EnCana Oil & Gas (USA), Inc. v. Miller , 2017 Colo. App. LEXIS 1009 ( 2017 )

COLORADO COURT OF APPEALS 2017COA112
Court of Appeals No. 16CA1979
City and County of Denver District Court No. 16CV31444
Honorable Shelley I. Gilman, Judge
EnCana Oil & Gas (USA), Inc.,
Plaintiff-Appellant,
v.
Sally Miller; Barclay Farms, LLC; Joan Elaine Brehon; David Furlong and
Joyce Furlong, as Co-Trustees for the Janette Foote Estate; Niles Miller; White
River Royalties, LLC; Whitney Brace, as Trustee for the T.E. McClintlock Trust;
and Helen Nelson, as Trustee for the Edwin Miller Trust,
Defendants-Appellees.
JUDGMENT AFFIRMED
Division II
Opinion by JUDGE FOX
Dailey and Bernard, JJ., concur
Announced August 10, 2017
Welborn Sullivan Meck & Tooley, P.C., Jens Jensen, Brian S. Tooley, Samuel S.
Bacon, Denver, Colorado, for Plaintiff-Appellant
Law Offices of George A. Barton, P.C., Stacy A. Burrows, George A. Barton,
Robert G. Harken, Overland Park, Kansas, for Defendants-Appellees
¶1 A certified class of Colorado oil and gas royalty owners (the
Class) and EnCana Oil & Gas (USA), Inc. (EnCana), were involved in
litigation beginning in 2005 over EnCana’s alleged underpayment of
royalties on natural gas it produced. In 2008, EnCana and the
Class entered into a settlement agreement that detailed the
payment of funds to settle past claims, established the methodology
EnCana would use for future royalty payments, and included an
arbitration clause. The district court’s final judgment approved and
incorporated the settlement agreement, dismissed the 2005 case
with prejudice, and reserved jurisdiction to enforce the agreement.
In 2016, Colorado oil and gas royalty owners Sally Miller; Barclay
Farms, LLC; Joan Elaine Brehon; David and Joyce Furlong, as Co-
Trustees for the Janette Foote Estate; Niles Miller; White River
Royalties, LLC; Whitney Brace, as Trustee for the T.E. McClintlock
Trust; and Helen Nelson, as Trustee of the Edwin Miller Trust
(collectively Owners), purporting to act on behalf of the Class, filed a
demand for arbitration alleging that EnCana had underpaid
royalties owed to members of the Class in violation of the 2008
settlement agreement. EnCana quickly filed a new case in district
court asserting that (1) the Class ceased to exist when the 2005
1
case was dismissed with prejudice in 2008 and (2) the 2008
settlement agreement did not authorize arbitration on a class-wide
basis. In September 2016, the district court issued an order finding
that the Class had not ceased to exist, deciding that the claims
between EnCana and the Class should be resolved in class-wide
arbitration, and entering summary judgment against EnCana.
EnCana now appeals the district court’s September 2016 order. We
affirm.
I. Background
¶2 In the 2005 case, Miller v. EnCana Oil & Gas (USA) Inc., No.
05CV2753 (City & Cty. of Denver Dist. Ct. Aug. 26, 2008), the then
putative Class sued EnCana over EnCana’s alleged underpayment
of royalties for natural gas produced in Colorado. The Class sought
damages and declaratory relief to determine the proper method for
calculating future royalty payments where the Class members’
royalty agreements were silent as to the deduction of
post-production costs from royalty payments. In 2006, after
briefing and a two-day evidentiary hearing, the district court
certified the Class pursuant to C.R.C.P. 23(b)(3). Notice of the
2
certification was mailed to approximately 6000 Class members and
about 150 members opted out of the Class.
¶3 In 2008, EnCana and the Class entered into a settlement
agreement stating that EnCana’s payment of $40,000,000 to the
Class resolved all disputes concerning natural gas production
through December 31, 2008. EnCana and the Class further agreed
on a royalty payment methodology for natural gas production on or
after January 1, 2009, allocating post-production costs based on
the location of the well(s) processing the gas.1 The agreement
contains the following arbitration clause:
In the event of a dispute over EnCana’s
payment of royalty under [the methodology for
calculating royalties on gas produced on or
after January 1, 2009], such dispute will be
resolved in an arbitration administered by the
Judicial Arbiter Group (“JAG”), with the
Honorable Richard W. Dana as Arbitrator. The
arbitration will be conducted in accordance
with the rules (but not under the
administrative auspices) of the American
Arbitration Association [AAA] then in effect. If
Judge Dana is unable to serve as Arbitrator,
the Arbitrator will be designated by JAG from
among its panel of Arbitrators. If JAG no
1For payment of royalties on gas produced on and after January 1,
2009, section 10 of the agreement places Class members into six
geographically divided groups, which we refer to as “subclasses,”
although the settlement agreement did not explicitly do so.
3
longer exists, the Parties will attempt to agree
on an arbitrator, and if unable to do so,
arbitration will be conducted under the rules
of the [AAA] then existing.
As relevant here, the agreement (1) defines “Parties” as “Plaintiffs,
Class Members and EnCana, each of whom individually may be
referred to as a ‘Party’”; (2) adopts Colorado law; (3) provides that it
runs with the land; and (4) states that it is binding upon “EnCana
and the Class Members and their respective . . . successors and
assigns, with respect to both the current interests owned by
EnCana and Class Members and any additional interest that either
EnCana or Class Members acquire under the Royalty Agreements.”2
¶4 The district court preliminarily approved the settlement
agreement, and a notice of the proposed settlement was mailed to
the Class members informing them of the settlement terms and
their right to object. Based upon the evidence adduced at the class
fairness hearing, the district court approved the settlement as being
“fair, reasonable, bona fide and adequate to the Settlement Class.”
The district court then entered a final judgment approving the
2 The agreement defines “Royalty Agreements” as “all instruments
. . . conveying or reserving royalty or overriding royalty interests,
under which any Class Member receives or has received royalty
payments, and therefore is subject to this Agreement.”
4
settlement agreement “between EnCana and [the] Class[,] except for
those persons and entities [opting] out of the class,” and dismissing
the case with prejudice. The judgment states that “[f]or production
of Natural Gas . . . occurring from the Leases on and after January
1, 2009 and continuing for the respective lives of the Leases,
EnCana (and its successors) shall calculate and pay Class Members
(and their successors) royalties as set forth in the Agreement,”
consistent with the methodology and subclasses laid out in section
10 of the agreement. The district court’s judgment expressly
reserves jurisdiction, without affecting the
finality of this Final Judgment, over (a)
implementing, administering and enforcing
this Settlement and any award or distribution
from the Settlement Funds; (b) disposition of
the Settlement Funds; and (c) other matters
related or ancillary to the foregoing.
The judgment incorporates the settlement agreement, specifying
that the judgment and the settlement agreement “are to be
construed together as one Settlement between the Parties.”
¶5 In 2016, Owners, on behalf of the Class, filed a demand for
class arbitration with JAG, alleging that EnCana violated the
settlement agreement by underpaying royalties on natural gas
produced since January 1, 2009. EnCana responded by suing
5
Owners, in City and County of Denver District Court case
16CV31444, for declaratory relief. In a later motion, EnCana
claimed that the settlement agreement did not authorize arbitration
on a class-wide basis and requested that the district court decide
the issue and stay arbitration. Responding to EnCana’s motion,
Owners did not oppose EnCana’s request that the court, not the
arbitrator, decide whether their agreement authorized class
arbitration. The district court stayed arbitration until it resolved
the disputed question.
¶6 Owners next moved for summary judgment on the issue of
class arbitration, and EnCana later filed (1) a C.R.C.P. 56(h) motion
asking the district court to decide that the Class ceased to exist
after the 2008 dismissal with prejudice and (2) a cross-motion for
summary judgment on the class arbitration issue. In September
2016, the district court issued an order finding that the Class had
not ceased to exist and entering summary judgment in favor of
Owners, deciding that the claims between EnCana and the Class
should be resolved in class-wide arbitration.
¶7 EnCana now appeals the September 2016 order.
6
II. The Class May Enforce the Settlement Agreement
¶8 EnCana contends that the district court erred in finding that
the Class continued after the case was dismissed with prejudice in
2008. According to EnCana, C.R.C.P. 23 is a procedural tool
facilitating the aggregation of claims and does not affect substantive
rights or law; therefore, once the underlying case is dismissed, the
class and its ability to bring new claims cease to exist. Otherwise,
EnCana argues, the district court’s obligation under C.R.C.P.
23(c)(1) — to continually and rigorously analyze whether proceeding
as a class is appropriate — would continue beyond the case’s
dismissal with prejudice. EnCana asserts that the district court’s
September 2016 order lacked sufficient C.R.C.P. 23(c)(1) analysis
regarding (1) the named representatives’ current ability to
adequately represent the Class; (2) the current composition of the
Class; and (3) the alleged unilateral substitutions of Class counsel.
EnCana also argues that Class counsel did not provide sufficient
notice of the arbitration demand to Class members. We disagree.
A. Preservation and Standard of Review
¶9 The parties agree that this issue was properly preserved.
7
¶ 10 When deciding a motion under C.R.C.P. 56(h), a district court
may decide a legal question “[i]f there is no genuine issue of any
material fact necessary for the determination of the question of
law.” We review a court’s ruling on such a motion de novo. Francis
v. Aspen Mountain Condo. Ass’n, 2017 COA 19, ¶ 7. Also, an
arbitration clause in a settlement agreement is part of a contract,
the interpretation of which is a matter of law that we review de
novo. See Allen v. Pacheco, 71 P.3d 375, 378 (Colo. 2003).
B. Applicable Law
¶ 11 A district court “has inherent authority and jurisdiction to
make such orders as are necessary to give effect to or enforce its
prior decrees.” Mulei v. Jet Courier Serv., Inc., 860 P.2d 569, 571
(Colo. App. 1993) (“Although the trial court had dismissed the cause
with prejudice, it retained jurisdiction to give effect to the
settlement order.”). Accordingly, a district court may issue an order
dismissing a case with prejudice while retaining jurisdiction over a
settlement agreement resolving the underlying dispute. Kokkonen
v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 381 (1994) (“[I]f the
parties’ obligation to comply with the terms of the settlement
agreement had been made part of the order of dismissal — either by
8
separate provision (such as a provision ‘retaining jurisdiction’ over
the settlement agreement) or by incorporating the terms of the
settlement agreement in the order[ — ] . . . a breach of the
agreement” would be “a violation of the order.”); see Cross v. Dist.
Court, 643 P.2d 39, 41 (Colo. 1982) (“A compromise and settlement
is, in effect, a contract to end judicial proceedings.”); see also
Rothstein v. Am. Int’l Grp., Inc., 837 F.3d 195, 205 (2d Cir. 2016)
(“Like consent decrees, settlement agreements are ‘hybrid[s] in the
sense that they are at once both contracts and orders; they are
construed largely as contracts, but are enforced as orders.’”)
(alteration in original) (citation omitted).
C. Analysis
¶ 12 For two reasons, we determine that the Class survived the
2008 dismissal. We also conclude that EnCana’s remaining
arguments regarding Rule 23 and Class counsel fail.
1. The Certified Class Survives for the Life of the Agreement
¶ 13 First, the district court’s dismissal order incorporated the
settlement agreement and reserved jurisdiction to implement,
administer, and enforce the “Settlement and any award or
distribution from the Settlement Funds” and to address “other
9
matters related or ancillary” to said agreement. Because
compliance with the settlement agreement became a part of the
order of dismissal, the district court retains jurisdiction to give
effect to the agreement. See Mulei, 860 P.2d at 571; accord
Kokkonen, 511 U.S. at 381; Rothstein, 837 F.3d at 205. Until the
terms of the agreement are satisfied, the subclasses identified in the
agreement retain the right to enforce that agreement.
¶ 14 Second, the obligations placed on the settling parties did not
end with the 2008 dismissal. Rather, the agreement continues for
the respective “lives of the Leases” or Royalty Agreements covered
by the settlement agreement and expressly benefits and burdens
successors and assigns of the Parties. See Allen, 71 P.3d at 378
(stating that we must construe a settlement agreement according to
the plain and ordinary meaning of its terms in a manner that allows
each party to receive the benefit of the bargain, and the scope of the
agreement must reflect the reasonable expectations of the parties).
Any successors or assigns3 — who step into the shoes of a Class
3 The identities and interests of those successors or assigns, if
disputed, are for the arbitrator to decide. See Puleo v. Chase Bank
USA, N.A., 605 F.3d 172, 181 (3d Cir. 2010) (“[I]n the absence of a
threshold question regarding the validity of the arbitration
10
member concerning the royalties owed — are necessarily entitled to
enforce the terms of the settlement agreement. See Backus v.
Apishapa Land & Cattle Co., 44 Colo. App. 59, 61, 615 P.2d 42, 44
(1980) (stating that an assignee of contract rights stands in the
shoes of the assignor and may proceed in a contract action as if he
were the assignor).
2. The Agreement Contradicts EnCana’s Additional Claims
¶ 15 We reject EnCana’s claim that, if the Class survived the
dismissal, the district court had an unending and unfulfilled duty
under C.R.C.P. 23(c)(1) to rigorously analyze the Class’ satisfaction
of C.R.C.P. 23’s requirements. The settlement agreement effectively
endorsed the certified Class by creating, in section 10,
geographically based subclasses to resolve any prospective royalty
payment disputes. By accepting the six subclasses in the
agreement itself or the applicability of an arbitration agreement to a
given dispute, the FAA ‘requires courts to enforce privately
negotiated agreements to arbitrate[.]’”) (citation omitted); Coors
Brewing Co. v. Cabo, 114 P.3d 60, 66 (Colo. App. 2004) (“[T]he
arbitrator is the final judge of both fact and law.”). EnCana
suggests that the Class cannot bring new claims against EnCana or
other people or entities outside of the scope of the original
certification order, settlement, or judgment. We agree, see
Toothman v. Freeborn & Peters, 80 P.3d 804, 810 (Colo. App. 2002),
and we read the arbitration demand as merely seeking to enforce
the settlement agreement, not as advancing new claims.
11
agreement, EnCana expressly agreed to work with those subclasses
for the life of each Lease.
¶ 16 EnCana’s arguments about the district court’s alleged failure
to satisfy Rule 23 are not persuasive. Not only did the district court
conduct a full class certification process — as reflected in the
court’s exhaustive twenty-two page order4 — but EnCana endorsed
and reformulated that class in the settlement agreement. Because
EnCana undertook to pay the subclasses (and their successors and
assigns) until all its duties in the settlement agreement are satisfied
(for the “life of the Leases”), the district court did not err in declining
to engage in any further C.R.C.P. 23 analysis after the 2008
dismissal and judgment approving said agreement.
¶ 17 To the extent EnCana suggests that Class counsel seeks to
represent non-Class members, the merits (or lack thereof) of the
subclasses’ claim for prospective royalty payments (post January 1,
2009) will be addressed in the arbitration proceeding, consistent
with the AAA Rules, as the parties agreed. See Puleo v. Chase Bank
4 The order references a two-day class certification hearing.
Although the transcript of that hearing does not appear to be in our
record, an appellant’s failure to provide a complete record allows us
to presume the record supports the district court’s decision. See In
re Marriage of Dean, 2017 COA 51, ¶ 13.
12
USA, N.A., 605 F.3d 172, 181 (“[I]n the absence of a threshold
question regarding the validity of the arbitration agreement itself or
the applicability of an arbitration agreement to a given dispute, the
FAA ‘requires courts to enforce privately negotiated agreements to
arbitrate[.]’”) (citation omitted).
¶ 18 It is not evident that EnCana or its counsel — who are not
parties to the fee agreement between the Class and its counsel —
are the appropriate parties to complain that different lawyers
associated with Class counsel’s firm have joined the case. See
Abbott v. Kidder Peabody & Co., 42 F. Supp. 2d 1046, 1050
(D. Colo. 1999) (holding — where the defendants moved to declare
void the plaintiffs’ attorney-client contract and to disqualify the
plaintiffs’ counsel — that (1) the defendants had no standing under
Colorado law to challenge the enforceability of the attorney-client
representation contract between the plaintiffs and their counsel and
(2) although courts generally refuse to disqualify an attorney for a
conflict of interest where the attorney’s former client has not moved
for disqualification, the defendants had standing to seek
disqualification only because the interests of the public were so
greatly implicated that an apparent conflict of interest tended to
13
undermine the validity of the proceedings). When the district court
certified the Class, it necessarily determined that Class counsel
could adequately represent the Class members. See Wininger v. SI
Mgmt. L.P., 301 F.3d 1115, 1121-22 (9th Cir. 2002). In any event,
EnCana provides no authority to support its objection to the
participation of another lawyer from Class counsel’s law firm, or to
contest the absence of one of the Class’ initially appointed lawyers.
¶ 19 We next reject EnCana’s contention that Class counsel did not
provide sufficient notice of the arbitration demand to Class
members in violation of their right to due process. A division of this
court has held, and EnCana and the Class do not dispute, that the
Class members received sufficient notice after the Class was
certified and after the district court preliminarily approved the
settlement agreement. See Miller v. EnCana Oil & Gas (USA) Inc.,
(Colo. App. No. 08CA2131, June 11, 2009) (not published pursuant
to C.A.R. 35(f)). Our review of the 2016 arbitration demand leads
us to conclude that it does not bring claims different from those
resolved by the 2008 settlement agreement; rather, it merely seeks
to enforce that agreement. Therefore, no additional notice was
required before filing the 2016 arbitration demand. If the arbitrator
14
later believes further notice is appropriate, the arbitrator can
address the issue in the arbitration proceeding.
¶ 20 The district court’s ruling did nothing more and nothing less
than give effect to the settlement agreement. Thus, there is no
error.
III. Class Arbitration
¶ 21 Next, EnCana argues that the district court erred in
determining that the settlement agreement contains a contractual
basis to conclude that EnCana and the Class agreed to class
arbitration. EnCana contends that, because the arbitration clause
is silent on the matter of class arbitration, the district court should
have presumed that the parties agreed to bilateral arbitration only.
EnCana further argues that the district court erred in granting
summary judgment in favor of Owners on the issue of class
arbitration because there was a genuine issue of material fact as to
whether the parties agreed to class arbitration. We are not
persuaded.
A. Preservation and Standard of Review
¶ 22 The parties agree that this issue has been properly preserved.
15
¶ 23 We review a district court’s order granting summary judgment
de novo. Lewis v. Taylor, 2016 CO 48, ¶ 13. “Summary judgment
is appropriate only if ‘the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits,
if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of
law.’” Id. (quoting C.R.C.P. 56(c)).
¶ 24 Arbitration is a matter of contract, AT&T Mobility LLC
v. Concepcion, 563 U.S. 333, 339 (2011); see also Taubman Cherry
Creek Shopping Ctr., LLC v. Neiman-Marcus Grp., Inc., 251 P.3d
1091, 1094 (Colo. App. 2010), the interpretation of which presents
a legal question that we review de novo while applying state law.5
5 Arbitration provisions normally deprive the district court of
jurisdiction over certain matters related to a settlement agreement,
but here EnCana and the Class agreed that the district court, not
the arbitrator, should resolve their present dispute. Thus, neither
the district court nor this court has any reason to address the issue
of who should decide whether the arbitration clause in the
settlement agreement refers to class or bilateral arbitration. See
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 85 (2002)
(noting that, regarding arbitration proceedings, a court decides
substantive issues and the arbitrator decides procedural issues
absent “an agreement to the contrary”); but see Oxford Health Plans
LLC v. Sutter, 569 U.S. ___, ___ n.2, 133 S. Ct. 2064, 2068 n.2
(2013) (recognizing that “whether the availability of class arbitration
is a question of arbitrability” remains an open question). The
16
See Jacks v. CMH Homes, Inc., 856 F.3d 1301, 1304 (10th Cir.
2017); Radil v. Nat’l Union Fire Ins. Co. of Pittsburg, 233 P.3d 688,
692 (Colo. 2010); Premier Farm Credit, PCA v. W-Cattle, LLC, 155
P.3d 504, 517 (Colo. App. 2006).
B. Applicable Law
¶ 25 “Arbitration is . . . a private means of dispute resolution
wherein the parties have freedom to structure both the boundaries
of the arbitration award and the procedures under which the
arbitrator will arrive at his decision.” S. Wash. Assocs. v. Flanagan,
859 P.2d 217, 220 (Colo. App. 1992); see PoolRe Ins. Corp. v.
Organizational Strategies, Inc., 783 F.3d 256, 262 (5th Cir. 2015). A
valid arbitration clause in a settlement agreement “divests trial
courts of jurisdiction over all questions that are to be submitted to
arbitration, pending the conclusion of arbitration,” but a district
court retains jurisdiction over the remaining questions not subject
to the parties’ agreement. Lane v. Urgitus, 145 P.3d 672, 679 (Colo.
2006); see also Oklahoma v. Hobia, 775 F.3d 1204, 1213 (10th Cir.
2014).
parties also agree that the Federal Arbitration Act, 9 U.S.C. §§ 1-
307 (2012), and Colorado law apply. The parties do not argue that
those laws conflict here.
17
¶ 26 As a part of the settlement agreement, class arbitration is a
matter of consent. Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559
U.S. 662, 684 (2010) (“[A] party may not be compelled . . . to submit
to class arbitration unless there is a contractual basis for
concluding that the party agreed to do so.”). While the question of
what contractual basis may support a finding that the parties
authorized class arbitration remains undecided, see id. at 687 n.10,
it is clear that an agreement compelling the parties to submit to
class arbitration may be implicit or explicit. See id. at 685; Jock
v. Sterling Jewelers Inc., 646 F.3d 113, 121 (2d Cir. 2011) (“The
[Stolt-Nielsen] Court contemplated that an arbitration agreement
may contain an implicit agreement to authorize class
arbitration[.]”). But, an implicit agreement to class arbitration
cannot be presumed “solely from the fact of the parties’ agreement
to arbitrate.” Stolt-Nielsen, 559 U.S. at 685 (concluding that there
was no contractual basis for ordering class procedures where the
parties stipulated that they never reached any agreement on class
arbitration and that their agreement was silent on the matter).
¶ 27 To best effectuate the parties’ intent, “[w]e must construe the
terms of the [arbitration] agreement in a manner that allows each
18
party to receive the benefit of the bargain, and the scope of the
agreement must faithfully reflect the reasonable expectations of the
parties.” Allen, 71 P.3d at 378; see also Moss v. First Premier Bank,
835 F.3d 260, 264 (2d Cir. 2016) (“As with any contract, ‘the
parties’ intentions control.’”) (citation omitted). In determining the
scope of an arbitration clause in a settlement agreement, we look to
“the wording in order to ascertain and give effect to the mutual
intent of the parties as well as the subject matter,” the “purposes to
be accomplished,” and the circumstances surrounding the
agreement’s formation. Lane, 145 P.3d at 677, 679. If ambiguities
are found in the clause, we must compel arbitration unless we can
say “with positive assurance” that the arbitration clause is not
susceptible of any interpretation that encompasses the subject
matter of the dispute. Allen, 71 P.3d at 378 (citation omitted).
Moreover, a “broad or unrestricted” arbitration clause makes the
strong presumption favoring arbitration apply with even greater
force. Id. (citation omitted).
¶ 28 Furthermore, we interpret an agreement “in its entirety with
the end in view of seeking to harmonize and to give effect to all
provisions so that none will be rendered meaningless.” Gagne
19
v. Gagne, 2014 COA 127, ¶ 53 (quoting Pepcol Mfg. Co. v. Denver
Union Corp., 687 P.2d 1310, 1313 (Colo. 1984)). “[A] contract
should never be interpreted to yield an absurd result.” Atmel Corp.
v. Vitesse Semiconductor Corp., 30 P.3d 789, 793 (Colo. App. 2001),
abrogated on other grounds by Ingold v. AIMCO/Bluffs, L.L.C.
Apartments, 159 P.3d 116 (Colo. 2007).
C. Analysis
¶ 29 Here, it is undisputed that the claims concerning EnCana’s
compliance with the settlement agreement will be resolved by
arbitration and that the courts, not the arbitrator, will decide
whether arbitration shall occur on a class-wide or individual basis.6
The only question for us, then, is whether EnCana and the Class
authorized class arbitration in their settlement agreement.
¶ 30 As a preliminary matter, we reject EnCana’s repeated
argument that we must reverse the district court’s ruling on class
arbitration because this ruling depends upon the allegedly
erroneous finding that the Class survived the 2008 dismissal. As
discussed above, neither applicable law nor the terms of the
6The parties agree that the duty to arbitrate is valid and that the
court should decide their dispute over the scope of the agreement’s
arbitration clause. See supra note 5.
20
settlement agreement support EnCana’s claim that the Class does
not exist.
¶ 31 Where, as here, a settlement agreement explicitly names all
members of a certified class as a party to the agreement, frames the
pertinent disputes in class-wide or subclass-wide terms, and gives
relief on a class-wide or subclass-wide basis, the arbitration
clause’s context persuasively demonstrates an agreement to class
arbitration, rather than bilateral arbitration.
¶ 32 Looking to the plain language, the settlement agreement states
that it “is entered into by [Owners] and each member of the Class
[and EnCana].” The agreement defines the following terms:
 “Class” means the Class certified in 2006;
 “Class Members” means “each member of the Class,
including [Owners, and excluding] the persons and entities
who elected to opt out of the Class in response to the Notice
of Certification of Class Action”; and
 “Parties” means “[Owners], Class Members and EnCana,
each of whom individually may be referred to as a ‘Party.’”
The Class is integral in defining the disputes covered by the
agreement and the agreement’s class-wide relief. Adopting
21
EnCana’s proffered interpretation of the settlement agreement
would require us to ignore the class-wide framing of the disputes
and relief and read the repeatedly used word “Class” out of the
settlement agreement, replacing it with something like “individual
royalty owner.” Such an interpretation contradicts the agreement’s
plain language. See Lane, 145 P.3d at 677, 679.
¶ 33 The settlement agreement broadly provides, without limitation,
that Class members must resort to arbitration to settle any “dispute
over EnCana’s payment of royalty.” See Shell Oil Co. v. CO2 Comm.,
Inc., 589 F.3d 1105, 1109 (10th Cir. 2009) (enforcing arbitration
provisions in class action settlement agreement, which required
arbitration of all disputes “arising from or relating in any way to”
the agreement); see also Allen, 71 P.3d at 379 (holding that a
wrongful death claim brought by a woman was within the scope of
an arbitration agreement between a healthcare provider and the
woman’s husband where the agreement covered “‘any claim of
medical malpractice’ and any claim brought ‘[f]or any reason’”); see
generally 1 McLaughlin on Class Actions § 2:13 (13th ed. 2016)
(observing that, to date, “the vast majority of [AAA Clause
22
Construction Awards] have interpreted ‘silent’ clauses to authorize
class arbitration”).
¶ 34 If EnCana were to fail to employ the methodology established
by the settlement agreement, that failure would necessarily affect
all members of at least one subclass, not merely an individual Class
member. No reasonable construction of the arbitration clause of
this class action settlement agreement results in a prohibition of
class-wide relief. See Allen, 71 P.3d at 378 (“[T]he scope of the
agreement must faithfully reflect the reasonable expectations of the
parties.”). To conclude that the settlement agreement evidences
that the parties contemplated engaging in approximately 5850
individual arbitrations7 to resolve future disputes — rather than a
single class (or subclass) arbitration challenging EnCana’s
compliance with the methodology established by the settlement
agreement to resolve the class action lawsuit — would be absurd.
See Atmel Corp., 30 P.3d at 793; cf. Mork v. Loram Maint. of Way,
Inc., 844 F. Supp. 2d 950, 952 (D. Minn. 2012) (concluding that
7 Approximately 150 putative members opted out of the Class before
the 2008 settlement. Under EnCana’s current reading of the
arbitration clause, not only would an individual arbitration be
required for each dispute of approximately 5850 Class members,
but also for those of any successors and assigns.
23
where the parties agreed that the court had to order arbitration, but
disagreed about whether collective arbitration was allowed, the
breadth of the arbitration clause — covering “claims or disputes of
any nature” — allowed for collective arbitration); Smith & Wollensky
Rest. Grp. v. Passow, 831 F. Supp. 2d 390, 392 (D. Mass. 2011)
(denying challenge to arbitrator’s award where the arbitrator
reasonably interpreted an arbitration clause — covering “any claim
that, in the absence of this Agreement, would be resolved in a court
of law under applicable” law — as being sufficiently broad to allow
for arbitration of class action claims).
¶ 35 Further, the settlement agreement repeatedly refers to “the
Parties” in provisions addressing EnCana and all Class members.
For example, the agreement provides that, if the district court
“approves this Settlement Agreement, then the Parties jointly shall
seek entry of the Final Judgment.” In comparison, EnCana and the
Class utilized more descriptive language to refer to a specific party
when they deemed it necessary. For example, the agreement
contains provisions stating the following:
 “Each Party agrees to indemnify [from] all actions [that]
the released Party may sustain[.]” (Emphasis added.)
24
 “Nothing in this Agreement shall [be] construed as a
cross-conveyance or pooling of the Royalty Agreements
which in any manner affects the right of any separate
Class Member to deal with their separate property
interests in the Royalty Agreements as their sole and
separate property without regard to the rights and
interests of any other separate Class Member.”
(Emphasis added.)
 “Given the absence of any reliance by one Party upon any
representation by the other Party other than as
specifically set forth herein, [the] Parties agree that [their
rights and obligations] with respect to the subject matter
of this Agreement will be exclusively as set forth in this
Agreement and the final Judgment.” (Emphasis added.)
¶ 36 Accordingly, if EnCana and the Class had wanted the
arbitration clause to refer to bilateral arbitration, the clause could
have specified any or all of the following: (1) the subject disputes
would be between EnCana and an individual Class member; (2) the
individual parties involved in such a dispute would attempt to agree
on an arbitrator; (3) both Parties would expressly waive class
25
arbitration; or (4) the arbitration would be conducted in accordance
with the AAA rules then in effect with regard to bilateral arbitration
and exclude the rules on class arbitration (the current AAA rules
have been in effect since 2003, almost five years before the parties
entered into the 2008 settlement agreement).8 See AAA,
Supplementary Rules for Class Arbitrations (effective Oct. 8, 2003),
https://perma.cc/RH8F-VQFB; see also Fensterstock v. Educ. Fin.
Partners, 611 F.3d 124, 129 (2d Cir. 2010) (noting that the
arbitration clause provided that arbitration “[c]laims must proceed
on an individual (non-class, non-representative) basis”), cert.
granted, judgment vacated, and case remanded on other grounds
sub nom. Affiliated Comput. Servs., Inc. v. Fensterstock, 564 U.S.
1001 (2011); La. Health Serv. Indem. Co. v. Gambro A B, 756 F.
Supp. 2d 760, 768 (W.D. La. 2010) (recognizing that sophisticated
parties can write an arbitration clause to “specifically state that no
class arbitration shall be permitted”); Bonanno v. Quizno’s
Franchise Co., No. 06-CV-02358-CMA-KLM, 2009 WL 1068744 (D.
8Although the agreement’s failure to expressly prohibit class
arbitration cannot be the sole basis for concluding that the parties
agreed to class arbitration, Stolt-Nielsen S.A. v. AnimalFeeds Int’l
Corp., 559 U.S. 662, 684 (2010), it remains a factor to consider.
26
Colo. Apr. 20, 2009) (examining a class action bar in a contract and
concluding that it was not unconscionable under Colorado law).
Instead, the arbitration clause reads that a future
dispute will be resolved in an arbitration
administered by [JAG] . . . [and] conducted in
accordance with the rules . . . of the [AAA] then
in effect. . . . If JAG no longer exists, the
Parties will attempt to agree on an arbitrator,
and if unable to do so, arbitration will be
conducted under the rules of the [AAA] then
existing.
Construing the agreement as a whole and seeking to harmonize all
provisions, we conclude that the agreement’s plain language
evidences the parties’ intent to allow class (or subclass) arbitration.
See Gagne, ¶ 53.
¶ 37 Unlike the agreements in Stolt-Nielsen, 559 U.S. at 684, and
its progeny, the arbitration clause at issue exists in the context of a
class action settlement agreement that designates members of a
certified class into six subclasses on the basis of geographic
markers in order to address prospective royalty payments and
related disputes. The arbitration clause is not part of a bilateral
contract, such as one between an individual consumer and a
corporate entity. See, e.g., Bonanno, 2009 WL 1068744, at *2. The
27
settlement agreement resolved the Class’ claims on a class-wide
basis by establishing a royalty payment methodology dependent on
six designated subclasses of Class members and their successors
and assigns — not by establishing approximately 5850 individual
methodologies specific to each Class member.9 Therefore, the
parties’ intent to resolve their past and future disputes on a
class-wide or subclass-wide basis is also apparent from the
circumstances of the settlement agreement’s formation. See Lane,
145 P.3d at 679.
¶ 38 Because the settlement agreement’s language and context
evidence the parties’ contemplation of class arbitration, we agree
with the district court that summary judgment was proper on the
issue of class arbitration because there was no genuine issue of
material fact and Owners were entitled to judgment as a matter of
law. See Lewis, ¶ 13 (citing C.R.C.P. 56(c)); Premier Farm Credit,
155 P.3d at 517 (reasoning that the interpretation of a contract
presents a question of law).
9An arbitration clause’s mere presence in a class action settlement
agreement may not be sufficient to demonstrate the parties’
authorization of class arbitration. But, as explained above, there is
much more than the clause’s mere presence in the class action
settlement evidencing an agreement to class arbitration here.
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IV. Conclusion
¶ 39 The judgment is affirmed.
JUDGE DAILEY and JUDGE BERNARD concur.
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