OG&E 2009 Annual Report Download - page 30

class certification and alleges that approximately 60 defendants, including two of OGE Energy’s subsidiary entities, have improperly
measured the volume of natural gas. The Fourth Amended Petition asserts theories of civil conspiracy, aiding and abetting,
accounting and unjust enrichment. In their briefing on class certification, the plaintiffs seek to also allege a claim for conversion. The
plaintiffs seek unspecified actual damages, attorneys’ fees, costs and pre-judgment and post-judgment interest. The plaintiffs also
reserved the right to seek punitive damages.
Discovery was conducted on the class certification issues, and the parties fully briefed these same issues. A hearing on class
certification issues was held April 1, 2005. In May 2006, the court heard oral argument on a motion to intervene filed by Colorado
Consumers Legal Foundation, which is claiming entitlement to participate in the putative class action. The court has not yet ruled on
the motion to intervene.
The class certification issues were briefed and argued by the parties in 2005 and proposed findings of facts and conclusions
of law on class certification were filed in 2007. On September 18, 2009, the court entered its order denying class certification. On
October 2, 2009, the plaintiffs filed for a rehearing of the court’s denial of class certification. On February 10, 2010 the court heard
arguments on the rehearing. No ruling on this motion has been made.
OGE Energy intends to vigorously defend this action. At this time, OGE Energy is unable to provide an evaluation of the
likelihood of an unfavorable outcome and an estimate of the amount or range of potential loss to OGE Energy.
3. Franchise Fee Lawsuit. On June 19, 2006, two Company customers brought a putative class action, on behalf of all
similarly situated customers, in the District Court of Creek County, Oklahoma, challenging certain charges on the Company’s electric
bills. The plaintiffs claim that the Company improperly charged sales tax based on franchise fee charges paid by its customers. The
plaintiffs also challenge certain franchise fee charges, contending that such fees are more than is allowed under Oklahoma law. The
Company’s motion for summary judgment was denied by the trial judge. The Company filed a writ of prohibition at the Oklahoma
Supreme Court asking the court to direct the trial court to dismiss the class action suit. In January 2007, the Oklahoma Supreme Court
“arrested” the District Court action until, and if, the propriety of the complaint of billing practices is determined by the OCC. In
September 2008, the plaintiffs filed an application with the OCC asking the OCC to modify its order which authorizes the Company to
collect the challenged franchise fee charges. On March 10, 2009, the Oklahoma Attorney General, the Company, OG&E
Shareholders Association and the Staff of the Public Utility Division of the OCC all filed briefs arguing that the application should be
dismissed. On December 9, 2009 the OCC issued an order dismissing the plaintiffs’ request for a modification of the OCC order
which authorizes the Company to collect and remit sales tax on franchise fee charges. In its December 9, 2009 order, the OCC advised
the plaintiffs that the ruling does not address the question of whether the Company’s collection and remittance of such sales tax should
be discontinued prospectively. On December 21, 2009, the plaintiffs filed a motion at the Oklahoma Supreme Court asking the court
to deny the Company’s writ of prohibition and to remand the cause to the District Court. On December 29, 2009, the Oklahoma
Supreme Court declared the plaintiffs’ motion moot. On January 27, 2010, the OCC Staff filed a motion asking the OCC to dismiss
the cause and close the cause at the OCC. If the OCC Staff’s motion is granted, the plaintiffs would be required to file a new cause in
order to ask for prospective relief. In its motion, the OCC Staff stated that the plaintiff’s counsel advised the OCC Staff counsel that
the plaintiffs have no desire to seek a determination regarding prospective relief from the OCC. It is unknown whether the plaintiffs
will attempt to continue the District Court action. The Company believes that the lawsuit is without merit.
4. Oxley Litigation. The Company has been sued by John C. Oxley D/B/A Oxley Petroleum et al. in the District Court
of Haskell County, Oklahoma. This case has been pending for more than 11 years. The plaintiffs alleged that the Company breached
the terms of contracts covering several wells by failing to purchase gas from the plaintiffs in amounts set forth in the contracts. The
plaintiffs’ most recent Statement of Claim describes approximately $2.7 million in take-or-pay damages (including interest) and
approximately $36 million in contract repudiation damages (including interest), subject to the limitation described below. In 2001, the
Company agreed to provide the plaintiffs with approximately $5.8 million of consideration and the parties agreed to arbitrate the
dispute. Consequently, the Company will only be liable for the amount, if any, of an arbitration award in excess of $5.8 million. The
arbitration hearing was completed recently and the next step is briefing by the parties. While the Company cannot predict the precise
outcome of the arbitration, based on the information known at this time, the Company believes that this lawsuit will not have a
material adverse effect on the Company’s financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders.
Under the reduced disclosure format permitted by General Instruction I(2)(c) of Form 10-K, the information otherwise
required by this item has been omitted.
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