Cheapside Minerals v. Devon Energy, No. 23-40591 (5th Cir. 2024)
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The case involves a group of 214 plaintiffs who filed a lawsuit against Devon Energy Production Company, L.P. in a Texas state court, alleging that Devon had underpaid them over $100 million in oil-and-gas royalties. Devon, a citizen of Oklahoma, removed the case to federal court under the Class Action Fairness Act (CAFA). The plaintiffs sought to have the case remanded to the state court based on CAFA’s “local controversy” exception. The district court agreed and ordered the case to be remanded.
On appeal, the United States Court of Appeals for the Fifth Circuit disagreed with the district court's interpretation of the statute. The appellate court found that not all plaintiffs had incurred their "principal injuries" (financial harm from Devon's alleged underpayment of royalties) in Texas, as required under the "local controversy" exception of CAFA.
Accordingly, the appellate court vacated the district court's judgment remanding the case to state court and directed that the case be reinstated on the district court's docket. This ruling signifies that the case will proceed in federal court, not state court. The court's ruling also clarified an important aspect of the CAFA's "local controversy" exception, specifically that all plaintiffs must have incurred their "principal injuries" in the state where the action was originally filed for the exception to apply.
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