for the western district of oklahoma brian thieme, on ... · defendant chesapeake energy corp. is a...

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA

BRIAN THIEME, on behalf of himself and all others similarly situated,

§ § § §

Plaintiff, § § v. § Civil Action No. 16-cv-________ § CHESAPEAKE ENERGY CORP., CHESAPEAKE EXPLORATION, L.L.C., as successor by merger to CHESAPEAKE EXPLORATION, L.P., SANDRIDGE ENERGY CORP., TOM L. WARD, AND JOHN DOES 1–50.

§ § § § § § §

Defendants. §

PLAINTIFF’S ORIGINAL CLASS ACTION COMPLAINT

Plaintiff Brian Thieme, by his undersigned attorneys, files this original class action complaint,

both individually and on behalf of a class of all those similarly situated, for treble damages under the

antitrust laws of the United States.

NATURE OF THE ACTION

1. This action arises out of a conspiracy to rig bids and depress the market for

purchases of oil and natural gas leasehold interests and properties containing producing oil and

natural gas wells, in violation of Sections 1 and 3 of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 3.

The conspiracy commenced on or around December 27, 2007, and continued until at least March 31,

2012 (the “Class Period”). The defendants conduct resulted in a criminal indictment against Aubrey

K. McClendon, a former executive of Defendant Chesapeake Energy Corp., for violations of Section

206-M

Case 5:16-cv-00209-M Document 1 Filed 03/03/16 Page 1 of 15

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1 of the Sherman Act. See United States v. Aubrey K. McClendon, No. CR-16-043, (W.D. Okla. March 1,

2016).1

JURISDICTION AND VENUE

2. This complaint is filed under Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15

and 26, to recover treble damages, equitable relief, costs of suit, and reasonable attorneys’ fees for

violation of Sections 1 and 3 of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 3. The Court has original

federal question jurisdiction over the Sherman Act claim asserted in this complaint pursuant to 28

U.S.C. §§ 1331 and 1337 and Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26.

3. Venue is proper in this District pursuant to Sections 4(a) and 12 of the Clayton Act,

15 U.S.C. §§ 15 and 22, and 28 U.S.C. § 1391(b), (c), and (d) because the defendants reside, transact

business, are found within this District, and/or have agents within this District, and a substantial part

of the events giving rise to Plaintiff’s claims occurred and a substantial portion of the affected

interstate trade and commerce described below has been carried out in this District.

4. This Court has personal jurisdiction over Defendants under 15 U.S.C. § 22 and

because, inter alia, each: a) transacted business in this District; b) purchased leasehold interests and

producing properties in this District; c) have substantial aggregate contacts with this District; and d)

engaged in an illegal price-fixing, bid-rigging and customer and market allocation conspiracy that was

directed at, and had the intended effect of, causing injury to, persons and entities residing in, located

in, or doing business in this District.

PLAINTIFF

5. Plaintiff Brian Thieme is a citizen and resident of Colorado. Plaintiff Thieme owns

mineral interests in Alfalfa County, Oklahoma. In 2011, he entered into an oil and gas lease with

Defendant Chesapeake (specifically, on information and belief, Chesapeake Exploration) in which

1 On March 2, 2016, Aubrey McClendon was killed in a car accident in Oklahoma City, Oklahoma.


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Chesapeake purchased a leasehold interest in his mineral estate. As part of the consideration for

entering into such lease, Chesapeake paid Plaintiff Thieme a lease bonus.

DEFENDANTS2

6. Defendant Chesapeake Energy Corp. is a corporation organized under Oklahoma law

with its principal place of business in Oklahoma at 6100 N. Western Avenue, Oklahoma City,

Oklahoma 73118-1044.

7. Chesapeake Exploration, L.L.C. is a successor by merger to Chesapeake Exploration,

L.P. Chesapeake Exploration L.L.C. is a limited liability company organized under Oklahoma law.

Chesapeake Exploration, L.L.C. is made up of three members, Chesapeake Operating, L.L.C.

(discussed above), Chesapeake E&P Holding Corporation, and Chesapeake Appalachia, L.L.C.

Chesapeake E&P Holding Corp. is a corporation organized under Oklahoma law with its principal

place of business in Oklahoma. Chesapeake Appalachia, L.L.C. is a limited liability company with

Chesapeake Energy Corporation as its sole member. Chesapeake Energy Corporation is a corporation

organized under Oklahoma law with its principal place of business in Oklahoma.

8. Defendant SandRidge Energy Corp. is a corporation existing and operating under the

laws of the State of Delaware with its principal place of business at 123 Robert S. Kerr Avenue,

Oklahoma City, Oklahoma 73102.

9. Defendant Tom L. Ward is former CEO of Defendant SandRidge Energy.

10. Defendants John Doe Nos. 1–50 are other entities or persons whose identities are

currently unknown to Plaintiff. John Doe Nos. 1–50 are alleged to have participated in the bid

rigging and unlawful restraint of trade, and described herein.

2 Unless otherwise noted, the Complaint refers to Chesapeake Energy Corp. and Chesapeake Exploration, LLC, collectively as “Chesapeake.”


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AGENTS

11. The acts Defendants have allegedly committed were authorized, ordered, or

performed by their directors, officers, managers, agents, employees, or representatives while actively

engaged in the management of Defendants’ affairs. Such agents include the landmen or “lease

hounds” that facilitate the purchase of the leasehold interests and producing properties.

INTERSTATE TRADE AND COMMERCE

12. Throughout the Class Period, Defendants’ and their conspirators’ conduct with

respect to the purchases of leasehold interests and producing properties that are the subject of this

Complaint were within the continuous and uninterrupted flow of, and substantially affected,

interstate trade and commerce, which included:

a) Entering into and executing transactions for the purchase of leasehold interests and producing properties that include purchasers and sellers from different states;

b) Transferring or causing the transfer of money or payments across state lines in

connection with purchases of leasehold interests and producing properties; and

c) Selling oil, natural gas, and natural gas liquids in interstate commerce.

FACTUAL ALLEGATIONS

A. STRUCTURE, CONDUCT, AND PERFORMANCE OF THE MARKET FOR LEASEHOLD INTERESTS AND PRODUCING PROPERTIES

13. A leasehold interest in an oil and gas lease generally grants the lessee the right to

develop the mineral interest to explore for and extract oil, natural gas, and natural gas liquids for a

certain length of time. The typical oil and natural gas lease spans three to five years. However, the

lease is considered “held by production” and continues indefinitely if the lessee extracts “production

in paying quantities”; that is, the lessee produces quantities sufficient to yield a return, however small,

in excess of “lifting expenses,” even though well drilling and completion costs might never be repaid.

The lease is held by production so long as the lessee maintains production in paying quantities.


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Accordingly, the impact of Defendants’ combination and conspiracy affects the royalty paid,

potentially, for generations.

14. In the oil and gas industry, exploration and production companies like Defendants

Chesapeake and SandRidge Energy frequently compete to purchase leasehold interests. Such

competition increases the prices of these leasehold interests, resulting in more money for parties like

Plaintiff Thieme.

15. Exploration and production companies also compete to purchase interests in

properties that are already producing in paying quantities. “Producing properties” are tracts of land

with existing wells that are actively producing oil, natural gas, or natural gas liquids. The current

lessee of the interest may sell to an exploration and production company like Defendants Chesapeake

and SandRidge Energy. This transaction typically includes the underlying leasehold estate and the

drilling infrastructure.

16. In the present case, Defendants Chesapeake and SandRidge Energy were engaged in

the business of oil, natural gas, and/or natural gas liquid production during the Class Period. They

were actual and potential competitors for the acquisition of the types of leasehold interests and

producing properties described above, many of which are located in Oklahoma, Texas, Colorado, and

Kansas and subject to the combination and conspiracy alleged in this Complaint. The leasehold

interests in question comprise a geological formation referred to as the “Anadarko Basin Region.”

17. The Anadarko Basin Region, as that term is defined in this Complaint, includes the

Anadarko basin, the Anadarko Woodford Shale Play, the South Oklahoma Woodford Shale Play, and

the Mississippian Lime Play. The Anadarko Basin Region is one of the deepest and most prolific

hydrocarbon producing fields in the continental United States. The basin reaches into parts of

northwest Oklahoma, north Texas, southeast Colorado, and Kansas.3

3 The Anadarko Basin Region is located within the following counties:


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B. THE DEPARTMENT OF JUSTICE’S INDICTMENT OF AUBREY MCCLENDON

18. On March 1, 2016, a grand jury indicted McClendon and other unnamed co-

conspirators on the charge of engaging in an unreasonable restraint of commerce in violation of

Section 1 of the Sherman Act, 15 U.S.C. § 1.4 The basis of the indictment was the combination and

conspiracy that Mr. McClendon, the other defendants named herein (including Chesapeake,

SandRidge Energy, and Tom Ward), and unknown co-conspirators engaged in to suppress and

eliminate competition by rigging bids for certain leasehold interests and producing properties.

19. The purpose of the combination and conspiracy was to suppress the prices that

Defendants Chesapeake and SandRidge Energy paid to acquire certain leasehold interests and

producing properties in the Colorado, Kansas, Oklahoma, and Texas by eliminating competition

between Chesapeake and SandRidge Energy for the purchase of such leasehold interests and

producing properties.

Ø Oklahoma: Alfalfa, Atoka, Beckham, Blaine, Caddo, Canadian, Carter, Coal, Cotton, Creek, Dewey, Ellis, Garfield, Garvin, Grady, Grant, Greer, Harmon, Harper, Hughes, Jackson, Jefferson, Kay, Kingfisher, Kiowa, Lincoln, Logan, Major, McClain, McIntosh, Noble, Osage, Pawnee, Payne, Pittsburg, Roger Mills, Stephens, Tulsa, Washington, Washita, Woods, Woodward.

Ø Texas: Sherman, Hansford, Ochiltree, Lipscomb, Moore, Hutchinson, Roberts, Hemphill, Potter, Carson, Gray, Wheeler, Donley, and Collingsworth.

Ø Colorado: Las Animas and Baca.

Ø Kansas: Barber, Butler, Clark, Coffey, Comanche, Cowley, Dickinson, Edwards, Elk, Finney, Ford,

Gove, Grant, Gray, Greenwood, Harper, Harvey, Haskell, Hodgeman, Kearny, Kingman, Kiowa, Lane, Logan, Lyon, Marion, McPherson, Meade, Montgomery, Ness, Pawnee, Pratt, Reno, Rice, Rush, Saline, Scott, Sedgwick, Seward, Sheridan, Sherman, Stafford, Stevens, Sumner, Thomas, Trego, Wallace, Wilson, Wichita, and Woodson.

4 A copy of the indictment, captioned United States v. Aubrey K. McClendon, No. CR-16-043, (W.D. Okla. March 1, 2016), is attached as Exhibit 1.


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20. The indictment detailed the manner in which Defendants carried out the bid rigging

combination and conspiracy. According to the indictment, Defendants accomplished the

combination and conspiracy by:

a) engaging in communications concerning certain leasehold interests and producing properties, and the prices therefor, in the Western District of Oklahoma;

b) agreeing during those communications that [Defendants Chesapeake and SandRidge Energy] would not compete against one another for certain leasehold interests and producing properties in the Western District of Oklahoma either by one company not submitting offers or bids to certain owners of leasehold interests and producing properties, or by one company withdrawing previously submitted offers or bids to certain owners of leasehold interests and producing properties in exchange for a share or a subset of the leasehold interests and/or producing properties purchased by the other company at the acquisition cost;

c) submitting offers or bids, withholding offers or bids, or acting to withdraw previously submitted offers or bids, to owners of certain leasehold interests and producing properties in the Western District of Oklahoma in accordance with the agreement reached;

d) acquiring certain leasehold interests and producing properties in the Western District of Oklahoma at collusive and noncompetitive prices and then providing the non-acquiring co-conspirator a share or a subset of the leasehold interests and/or producing properties at the acquiring co-conspirator’s cost; and

e) employing measures to keep their conduct secret, including, but not limited to, agreeing not to reveal their anticompetitive agreement to the owners of the leasehold interests and producing properties at issue in this Indictment, and instructing their subordinates to do the same.

21. The above-described combination and conspiracy artificially depressed the prices of

the leasehold interests and producing properties that Defendants Chesapeake and SandRidge Energy

purchased. The combination and conspiracy affected not only the interests and properties that

Defendants Chesapeake and SandRidge Energy purchased, but also the overall market. Thus, sellers

of leasehold interests and producing properties to entities other than Defendants Chesapeake and

SandRidge Energy received less value than they would have in a competitive market, despite the fact

that they did not sell to Chesapeake and SandRidge Energy.


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22. Mr. McClendon derived considerable personal benefits from the combination and

conspiracy through Chesapeake “Founder Well Participation Program.” (“FWPP”). The FWPP

permitted Mr. McClendon and Defendant Tom Ward to continue participating as working interest

owners in new oil and natural gas wells drilled by the Chesapeake. Mr. McClendon was thus

permitted to participate in all of the wells spudded by or on behalf of the Chesapeake during each

calendar year. Defendant Tom Ward’s participation rights in the FWPP terminated on August 10,

2006, the date he resigned from Chesapeake. Defendant Ward’s participation in the program

therefore predates the Class Period.

23. Defendant Ward, however, did participate in a similar program at Sandridge Energy,

which was called the “SandRidge Executive Well Participation Program,” during the Class Period.

Mr. Ward was able to participate in all of the wells spudded by or on behalf of Sandridge Energy

throughout the Class Period. On information and belief, Mr. Ward did in fact participate in such

wells. Thus, Defendant Ward, like Mr. McClendon, obtained personal benefits from the combination

and conspiracy.

CLASS ACTION ALLEGATIONS

24. Plaintiff brings this action on behalf of himself and as a class action pursuant to

Rule 23(a), (b)(2) and (b)(3) of the Federal Rules of Civil Procedure on behalf of the following sub-

classes (collectively, the “Class”):

Direct Seller Class:

All persons and entities who 1) sold to Defendants5 leasehold or working interests on lands within the Anadarko Basin Region with no producing oil and gas of wells or 2) who owned tracts of land within the Anadarko Basin Region with producing oil and gas wells where Defendants purchased such land’s leasehold and working interests, at any time between December 27, 2007 and March 31, 2012. Excluded from the class are Defendants,

5 “Defendants” as used in the class definition include any predecessor, subsidiary, agents (such as landmen), or affiliate of Defendants.


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any parent, subsidiary or affiliate thereof, and Defendants’ officers, directors, employees, and immediate families. Diminution in Sales Price Class: All persons and entities who 1) sold to parties other than Defendants6 leasehold or working interests on lands within the Anadarko Basin Region with no producing oil and gas wells or 2) who owned tracts of land within the Anadarko Basin Region with producing oil and gas wells where such leasehold or working interests were sold to a party other than Defendants, at any time between December 27, 2007 and March 31, 2012. Excluded from the class are Defendants, any parent, subsidiary or affiliate thereof, and Defendants’ officers, directors, employees, and immediate families.

25. Plaintiff does not know the exact number of members of the Class because

such information is in the exclusive control of Defendants. Due to the nature of the trade

and commerce involved, however, Plaintiff believes that Class members number at least in the

hundreds or thousands and are sufficiently numerous and geographically dispersed so that joinder of

all Class members is impracticable.

26. There are questions of law and fact which are common to the claims of Plaintiff and

the Class, including, but not limited to:

a. Whether Defendants engaged in a combination or conspiracy with their co-conspirators to rig bids and/or allocate the market for the purchase of leasehold interests and producing properties;

b. Whether the purpose and/or effect of the acts and omissions alleged herein

was to restrain trade, or to affect, fix, or depress the price of leasehold interests and producing properties;

c. Whether Defendants violated Sections 1 and 3 of the Sherman Act (15

U.S.C. §§ 1, 3);

d. Whether Defendants’ agents, officers, employees, or representatives participated in correspondence and meetings in furtherance of the illegal conspiracy alleged herein, and, if so, whether such agents, officers, employees,

6 “Defendants” as used in the class definition include any predecessor, subsidiary, agents (such as landmen), or affiliate of Defendants.


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or representatives were acting within the scope of their authority and in furtherance of Defendants’ business interests;

e. Whether, and to what extent, the conduct of Defendants caused injury to

Plaintiff and members of the Class, and, if so, the appropriate measure of damages; and

f. Whether Plaintiff and members of the Class are entitled to injunctive relief to

prevent the continuation or furtherance of the violation of Sections 1 and 3 of the Sherman Act.

27. Plaintiff’s claims are typical of the claims of the members of the Class.

28. Plaintiff will fairly and adequately assert and protect the interests of the Class

Plaintiff’s interests are coincident with, and not antagonistic to, those of the other members of

the Class.

29. Plaintiff is represented by counsel competent and experienced in the prosecution of

antitrust and class action litigation.

30. The questions of law and fact common to the members of the Class

predominate over any questions affecting only individual members.

31. A class action is superior to other available methods for the fair and efficient

adjudication of this controversy because:

a. The Class is readily definable and one for which records should exist in the files of Defendants.

b. Prosecution as a class action will eliminate the possibility of repetitious

litigation. c. Treatment as a class action will permit a large number of similarly

situated persons to adjudicate their common claims in a single forum simultaneously, efficiently, and without the duplication of effort and expense that numerous individual actions would require.

d. Class treatment will permit the adjudication of relatively small claims by

many Class members who otherwise could not afford to litigate an antitrust claim such as is asserted in this complaint on an individual basis.


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32. This class action presents no difficulties of management that would preclude its

maintenance as a class action.

TOLLING OF THE STATUTE OF LIMITATIONS

33. Plaintiff had neither actual nor constructive knowledge of the facts constituting its

claim for relief.

34. Plaintiff and members of the Class did not discover, and could not have discovered

through the exercise of reasonable diligence, the existence of the conspiracy alleged herein until at

or about March 1, 2016, the date on which the indictment of Mr. McClendon and the unnamed

co-conspirators became public.

35. Defendants engaged in a secret conspiracy that did not reveal facts that would put

Plaintiff or the Class on inquiry notice that there was a conspiracy to fix prices for leasehold interests

and producing properties.

36. Accordingly, Plaintiff could not have had either actual or constructive knowledge of

the price fixing scheme until Mr. McClendon and the unnamed co-conspirators indictment became

public.

37. Because Defendants’ agreement, understanding and conspiracy was kept secret,

Plaintiff and members of the Class were unaware of Defendants’ unlawful conduct alleged

herein and did not know that the prices for which they sold their leasehold interests or producing

properties were artificially depressed during the Class Period.

COUNT I

Violation of Section 1 and 3 of the Sherman Act (15 U.S.C. §§ 1, 3)

38. Plaintiff incorporates by reference the preceding paragraphs as if fully set forth

herein.


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39. Defendants and their co-conspirators engaged in a continuing combination and

conspiracy to rig bids and unlawfully depress the prices of leasehold interests and producing

properties within the United States, its territories, and the District of Columbia in violation of Section

1 and 3 of the Sherman Act (15 U.S.C. §§ 1, 3).

40. Defendants and their co-conspirators agreed to, and did in fact, restrain trade or

commerce by bid rigging and depressing the prices for leasehold interests and producing properties

below competitive levels.

41. In formulating and effectuating their combination or conspiracy, Defendants and

their co-conspirators engaged in bid rigging and other anticompetitive activities, the purpose and

effect of which were to artificially depress the price of leasehold interests and producing

properties.

42. The illegal combination and conspiracy alleged herein had the following effects,

among others:

a. The prices Defendants paid Plaintiff and members of the Class for leasehold interest and producing properties were artificially depressed below competitive levels;

b. Plaintiff and members of the Class have been deprived of free and

open competition in sales of their leasehold interests and producing properties;

c. Plaintiff and members of the Class have sold their leasehold interests

and producing properties for less than they would have had they sold in a competitive marketplace where Defendants’ combination and conspiracy was absent;

d. Competition for the purchase of leasehold interests and producing

properties have been restrained.

43. As a direct and proximate result of Defendants’ conduct, Plaintiff and members of

the Class have been injured and damaged in their business and property in an amount to be

determined according to proof.


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PRAYER FOR RELIEF

WHEREFORE, Plaintiff prays:

A. That the Court determine that this action may be maintained as a class action under

Rule 23(a), (b)(2) and (b)(3) of the Federal Rules of Civil Procedure and direct that reasonable notice of this action, as provided by Rule 23(c)(2) of the Federal Rules of Civil Procedure, be given to members of the Class;

B. That the Court adjudge and decree that the contract, combination and conspiracy alleged

herein is a per se unreasonable restraint of trade in violation of Sections 1 and 3 of the Sherman Act;

C. That the Court enter judgment against Defendants, jointly and severally, in favor of Plaintiff

and the Class;

D. That the Court award Plaintiff and the Class treble damages;

E. That the Court award Plaintiff and the Class attorneys’ fees and costs as well as pre-judgment and post-judgment interest as permitted by law

F. That Defendants and their co-conspirators, their respective successors, assigns, parents,

subsidiaries, affiliates and transferees, and their respective officers, directors, agents and employees, and all other persons acting or claiming to act on behalf of Defendants or their co-conspirators, or in concert with them, be permanently enjoined and restrained from, in any manner, directly or indirectly, continuing, maintaining or renewing the combination, conspiracy, agreement, understanding or concert of action, or adopting any practice, plan, program or design having a similar purpose or affect in restraining competition; and

G. That the Court award Plaintiff and the Class such other and further relief as may be deemed

necessary and appropriate.

DEMAND FOR JURY TRIAL

Pursuant to Fed. R. Civ. P. 38(b), Plaintiff requests a jury trial on all matters so

triable.


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Dated Thursday, March 03, 2016.

Respectfully submitted

s/ Douglas D. Wilguess Douglas D. Wilguess, OBA No. 16337

Heather A. Garrett, OBA No. 19099 WILGUESS & GARRETT, PLLC One Leadership Square 211 N. Robinson, Suite 1350 Oklahoma City, OK 73102 Telephone: (405) 235-0200 Facsimile: (405) 232-6515 [email protected] [email protected]

Warren T. Burns (Pro Hac Vice to be filed) TX State Bar No. 24053119 Daniel H. Charest (Pro Hac Vice to be filed) TX State Bar No. 24057803 Will Thompson (Pro Hac Vice to be filed) TX State Bar. No. 24094981 BURNS CHAREST LLP 500 North Akard Street, Suite 2810 Dallas, Texas 75201 Telephone: (469) 904-4550 Facsimile: (469) 444-5002 [email protected] [email protected] [email protected] Isaac Diel (Pro Hac Vice to be filed) SHARP MCQUEEN PA 6900 College Boulevard Suite 285 Overland Park, Kansas 66211 Telephone: (913) 661-9931 [email protected]


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Terrell W. Oxford (Pro Hac Vice to be filed) SUSMAN GODFREY LLP 1000 Louisiana Suite 5100 Houston, Texas 77002-5096 Tel: (713) 651-9366 FAX: (713) 654-6666 [email protected] William C. Carmody (Pro Hac Vice to be filed) Arun Subramanian (Pro Hac Vice to be filed) SUSMAN GODFREY L.L.P. 560 Lexington Ave., 15 Floor New York, NY 1002-6828 Telephone: (212) 336-8330 Facsimile: (212) 336-8340 [email protected] [email protected] Larry D. Lahman Michael E. Kelly Carol Hambrick Lahman Mitchell DeClerck MITCHELL DECLERCK 202 West Broadway Avenue Enid, Oklahoma 73701 Tel: (800) 287-5144 FAX: (580) 234-8890


EXHIBIT 1

Case 5:16-cv-00209-M Document 1-1 Filed 03/03/16 Page 1 of 8

Case 5:16-cr-00043-M Document 1 Filed 03/01/16 Page 1 of 7

IN THE UNITED STATES DISTRICT COURT F~ ILE D THE WESTERN DISTRICT OF OKLAHOMA

MAR O 1 2~16

UNITED STATES OF AMERICA,

Plaintiff,

vs.

AUBREY K. McCLENDON

Defendant.

) ) ) ) ) ) ) ) ) )

No.: CR Violation: 15 U.S.C. § 1

INDICTMENT

The Federal Grand Jury charges:

Introduction

At all times relevant to this Indictment:

M

I. The defendant, AUBREY K. McCLENDON, was employed by Company

A as its Chief Executive Officer, President, and as~ Director until at least March 2012.

2. Co-conspirator 1 was employed by Company B as its Chief Executive

Officer and Chairman of the Board of Directors until at least March 2012.

3. Company A was a corporation organized and existing under the laws of

Oklahoma with its principal place of business in Oklahoma City, Oklahoma. Company B

was a corporation organized and existing under the laws of Delaware with its principal

place of business in Oklahoma City, Oklahoma.



4. In the business of oil and natural gas exploration and production,

companies frequently compete to purchase leasehold interests. A leasehold interest

grants a lessee the right to develop the land and to explore for and extract oil and natural

gas for a set length of time. Typical oil and natural gas leases span three to five years. If

a lessee drills on the land during that time period, the lease is considered "held by

production" for as long thereafter as oil and gas or either of them is produced from these

lands.

5. In addition to competing for leasehold interests for undeveloped _land,

companies also compete to purchase producing properties. Producing properties are

tracts of land with one or more wells that are actively producing oil and/or natural gas. A

lessee may sell its interest in the producing property, which typically includes both the

underlying leasehold interest and the infrastructure, to another oil and gas company.

6. Company A and Company B were engaged in the business of oil and

natural gas exploration and production and were actual and potential competitors in the

acquisition of leasehold interests and producing properties in northwest Oklahoma,

including the leasehold interests and producing properties subject to the charged

combination and conspiracy.

COUNT 1: Conspiracy to Rig Bids

7. Beginning at least as early as December 2007 and continuing until at least

as late as March 2012, the exact dates being unknown to the Grand Jury, in the Western

District of Oklahoma, the defendant, AUBREY K. McCLENDON, and his co

conspirators knowingly entered into and engaged in a combination and conspiracy to

2



suppress and eliminate competition by rigging bids for certain leasehold interests and

producing properties. The combination and conspiracy engaged in by the defendant,

AUBREY K. McCLENDON, and his co-conspirators was in unreasonable r~straint of

interstate commerce in violation of Section 1 of the Sherman Act ( 15 U.S.C. § I).

8. The charged combination and conspiracy consisted of a continuing

agreement, understanding, and concert of action among the defendant, AUBREY K.

McCLENDON, and his co-conspirators, the substantial terms of which were to suppress

the prices that Company A and Company B paid to acquire certain leasehold interests and

producing properties in the Western District of Oklahoma by eliminating competition

between Company A and Company B for the purchase of these leasehold interests and

producing properties.

9. The charged combination and conspiracy began on or about December 27,

2007 when the defendant, AUBREY K. McCLENDON, contacted Co-conspirator 1 and

proposed eliminating the head-to-head competition between Company A and Company B

for the purchase of certain leaseholds and producing properties in northwest Oklahoma

by agreeing not to submit bids for these leaseholds and producing properties in order to

keep prices down. The defendant, AUBREY K. McCLENDON, and Co-conspirator 1

agreed that Company B would refrain from submitting bids for these leaseholds and

producing properties in order to keep prices down and in exchange for Company B

receiving a share of the leaseholds and producing properties purchased by Company A at

Company A's cost.

3



10. The defendant, AUBREY K. McCLENDON, and his co-conspirators

continued to rig bids for the purchase of additional leaseholds and producing properties in

northwest Oklahoma in a similar manner, as described below, until at least as late as

March 2012.

11. Various corporations and individuals, not made defendants in this

Indictment, participated as co-conspirators in the offense charged herein and performed

acts and made statements in furtherance thereof.

12. Whenever in this Indictment reference is made to any act, deed, or

transaction of any corporation, the allegation means that the corporation engaged in the

act, deed, or transaction by or through its officers, directors, agents, employees, or other

representatives while they were actively engaged in the management, direction, control or

transaction of its business or affairs.

Manner and Means of the Conspiracy

13. For the purpose of forming and carrying out the charged combination and

conspiracy, the defendant, AUBREY K. McCLENDON, and his co-conspirators did

those things that they combined and conspired to do, including, among other things:

(a) engaging in communications concerning certain leasehold interests

and producing properties, and the prices therefor, in the Western

District of Oklahoma;

(b) agreeing during those communications that Company A and

Company B would not compete against one another for certain

leasehold interests and producing properties in the Western District

4



of Oklahoma either by one company not submitting offers or bids to

certain owners of leasehold interests and producing properties, or by

one company withdrawing previously submitted offers or bids to

certain owners of leasehold interests and producing properties in

t:xchange for a share or a subset of the leasehold interests and/or

producing properties purchased by the other company at the

acquisition cost;

( c) submitting offers or bids, withholding offers or bids, .or acting to

withdraw previously submitted offers or bids, to owners of certain

leasehold interests and producing properties in the Western District

of Oklahoma in accordance with the agreement reached;

( d) acquiring certain leasehold interests and producing properties in the

Western District of Oklahoma at collusive and noncompetitive

prices and then providing the non-acquiring co-conspirator a share or

a subset ofthe leasehold interests and/or producing properties at the

acquiring co-conspirator's cost; and

( e) employing measures to keep their conduct secret, including, but not

limited to, agreeing not to reveal their anticompetitive agreement to

the owners of the leasehold interests and producing properties at

issue in ·this Indictment, and instructing their subordinates to do the

same.

5



:rp1de aqd. Commerce,

14. During the period covered by this Indictment, the business activities of

defendant, AUBREY K. McCLENDON, and his co-conspirators in connection with the

purchases of leasehold interests and producing properties that are the subject of this

Indictment were within the continuous and uninterrupted flow of, and substantially

affected, interstate trade and commerce, including:

(a) entering into and executing transactions for the purchase of

leasehold interests and producing properties that include purchasers

and sellers from different states;

(b) ~ransferring or causing the transfer of substantial sums of money

across state lines in connection with purchases ·of leasehold interests

and producing properties; and

( c) selling oil and natural gas in interstate commerce.

All pursuant to Title 15, United States Code, Section 1.

A TRUE BILL:

~~~ FOREPERSON OF THE GRAND JURY



Assistant Attorney General

., .. BRE~

Deputy Assistant Attorney General

22~)~ MARVIN N. PRICE, JR. ? Director of Criminal Enforcement

Antitrust Division U.S. Department of Justice

7

· liJtJ~ FRANK\ VONDRAK Chief, Chicago Office

;eM~~ Assistant Chief

STEPHEN D. BOOKER JASON C. TURNER CHESTER C. CHOI

Attorneys, Antitrust Division U.S. Department of Justice Chicago Office 209 S. LaSalle Street, Suite 600 Chicago, Illinois 60604 Tel.: (312) 984-7200


JS 44 (Rev. 12/12) CIVIL COVER SHEET The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is reqmred for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON ND('J' PAGE OF THIS FORM.)

I. (a) PLAINTIFFS Brian Thieme

(b) County of Residence of First Listed Plaintiff Denver. Colorado (EXCEPT IN US. PLAINTIFF CASES)

( C) Attorneys (Finn Name, Address, and Telephone Number)

See attachment

DEFENDANTS Chesapeake Energy Corp .• Chesapeake Exploration. L.L.C .• as a successor by merger to Chesapeake Exploration. L.P .• Sandridge Energy Corp .• Tom L. Ward and John Does 1-50

County of Residence of First Listed Defendant Oklahoma OK (IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE TRACT OF LAND INVOLVED.

Attorneys (If Known)

II. BASIS OF JURISDICTION (Placean "X"inOneBoxOnlyJ III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an "X" in One Box/or Plaintiff (For Diversity Cases Only) and One Box for Defenda111)

01 U.S. Government l'ol 3 Federal Question PTF DEF PTF DEF

Plaintiff (U.S. Gowmme/11 Not a Party) Citizen of This State O I O I Incorporated or Principal Place O 4 0 4 of Business In This State

0 2 U.S. Government 04 Diversity Citizen of Another State 0 2 0 2 Incorporated and Principal Place 0 5 0 5 Defendant (Indicate Citizenship of Parties in Item Ill) of Business In Another State

0 3 0 3 Foreign Nation 0 6 0 6

IV NATURE OF SUIT (Place an "X" m One Box Onlv) I CONTRACT TORTS FORFEITURE/PENALTY BANKRUPTCY UTHERSTATUTES

0 110 Insurance PERSONAL INJURY PERSONAL INJURY 0 625 Drug Related Seizure 0 422 Appeal 28 USC 158 0 375 False Claims Act 0 120 Marine 0 310 Airplane 0 365 Personal Injury • ofProperty21 USC 881 0 423 Withdrawal 0 400 State Reapportionment 0 130 Miller Act 0 315 Airplane Product Product Liability 0 690 Other 28 USC 157 )1,1 41 O Antitrust 0 140 Negotiable Instrument Liability 0 367 Health Care/ 0 430 Banks and Banking 0 150 Recovery of Overpayment 0 320 Assaul~ Libel & Pharmaceutical PR •vERTY RIGtt S 0 450 Commerce

& Enforcement of Judgment Slander Personal Injury 0 820 Copyrights 0 460 Deportation 0 15 I Medicare Act 0 330 Federal Employers' Product Liability 0 830 Patent 0 470 Racketeer Influenced and 0 152 Recovery of Defaulted Liability 0 368 Asbestos Personal 0 840 Trademark Corrupt Organizations

Student Loans 0 340 Marine Injury Product 0 480 Consumer Credit (Excludes Veterans) 0 345 Marine Product Liability .A~,u ""..a' r 0 490 Cable/Sat TV

0 153 Recovery of Overpayment Liability PERSONAL PROPERTY 0 7!0 Fair Labor Standards 0 861 HIA (1395ft) 0 850 Securities/Commodities/ of Veteran's Benefits 0 350 Motor Vehicle 0 370 Other Fraud Act 0 862 Black Lung (923) Exchange

0 160 Stockholders' Suits 0 355 Motor Vehicle 0 371 Truth in Lending 0 720 Labor/Management 0 863 DIWC/DIWW (405(g)) 0 890 Other Statutory Actions 0 190 Other Contract Product Liability 0 380 Other Personal Relations 0 864 SSID Title XVI 0 891 Agricultural Acts 0 195 Contract Product Liability 0 360 Other Personal Property Damage 0 740 Railway Labor Act 0 865 RSI (405(g)) 0 893 Environmental Matters 0 196 Franchise Injury 0 385 Property Damage 0 751 Family and Medical 0 895 Freedom oflnformation

0 362 Personal Injury - Product Liability Leave Act Act Medical Malpractice 0 790 Other Labor Litigation 0 896 Arbitration

I REAL PROPERTY CIVIL RIGHTS PRISONERJ>ETmONS 0 791 Employee Retirement FEDERAL TAX SUITS 0 899 Administrative Procedure

0 210 Land Condemnation O 440 Other Civil Rights Habeas Corpus: Income Security Act O 870 Taxes (U.S. Plaintiff Act/Review or Appeal of 0 220 Foreclosure 0 441 Voting 0 463 Alien Detainee or Defendant) Agency Decision O 230 Rent Lease & Ejectment 0 442 Employment 0 510 Motions to Vacate 0 871 IRS-Third Party 0 950 Constitutionality of O 240 Torts to Land 0 443 Housing/ Sentence 26 USC 7609 State Statutes 0 245 Tort Product Liability Accommodations 0 530 General 0 290 All Other Real Property 0 445 Amer. w/Disabilities • 0 535 Death Penalty IMMIGRATION

Employment Other: 0 462 Naturalization Application 0 446 Amer. w/Disabilities • 0 540 Mandamus & Other 0 465 Other Immigration

Other 0 550 Civil Rights Actions 0 448 Education 0 555 Prison Condition

0 560 Civil Detainee -Conditions of Confmement

V, 0 RIG IN (Place a11 "X" i11 One Box Only)

)l( I Original O 2 Removed from Proceeding State Court

0 3 Remanded from Appellate Court

0 4 Reinstated or Reopened

0 5 Transferred from Another District (specify)

0 6 Multidistrict Litigation

Cite the U.S. Civil Statute under which you are filing (Do not cite j11risdictional statutes unless diversit)~:

VI. CAUSE OF ACTION 1-;'-'~'-e~.;;.d;..;};.:.s~C.;;.ri.;..~t.:..;;"-n.;;.;!.;.;.~~.;;;.a..:;;;~sc.c.:-: -------------------------------

Antitrust violation of Section 1 of the Sherman Act

VII. REQUESTED IN COMPLAINT:

IS CHECK IF THIS IS A CLASS ACTION DEMANDS

VIII. RELATED CASE(S) IF ANY

DATE

03/03/2016 FOR OFFICE USE ONLY

RECEIPT# AMOUNT

UNDER RULE 23, F.R.Cv.P.

(See instn,clions): JUDGE

SIGNATURE OF ATTORNEY OF RECORD

sf Douglas D. Wilguess

APPL YING IFP

CHECK YES only if demanded in complaint:

JURY DEMAND: )!;I Yes O No

DOCKET NUMBER

JUDGE MAG.JUDGE

I


JS 44 Reverse (Rev. 12/12)

INSTRUCTIONS FOR ATTORNEYS COMPLETING CIVIL COVER SHEET FORM JS 44

Authority For Civil Cover Sheet

The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaint filed. The attorney filing a case should complete the form as follows:

I.(a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving both name and title.

(b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases, the county ofresidence of the "defendant" is the location of the tract ofland involved.)

(c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting in this section "(see attachment)".

II. Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.Cv.P., which requires that jurisdictions be shown in pleadings. Place an "X" in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below. United States plaintiff. (I) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here. United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an "X" in this box. Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box I or 2 should be marked. Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity cases.)

III. Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this section for each principal party.

IV. Nature of Suit. Place an "X" in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficient to enable the deputy clerk or the statistical clerk(s) in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, select the most definitive.

V. Origin. Place an "X" in one of the six boxes. Original Proceedings. (1) Cases which originate in the United States district courts. Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441. When the petition for removal is granted, check this box. Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date. Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date. Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrict litigation transfers. Multidistrict Litigation. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section 1407. When this box is checked, do not check (5) above.

VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutes unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service

VII. Requested in Complaint. Class Action. Place an "X" in this box if you are filing a class action under Rule 23, F.R.Cv.P. Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction. Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded.

VIII. Related Cases. This section of the JS 44 is used to reference related pending cases, if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases.

Date and Attorney Signature. Date and sign the civil cover sheet.


Douglas D. Wilguess, OBA No. 16337 Heather A. Garrett, OBA No. 19099 WILGUESS & GARRETT, PLLC One Leadership Square 211 N. Robinson, Suite 1350 Oklahoma City, OK 73102 Telephone: (405) 235-0200 Facsimile: (405) 232-6515

Warren T. Burns Daniel H. Charest Will Thompson BURNS CHAREST LLP 500 North Akard Street, Suite 2810 Dallas, Texas 75201 Telephone: (469) 904-4550 Facsimile: ( 469) 444-5002

Isaac Diel SHARP MCQUEEN PA 6900 College Boulevard Suite 285 Overland Park, Kansas 66211 P: (913) 661-9931

Terrell W. Oxford SUSMAN GODFREY LLP 1000 Louisiana Suite 5100 Houston, Texas 77002-5096 Tel: (713) 651-9366 FAX: (713) 654-6666 [email protected]

William C. Carmody Arun Subramanian SUSMAN GODFREY L.L.P. 560 Lexington Ave., 15 Floor New York, NY 1002-6828 Telephone: (212) 336-8330 Facsimile: (212) 336-8340 [email protected] [email protected]

Larry D. Lahman Michael E. Kelly Carol Hambrick Lahman

ATTACHMENT


Mitchell DeClerck MITCHELL DECLERCK 202 West Broadway Avenue Enid, Oklahoma 73701 Tel: (800) 287-5144 FAX: (580) 234-8890


for the western district of oklahoma brian thieme, on ... · defendant chesapeake energy corp. is a...

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