Justice upholds $155 million interest payment judgment in favor of Oklahoma well owners

Neil Gorsuch - Wikipedia


A $155 million judgment in a lawsuit over late payments to 53,000 oil-well owners in Oklahoma was upheld by U.S. Supreme Court Justice Neil Gorsuch.

He did so by rejecting a request from pipeline operator Energy transfer LP’s Sunoco Inc. unit to block the judgment. Justice Gorsuch denied Sunoco’s bid to stay proceedings to enforce the judgment while Sunoco appeals a 2020 decision by a federal judge.

The original federal court decision found Sunoco had violated Oklahoma law by failing to pay the interest on more than 1.5 million late payments to royalty owners in wells across Oklahoma. The ruling came in a 2017 lawsuit by an Oklahoma farmer who argued Sunoco had violated Oklahoma State laws known as the Production Income Standards Act when it did not pay statutory interest for years on late payments.

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In his ruling, U.S. District Judge John Gibney determined Sunoco was aware of the unpaid interest and made no effort to pay it. He also ruled that Sunoco withheld more than $74 million on more than 1.5 million late payments.

He also stated in his ruling that the company “simply keeps the money for its own use, knowing two things: that most owners will not charge interest, and that eventually potential owners’ claims will die of statute of limitations.”

Judge Gibney awarded $ 80 million in compensatory damages and $ 75 million in criminal damages.

Sunoco argued that without the intervention of the Supreme Court, the money could have been collected and paid before it could challenge the lower court decision dismissing the appeal.