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By Sanjeev Kumar
Founding Attorney

What sort of backlash could a business face amid allegations of unfair price schemes?

When it comes to running a small business, choosing a price scheme that both drives the profit margin and attracts customers can be tricky. On the one hand, a business wants to be competitive in the market climate and, on the other, it needs to make a reasonable profit. There are a number of pitfalls to watch out for when attracting new customers — such as charging new accounts, and deducting expenses accurately – just ask the recently embattled Chesapeake Energy Corporation.

In recent news, Chesapeake Energy has been named in over 400 lawsuits by disgruntled landowners accusing the conglomerate of cheating customers left and right – resulting in possible liability topping $1 billion. According to allegations, Chesapeake has presented thousands of landowners with lease agreements concerning over 25,000 tracts of land around Texas. Allegedly, these landowners – seemingly unfamiliar with Texas underground oil and gas laws – signed agreements with Chesapeake, not knowing the full measure of their entitlements to royalties on energy produced by the land.

More specifically, landowners assert that the company wrongfully miscalculated the price of gas. and charged landowners transport costs and expenses after the gas had already been transmitted.

These cases have been set for a series of trial dates docketed to begin in early 2016. Earlier this year, the company reached a settlement with several investors over similar claims, the details of which have not been publicly released.

One set of landowners claims they have not seen a royalty check in months. Though they say they never expected to “get rich” off the land, one landowner has stated, “I’m just hoping there will possibly be some back payments, and it will force Chesapeake to pay what is due,” — a statement resoundingly familiar among the large group of plaintiffs seeking retribution from Chesapeake.

About the Author
Sanjeev Kumar is the founder and principal at the Kumar Law Firm, which provides a wide range of legal services to entrepreneurs and business owners in the area of business & corporate law and intellectual property along with related areas of interest to clients such as business succession planning, wealth preservation through estate planning, and alternate dispute resolution.