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Looney v. Chesapeake Energy Corp.

United States District Court, W.D. Arkansas, Fort Smith Division

January 13, 2017

BILLY C. LOONEY; GOODWIN & HERMAN ASSOCIATES, LLC, an Arkansas limited liability company; and SILOAM MINERALS, LLC, an Arkansas limited liability company PLAINTIFFS
v.
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 AWARDS

          TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE

         Now 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.

         The 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).").

         Now 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.

         I. DISCUSSION

         A. Calculation of Costs

         During 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.

         Turning 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 Objectors[1]brought 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.

         The 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 period.

         Accordingly, 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.

         The 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.

         B. Calculation of Fees and Incentive Awards

         Class 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 distributed.

         An 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 ...


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