Looney v. Chesapeake Energy Corporation et al

Filing 91

ORDER granting in part and denying in part 51 Motion for Attorney Fees, and 89 Supplemental Motion for Attorney Fees in favor of Goodwin & Herman Associates, LLC, Siloam Minerals, LLC, Billy C. Looney against Chesapeake Energy Corporation, Chesa peake Energy Marketing, Inc., Chesapeake Exploration, LLC, Chesapeake Operating, Inc. in the amount of $1,035,729.79 with court costs in the amount of $142,810.64; awarding $5,000.00 incentive fees to Class Representatives Billy C. Lo oney, Goodwin & Herman Associates, LLC, and Siloam Minerals, LLC; any appeal or challenge of attorneys' fees and expenses does not affect finality of Order of Final Approval and Judgment; overruling E. Gary Torelli's written objections (Docs. 63,76). Signed by Honorable Timothy L. Brooks on January 13, 2017. (msj)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF 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

v.

PLAINTIFFS

CASE NO. 2:15-CV-02108

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
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

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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

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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
1

The "Cambiano Objectors" are Pinion Energy Company, Charter Land Company, LLC ,
Petit Jean Land Company, LLC , Mark Cambiano, The Haroldine H. Hammond Living Trust,
The Mary E. Hammond Living Trust, and Paraclifta Land and Minerals, Limited
Partnership.

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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

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$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

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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
results obtained ; (6) the novelty and difficulty of the issues involved ; and (7) the prevailing
rate customarily charged in the area for similar legal services . 304 Ark. 227 , 229-30 (1990)
(cited to with approval by G&K Servs. Co., Inc. v. Bill's Super Foods, Inc., 766 F.3d 797 ,
801 (8th Cir. 2014)) .
Class Counsel , who are eight experienced attorneys representing six separate law
firms located in Arkansas , Mississippi, and New York, initially submitted Declarations in
support of their request for fees that summarized the hours that they, their partners and
associates, and their paralegals billed to this case. See Doc. 51-1 . The hourly rates that
were originally claimed by Class Counsel were extremely wide-ranging, to say the least.
For example , on the high end of the spectrum, attorney Thomas P. Thrash of Little Rock,
Arkansas, originally claimed an hourly rate of $700, while his partner Marcus N. Bozeman
billed out at $500 per hour; Larry D. Moffett of Oxford , Mississippi, also claimed an hourly
rate of $700 and a paralegal rate of $150 per hour; Don Barrett of Lexington , Mississippi,
claimed an eye-popping rate of $825 per hour, while his partner, Brian Herrington , claimed
a slightly more modest rate of $425 per hour; and Daniel E. Seltz of New York, New York
claimed a rate of $605 per hour, while his five paralegals claimed rates ranging from $335
to $345 per hour. On the lower end of the spectrum , attorney Matthew H.P. Warner of
Little Rock, Arkansas , requested a rate of $325 per hour; Debra Kay Brown , also of Little

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Rock, billed out at $300 per hour; and Ms. Brown's partner, Steven T. Shults , charged
$350 per hour.
Bearing in mind that this case was filed in the Fort Smith, Arkansas division of the
Western District of Arkansas , the prevailing rate the Court should use when performing the
lodestar calculation is the rate ordinarily charged by attorneys who practice in the area
where the case was filed-that is , in the Fort Smith/River Valley region of Arkansas. In the
Court's estimation , the average rate that an experienced attorney specializing in complex
litigation in the Fort Smith area would charge is approximately $300 per hour. That rate
will therefore be used in calculating the lodestar for Class Counsel in this case.2
Turning to the rate that would be reasonable to charge for paralegal services , the
Court finds that the relevant legal market supports a range of $40 to $75 per hour,
depending on the experience and skill-level of the paralegal in question . Unfortunately,
Class Counsel only provided the Court with their paralegals' names and neglected to state
any information about the paralegals' experience and qualifications, much less any proof

2

The Court notes that during the final approval hearing on September 26 , 2016 , the Court
questioned Mr. Thrash, who was designated to speak on behalf of all Class Counsel , as
to why the billing rates submitted to the Court by his co-counsel were so disparate,
particularly in view of the Court's obligation to perform a lodestar cross-check and assess
a reasonable rate for a// Class Counsel based on the prevailing rate customarily charged
in the area where the case was brought. It appears Mr. Thrash communicated the Court's
concerns to his colleagues, and on December 16, 2016 , all eight attorneys submitted
Supplemental Declarations (Doc. 89-2) in which they revised their collective billing rate to
$350 per hour. The Court appreciates Class Counsel's effort to present it with a uniform
hourly rate that is much closer to "reasonable" than the other rates originally claimed ;
however, as Class Counsel failed to attach any affidavits or other proof that would show
why $350 per hour is an appropriate hourly rate under the circumstances , the Court was
obliged to draw upon on its own knowledge of the Fort Smith/River Valley legal market and
make its own assessment of a reasonable rate .

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of the local prevailing rates . In the absence of such information, the Court finds that a
reasonable rate for these paralegals' time is $65 per hour.
Next, the Court must multiply the claimed number of attorney hours by the
reasonable hourly rate . Class Counsel have attested that in this case , they have accrued
3,311 .65 hours, in the aggregate. Although counsel have not provided an itemization that
would be required in other contexts, the Court finds their sworn representations to be
reasonable , given the heavy demands involved in litigating this complex case over a
number of years. Multiplying 3,311 .65 hours by an hourly rate of $300 yields an attorneys'
fee of $993 ,495 . To that total is added $13 ,032.50 in fees for paralegal services, which
is calculated by multiplying 200 .50 hours of paralegal time by the reasonable rate of $65
per hour. The combined fee for both attorney and paralegal time , using the lodestar
approach , is therefore $1 ,006 ,527 .50.

This amount is only $29 ,202 .29 less than

$1 ,035 ,729 .79-or one-third of the Settlement Fund , after expenses are subtracted .
The lodestar cross-check indicates that Class Counsel's request for a fee equivalent
to one-third of the Settlement Fund is reasonable. Class Counsel undertook significant
risks in representing the Class on a contingent-fee basis. Given the amount of time Class
Counsel invested in the lawsuit, the difficulty of the issues involved , and the successful
outcome that was negotiated on behalf of the Class, the Court will award attorneys' fees
in the total amount of $1 ,035,729.79. The Court will also award $5,000 in incentive awards
to each of the Class Representatives: Billy C. Looney, Goodwin & Herman Associates ,
LLC , and Siloam Minerals, LLC .

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C. Mr. Torelli's Objection
Class member Torelli states in both his first written Objection to the Class
Settlement Agreement (Doc. 63) and his Supplemental Objection (Doc. 76) that he
believes the amount of fees claimed by Class Counsel is too high , and that the Court
should reduce the fees to somewhere around 10% of the total Settlement Fund. Mr.
Torell i, who represents himself prose, does not elaborate as to why 10% of the Settlement
Fund is appropriate, but 33 .3% is too much .
The Court is sympathetic to Mr. Torelli's concern that Class Counsel's fee request
certa inly appears high , at least without context. A fee award of more than $1 million is
rare , but not necessarily unusual in complex cases of this nature. The resolution of the
claims was achieved through the efforts of multiple attorneys who fronted their costs in the
hope that they might be paid at some point in the future.

Class counsel were not

guaranteed payment. Further, this case was contested by Defendants at every turn , from
the discovery phase , to dispositive motion practice, to multiple in-court hearings, to a daylong mediation session . Had Class Counsel been retained on an hourly basis, they would
have billed approximately the same amount in total. The small premium awarded here is
actually less-than-commensurate with the risk Class Counsel assumed . Awarding Class
Counsel one-third of the Settlement Fund in compensation for their efforts in this case is
fair and reasonable . Cf Barfield v. Sho-Me Power Elec. Coop. , 2015 WL 3460346, at *4
(W.D. Mo. June 1, 2015) (collecting cases from the Eighth Circuit in which courts found
that one-third of the common settlement fund was a reasonable attorneys' fee , plus

9

separate reimbursement for costs) . Accordingly, Mr. Torelli 's objection as to the amount
of attorneys' fees and costs is OVERRULED.
II. CONCLUSION
IT IS ORDERED that the Motion for Award of Attorneys' Fees , Reimbursement of
Litigation Expenses, and Incentive Awards (Doc. 51) and Supplemental Motion for Fees
(Doc. 89) are both GRANTED IN PART AND DENIED IN PART, in that Class Counsel are
awarded $142,810.64 in costs and expenses and $1,035,729.79 in fees .
IT IS FURTHER ORDERED that Class Representatives Billy C . Looney, Goodwin

& Herman Associates , LLC , and Siloam Minerals, LLC , each be awarded an incentive fee
of $5,000.
IT IS FURTHER ORDERED that any appeal or challenge of the Court's approval of
an award of fees and expenses shall in no way disturb or affect the finality of the Order of
Final Approval and Judgment entered with respect to the Class Settlement Agreement.
IT IS FURTHER ORDERED that Mr. E. Gary Torelli's written objections (Docs. 63 ,
76) as to the amount of attorneys' fees and costs requested by Class Counsel are
OVERRULED.

~~

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IT IS SO ORDERED on this_ day of January, 201 ?i.

OKS
S DISTRICT JUDGE

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