MEMORANDUM AND ORDER
JULIE A. ROBINSON, District Judge.
Plaintiffs Pacific Oil and Gas, LLC, Oil and Gas Technology, William Gumma, Conover H. Able III, Bill Pearson, Jonathan S. Wimbish, Charles G. Clark, Ronald J. Lincoln, John Horne, Clarence Cottman, Erin R. Cottman, Claire C. Keneally, John S. Keneally, Ian M. Keneally, Susan C. Connell, and Edwin C. Brown all individually and derivatively on behalf of Chisholm Partners, LLC filed this action alleging that Defendants Chesapeake Energy Corp., Chesapeake Exploration, LLC, Tom L. Ward, and John Does 1-50 conspired, in the course of acquiring mineral leases, to keep the prices for such leases artificially low by agreeing not to compete against each other during acquisition in violation of the Sherman Antitrust Act.
I. Factual and Procedural Background
This matter has a convoluted factual background, so for purposes of brevity, the Court will briefly summarize the allegations of this suit as it relates to the pending motion to transfer. Defendant Chesapeake Energy Corporation ("Chesapeake Energy") is a corporation organized under Oklahoma law with its principal place of business in Oklahoma. Defendant Chesapeake Exploration, LLC ("Chesapeake Exploration") is a limited liability company organized under Oklahoma law with its principal place of business in Oklahoma. Throughout this Order, for purposes of clarity, Defendants Chesapeake Energy and Chesapeake Explorations will be referred to collectively as Chesapeake. Defendant Tom Ward, an Oklahoma resident, is the former SandRidge Energy Corporation ("SandRidge") chief executive officer. SandRidge, prior to bankruptcy, was a corporation formed under the laws of Delaware with its principal place of business in Oklahoma.
Plaintiffs claim Defendants colluded to rig the market for oil and gas leaseholds by agreeing to not compete against each other in acquiring the leaseholds. The Complaint in this matter alleges that Chisholm Partners, LLC ("Chisholm"), a limited liability corporation formed under Louisiana law, owned mineral leases covering 7,300 acres in Harper and Sumner County, Kansas and approximately 21,320 acres in Kingman County, Kansas.
The matter before this Court was not the only lawsuit filed following McClendon's indictment. Twelve suits were filed in the Western District of Oklahoma alleging that Chesapeake and SandRidge conspired to rig bidding during their acquisition of mineral leases in the Anadarko Basin region in violation of the Sherman Act. These suits were consolidated on April 15, 2016 in the Anadarko Basin Litigation before United States District Court Judge Vicki Miles-LaGrange.
After the administrative closing of the Anadarko Basin Litigation in the Western District of Oklahoma, this matter was filed on July 13, 2016. The motion to transfer to the Western District of Oklahoma was filed on September 27, 2016. The parties apprised the Court through notices pursuant to D. Kan. Rule 7.1(f) in December 2016 that the Anadarko Basin Litigation was not yet re-opened, but likely would be re-opened following settlement of the bankruptcy matter involving SandRidge.
II. Legal Standard
Defendants move to transfer this case to the Western District of Oklahoma under 28 U.S.C. § 1404. Under § 1404(a), the Court may transfer a case to any district where it might have been brought "for the convenience of the parties and witnesses" and "in the interest of justice." The parties do not dispute that this matter could have been brought in the Western District of Oklahoma.
"Unless the balance is strongly in favor of the movant the plaintiff's choice of forum should rarely be disturbed."
Defendants argue that this matter is properly transferred to the Western District of Oklahoma given the pendency of the Anadarko Basin Litigation with nearly identical facts and underlying legal issues. Plaintiffs essentially concede that this case and the Anadarko Basin Litigation may be consolidated for purposes of discovery.
A. Plaintiffs' Choice of Forum
Although a plaintiff's forum choice "should rarely be disturbed,"
In the briefing for this motion, Plaintiffs allege only one significant connection with Kansas, the mineral lease land at issue is located in Kansas. Plaintiffs allege in the Complaint that Chesapeake and SandRidge were actively discovering and drilling in Kansas during the relevant time period, but Plaintiffs do not allege in the briefing that this creates a significant connection to Kansas in proving the underlying conspiracy.
To state a claim under § 1 of the Sherman Act, a plaintiff must plead a contract, combination, or conspiracy among two or more independent actors; that unreasonably restrains trade; and is in, or substantially affects, interstate commerce.
One of the key issues will be the difference in leasehold price between the sale of the land at issue and the sale of Kansas land in a competitive market, a key fact centered in Kansas. However, the Court is equally mindful that Plaintiffs' Complaint alleges that the land involved in the overarching conspiracy spans the entire Anadarko Basin region, which includes Kansas, Oklahoma, Texas, and Colorado.
To summarize, the Court finds that the facts giving rise to the Sherman Antitrust violation "have [a] material relation or significant connection" to Kansas. The leasehold land at issue is in Kansas, so this is a material fact that will ultimately be important when assessing the price of the land sold in this transaction as compared to other similarly situated Kansas leasehold lands in the competitive market. However, the Court also finds that the fact that the land at issue is in Kansas is somewhat neutralized given that the conspiracy alleged in the Complaint itself took place in Oklahoma and spanned the entire Anadarko Basin region, so this is not unique to Kansas. The Court therefore finds that both Oklahoma and Kansas have nearly equivalent connections to the operative facts.
B. Accessibility of Witnesses and Other Sources of Proof
"The convenience of witnesses is the most important factor in deciding a motion under § 1404(a)."
Defendants offered the affidavit of Fred Gipson, the lead counsel for Chesapeake and its subsidiaries.
Defendants also asserted Defendant Tom Ward is an Oklahoma resident and SandRidge was headquartered in Oklahoma, so it is likely that many of the witnesses involved with the transaction from SandRidge will be located in Oklahoma.
Plaintiffs counter that it is uncertain at this point that these witnesses would be required to testify at trial because it is unknown whether they have knowledge related to the conspiracy. Plaintiffs further offer that at this stage in the litigation it is impossible to know whether the listed individuals would refuse to appear and nothing would preclude offering their testimony through deposition. Notably absent from Plaintiffs' response is identification of any key witnesses who are located in Kansas and unwilling to travel to Oklahoma to testify.
The Court finds that the key issue at trial will be establishing the existence of a conspiracy between Chesapeake and SandRidge to rig bidding for leaseholds and depress the price for such leaseholds. Although the leaseholds involved in the conspiracy spanned the entire Anadarko Basin, the alleged conspiracy took place in Oklahoma where both companies were organized and headquartered. The executives who would have been involved in the conspiracy are presumably all located in Oklahoma. As Defendants have provided through Mr. Gispon's affidavit, the employees involved in this transaction are all located in Oklahoma. These witnesses live more than 100 miles away from Kansas City, so they would not be subject to this Court's subpoena power.
Plaintiffs cite Wiston XXV Limited Partnership v. Brophy, Gestal, Knight & Co.
Here, the Court has already found that Plaintiffs are not Kansas residents, and that Defendants are Oklahoma residents. Defendants have provided a list of non-party witnesses who have important testimony related to the transaction at issue. Many are top executives who presumably were involved with this transaction and other similar acquisitions, so the Court finds they will likely have material testimony. These witnesses are all living in the Oklahoma City area, which is outside this Court's subpoena power. These witnesses would be free to refuse to testify. Plaintiff has not offered a single key witness located in Kansas nor a single key non-party witness who would refuse to testify should this case be transferred to Oklahoma. Thus, using the reasoning employed in Wiston, the Court finds that transfer is warranted because the convenience of Defendants' witnesses clearly outweighs that of Plaintiffs' witnesses, given that no showing has been made that any reside in Kansas or would refuse to testify in Oklahoma. Defendants have satisfied their burden in demonstrating inconvenience to witnesses whereas Plaintiffs have not countered with any similar evidence.
The convenience factor weighs in favor of transfer given the specific witnesses identified by Defendants, the uncertainty about the non-party witness' willingness to travel to Kansas for trial, the unsatisfactory nature of using their deposition testimony at trial, and the lack of evidence that any material witness to this dispute is located in Kansas or unwilling to travel to Oklahoma for trial.
C. Cost of Making Necessary Proofs
Defendants argue that all or nearly all of the witnesses are within a short driving distance of Oklahoma City, where the courthouse for the Western District of Oklahoma is located, as opposed to 350 miles away from Kansas City. Defendants argue trial would be more expensive in Kansas City because nearly all of these witnesses would need to travel a significant distance. While the Court could not discern Plaintiffs' response, Plaintiffs generally argue that there is a great connection between Kansas and the facts at issue. As the Court explained above, the only connection to Kansas is the underlying leaseholds. Plaintiffs do not allege the witnesses are located in Kansas, the evidence is located in Kansas, or any other facts relating to Kansas. Again, Defendants have met their burden to establish many of the witnesses would need to travel to attend trial in Kansas whereas Plaintiffs have not countered with any evidence. Thus, the Court finds that this factor weighs in favor of transfer.
D. Difficulties that May Arise from Congested Dockets
"When evaluating the administrative difficulties of court congestion, the most relevant statistics are the median time from filing to disposition, median time from filing to trial, pending cases per judge, and average weighted filings per judge."
E. Efficient Administration of Justice
The Court finds this factor particularly important to the § 1404(a) analysis given the Anadarko Basin Litigation, which almost exactly mirrors the litigation at issue here. In Defendants' briefing on this motion, Defendants compare the Complaint in this matter
Plaintiffs argue that if this case is transferred to the Western District of Oklahoma, it will become part of the pending consolidated Anadarko Basin Litigation. Plaintiffs distinguish this case from the Anadarko Basin Litigation because this case involves Kansas land and is not a putative class action. Plaintiffs object to filing a consolidated complaint in the Anadarko Basin Litigation. Plaintiffs also object to losing their counsel to the lead counsel appointed in the Anadarko Basin Litigation. However, Plaintiffs ultimately concede that for purposes of efficiency, the matters may be consolidated for purposes of discovery.
The pendency of related litigation in another forum is a proper factor to consider in resolving choice of venue questions.
The Court also finds Plaintiffs' attempt to distinguish this case from the Anadarko Basin Litigation unavailing. First, the Anadarko Basin Litigation does involve land in Kansas.
The Court is also not persuaded that the fact that Plaintiffs do not want to join the consolidated proceeding is a consideration that carries weight in this analysis. Yet again, Plaintiffs fail to cite law that this Court should ignore the pending consolidated proceeding — considering nearly identical cases— in favor of Plaintiffs' concerns regarding a consolidated complaint and appointed counsel. Again, this Court finds that the transferee court is better positioned to consider Plaintiffs' concerns regarding consolidation. Plaintiffs may assert the right to counsel and its own complaint when and if this matter becomes consolidated.
In conclusion, because of the similarities in this action and the Anadarko Basin Litigation, transfer to the Western District of Oklahoma is warranted to facilitate the interest of justice and avoid inconsistent results. If this Court were to refuse to transfer, two district courts would be simultaneously litigating nearly identical factual and legal issues involving identical defendants, which is neither efficient nor convenient to the parties. Given that Plaintiffs agree this may be consolidated with the Anadarko Basin Litigation for purposes of discovery, the Court is only further persuaded that transfer is proper for purposes of the efficiency of the proceeding. This factor weighs in favor of transfer.
F. Relative Advantages and Obstacles to a Fair Trial
Plaintiffs spend a significant amount of the briefing addressing a concern that transfer will be prejudicial because Defendants are well known and respected in Oklahoma City. For example, Plaintiffs offer that Chesapeake's headquarters are in Oklahoma City, Defendant Tom Ward and SandRidge are both located in Oklahoma City, Aubrey McClendon and Defendant Tom Ward are part of the group that brought National Basketball Association team the Oklahoma City Thunder to Oklahoma City, and the media praised Aubrey McClendon following his death. Plaintiffs argue that the jury pool will be biased in favor of Defendants, and Kansas will offer a more neutral jury pool than Oklahoma. Defendants counter that many plaintiffs have sued Defendants in the Western District of Oklahoma and are satisfied that they may achieve a fair trial, so a fair and impartial trial is possible against Defendants.
This Court has previously rejected contentions that a fair trial is not possible in the city in which the defendant corporations are headquartered.
Similar to Aramburu, the Court acknowledges that Defendants are headquartered or important figures in Oklahoma City. However, the Court agrees with the reasoning in Aramburu. The argument that Oklahoma City residents will be unwilling to hold against Defendants is at most speculative. The Court is confident that Plaintiffs' concerns that Oklahoma City residents may be biased in favor of Defendants will be adequately addressed through voir dire of the prospective witnesses.
Further, the Court disagrees with Plaintiffs' position that the media has irreversibly biased the jury pool in favor of Defendants. The allegedly sterling reputation that Defendant Chesapeake and SandRidge, along with their executives, have enjoyed has undoubtedly been tainted following Aubrey McClendon's indictment for these exact allegations. While Plaintiffs offer numerous positive media portrayals of Defendants, the Court has no doubt there was a large amount of media coverage following Aubrey McClendon's criminal indictment. The Court is simply not persuaded that the jury pool in Oklahoma has been irreversibly tainted in favor of Defendants, especially given the criminal indictment that spurred this litigation, such that a fair trial would be impossible.
Also, as Defendants correctly point out, the jury pool is not only Oklahoma City residents. The jury pool for the Western District of Oklahoma is drawn from 40,000 people.
Ultimately, the Court finds this factor neutral because either Kansas or Oklahoma will provide a fair trial to the parties.
G. Remaining Factors
The remaining factors are either irrelevant or neutral. This case is brought under the Sherman Act, which is federal law. Given this is federal law, there is no question about the enforceability of the judgment or the ability of a federal judge to apply federal law in Oklahoma. Likewise, there are no anticipated issues of conflicts of laws. Defendants do not offer other considerations that weigh in favor of transfer.
The Court finds that Defendants have met the heavy burden of showing that the factors weigh strongly in favor of a transfer to the Western District of Oklahoma. Indeed, the present action reflects a classic example of a case that ought to be transferred. Plaintiffs are not residents of the chosen forum, so the Court does not give weight to this consideration as it normally would. While the underlying leaseholds are situated on land in Kansas, Plaintiffs allege this is the only significant connection to Kansas. The Court does give some weight to this factor for denying transfer. However, every other factor weighs heavily in favor of transfer or is neutral. The witnesses to prove or disprove the claims are in Oklahoma, so the convenience to the witnesses and cost of making necessary proof weigh heavily in favor of transfer. The matter pending before the Western District of Oklahoma, the Anadarko Basin Litigation, is nearly identical to this case, so this will assist in the efficient administration of justice. Where Defendants have met their hefty burden to produce evidence in favor of transfer, Plaintiffs have done little rebut most of Defendants' contentions. Thus, this case is properly transferred.