The Tenth Circuit on Monday delivered a jolt to a long-running battle over unpaid oil royalties in Oklahoma, upholding $103.9 million in compensatory damages for landowners while wiping out $75 million in punitive damages previously ordered against Sunoco Inc. A panel majority left most of the underlying judgment intact, turning the years-old litigation into a courtroom tug-of-war over what counts as contract liability — and what crosses into tort.
Court Affirms Class Findings but Strikes Punitive Award
A three-judge panel largely agreed with the Oklahoma federal court’s earlier conclusions, preserving the class certification of roughly 53,000 landowners, their standing, and the district court’s calculation of prejudgment interest as part of actual damages. But the majority balked at Sunoco’s punitive exposure, comparing the legal boundary between contract and tort to a bright line the landowners could not cross.
Punitive Damages Only for Tort, Court Says
Writing for the majority, U.S. Circuit Judge Richard E.N. Federico, joined by Judge Scott M. Matheson Jr., held that Oklahoma’s Production Revenue Standards Act (PRSA) creates obligations that function as contract duties — not tort actions. Thus, punitive damages fall outside the statute’s reach.
“To dodge the rule barring punitive damages for breach of contract, the class insists the PRSA created a statutory tort,” the panel wrote. “But Oklahoma courts have already rejected that premise.”
