Thousands of landowners in Oklahoma and Kansas could be compensated if a federal court approves a $6.95 million settlement filed Wednesday to resolve claims that Chesapeake Energy Corp., one of its co-founders and SandRidge Energy Inc. conspired to rig bids and fix prices for oil and gas leases in the Anadarko Basin.
The class action lawsuit was filed more than two years ago by a group of landowners after the Department of Justice indicted co-founder and former Chesapeake CEO Aubrey McClendon on a charge that he masterminded the alleged conspiracy. The indictment came one day before he died in a one-vehicle car crash. After McClendon’s death, the Justice Department dropped the indictment against him, but plaintiffs continued their case against Chesapeake, its other co-founder Tom Ward, and SandRidge, which Ward founded in 2006.
A Chesapeake representative confirmed that the company has agreed to provide $2.65 million of the settlement, leaving Ward to pay $4.3 million. With the settlement, neither the company nor Ward admitted to any wrongdoing.
Proceedings have stretched over two years. But after a pair of contentious mediation sessions overseen by retired Oklahoma federal judge Michael Burrage earlier this year, settlement papers were filed Wednesday in the U.S. District Court for the Western District of Oklahoma. The settlement indicates that Chesapeake and Ward have agreed to a lump sum payment of nearly $7 million, including legal fees for class representatives, under a deal that would absolve them of all federal and state claims.
“This settlement finally gives thousands of landowners in Oklahoma and Kansas the relief and justice they deserve,” said co-lead counsel for the plaintiffs Christopher Cormier, of Cohen Milstein Sellers & Toll PLLC. “In case proceedings, Chesapeake admitted to potential isolated instances of anticompetitive conduct, and while the plaintiffs believe a large-scale conspiracy could ultimately be proven, they determined this guaranteed settlement provides much-needed closure and accountability.”
Multiple lawsuits that alleged a conspiracy and violations of federal antitrust law were consolidated in April 2016. Shortly after, however, SandRidge, filed for bankruptcy.
The case was stayed pending the bankruptcy, but plaintiffs filed an unopposed motion to reopen it. With SandRidge out of the picture, Chesapeake and Ward were the remaining defendants. In 2013, Ward was forced out of SandRidge, which eventually emerged from bankruptcy. He went on to start other companies.
The lawsuit alleged that defendants illegally conspired to stabilize and depress the price of royalty and bonus payments paid to landowners in the Mississippian Lime play in both states. Specifically, plaintiffs claimed that the defendants communicated about and agreed on prices, allocated particular geographic areas between themselves and rigged bids for leases of land, lowering acquisition prices across the region and harming landowners.