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Boulter v. Noble Energy Inc.

Nos. 21-1384 & 22-1170. 7/25/2023. D.Colo. Judge Carson. Colorado Oil and Gas Conservation Commission— Subject Matter Jurisdiction—Exhaustion of Administrative Remedies—Issue Preclusion— Change in Law—Unpublished Colorado Court of Appeals Opinion—Appellate Jurisdiction.

July 25, 2023

Boulter; Boulter, LLC; Ralph Nix Produce, Inc.; and Barclay Farms, LLC (plaintiffs) are a putative class of oil and gas lessors. In 2020, they filed a complaint alleging that Noble Energy, Inc. and Kerr-McGee Oil & Gas Onshore, LP (defendants) had underpaid oil royalties for certain oil and gas leases. Defendants moved to dismiss, contending that the district court lacked subject matter jurisdiction because plaintiffs failed to exhaust their administrative remedies as required by Colorado’s Oil and Gas Conservation Act (Act). The district court dismissed the case without prejudice for lack of subject matter jurisdiction (Boulter I). Plaintiffs did not appeal, but three months later, on May 17, 2021, they filed a nearly identical complaint. On June 3, 2021, the Colorado Court of Appeals issued Antero Resources Corp. v. Airport Land Partners Ltd., No. 19CA1799 (Colo.Ct.App. June 3, 2021) (unpublished). Plaintiffs contended that Antero changed the relevant law to no longer require that the Colorado Oil and Gas Conservation Commission (COGCC) first determine that it lacks jurisdiction before a court may address a royalty agreement issue. The district court disagreed and again dismissed the case without prejudice in October 2021 (Boulter II). Plaintiffs appealed Boulter II and filed a third nearly identical complaint in December 2021 (Boulter III). The Boulter III court recited the Boulter I and Boulter II analysis and dismissed the third complaint without prejudice. Plaintiffs appealed Boulter III, and the Tenth Circuit consolidated the Boulter II and Boulter III appeals. During the pendency of plaintiffs’ appeals, the Colorado Supreme Court affirmed Antero and clarified the scope of COGCC’s jurisdiction.

As an initial matter on appeal, the Tenth Circuit determined that Boulter I, which plaintiffs did not appeal, precludes plaintiffs’ Boulter II and Boulter III jurisdictional argument. Accordingly, unless an exception applies, issue preclusion bars plaintiffs from relitigating the exhaustion issue. An issue preclusion exception exists when the issue is one of law and a new determination is warranted to account for an intervening change in the legal context or to avoid an inequitable administration of laws. Further, res judicata and collateral estoppel do not apply where, between the first and second suits, an intervening change in the law or the modification of significant facts create new legal conditions. Under either Colorado or federal law, for the issue preclusion change-in-law exception to apply, the relevant change in law must occur between the preclusive judgment and any subsequent action. Here, plaintiffs did not appeal Boulter I, and Antero was released two weeks after plaintiffs filed Boulter II. Therefore, even if Antero changed Colorado law, the district court could not rely on the change, and it did not err in dismissing Boulter II for lack of jurisdiction. On the other hand, Antero occurred between Boulter I’s preclusive judgment and the Boulter III filing, so the Tenth Circuit addressed plaintiffs’ change-in-law argument in the Boulter III appeal. The Tenth Circuit concluded that the Colorado Court of Appeals’ decision not to publish Antero suggests that it did not intend to change the law nor intend for the decision to be binding authority. And because the Colorado Supreme Court’s decision postdates all of plaintiffs’ complaints, the Tenth Circuit could not review its potential change in law. Accordingly, Antero did not change the law, and Boulter I precludes plaintiffs from relitigating exhaustion and futility in Boulter II and III. Because plaintiffs did not exhaust their administrative remedies with COGCC, the district court lacks subject matter jurisdiction over both Boulter II and III.

Defendants argued that this appeal should be dismissed for lack of appellate jurisdiction because plaintiffs did not timely appeal Boulter I, and Boulter II and III are effectively Boulter I appeals. However, while the deadline to appeal Boulter I passed years ago, the potential change in law created a question requiring the Tenth Circuit to rule, on different jurisdictional grounds, that the district court correctly dismissed Boulter II and III.

The dismissal for lack of subject matter jurisdiction was affirmed.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

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