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US Supreme Court’s Gorsuch allows enforcement of $155 million in damages against power transfer unit

(Corrects RIC and parent company name of Sunoco Inc in headline and first paragraph)

By Nate Raymond

(Reuters) – U.S. Supreme Court Justice Neil Gorsuch on Thursday rejected a request by the Sunoco Inc unit of pipeline operator Energy Transfer LP to block attempts to enforce a $155 million judgment in a lawsuit in which it was charged with failing to pay interest on late payments to 53,000 oil well owners in Oklahoma.

Gorsuch turned down Sunoco’s request for suspension to enforce the verdict, as the company appeals a 2020 federal judge’s decision finding it violated Oklahoma law by failing to pay interest on more than 1.5 million late payments to royalty owners in state wells.

Gorsuch handles certain cases in court from a group of states, including Colorado.

Sunoco’s attorneys argued that without Supreme Court intervention, the money could be collected and distributed to resource owners before the company could challenge a lower court decision to overturn the jurisdictional appeal.

The judges are scheduled for Sept. 28 to consider whether Sunoco’s appeal against the verdict will be heard. Lawyers for the company did not immediately respond to a request for comment. Lawyers for the plaintiffs declined to comment.

The verdict stemmed from a 2017 lawsuit by a farmer named Perry Cline on behalf of himself and other owners of stakes in Oklahoma wells from which Sunoco bought and then sold crude oil.

Cline accused Sunoco of violating a law in Oklahoma called the Production Revenue Standards Act by for years failing to pay well owners the legal interest on late payments it made on oil revenues. Under that law, companies that buy crude oil from well owners and then pay late must also pay interest.

U.S. District Judge John Gibney concluded in 2020 that Sunoco knew it owed interest on the late proceeds, but made no effort to pay the interest owed, and withheld more than $74 million on more than 1.5 million late payments. .

The judge ruled that the company had long ago decided not to pay interest on late payments by adopting a policy to pay only when a resource owner requested it, thus avoiding paying millions of dollars annually.

Gibney found that Sunoco “just keeps the money for his own use, knowing two things: that most owners will not charge interest and that the potential claims of the owners will eventually die due to the statute of limitations.”

The judge awarded $80 million in damages and $75 million in punitive damages.

(Reporting by Nate Raymond in Boston; editing by Will Dunham)

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