Davis v. JD Minerals: another fixed vs floating royalty dispute

Last month the El Paso Court of Appeals issued its opinion in a long-running dispute over royalties on a section of land in Upton County. Davis et al. v. COG Operating, LLC, et al., No. 08-20-00205-CV. The court addressed several issues, one of which was the construction of a 1939 deed that reserved a royalty interest described as “one-fourth of the 1/8 royalty usually reserved by and to be paid to the land owner in event of execution of oil and gas leases, so that 1/4 of the 1/8 royalty to be paid to us, our heirs or assigns, if, as and when produced from the above described land ….” The court concluded that this was a “floating” royalty equal to 1/4th of the royalty reserved in the lease, not a fixed 1/4 of 1/8 royalty. This appears to be the correct result based on other recent cases construing similar language.

I have a bone to pick, however, with the language in the opinion describing the royalty reserved. To be fair, other courts have made the same error, and the same error was made by the appellants in their brief. The court concluded that the grantors reserved “a floating, 1/4 NPRI in Section 45.” A 1/4 NPRI is a 1/4th royalty interest, not 1/4th of the royalty reserved in the lease. A 1/4th royalty is equivalent to one out of every four barrels produced. One-fourth of the royalty under a lease reserving a 1/4th royalty is 1/4 of 1/4, or 1/16 royalty interest, not a 1/4th NPRI. Clearly, in using the term “floating, 1/4 NPRI” the court meant to conclude that the deed reserved 1/4th of the royalty reserved in any future lease. But referring to it as a 1/4 NPRI is confusing.

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New Federal Law Bans NDAs in Sexual Harassment Cases

Employers often have an interest in ensuring that details of the workplace do not get out into the general public. Accordingly, they often require employees and other business associates to sign nondisclosure agreements (NDAs) as a condition of working at or with the company. Employees, who want a job, usually do not feel as if they are in a position to say no when their employer makes this request, although some states have outlawed NDAs as a condition of employment.

However, public policy also has an interest in having employees’ voices heard under certain circumstances. With this in mind, Congress has passed a new federal law that will automatically invalidate NDAs in the case of sexual harassment or misconduct at work. Victims will be able to speak out about their experiences, notwithstanding any NDA that they have already signed. And, companies will be prohibited from suing employees who go to the media with their stories under the terms of an NDA.

Non-Disclosure Agreements Are Not Always Favored Legally

Courts will often find a reason to not enforce an NDA. While NDAs are a common tool that employers use to maintain confidentiality about designated topics, in some cases, courts will try to find a way to allow employees to speak, especially when their NDA has harmed their right to earn a living. Nonetheless, there are also situations in which a company has a valid interest in an NDA, especially when trade secrets and corporate processes are involved.

There are times when an employee feels the need to speak out. This is often the case when there are allegations of sexual harassment or misconduct in the workplace. NDAs have been used to prevent employees from speaking out about sexual harassment in the workplace. The #MeToo movement highlighted this issue.

The Speak Out Act Restricts How NDAs Can Be Enforced

Congress recently passed the Speak Out Act, which applies to both non-disclosure and non-disparagement agreements. The legislation was signed into law by President Biden on December 7, 2022. The heart of the legislation is that:

“No nondisclosure clause or nondisparagement clause agreed to before the dispute arises shall be judicially enforceable in instances in which conduct is alleged to have violated Federal, Tribal, or State law.”

The Law Retroactively Invalidates NDAs in Certain Circumstances

The Speak Out Act applies retroactively to all NDAs that were already signed prior to the passage of the legislation. The law makes it illegal to enforce an NDA that would prevent a sexual harassment or assault victim from speaking out about their allegations. The law makes it clear that it applies to any claim that is filed after the date that the bill was signed into law, regardless of when the NDA was dated.

Further, the Speak Out Act does not prevent a state from passing even more restrictive laws regarding the use of NDAs.

Blanket NDAs Are Sometimes Problematic

The legislation does not apply to an NDA that was agreed to after the harassment occurred. Employers may have an interest in keeping certain conduct secret, and they may require that their employees sign an NDA when they settle a sexual harassment claim. In this situation, an employee has the ability to specifically consider whether they want to sign the agreement in light of the behavior that has already occurred and the compensation they’re receiving as part of the settlement. However, the prohibition would continue to apply in the event that the employee signed a blanket NDA before the harassment occurred.

From an employer’s standpoint, the Speak Out Act is another blow against the certainty NDAs can bring. If an employer has required an employee to sign an NDA as a condition of employment, they should not expect that it will always be upheld in court. While employees may be afraid of the potential consequences of violating an NDA, they may have a chance to invalidate theirs if they challenge it in court. Alternatively, they may purposely violate the NDA and dare the employer to file suit.

Employers Can Still Use Non-Disclosure Clauses in Settlement Agreements

Employers who settle sexual harassment allegations should consider the use of an NDA in the settlement agreement if it is consistent with state and federal law. Some states do not allow this, though Texas does not prohibit an NDA that is a part of a contract. Although the alleged victim has a right to speak, the two parties also have the freedom to enter into a contract with each other. For now, Texas law only holds that two parties cannot conceal a public hazard in a settlement agreement.

Companies should consult a labor and employment attorney at the first moment an employee alleges they were the victim of sexual harassment. Texas has recently enacted robust laws concerning sexual harassment in the workplace in the wake of the #MeToo movement.

Although a company wants to protect its reputation, there are things it can do that could make its situation worse. If a company is perceived to be covering something up, the public could react far more harshly should details come to light. This is not to say that companies cannot do everything in their power to secure confidentiality, especially if they are paying out money in a settlement agreement. The company has its own legal rights to protect, notwithstanding any allegations made against it.

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Let’s Talk Attorney Fees in Serial Plaintiff Cases and Let’s Talk About the Pregnant Workers Fairness Act

To start the new year, we are going to have a short discussion of a couple of cases dealing with attorney fees in the serial plaintiff context. Then, we are going to explore the Pregnant Workers Fairness Act that was just signed by Pres. Biden as part of the massive bill to keep the government open. As usual the blog entry is divided into categories and they are: Shayler v. 1310 PCH, LLC; Garcia v. Guadalupe Alcocer; Pregnant Workers Fairness Act highlights; and Pregnant Workers Fairness Act thoughts/takeaways. It is hard to believe that the reader won’t want to read the whole blog entry, but of course the reader is free to focus on any or all of the sections.

I
Shayler v. 1310 PCH, LLC

In Shayler v. 1310 PCH, LLC, here, the Ninth Circuit in a published decision decided on October 24, 2022, winds up approving a 65% downward multiplier to the total amount of fees and a $300 per hour blended billing rate for plaintiff’s counsel because the nature of the work was turnkey. Also, the court specifically referenced abusive ADA litigation and that the serial plaintiff model allows for a quick recovery of attorney’s fees with relatively minimal difficulty. The cases also include boilerplate filing then rarely involve complex legal issues or any difficult factual discovery. Finally, the court said that $300 per hour was a sufficient figure for a case involving a run-of-the-mill repeat player ADA case lacking in legal, factual, or procedural complexity.

Comment: I know what it takes to keep my doors open even as a solo practitioner practicing virtually. $300 per hour is not much at all. I doubt the firm can make much of a profit at that figure, if any. It is a published decision, so I definitely expect defense firms to utilize this case widely in attempting to keep plaintiff’s attorney fees to the bare minimum.

II
Garcia v. Guadalupe Alcocer

In Garcia v. Guadalupe Alcocer, here, the Ninth Circuit in an unpublished decision decided on December 8, 2022, holds an award for attorney fees for a defendant involved in litigation with a serial plaintiff. The court said that there was no way the plaintiff attorney could have believed that the plaintiff had a credible intent to return, which is necessary to get injunctive relief, and therefore the defendant was entitled to its fees.

Comment: There can be real advantages for a defense attorney to notice up a deposition immediately to establish standing, an idea that my colleague Richard Hunt frequently brings up in his access defense blog. Also, on the plaintiff side, plaintiff attorneys do need to be aware of the requirement to establish an intent to return when they are prosecuting title III cases. Finally, keep in mind that how intent to return is viewed can vary considerably from jurisdiction to jurisdiction.

III
Pregnant Workers Fairness Act Highlights

I previously blogged on the Pregnant Workers Fairness Act here, but it pays to go over it as it exists when it was signed into law.

The Pregnant Workers Fairness Act can be found at the very end of the massive bill that Pres. Biden signed to keep the government open. That bill is here. The highlights of the bill follow:

1. Applies to employers of 15 or more.
2. Applies to Congress.
3. Applies to State elected officials and their staff.
4. Applies to States.
5. Applies to federal employees.
6. Applies to religious entities with respect to their employees.
7. A key term is “known limitation,” which means a physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions that the employee or employee’s representative has communicated to the employer whether or not such condition meets the definition of disability under the ADA.
8. Another key term is “qualified employee,” which means an employee or applicant who, with or without reasonable accommodation, can perform the essential functions of the employment position.
9. A person is qualified under the Act if all of the following are true: 1) any inability to perform an essential function is for a temporary period; 2) the essential function could be performed in the near future; and 3) the inability to perform the essential function can be reasonably accommodated.
10. “Reasonable accommodation,” and “undue hardship,” have the same meaning as under title I of the ADA and its final implementing regulations, including the interactive process regulations.
11. Unlawful employment practices include:

(1) not make reasonable accommodations to the known
limitations related to the pregnancy, childbirth, or related
medical conditions of a qualified employee, unless such covered
entity can demonstrate that the accommodation would impose an
undue hardship on the operation of the business of such covered
entity;
(2) require a qualified employee affected by pregnancy,
childbirth, or related medical conditions to accept an
accommodation other than any reasonable accommodation arrived
at through the interactive process referred to in section
102(7);
(3) deny employment opportunities to a qualified employee
if such denial is based on the need of the covered entity to
make reasonable accommodations to the known limitations related
to the pregnancy, childbirth, or related medical conditions of
the qualified employee;
(4) require a qualified employee to take leave, whether
paid or unpaid, if another reasonable accommodation can be
provided to the known limitations related to the pregnancy,
childbirth, or related medical conditions of the qualified
employee; or
(5) take adverse action in terms, conditions, or privileges
of employment against a qualified employee on account of the
employee requesting or using a reasonable accommodation to the
known limitations related to the pregnancy, childbirth, or
related medical conditions of the employee.

12. Exhaustion of administrative remedies is required.
13. This is a fee shifting statute.
14. Damages are tied into title VII the of the civil rights act.
15. Prohibits retaliation.
16. Prohibits coercion, which term includes coercing, intimidating, threatening, and interfering.
17. An employer’s good faith effort with respect to the interactive process is a defense to damages just as it is with title I of the ADA.
18. EEOC has to come up with regulations within one year of Pres. Biden signing the bill. The regulations implementing the statute with respect to Congress must parallel the EEOC regulations.
19. There is a forcible waiver of State sovereign immunity.

IV
Pregnant Workers Fairness Act Thoughts/Takeaways

1. A disability is not necessary for person to be protected by the Pregnant Workers Fairness Act.
2. Reasonable accommodations and undue hardship mean the same thing as the ADA and that is in the statute. Interesting question as to whether putting this in the statute would allow the Supreme Court to say that undue hardship and reasonable accommodation can mean something different with respect to religion than it does with respect to the ADA and the Pregnant Workers Fairness Act because analogous statutory language and final regulatory language do not exist in the religious accommodation area. Also, while the law theoretically applies to religious employers, don’t forget about Our Lady of Guadalupe and Hosanna-Tabor, here and here for example.
3. Interactive process is specifically in the statute. With respect to the ADA, it only appears in the title I regulations but has been adopted widely throughout title I-III jurisprudence.
4. In the unlawful employment practices section of the Act, the very first subsection implicitly says that the ADA’s concept of fundamental alteration found in title II and title III of the ADA is very much in play.
5. I have said for years that employers should go slowly with respect to insisting on leave rather than engaging in the interactive process and coming up with a reasonable accommodation. Subsection 4 of the unlawful employment practices section makes clear that employers cannot do this. I would expect that ADA plaintiff side lawyers use this particular provision by analogy against employers that force people on leave instead of engaging in the interactive process to see what accommodation may work for an employee with a disability.
6. The Act extends to terms, conditions, and privileges of employment.
7. Good faith efforts are a defense to damages just like in the ADA.
8. Sovereign immunity is forcibly waived. It will be interesting to see how the courts feel about that with respect to the Act’s congruence and proportionality to the harm being redressed. Keeping in mind that since women are in the intermediate class for purpose of equal protection jurisprudence, one has to figure that the odds would be quite high that courts would find sufficient congruence and proportionality and uphold the law as being constitutional.
9. The use of the term “based on,” means that causation is but for as detailed in Bostock, discussed here.
10. The Act means the confusion created by the Supreme Court in Young is now clarified by statute.
11. Previously, I have said in many a presentation that it is important to think ADA when accommodating pregnancy as a matter of preventive law, this Act now mandates such thinking.

 

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Is The Will I Signed In Another State Valid in Texas?

I have written before that a move to another state can trigger a need to update your will. It’s not necessarily because the move invalidates the will. Generally, a will signed in accordance with the laws of one state would remain valid if you move to Texas.

Why is it important to have your will updated?

Texas has unique procedures and laws that can simplify probate and can affect the distribution of your estate.

Texas allows a testator to request an independent administration when the testator provides in his or her will that there should be no action in the probate court in the settlement of the estate other than the probating and recording the will and the return of an inventory, appraisement, and the list of claims of his estate or an affidavit in lieu of an inventory. Independent administrations usually involve only one court hearing and the filing of an inventory or an affidavit in lieu thereof, which simplifies the probate process.

Additionally, Texas wills can include a self-proving affidavit. The self-proving affidavit affirms that the will was properly signed by the testator in the presence of two witnesses, who observed the testator sign his will and heard him say that it was his last will and testament. The benefit of a self-proving affidavit is that it eliminates the need for witnesses to appear in a probate proceeding to testify about the validity of a will, which saves time and expense. Some states do not permit the use of a self-proving affidavit.

While the Will you made in another state may be valid in Texas, it is not likely to be as effective as one specifically drafted to take advantage of Texas’ probate process. Having a Will tailored to this state’s laws will ensure that your estate is handled in the most expeditious manner and your property is distributed according to your wishes.

This article was originally published on February 27, 2012, and updated on January 1, 2023.

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Let the Jury Decide

One the greatest rights we have is the right to a jury trial. While many employment cases never make it to a jury, employees still have this fundamental right to attempt to get his/her case to a jury.

Over the last year, we have witnessed more employment cases being tried before a jury. One of the reasons we are seeing more jury trials is courts are trying to clear their backlogs from the pandemic, and the way to do that is by having jury trials and getting cases off their dockets. Another reason is people want their day in court. As a result, we have witnessed significant jury verdicts in employment cases.

I also realize that some people do not like juries. Why is this? Maybe it’s because your fate is in the hands of people that you do not know. Perhaps you may not feel confident that you will be given a jury of people who are truly your peers. That is okay if you are uncomfortable having a jury decide your case. You can always have a bench trial before the judge. I must admit getting a case to a jury is not easy, which is discussed by my colleague, Jairo Castellanos, in a recent blog.  But, for now, let’s discuss who jurors are, their purpose, and recent jury verdicts.

Continue reading ›

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Oops! Sellers Didn’t Read The Mineral Deed Before Signing

Precious little legal analysis is required to grasp the lesson from Springbok Royalty Partners v. Cook.  No mode or manner of legal gymnastics is likely to save parties from the legal effect of a contract they didn’t bother to read before they signed it.

The agreement

Following a lengthy conversation between the Cooks and a Springbok employee, the parties agreed to a price for the sale of the Cooks’ minerals and signed a letter agreement entitled “Offer to Purchase Mineral Interests in Lands”. Springbok made a cash offer of $575,000 in consideration for a mineral deed for all of the right, title and interest they held and/or owned in and to 111 net mineral acres under land in DeSoto Parish, Louisiana.

The agreement included language to the effect: It would form a binding agreement; the Cooks would be deemed to have received good, valuable and sufficient consideration for their execution and delivery of their counterpart of the letter and performance of their obligations thereunder; they would not take a position to the contrary; if they signed the agreement they would be obligated to execute and deliver a mineral deed covering all their interest in the property.

The suit

Springbok sued the Cooks to enforce the letter agreement. The Cooks refused to conclude the sale after receiving a better offer. Summary judgment in favor of Springbok was affirmed.

The Cooks’ summary judgment affidavits testified that they thought they were selling half of their interests and that they never intended to sell the entirety. They also testified that they did not read the agreement prior to signing it.

The Cooks’ futile arguments

The contract was ambiguous:  The agreement was clear and explicit and led to no absurd consequences. It unambiguously stated that they were selling all of their mineral interests. When Mr. Cook read the contract two days after he signed, it became clear to him then that they had sold the entirety of their interests.

Unilateral error: Consent may be vitiated by error, fraud or duress only when it concerns a cause without which the obligation would not have occurred and that cause was known or should have been known to the other party. Unilateral error will not vitiate consent to a contract unless the error was inexcusable.  The Cooks were sophisticated landowners who had previously executed leases and engaged in other complicated property transactions.

Fraud:  The Springbok employee knew or should have known that their intent was to only convey half of their minerals. Fraud does not vitiate consent where the party against whom the fraud was directed could have ascertained the truth without difficulty, inconvenience or special skill. The record showed no evidence of fraud.

Accounting was error. because Springbok did not plead for it. The trial court had discretion to allow enlargement of the plaintiff’s recovery to conform to the evidence. The final judgment must grant the relief to which the party whose favor it is rendered is entitled even if the party has not demanded such relief in his pleadings and there is no prayer for general and equitable relief.

New Orleans’ own Walter “Wolfman” Washington RIP

Anita Pointer RIP

 

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COP27 … More of the Same

We’ll end the year end with a look at “COP27”, the all-expense-paid shindig that was the 27^th United Nations Climate Change Conference of the Parties, featuring exaggerations, hysteria, and outright misstatements burning with greater intensity and frequency than their beloved climate itself.

Before you decide who to trust, remember who says they “own the science”.

Conservation for thee but not for me

A reported 400 private jets made their carbon-spewing way to a luxury resort in Egypt to again pronounce the fiery demise of Mother Earth. This is just fine with the BBC because the work of saving the planet is much more important than anything you do.

A word from our sponsor

Get your Greta Thurnberg thermostat!

Crying “wolf”

U.S. warming could be exaggerated by 50%, says Watts Up With That!, citing sources.

Chicken Little speaks

Mainstream media, including my own overmatched Dallas Morning News, succumbs to hysteria from the Associated Press. “Act Now or Die!” … as in, give them lots of money!

Your legitimacy is in question when University of Colorado Boulder scientists worry about mental health crises in youth because of climate change catastrophism.

Pinocchio speaks

Blame the Morning News for being understaffed. The Seattle Times, though, censors “disinformation” and issues demonstrably false “information” of its own.

According to Heartland Institute, a new poll casts considerable doubt on the “97 percent consensus” among scientists about climate change.

Reality speaks

The problem, says Matt Ridley in Not Alot of People Know That, is that green zealots are threatening real conservation.

According to Dan Eberhart in Forbes, the delusion is that alternatives can carry the day. We will need fossil fuels for a long time.

And by some accounts the Polar Bears are doing fine.

Closer to home, and to your wallet and our energy security, Alex Epstein exposes 12 myths about the “Inflation Reduction Act” .

Grifting speaks

Ignoring the life-changing benefits of fossil fuels to their standard of living, less-developed countries trolling for free cash are hard at work to appropriate your taxes, and they are enabled by our enerzy czar and COP27 delegate. What’s the over/under on the kleptocracy quotient? Half, ... most?

Your musical interlude

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