, similarly situated prospective intervenorswere able to file motions to intervene before the conclusion of the trial. The districtcourt did not abuse its discretion in concluding that Charter Land offered no goodreason for its delay and denying the motion.

III. Conclusion

We dismiss each appeal besides that of Charter Land for lack of jurisdiction.We affirm the district court’s denial of Charter Land’s motion to intervene as untimely.