United States District Court, W.D. Arkansas, Fort Smith Division
BILLY C. LOONEY; GOODWIN & HERMAN ASSOCIATES, LLC, an Arkansas limited liability company; and SILOAM MINERALS, LLC, an Arkansas limited liability company PLAINTIFFS
CHESAPEAKE ENERGY CORPORATION, an Oklahoma corporation; CHESAPEAKE OPERATING, LLC, formerly doing business as CHESAPEAKE OPERATING, INC., an Oklahoma corporation; CHESAPEAKE EXPLORATION, LLC, an Oklahoma limited liability company; and CHESAPEAKE ENERGY MARKETING, LLC, formerly doing business as CHESAPEAKE ENERGY MARKETING, INC., an Oklahoma Corporation DEFENDANTS
ORDER ON ATTORNEYS' FEES, COSTS, AND INCENTIVE
TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE
pending before the Court are Class Counsel's Motion for
Award of Attorneys' Fees, Reimbursement of Litigation
Expenses, and Incentive Awards (Doc. 51) and Brief in Support
(Doc. 52), and Class Counsel's Supplemental Motion for
Fees (Doc. 89). Defendants do not oppose either Motion.
Court heard oral argument on the issue of fees during a
hearing on September 26, 2016, at which time the Court also
considered the parties' Joint Motion for Approval of
Class Action Settlement, as well as objections to the
proposed settlement by certain class members. One of those
objectors, class member E. Gary Torelli, noted in his written
objections that he believed the amount of attorneys' fees
requested by Class Counsel was "much too high" and
should be lowered to "no more than 10% [of the
settlement] total." (Docs. 63, 76). On October 7, 2016,
the Court entered an Order (Doc. 87) resolving nearly all the
outstanding objections to the Class Settlement Agreement,
including Mr. Torelli's, but expressly reserved ruling on
Mr. Torelli's specific objection to the reasonableness of
Class Counsel's fee request. See Doc. 87, pp.
17-18 ("IT IS ORDERED that all objections to the class
action settlement lodged by class member E. Gary Torelli are
OVERRULED, with the exception of his objection regarding the
reasonableness of Class Counsel's request for attorney
fees, as this objection will be addressed by the Court when
it rules at a later date on Class Counsel's Motion for
Award of Attorneys' Fees, Reimbursement of Litigation
Expenses, and Incentive Awards (Doc. 51).").
that the matter of Class Counsel's fees and costs is ripe
for consideration, the Court will address Mr. Torelli's
objection in the context of the Court's analysis as to an
appropriate award of fees and costs. For the reasons
described herein, the Motion for Award of Attorneys'
Fees, Reimbursement of Litigation Expenses, and Incentive
Awards (Doc. 51) and Supplemental Motion for Fees (Doc. 89)
are GRANTED IN PART AND DENIED IN PART.
Calculation of Costs
the hearing on final approval of the Class Settlement
Agreement, the Court requested that Class Counsel provide
additional records to itemize the costs and expenses claimed.
In particular, the Court asked Class Counsel to separate
travel expenses into separate categories so that the Court
could fairly evaluate the claimed expenses for
reasonableness. The updated Supplemental Declarations (Doc.
89-2) provide the level of detail that the Court requested.
to each individual attorney's itemization of costs and
expenses, the Court notes to begin with that Class Counsel
did not retain experts to review the thousands of lease
contracts and royalty stubs at issue in the case, nor did
they employ experts to perform an assessment of the potential
damages at stake. The Cambiano Objectorsbrought this issue
to the Court's attention during the final approval
hearing, seeking to use it as an example of how Class Counsel
failed to diligently prosecute this case. Class Counsel
explained at the hearing that in order to keep costs down,
the experienced staff and attorneys of the multiple law firms
involved in the case took on the role of "experts,
" and were fully capable of reviewing all the gas leases
by hand and performing accurate damage assessments. In the
end, the Court was persuaded by Class Counsel's reasoning
and finds that many of the claimed costs and expenses on
Class Counsel's billing and expense records reflect the
work that the attorneys and their staff actually put into the
case, and chose not to outsource to experts, which
potentially saved money in the long run.
Court has scrutinized the costs submitted by Class Counsel
and has performed a line-by-line assessment for
reasonableness as to each and every cost that was claimed.
Each attorney's costs appear reasonable to the Court,
with the exception of a $528 charge for limousine service
apparently shared by four attorneys who attended the
mediation in Oklahoma City in January of 2016. See
Doc. 89-2, p. 19. This cost was claimed by attorney Don
Barrett, who was one of the four who attended the mediation.
The Court finds that hiring a limousine service was
unreasonable under the circumstances, and will reduce this
cost to $200, an amount appropriate for taxicab or Uber
service in and around Oklahoma City during the relevant time
the Court awards: $5, 164.04 to the Thrash Law Firm, P.A.;
$6, 411.31 to the law firm of Lieff, Cabraser, Heimann &
Bernstein, LLP; $14, 497.82 to the law firm of Graves Warner
PLC; $2, 167.01 to the law firm of Shults and Brown, LLP; $9,
654.32 to the law firm of Daniel, Coker, Horton & Bell,
P.A.; and $3, 969.13 ($4, 297.13 in claimed costs, minus a
$328 deduction for the excessive cost of limousine service)
to the Barrett Law Group, P.A.
Court further awards $62, 688.26 to Class Counsel to be used
to reimburse the Claims Administrator for its services, and
$2, 500 to reimburse the Tax Administrator for its services.
As for the claimed amount of $36, 216.59 in "Assessment
Fund Expenses, " the only documents that support this
total are found in attorney Don Barrett's first
Declaration (Doc. 51-1, pp. 16, 19-20). Based on these
documents, it appears that several of the law firms involved
in representing the Class deposited money into a designated
litigation fund, all totaling $36, 000. See Id. at
p. 19. The attorneys then drew upon the litigation fund from
November 24, 2014, to July 18, 2016, in the total amount of
$35, 758.75. See Id. at p. 20. There is no
documentation to support Class Counsel's request for $36,
216.59 for reimbursement of expenses from this fund.
Therefore, Class Counsel will receive only $35, 758.75 in
Assessment Fund Expenses. In total, the amount of reasonable
costs and expenses awarded to Class Counsel is $142, 810.64.
Calculation of Fees and Incentive Awards
Counsel request an award of fees in an amount equal to
one-third of the total Settlement Fund, after expenses are
subtracted and paid from the Fund. Here, the Settlement Fund
is $3, 250, 000, as per the Class Settlement Agreement (Doc.
36-1). The Court has found that the expenses to be awarded to
Class Counsel are $142, 810.64. See Section I.A.,
supra. Once those expenses are subtracted from the
Settlement Fund, what remains is $3, 107, 189.36. One-third
of the remaining total is $1, 035, 729.79, and this appears
to be the amount that Class Counsel believes is reasonable
for the Court to award. Class Counsel also request a $5, 000
incentive award for each Class Representative, to be paid
from the net Settlement Fund after fees and expenses are
award of attorney fees is committed to the sound discretion
of the district court. Petrovic v. Amoco Oil Co.,200 F.3d 1140, 1157 (8th Cir. 1999); see also Fed.
R. Civ. P. 23(h). In the Eighth Circuit, "[i]t is well
established . . . that a district court may use the
'percentage of the fund' methodology to evaluate
attorney fees in a common-fund settlement."
Petrovic, 200 F.3d at 1157. The reasonableness of a
fee award may be double-checked by calculating the fee using
a "lodestar" approach and then comparing the two
figures. Calculating the lodestar involves adding the
attorney hours billed to the case, then multiplying those
hours by a rate that is appropriate, given the experience of
the attorneys and the prevailing rate charged in the area for
similar legal services. Id. Other factors that may
guide a court in considering the reasonableness of a fee
request are found in the Arkansas Supreme Court case of
Chrisco v. Sun Industries, Inc., as follows: (1) the
amount of time counsel invested in the lawsuit; (2) the
appropriateness of counsel's rates, given the experience
and ability of the attorneys; (3) the time and labor required
to perform the legal services properly; (4) the amount
potentially at issue in the case; (5) the ...