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America November 18, 2025 4 mins read

Tenth Circuit’s Sunoco Oil Ruling $75M Knock Off Reshapes High-Stakes Royalty Fight

America ı By Rihem Akkouche

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Sunoco Oil Ruling $75M Knock Off

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.”

A Split Panel and a Forceful Dissent

In a partial dissent, U.S. Circuit Judge Nancy L. Moritz pushed back sharply, arguing that Congress left a door open that the majority refused to walk through. She pointed to the Energy Litigation Reform Act, which, she said, “specifically authorizes punitive awards against defendants that willfully withhold proceeds.”

Judge Moritz: Punitive Awards Should Still Be Considered

Judge Moritz agreed that the district court properly found Sunoco intended to withhold interest — not the principal proceeds themselves — making punitive damages unavailable under the particular facts. Still, she insisted the lower court should reconsider punitive liability under the correct statutory framework.

“So I join the majority in vacating the $75 million punitive award,” she wrote, “but I would remand for reevaluation under the ELRA standard.”

How the Dispute Took Shape

The case dates back to a 2020 ruling by U.S. District Judge John A. Gibney Jr., who found Sunoco had systematically shorted royalty owners by failing to automatically pay interest on late royalty disbursements. The practice, the court said, was not a clerical misstep but a deliberate policy to avoid additional costs unless landowners specifically requested them.

Judge Gibney ordered Sunoco to pay more than $80 million in compensatory damages and $75 million in punitive damages, calling the company’s conduct “reprehensible.”

Judgment Grows to $180 Million

The current appeal stems from the court’s 2023 adoption of a revised allocation plan that layered in additional prejudgment interest, boosting the final judgment to nearly $180 million. Sunoco asked the Tenth Circuit to vacate the ruling outright or slash it substantially — and to decertify the class along the way.

Panel Rejects Sunoco’s Bid to Unravel the Class

The judges were unswayed. During oral arguments last year, the panel had already signaled skepticism, and Monday’s opinion confirmed it: the class met the legal tests for predominance and commonality.

According to the ruling, the class demonstrated Sunoco relied on a “uniform scheme or policy” across the entire member pool. The heart of the dispute — whether Sunoco breached its obligations by failing to pay interest automatically — overshadowed any minor individualized damages questions.

Sunoco’s Record-Keeping Backfires

Sunoco argued that not all class members could be individually identified because the company lacked names for many accounts. The panel turned that argument back on the company itself.

“Sunoco failed to gather and produce the owner information it was statutorily required to maintain,” the court wrote. “Gaps in a defendant’s records cannot be used to defeat class certification.”

Standing and Interest Calculations Upheld

The panel also rejected Sunoco’s challenge to standing, noting that each class member suffered a traceable monetary injury when Sunoco withheld automatic interest payments.

Majority Backs 12% Compounded Interest

The majority sided with the district court’s use of 12% annual compound interest, finding the PRSA mandates such accrual until the relevant proceeds and interest are paid.

Judge Moritz disagreed, contending that once proceeds are paid, interest should stop accruing, and she would have remanded for recalculation of the nearly $104 million interest award.

What Comes Next

Counsel for the landowners declined to comment, and Sunoco did not respond to inquiries late Monday. The panel consisted of Judges Matheson, Moritz, and Federico. The class is represented by Russell S. Post and Owen J. McGovern of Beck Redden LLP.

The ruling leaves Sunoco facing more than $100 million in liability — even with the Sunoco Oil Ruling $75M Knock Off eliminating punitive damages — as the high-stakes fight over Oklahoma oil royalties rolls into its next phase.

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Rihem Akkouche

Rihem Akkouche is a passionate journalist dedicated to shedding light on compelling stories, sparking conversations, and fostering a more informed world.

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