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Chevron “systematically breached” its duties to pay royalties to owners of land in Texas where it mines natural gas, and owes them at least $5 million in damages, a new class action lawsuit alleges.
The class action lawsuit was filed Tuesday in California district court, and accuses the energy company of breaching the terms of its oil and gas lease with the Jackson Family Mineral Trust by stiffing it on royalties owed from mining its Jackson, S P well in Hansford County, Texas.
Plaintiff Shelly Nash Fitzgerald, trustee of the Jackson Family Mineral Trust, says Chevron concealed its systematic underpayment of royalties owed on monthly pay stubs by “falsely representing” that it was paying royalty on the full volume and value of production from their wells, when in fact, it was not.
Chevron is allowed to use gas, oil and water found on the land for free while on the land, but once taken off, it must pay royalties. However Chevron did not do this, the lawsuit alleges. Fitzgerald says Chevron breached their trust by not declaring the off-site use on monthly pay stubs.
“There was nothing on the monthly check stubs that indicated or even raised an objective reasonable suspicion that [Chevron] was not paying royalty on gas used off the lease,” she alleges.
The lawsuit points out that the landowner and the Class are not part of the oil and gas industry, and do not have expertise in when gas is or is not used off the lease. Chevron gave them monthly check stubs to relay the volume and value of gas from each well, and they relied on the representations in the stubs, the class action states.
“Unknowing that anything was awry, Plaintiff and the members of the Class relied on the affirmative representations on the monthly check stubs that they were being paid on the full volume and at the proper value for all gas.”
The group added they could not have discovered the “accounting tricks” by the exercise of reasonable diligence alone, and so Chevron owes them a duty of trust when relaying the accounts to them.
“Defendant controls every aspect of the relationship: it produces the gas, it signs the midstream contracts, it accepts payment, it calculates the royalties, and it makes the distributions to itself and to royalty owners,” the lawsuit states.
“Royalty owners are not involved in any one of these steps, and they are powerless to stop any accounting tricks Defendant engages in. It is an asymmetrical power imbalance that permits Defendant to take advantage of royalty owners and conceal cheating on royalty payments.”
Nash Fitzgerald is seeking to represent all current royalty owners in Texas wells where Chevron was the operator from April 1, 2011, where the oil and gas leases expressly contain an on-lease free use clause.
She is suing Chevron for breach of lease, and is asking for a jury trial, certification of the Class, damages in excess of $5 million for the breach of lease, fees and costs.
This is not the first class action lawsuit Chevron has faced. In February this year, The San Francisco Herring Association (SHA) filed a class action lawsuit claiming the recent 750 gallon Chevron oil spill will devastate the industry for years to come.
And in 2019, Chevron Corp. agreed to a $3.2 million settlement resolving class action lawsuit claims that the company violated FSLA regulations by misclassifying their drill set managers as independent contractors.
What do you think of the latest class action lawsuit against Chevron? Let us know in the comments!
The plaintiffs are represented by Keith A. Robinson of Kar Law Group and Rex A. Sharp, W. Greg Wright and Scott B. Goodger of Sharp Law, LLP.
The Chevron Breach of Lease Class Action Lawsuit is Shelly Nash Fitzgerald, et al, v. Chevron U.S.A. Inc., Case No. 4:21-cv-02650, in the U.S. District Court Northern District of California Oakland Division.
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3 thoughts onChevron Used ‘Accounting Tricks’ to Underpay Landowners for Mined Gas, Class Action Claims
Yes we was left shares grandaddy Chevron royitiy I no I Haven’t received a check 5years .And I believe Chevron owns us money we supposed to gt these royitiy checks my grandaddy passed we didn’t later I sure like sum help
Yes we was left shares grandaddy Chevron royitiy I no I Haven’t received a check 5years .And I believe Chevron owns us money we supposed to gt these royitiy checks my grandaddy passed we didn’t later
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