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Nearly 70,000 Gas Royalty Owners Nationwide United to Sue Exxon

Judge Edward C. Prado of the U.S. District Court for the Western District ...

Judge Edward C. Prado of the U.S. District Court for the Western District of Texas in San Antonio has certified a nationwide class action suit against the Exxon Corporation (now Exxon Mobil), which will unite nearly 70,000 gas royalty owners who allege that Exxon unfairly determined the royalties they should receive from natural gas and natural gas liquids sales.

The Houston-based law firm of Fleming & Associates, L.L.P. filed the suit on behalf of the plaintiffs, who leased their mineral rights to Exxon in exchange for royalties produced from the sales of natural gas and natural gas liquids.

Under the terms of the suit, royalty owners seek redress for numerous actions perpetrated upon them by Exxon. They allege that Exxon and its affiliates have engaged in a "gas value chain" scheme of operation in which Exxon allows its affiliates to produce, gather, process, transport, and market the gas, while making unreasonable and excessive profits at each stage of this chain. Meanwhile, the suit says, royalties are calculated on the transfer of the gas to Exxon's affiliates, not on the actual value of the gas received from third parties. In doing this, substantial value is shifted away from the royalty owners to Exxon.

"Exxon has been skimming money off the top and leaving these royalty owners high and dry," said attorney Robert R. Herring of Fleming & Associates. "They funnel money to themselves through their affiliates, unfairly calculating the basis on which royalties should be paid, thus underpaying royalty owners. Exxon clearly has violated its contractual duty to market this gas diligently and to obtain the highest price reasonably possible. So many royalty owners across the country have been affected by these unfair practices that a class action suit is the best way to address these wrongs."

The law firm of Fleming & Associates, L.L.P. concentrates its practice on complex litigation matters and has been highly visible in the areas of toxic tort, insurance fraud, fen-phen, lead paint and tobacco cases