KEVIN L. JETER, JOE A. JETER, BARBARA LUCAS, JAMES H. MILLER, SHARON RIGSBY MILLER, LARRY SMITH and JANICE SUE PARKER, individually and as Class Representatives on Behalf of All Similarly-Situated Persons, Plaintiffs, and JAMES D. ENLOE, CAROLYN R. ENLOE, and SCOTT BAILY, individually and as Class Representatives on Behalf of All Similarly-Situated Persons, Consolidated Plaintiffs, v. BULLSEYE ENERGY, LLC, CEP MID-CONTINENT, LLC, KRS&K, an Oklahoma Partnership, ROBERT M. KANE, LOUISE KANE ROARKE, ANN KANE SEIDMAN, MARK KANE, PAMELA BROWN, and GARY BROWN, Defendants / Consolidated Defendants Case No. 12-CV-411-TCK-CDL, Consolidated with: Case No. 15-CV-455-TCK-CDL United States District Court, N.D. Oklahoma Filed June 23, 2023 Little, Christine D., United States Magistrate Judge ORDER *1 Before the Court is the “Plaintiffs' Motion to Compel Documents Responsive to [Doc.] 218” (Doc. 398), defendants' response in opposition (Doc. 405), and plaintiffs' reply brief (Doc. 407). The Court conducted a hearing on the Motion, ordered production of the documents at issue for in camera review, took the matter under advisement, and has now reviewed all of the documents submitted in camera. I. Background Broadly stated, this lawsuit involves a dispute over the amount of royalties paid to plaintiffs on leases in Nowata and Washington Counties. The plaintiffs claim that they were underpaid, and they seek an accounting and damages for alleged fraud, breach of fiduciary duty, breach of implied covenants, breach of contract, and racketeering. (Second Amended Complaint, Doc. 154). In 2004, after potential concerns arising from a significant damages verdict in an unrelated oil and gas royalty case, the defendants added language to the royalty check stubs that were sent to the plaintiffs: “Payment is based upon all proceeds paid to the producer under a contract between the producer and its purchaser (including affiliated purchasers). The contract authorizes the deduction of all gathering, transportation, compression, and similar charges incurred by the purchaser, directly or indirectly, from the amount paid to the producer.” (Doc. 187-1). At issue in the present discovery dispute is whether the defendants have properly withheld, on the basis of an assertion of attorney-client privilege, certain documents relating to the change in notice given with the checks to royalty owners as to deductions made. In support of the motion to compel, the plaintiffs cite 2015 deposition testimony and a declaration of defendant Robert H. Kane that was submitted in support of defendants' summary judgment motion in 2016. Therein, Mr. Kane indicated that he became aware of the Oklahoma appellate court's affirmance of a multi-million dollar punitive damages award in Bridenstine v. Kaiser-Francis Oil Co., Case No. 97,117 (Okla. Civ. App. Aug. 22, 2003).[1] According to Mr. Kane, “one of [his] concerns” after Bridenstine was that, “even though Kaiser-Francis deducted certain fees from the plaintiffs['] royalties, ‘it specifically represented on Class royalty check stubs that nothing had been deducted from the royalties to which Class was entitled by the terms of the leases.’ ” (Doc. 189 at ¶ 27 [citing Bridenstine]). Mr. Kane further testified that, based upon the affirmance of the Bridenstine verdict, he consulted his “oil and gas attorney ... , John Moricoli, to discuss what language should be included on the check stubs attached to the royalty checks being sent to royalty owners so as to avoid the situation in Bridenstine.” (Id. at ¶ 28). Mr. Kane “also provided [Mr. Moricoli] with the pertinent oil and gas leases, division orders, gas purchase contracts, basis for royalty payment, and then-current form of check stub.” (Id.). According to Mr. Kane, Mr. Moricoli advised Kane to include specific language on the check stub, and Kane “accepted the advice of [his] counsel, and beginning in 2004, the check stub sent with royalty checks to all royalty owners, including the named Plaintiffs, specifically disclosed that deductions for ‘all gathering, transportation, compression, and similar charges incurred by the [gas] purchaser,’ including ‘affiliated purchasers,’ were being made to the proceeds paid to the producer, upon which royalty payments were being made.” (Id.). *2 At paragraph 30 of his declaration, Mr. Kane again stated that he “relied upon the advice of [his] counsel in making the 2004 revisions to the check stub being sent to royalty owners, and acted in good faith in making such revisions.” (Id. at ¶ 30). Mr. Kane further indicated that he “worked with” his attorney, Moricoli and accountant, Mysock, “to arrive at the transportation fee ..., which is based upon Wild West's costs of operating its gathering system.” (Id. at ¶ 20). Following Mr. Kane's deposition and declaration, the plaintiffs subpoenaed documents from Mr. Moricoli and Mr. Mysock. The requested documents included the following: [A]ll communications and documents regarding advice offered to Robert Kane, Richard Kane, or any companies with which they are, or were, affiliated with pertaining to the sale of natural gas to other companies with which they are affiliated. [A]ll communications and documents regarding advice offered to Robert Kane, Richard Kane, or any companies with which they are, or were, affiliated with pertaining to the charging of costs and expenses relating to the transporting of natural gas. (See Doc. 200-1). The defendants moved to quash the subpoenas, based on their argument that the subpoenas called for the production of attorney-client privileged information beyond the specific “advice of counsel” assertions in their summary judgment motion and Mr. Kane's declaration. According to the defendants, they only raised “advice of counsel” as to the changed royalty check stub that was sent to royalty owners after 2004. In proceedings on the defendants' motion to quash and for protective order, which concluded in August of 2016, United States Magistrate Judge Paul J. Cleary noted that “[w]hen the client asserts reliance on advice of counsel as a defense, or offers proof of such reliance to establish a claim or defense, fairness dictates that [the client] be held to have waived the privilege ‘for communications with counsel relating to the claimed reliance.’ ” (Doc. 218 at 5-6). As to the scope of the waiver of attorney-client privilege, Judge Cleary found that: Kane has asserted the advice of counsel defense and therefore waived attorney-client privilege. This waiver extends beyond the narrow communications between Kane and Moricoli. First, the waiver extends to those corporate entities of which Kane is president or manager: White Hawk, Purgatory, Bullseye Energy, Gashoma, Wild West, Bullseye Operating and Cotton. Kane engaged in communication with counsel on this matter as an officer or manager of these entities. Second, the waiver is not limited merely to a conversation between Moricoli and Kane about the language to be added to the royalty checks, but extends to communications about the broader “subject matter” of the disclosed communications. Accordingly, attorney-client privilege has been waived as to all communications between Kane or any other Defendant and Moricoli regarding the subject of language to be put on royalty owners' checks concerning the basis of payment to royalty owners, the contract(s) between the producer and its purchaser and all deductions based on charges incurred by the purchaser, directly or indirectly.... Plaintiffs also seek all information from Moricoli and Mysock regarding the language to be placed on royalty owners' checks and regarding the computations of transportation costs. As to communications with Moricoli on this topic, there has been no waiver of privilege with respect to such communications, and the subpoena is quashed with regard to such communications. Defendants have not asserted an “advice of counsel” defense with respect to the calculation of transportation costs.... *3 [However,] any communications with Mysock concerning the transportation costs to be charged by Wild West are not privileged and would be subject to Rule 26 discovery. (Doc. 218 at 7-8) (internal citations omitted). Judge Cleary's rulings on the privilege waiver were entered on August 11, 2016, and no party objected or appealed those discovery rulings. Discovery closed on October 4, 2022, and plaintiffs filed the instant motion to compel thereafter, requesting that the undersigned enter an order compelling the defendants “to produce documents this Court has already ordered produced.” (Doc. 398 at 2). II. Discussion The undersigned finds and concludes that it is appropriate to determine this dispute by applying the prior discovery rulings made in 2016 by Judge Cleary concerning the scope of the waiver. Accordingly, the Court orders as follows with respect to the specific documents that were provided by the defendants and reviewed in camera. A. Redacted Moricoli Documents Following the 2016 Order on the defendants' motion to quash, the defendants produced some Moricoli documents, but withheld others as non-responsive or as not within the scope of the documents that Judge Cleary ordered to be produced. The original redacted production was labeled Moricoli 1-13. Plaintiffs assert that certain of the Moricoli documents that were produced by the defendants were improperly redacted because the subject matter of the documents is within the scope of the prior waiver found by Judge Cleary and because the defendants copied third parties on the communications with Moricoli. (Doc. 398 at 10). The plaintiffs also assert that, on additional privilege / non-responsive logs, the defendants have withheld additional documents that should have been produced. Since receiving defendants' privilege log in September of 2022, the plaintiffs now assert that the defendants waived attorney-client privilege regarding communications as to documents regarding transportation costs because they copied the accountant (Mysock), J. Ward Seibert, and E. Jack Browder on certain communications. (Doc. 398 at 20). In response, the defendants assert that there is an exception to any alleged privilege waiver because Mr. Browder was an officer, director, and interest owner in Gashoma, and Mr. Seibert was an officer and director of K&E Field Services, now known as Bullseye Operating, LLC, and was an officer and interest owner in Gashoma. Mr. Kane was also president of and owned an interest in Gashoma. Thus, according to the defendants' argument, communications copied to Seibert and Browder were for purposes of advancing a shared interest in securing legal advice on a common matter or defense between Gashoma, Bullseye Energy, Wild West, and White Hawk. (See Doc. 405 at 16-17). The defendants further assert that the documents showing Mr. Mysock as an additional recipient remain privileged because he was hired to provide advice about transportation costs that were then relayed to Mr. Moricoli. (Doc. 405 at 15). In response, the plaintiffs correctly point out that Judge Cleary already ruled that communications between the client with Mysock were not privileged. (Doc. 407 at 8; see also Doc. 218 at 8 [“any communications with Mysock concerning the transportation costs to be charged by Wild West are not privileged and would be subject to Rule 26 discovery.”]. However, Judge Cleary also ruled that communications with Moricoli counsel about calculation of transportation costs remain privileged and were not subject to “advice of counsel” waiver. (Doc. 218 at 8). *4 The attorney-client privilege is typically waived if the communication is disclosed to a third party. However, there is a common interest privilege with respect to “confidential communications made for the purpose of facilitating the rendition of professional legal services to the client ... [b]y the client or a representative of the client or the client's attorney or a representative of the attorney to an attorney or a representative of an attorney representing another party in a pending action and concerning a matter of common interest therein.” Okla. Stat. tit. 5, § 2502(B)(3).[2] Because Kane, Seibert, and Browder all were officers and interest owners in Gashoma, the Court finds their assertion of a common interest privilege with respect to a shared attorney-client communication to be well-taken. Thus, their inclusion on the letter did not constitute a separate waiver of any attorney-client privilege. See id. Applying Oklahoma law and Judge Cleary's prior rulings regarding privilege to the documents reviewed in camera, the undersigned finds as follows: Moricoli 1: The defendants' privilege log describes this document as a “[c]onfidential letter from client to outside counsel regarding computation of transportation costs.” The document that was produced included a reference to potential future discussions as to whether the defendants would “need to report the net amount received for the gas after fuel and shrink, and fees to Cotton Valley, show the transportation charges that are deducted, and then show the price paid by Cotton Valley and Wild West to the working and royalty interest....” (Moricoli 1). The defendants redacted a portion of this document under an assertion that it is outside the scope of the 2016 order on the motion to quash. The Court agrees that the information in the letter with Moricoli falls outside the scope of waiver found by Judge Cleary, such that the communication with Moricoli need not be produced. However, the redacted portion of the letter references enclosure of a letter from Ed Mysock regarding calculations, and the Mysock letter is not privileged according to the prior ruling. (Doc. 218 at 8). If that Mysock letter has not already been produced (or is not otherwise ordered produced below in this Order), it should be produced in accordance with the August 11, 2016 Order. Moricoli 2-3, 4-8, and 9-13: The defendants describe these documents as confidential communications between client and outside counsel regarding a potential operating contract, potential new gas purchase contract, potential new division order form, potential new lease form, and potential letter to lessors. The defendants assert that the redacted portions of the letter and email are outside the scope of the information ordered produced in 2016. Upon review of these documents, it appears that the documents fall within “the broader ‘subject matter’ of the disclosed communications ... [including] communications between [defendants] and Moricoli regarding the subject of language to be put on royalty owners' checks concerning the basis of payment to royalty owners, the contract(s) between the producer and its purchaser and all deductions based on charges incurred by the purchaser, directly or indirectly.” (See Doc. 218 at 8). By way of example, one of the redactions refers to a draft letter to royalty owners which, by its terms, was drafted for potential enclosure with royalty checks and to explain the basis for deductions. While the draft letter is not the new post-2004 check stub language (which has been produced), the documents are within the broader waived “subject of language to be put on royalty owners' checks concerning the basis of payment to royalty owners, the contract(s) between the producer and its purchaser and all deductions based on charges incurred by the purchaser, directly or indirectly.” (Doc. 218 at 7-8). These documents appear to be communications with counsel relating directly to Mr. Kane's reliance upon advice of counsel. (See Doc. 218 at 5-6 [“When the client asserts reliance on advice of counsel as a defense, or offers proof of reliance to establish a claim or defense, fairness dictates that he be held to have waived the privilege ‘for communications with counsel relating to the claimed reliance.’ ”]; see also id. at 7-8 [describing scope of waiver]). *5 Moreover, the documents included with the communications are precisely the types of documents that Mr. Kane referenced as providing to Moricoli in order to obtain the advice – which he defensively asserts he ultimately relied upon – regarding the language of the revised notice to royalty owners accompanying the checks. At paragraph 28 of his 2016 declaration, Mr. Kane reported that, as a result of Bridenstine, he discussed with counsel the language that should be included on the royalty check stubs “so as to avoid the situation in Bridenstine.” (Doc. 189 at 7, ¶ 28). Kane continued that he “also provided [Moricoli] with the pertinent oil and gas leases, division orders, gas purchase contracts, basis for royalty payment, and then-current form of check stub,” and “[a]fter review and discussion, [Kane] was advised by Mr. Moricoli to include the asterisked language set forth in the sample check stub....” (Id.). Kane “accepted [that] advice.” (Id.). Kane further injected that his reliance on his counsel's advice for the new check language was “in good faith” on Kane's part, and “[i]t was never [his] intent to mislead or defraud any royalty owner by including the revisions in the check stubs which were mailed to royalty owners.” (Id. at ¶ 30). Kane “believed that by including such language, [he] was giving plain and proper notice to the royalty owners that deductions were being made to arrive at the contract price upon which sales proceeds were paid and royalties calculated, and that affiliate sales could occur.” (Id.). By asserting his reliance upon counsel and using it defensively to establish good faith in providing revised notice to royalty owners with the checks, the defendants put these communications and the documents exchanged with counsel in the course of developing and obtaining that advice in issue and thereby waived privilege as to them. (See Doc. 218 at 5-8). Versions of these documents (which include additional documents that were not included within MORICOLI 1-13) were produced unredacted for in camera review and are labeled “IN CAMERA – MORICOLI 000002-000041.” These documents shall be produced to the plaintiffs for the reasons stated above. B. Additional Withheld Documents The defendants also provided for in camera review certain additional documents that were withheld on a claim that they were not responsive or were outside the scope of the production ordered by Judge Cleary in 2016. Based upon in camera review and, in accordance with the analysis above, the Court finds that certain of those documents should also be produced to the plaintiffs: In camera – Moricoli 42-47: These documents are described on “Defendants' Privilege Log of Non-Responsive Documents” as May 2004 letters from Mysock regarding transportation costs. These are from Mysock to Kane and are not privileged according to the 2016 order, and they shall be produced to the plaintiffs. (Doc. 218 at 8 [“communications with Mysock concerning the transportation costs to be charged by Wild West are not privileged and would be subject to Rule 26 discovery.”]). In camera – Moricoli 73-105 shall be produced for the same reasons set forth above as to In camera – Moricoli 2-41. The Court has determined that the additional documents submitted for in camera review are not responsive or required to be produced under the prior 2016 discovery order. Those non-responsive documents relate to communications with counsel regarding calculation of transportation costs, which were determined to remain privileged in the 2016 Order (Doc. 218 at 8), and others were communications with persons / entities who are not and were not parties to this litigation at the time of the 2016 order and were not with or copied to Mr. Kane, who is the person who has asserted reliance upon counsel advice to establish good faith in changing the check stub language and description of deductions. III. Conclusion For the foregoing reasons, and upon consideration of the parties' filings, the record in the case, and the documents submitted for in camera review, the Motion (Doc. 398) is hereby granted in part and denied in part as set forth herein. The documents that are ordered to be produced shall be produced to the plaintiffs' counsel by the close of business on June 26, 2023. IT IS SO ORDERED this 23rd day of June, 2023. Footnotes [1] The defendants submitted an additional, similar declaration, dated August 30, 2022, by Mr. Kane in opposition to the plaintiffs' class certification motion. (Doc. 389-25). [2] Judge Cleary determined previously that Oklahoma law regarding attorney-client privilege applies in this case, a conclusion no party has challenged in this dispute. (Doc. 218 at 4-5).