Tenth Circuit affirms liability for late oil payments under Oklahoma law
A federal appeals court has largely upheld a $103 million judgment against Sunoco over claims that the company failed to pay required interest on late oil royalty payments to tens of thousands of Oklahoma mineral owners.
The U.S. Court of Appeals for the Tenth Circuit ruled in favor of the plaintiff class in Cline v. Sunoco, affirming that Oklahoma’s Production Revenue Standards Act (PRSA) requires automatic interest payments when oil proceeds are paid late. However, the court vacated a separate $75 million punitive damages award, sending the case back to district court for revision.
Long-running class action began with Oklahoma landowner
The case originated in 2017, when Oklahoma farmer and landowner Perry Cline filed a class action lawsuit against Sunoco, Inc. (R&M) and Sunoco Partners Marketing & Terminals, L.P. Cline held royalty interests in three oil wells and alleged that Sunoco routinely made late payments without including the statutory interest required by Oklahoma law.
The lawsuit ultimately represented more than 53,000 royalty and working interest owners who received late payments from Sunoco without the required interest.
Oklahoma law mandates interest on late oil payments
Under the Production Revenue Standards Act, first purchasers of oil must:
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Pay proceeds within strict statutory deadlines
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Include 12% annual interest on any late payments
After a four-day bench trial in 2020, the U.S. District Court for the Eastern District of Oklahoma found Sunoco liable for more than $1.5 million in late-paid proceeds that did not include statutory interest. Because interest continued to accrue, the judgment grew to more than $103 million in actual damages, including compounded prejudgment interest.
Appeals court affirms most of the judgment
Sunoco appealed on multiple grounds, challenging:
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Class certification
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Standing of certain class members
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Calculation of prejudgment interest
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Availability of punitive damages
In its ruling, the Tenth Circuit affirmed the district court’s decisions on:
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Class certification and ascertainability
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Standing of the plaintiff class
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Actual damages, including compounded prejudgment interest
The court held that statutory interest under the PRSA accrues automatically and continues to compound until fully paid.
“We AFFIRM the district court’s orders granting class certification and determining the actual damages awarded to the Class, including prejudgment interest,” the court ruled.
Punitive damages vacated and remanded
The appeals court did, however, vacate the $75 million punitive damages award, concluding that punitive damages are not available under Oklahoma law when the sole proven claim is a statutory payment violation.
The case was remanded to the district court to amend the judgment accordingly.
“We reverse on one issue, punitive damages,” the court stated.
Dissent raises concerns over interest calculation
Appeals Court Judge Nancy L. Moritz issued a dissenting opinion, sharply criticizing the majority’s interpretation of Oklahoma law. She argued that statutory interest should stop accruing once the late proceeds are paid, even if interest itself remains unpaid.
Moritz noted that the interest award had grown to nearly $104 million, more than double the roughly $49 million Sunoco acknowledged it could owe.
“The majority significantly misinterprets Oklahoma’s statutory scheme and turns legislative intent on its head,” Moritz wrote.
Case details
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Docket: No. 23-7090 (10th Cir. 2025)
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Court: U.S. Court of Appeals for the Tenth Circuit