Anderson Living Trust et al v. Energen Resources Corporation
Filing
301
PROPOSED FINDINGS AND RECOMMENDED DISPOSITION by Chief Magistrate Judge Carmen E. Garza re 294 Joint Motion to Approve Settlement, Notice and Plan of Allocation, 295 Plaintiff's Motion for Attorney Fees Litigation Costs, Class Rep Service Fees, and Administrative Costs, 297 Plaintiff's Supplemental Motion for Attorney Fees. (crc)
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
THE ANDERSON LIVING TRUST
f/k/a THE JAMES H. ANDERSON LIVING
TRUST, et al.,
Plaintiffs,
v.
CV No. 13-909 WJ/CG
ENERGEN RESOURCES CORPORATION,
Defendant.
PROPOSED FINDINGS AND RECOMMENDED DISPOSITION
THIS MATTER is before the Court upon the parties’ Joint Motion and Brief in
Support of Final Approval of Class Settlement, Notice and Plan of Allocation (the
“Motion for Final Approval”), (Doc. 294), filed June 28, 2021; Plaintiff’s Motion for
Attorney Fees, Litigation Costs, Class Representative Service Fees, and Anticipated
Administrative Costs from the Settlement Fund and Memorandum in Support Thereof
(the “Motion for Fees”), (Doc. 295), filed June 28, 2021; and Plaintiff’s Supplement to
Motion for Attorney Fees and Litigation Costs—Hearing July 19, 2021 at 10:00 AM Via
Zoom Before Chief Magistrate Judge Garza (the “Supplemental Motion for Fees”), (Doc.
297), filed July 14, 2021. On June 30, 2021, Chief United States District Judge William
P. Johnson referred both motions to the undersigned to perform legal analysis and
recommend an ultimate disposition, pursuant to 28 U.S.C. § 636(b). (Doc. 296).
The Court, having considered the Motion for Final Approval, the Motion for Fees,
the Supplemental Motion for Fees, the terms of the parties’ settlement, the record of this
case, the relevant law, and the arguments presented by counsel at the final approval
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hearing on July 19, 2021, RECOMMENDS the Motion for Final Approval, the Motion for
Fees, and the Supplement be GRANTED.
I.
Factual and Procedural Background
This case stems from the alleged systematic underpayment of royalties on oil
and gas wells in the San Juan Basin. In September 2013, Plaintiffs, then comprised of
four separate trusts owning royalty interests in these wells, filed this class action against
Defendant Energen Resources, the owner and operator of the wells. See (Doc. 1); see
also (Doc. 5); (Doc. 70); (Doc. 256 at 1). Over the ensuing years of the litigation, three
of the four trusts were dismissed from the case, leaving only the Tatum Living Trust.
See (Doc. 212 at 2); (Doc. 293). Further, the only claim to survive to date is the Tatum
Living Trust’s claim of underpaid royalties on gas used as fuel (the “Colorado fuel gas
claim”), which the Honorable Chief Judge Johnson certified as a class claim. (Doc. 212
at 2); see also (Doc. 256).
On March 9, 2021, the parties informed the Court that they had reached a
settlement in this matter, (Doc. 282), and on April 5, 2021, they filed a Joint Motion for
Order (1) Preliminarily Approving Class Settlement, (2) Approving Notice to Class
Members, (3) Establishing Opt Out and Objection Procedures, (4) Appointing a Class
Administrator, and (5) Setting a Final Hearing Date to Consider Final Approval of the
Class Settlement, Attorneys’ Fees and Expenses, (Doc. 283). The proposed Settlement
Agreement (the “Agreement”), (Doc. 283-1), provided, in relevant part, that the Class
would receive $5,610,000.00. The Notice of Class Action and Proposed Settlement (the
“Notice”), (Doc. 283-2), set forth procedures for notifying the Class members of the
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Agreement, including the payment of attorney fees, costs, and reimbursement for
expenses, and for distributing the funds to the Class members.
On April 29, 2021, following a hearing on the motion, the undersigned entered a
Proposed Findings and Recommended Disposition (“PFRD”), (Doc. 290),
recommending the Court preliminarily approve the parties’ settlement of the Colorado
fuel gas claim, appoint a class administrator, and establish procedures for providing the
class members with notice of the Agreement, for opting out of the Agreement, and for
objecting to the Agreement. (Doc. 290 at 6-9).
That same day, Chief Judge Johnson entered an Order Adopting Chief
Magistrate Judge’s Proposed Findings and Recommended Disposition, (Doc. 291), in
which he preliminarily approved the Agreement, approved the Notice as to form and
content, directed Defendant Energen to deposit the settlement payment of
$5,610,000.00 into an escrow account, appointed a Class Administrator, and set forth
various deadlines concerning notice and due process for the Class. The matter was
then set for a final approval hearing. Id. at 3-4.
On June 28, 2021, the parties filed the instant Motion for Final Approval,
requesting the Court “(1) grant[] final approval of the proposed Settlement; (2) approve[]
the form, content, and manner of the Settlement Class Notice; (3) approve[] the Plan of
Allocation as fair, adequate, and reasonable; (4) approve[] attorney’s fees, litigation
expenses and incentive award; [and] (5) find[] there are no objections for the proposed
Settlement.” (Doc. 294 at 1). The parties indicate that no objections were lodged by any
of the Class members, and one class member (via her heir) elected to opt out. Id. at 3.
The parties also filed the instant Motion for Fees and Supplemental Motion for Fees,
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asking the Court to award from the Settlement Fund “(1) attorney fees, (2) litigation
costs, (3) class representative services fees, and (4) anticipated administrative costs.”
(Doc. 295 at 1); see also (Doc. 297). On July 19, 2021, the Court held a hearing on the
motions. See (Doc. 299).
II.
Final Approval of the Settlement Agreement
A.
Legal Standard
Federal Rule of Civil Procedure 23(e) provides that “the claims, issues, or
defenses of a certified class . . . may be settled . . . only with the court’s approval . . .
[and] only after a hearing.” FED. R. CIV. P. 23(e)(2). Approval by the Court is a two-step
process: preliminary approval and final approval. Stanforth v. Farmers Ins. Co. of
Arizona, 1:9-cv-1146 RB/RHS, 1162014 WL 11497806, *3 (D.N.M. Nov. 1, 2013). At the
final approval stage, the court must determine whether the settlement is fair, reasonable
and adequate. See Jones v. Nuclear Pharmacy, Inc., 741 F.2d 322, 324 (10th Cir.
1984); see also FED. R. CIV. P. 23(e)(2). Generally, courts will approve a proposed class
settlement where it appears to be the product of serious, informed, non-collusive
negotiations, has no obvious deficiencies, does not improperly grant preferential
treatment to class representatives or segments of the class, and falls within the range of
possible approval.” Stanforth, 1162014 WL 11497806, at *3.
B.
Analysis
In their Motion, the parties contend that the Agreement is “fair, adequate, and
reasonable[,]” that the Notice “constituted fair and adequate notice and was the best
practicable Notice under the circumstances, satisfying all the requirements of due
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process” and Rule 23, and that “[t]he proposed Plan of Allocation is fair, adequate, and
reasonable[.]” (Doc. 294 at 3).
i.
Fairness Under Fed. R. 23(e)(2)(A)-(F)
In determining whether a class settlement agreement is fair, reasonable, and
adequate, Rule 23(e) requires the Court to find: (1) the class representatives and class
counsel have adequately represented the class; (2) the proposal was negotiated at
arm’s length; (3) the proposal treats class members equitably relative to each other; and
(4) the relief provided for the class is adequate, taking into account (a) the costs, risks,
and delay of trial and appeal, (b) the effectiveness of any proposed method of
distributing relief to the class, including the method of processing class-member claims,
(c) the terms of any proposed award of attorney’s fees, including timing of payment, and
(d) any agreement required to be identified under Rule 23(e)(3). FED. R. CIV. P.
23(e)(2)(A)-(F).
1.
Whether the class representatives and class counsel have
adequately represented the class
This first factor focuses “on the actual performance of counsel acting on behalf of
the class.” Montgomery v. Continental Intermodal Group-Trucking LLC, 2:19-cv-940
GJF, 2021 WL 1339305, *4 (D.N.M. April 9, 2021) (quoting FED. R. CIV. P. 23 advisory
committee’s note).
In the eight years of litigation in this case, the parties have exchanged substantial
discovery, which provided Class Counsel with “an adequate appreciation of the case’s
merits before negotiating.” In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 531 (3d
Cir. 2004) (citations omitted). With that appreciation, Class Counsel achieved an
excellent result for the class—$5,600,000.00—which Class Counsel indicates amounts
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to “one hundred percent (100%) of principal damages and very close to one hundred
percent (100%) of interest as calculated by the Colorado Statutes on the . . . Colorado
fuel gas [claim].” (Doc. 295 at 8). Moreover, no class members objected to the
settlement. (Doc. 294 at 3).
The Court therefore finds that Class Counsel and the Tatum Living Trust
adequately represented the Class, and that this factor favors approval of the settlement.
2.
Whether the proposal was negotiated at arm’s length
The second factor focuses on whether the settlement negotiations “were
conducted in a manner that would protect and further the class interests.” Montgomery,
2021 WL 1339305, at *4 (quoting FED. R. CIV. P. 23 advisory committee’s note).
Here, the Agreement was reached as a result of arms-length negotiations
between attorneys experienced not only in class action litigation generally but in this
eight-year-long litigation. The attorneys are thus intimately familiar with the legal and
factual issues in this matter. Further, once the Class was certified, the parties
“exchange[d] . . . information necessary to . . . settlement [negotiations],” employing
experts, for at least a ten-month period. See (Docs. 270-278). Both parties’ experts,
whom counsel indicated at the motion hearing worked very well together, also engaged
in an exhaustive analysis of Defendant Energen’s royalty accounting data. Moreover,
Counsel agree that the Agreement was the product of good faith, arms-length
negotiations between the parties. (Doc. 294 at 5).
As such, the Court finds the Agreement was fairly and honestly negotiated at
arm’s length. See Lucas v. Kmart Corp., 234 F.R.D. 688, 693 (D. Colo. 2006)
(“Because the settlement resulted from arm’s length negotiations between experienced
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counsel after significant discovery had occurred, the Court may presume the settlement
to be fair, adequate, and reasonable.”).
3.
Whether the proposal treats class members equitably relative to
each other
This factor seeks to prevent the “inequitable treatment of some class members
vis-à-vis others.” Montgomery, 2021 WL 1339305, at *4-10 (quoting FED. R. CIV. P. 23
advisory committee’s note). “Matters of concern could include whether the
apportionment of relief among class members takes appropriate account of differences
among their claims, and whether the scope of the release may affect class members in
different ways that bear on the apportionment of relief.” Id.
Here, the Settlement Fund is allocated to Class members based on the amount
of monthly underpayments for the failure to pay royalty on fuel gas and when that
alleged underpayment occurred. (Doc. 294 at 8). The allocation plan also accounts for
all attorney fees, costs, and administrative expenses as ordered by the Court, and it
allocates these expenses pro rata to each Class member. Id. The allocation calculation
accounts for the time-delay of payment by applying Colorado’s 8% pre-judgment
interest compounded annually, beginning with the date the original payment was
allegedly due for the applicable months. Id. at 9. Using this methodology, Class
members are allocated a proportionate share of the net Settlement Fund, net of Class
Counsel’s requested fees and costs. Id.
The Court therefor finds that this plan of allocation treats each Class member
equitably relative to each other Class member.
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4.
Whether the relief provided for the Class is adequate
Finally, this factor recognizes that while the “relief that the settlement is expected
to provide to class members is a central concern,” such relief must be viewed in relation
to “the cost and risk involved in pursuing a litigated outcome.” Montgomery, 2021 WL
1339305, at *4 (quoting FED. R. CIV. P. 23 advisory committee’s note).
i.
Whether the relief provided for the Class is adequate, taking into
account the costs, risks, and delay of trial and appeal
The settlement provides substantial monetary payments to the Class members,
totaling $5,610,000.00, enabling them to avoid the real risks of litigation. Given the
heavy litigation of this case for over eight years, there is a great risk that the parties
would continue litigating it for years to come. Notably, the parties have already litigated
one appeal to the Tenth Circuit. See (Doc. 175); (Doc. 177); (Doc. 182); (Doc. 184);
(Doc. 185); (Doc. 193). The parties have also litigated an interlocutory appeal regarding
class certification of the Colorado fuel gas claim, which, as counsel indicated at the
motion hearing, Defendant Energen would likely continue to pursue if this case were to
proceed. See (Doc. 256); (Doc. 264); (Doc. 266).
The Court agrees that serious questions of law and fact exist, which place the
ultimate outcome of this litigation in doubt, “including whether, and to what extent,
Energen has underpaid royalties to the Class members on gas used off the lease
premises as fuel.” (Doc. 283 at 6). Given the lengthy history of the case and the
complexity of the legal issues, “it is clear that the parties could reasonably conclude that
there are serious questions of law and fact, which could significantly impact this case if
litigated.” Lucas, 234 F.R.D. at 693-94. Particularly, it appears the class members would
face a legitimate risk to their recovery of royalties related to the Tatum Living Trust fuel
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gas claim. Additionally, more litigation would lead to greater expense and delayed
recovery for the class members.
Thus, the Court finds that the relief provided for the Class members is adequate,
taking into account the costs, risks, and delay of trial and appeal.
ii.
Whether the relief provided for the Class is adequate, taking into
account the effectiveness of any proposed method of
distributing relief to the class
Under this factor, the court “scrutinize[s]” the method of claims processing to
ensure that it facilitates filing legitimate claims” and “should be alert to whether the
claims process is unduly demanding.” Montgomery, 2021 WL 1339305, at *4-10
(quoting FED. R. CIV. P. 23 advisory committee’s note). The Notice process here gave
Class members the option to opt out and the opportunity to object to the settlement,
which no Class member chose to do. See (Doc. 283-2); (Doc. 294 at 3). Further, the
Class Administrator mailed notices to the 412 Class members, 87 of which were
returned undeliverable. (Doc. 294-1 at 1). Class Counel then subjected the returned
mailings to a “skip trace” procedure wherein Class Counsel was able to find new
addresses or new names and new addresses for over seventy of the members. Id. In
response to these notices, only one member opted out, and that member’s share
represented only “2/1000[th] of a percent interest” in the Class. (Doc. 294 at 6).
Given the process employed to notify Class members of the settlement, the lack
of any objections and only one opt-out, as well as Chief Judge Johnson’s preliminary
approval of the form of the Notice, (Doc. 291), the Court finds the relief provided for the
Class is adequate taking into account the effectiveness of any proposed method of
distributing relief to the class.
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iii.
Whether the relief provided for the Class is adequate taking into
account the terms of any proposed award of attorney’s fees,
including timing of payment
This factor recognizes that “[e]xamination of the attorney-fee provisions may also
be valuable in assessing the fairness of the proposed settlement. Montgomery, 2021
WL 1339305, at *4-10 (quoting FED. R. CIV. P. 23 advisory committee’s note). Class
Counsel has requested attorney fees in the amount of $2,244,000.00, constituting 40%
of the Settlement Fund, out-of-pocket litigation expenses in the amount of $102,661.43,
class representative services fees in the amount of $5,000.00 to be paid to the Tatum
Living Trust, and current and anticipated administrative costs in the estimated amount of
$150,000.00 to be paid to the Class Administrator. (Doc. 295-1 at 2); (Doc. 297).
In the Notice, Class Counsel informed the Class members that attorney fees
would be requested in the amount of 40% of the gross recovery, to be taken from the
Settlement Fund. (Doc. 283-2). As stated above, no Class members objected and only
one opted out. (Doc. 295 at 5). Moreover, in the Motion for Fees and the Supplemental
Motion for Fees, Class Counsel submitted billing records and provided the Court with a
“lodestar cross-check” in order for the Court to review the request for reasonableness.
Id. at 4; (Doc. 297). The lodestar method computed attorney fees in the amount of
$1,694,125.00, which constitutes 30.2% of the Settlement Fund. (Doc. 295 at 4).
Counsel adequately detailed the hours spent litigating this case, the respective
hourly rates for the attorneys involved, which all appear to be reasonable, and provided
the Court with the lodestar cross-check. Moreover, courts in this District routinely award
fees in the range of 30-40% of any amount recovered. See Montgomery, 2021 WL
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1339305, at *7, n.5-6 (approving a fee request of 31.47% and citing twelve cases from
districts in the Tenth Circuit awarding fees in the range of 30% to 40%).
Therefore, the Court finds the relief provided for the Class is adequate taking into
account the terms of any proposed award of attorney’s fees, including timing of
payment.
iv.
Whether the relief provided for the Class is adequate taking into
account any agreement required to be identified under Rule
23(e)(3)
Under this factor, the parties are required to “file a statement identifying any
agreement made in connection with the proposal.” FED. R. CIV. P. 23(e)(3). The parties
have duly filed with the Court the Settlement Agreement and the Plan Allocation, and
thus the Court finds that this has been satisfied.
Therefore, given the foregoing, the Court finds that the relief provided to the
Class is adequate. The Court further finds, in conclusion that the parties have satisfied
the four prongs set forth under Rule 26(e)(2)(A)-(F).
ii.
Fairness Under the Rutter Factors
In addition to the four prongs set forth under Rule 26(e)(2)(A)-(F), the Tenth
Circuit requires that, in making these findings, the Court consider the following four
“Rutter” factors: (1) whether the settlement was fairly and honestly negotiated; (2)
whether serious legal and factual questions place the litigation’s outcome in doubt; (3)
whether the immediate recovery is more valuable than the mere possibility of a more
favorable outcome after further litigation; and (4) whether the parties believe the
settlement is fair and reasonable. Rutter & Willbanks Corp. v. Shell Oil Co., 314 F.3d
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1180, 1188 (10th Cir. 2002); see also Weinman v. Fid. Capital Appreciation Fund (In re
Integra Realty Res., Inc.), 354 F.3d 1246, 1266 (10th Cir. 2004).
1.
Whether the settlement was fairly and honestly negotiated
With regard to the first factor, the parties state the Agreement was “the product of
good faith, arms-length negotiations between the parties,” and that the parties engaged
in extensive discovery, including exhaustive analysis by qualified experts of Energen’s
royalty accounting data. (Doc. 294 at 5). The Court agrees.
As stated above, the Agreement was the result of arms-length negotiations
between attorneys experienced not only in class action litigation generally but in this
eight-year-long litigation. The attorneys are thus intimately familiar with the legal and
factual issues in this matter. Further, once the Class was certified, the parties
“exchange[d] . . . information necessary to . . . settlement [negotiations],” employing
experts, for at least a ten-month period. See (Docs. 270-278). As such, the Court finds
the settlement was fairly and honestly negotiated.
2.
Whether serious legal and factual questions place the litigation’s
outcome in doubt
With regard to the second factor, the parties contend serious questions of law
and fact exist, which place the ultimate outcome of this litigation in doubt. (Doc. 283 at
6). Again, the Court agrees. Across several fronts, it appears the Class members would
face a legitimate risk to their recovery of royalties related to the Colorado fuel gas claim,
as explained above. Additionally, more litigation in a case almost nine years old would
lead to greater expense and delayed recovery for the class members. As counsel
indicated at the hearing, given the lengthy history of the case and the complexity of the
legal issues, “it is clear that the parties could reasonably conclude that there are serious
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questions of law and fact, which could significantly impact this case if litigated.” Lucas v.
Kmart Corp., 234 F.R.D. 688, 693-94 (D. Colo. 2006). Thus, the Court finds the second
factor favors approval of the settlement.
3.
Whether immediate recovery is more valuable than continued
litigation
The Agreement awards the Class members a settlement amount of
$5,610,000.00. (Doc. 283-1, Exhibit A at 2). Counsel indicated that, according to experts
for both parties, this amount constitutes 100% of the amount the Class members could
have otherwise recovered, “plus substantial interest.” (Doc. 295 at 8). Given this
guaranteed recovery, which is substantial, the Court finds this factor favors approval of
the settlement.
4.
Whether the parties believe the settlement is fair and reasonable
Finally, the parties agree that the settlement is fair and reasonable. Id. at 6-10.
As stated above, counsel for both parties are experienced, and they have been involved
in this eight-year litigation since its inception. Further, “[c]ounsel’s judgment as to the
fairness of the agreement is entitled to significant weight.” Kmart Corp., 234 F.R.D. at
695. Therefore, given counsel’s unanimous support of the settlement, this factor favors
approval.
C.
Conclusion
Given the foregoing findings, the Court will thus recommend that the settlement
be approved as fair, reasonable, and adequate, and that the Motion for Final Approval
be granted in its entirety.
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III.
Attorney Fees and Costs
Under Federal Rule of Civil Procedure 23(h), the court may “award reasonable
attorney’s fees and nontaxable costs that are authorized by law.” Moreover, in class
settlement cases, counsel may seek those fees and expenses from the settlement fund.
Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980). The percentage awarded to the
class members, thus, results “in a sharing of the fees among those benefitted by the
litigation.” Brown v. Phillips Petroleum, Co., 838 F.2d 451, 454 (10th Cir. 1988).
In the Tenth Circuit, there is a preference for determining the reasonableness of
a fee award in common fund cases utilizing “the percentage of fund” method. Gottlieb v.
Barry, 43 F.3d 474, 483 (10th Cir. 1994). The Tenth Circuit does not use the lodestar
method and it does not require a lodestar cross-check, but some courts in this district
nevertheless require a lodestar cross-check only to determine the reasonableness of
the request. See Candelaria v. Health Care Serv. Corp., 2:17-cv-404 KG/SMV (Doc.
83); see also Montgomery v. Continental Intermodal Group-Trucking LLC, 2:19-cv-940
GJF (Doc. 63).
Further, the Tenth Circuit mandates courts to consider the following twelve
“Johnson factors”:
1.
2.
3.
4.
the time and labor involved;
the novelty and difficulty of the questions;
the skill requisite to perform the legal service properly;
the preclusion of other employment by the attorney due to
acceptance of the case;
5. the customary fee;
6. any prearranged fee—this is helpful but not determinative;
7. time limitations imposed by the client or the circumstances;
8. the amount involved and the results obtained;
9. the experience, reputation, and ability of the attorneys;
10. the undesirability of the case;
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11. the nature and length of the professional relationship with the client;
and
12. awards in similar cases.
Ramah Navajo Chapter v. Babbitt, 50 F. Supp. 2d 1091, 1096 (D.N.M. 1999) (quoting
Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974)).
Here, in Plaintiffs’ Motion for Fees, Class Counsel requests attorney fees in the
amount of $2,244,000.00, constituting 40% of the settlement fund, out-of-pocket
litigation expenses in the amount of $102,661.43, class representative services fees in
the amount of $5,000.00 to be paid to the Tatum Living Trust, and current and
anticipated administrative costs in the estimated amount of $150,000.00 to be paid to
the Class Administrator. (Doc. 295-1 at 2); (Doc. 297). The Court will consider each of
the Johnson factors in determining the reasonableness of this request.
1.
Time and Labor Involved
As detailed in Exhibit 1 to the Motion for Fees, lead counsel for the Class spent
over 1,500 hours on this case. (Doc. 295-1 at 1-2). Other counsel involved, also as
detailed in Exhibit 1, spent over 1,000 hours on the case. Id. All told, Class Counsel
spent over 2,500 hours working on this eight-year case. Id.
2.
Novelty and Difficulty of the Questions
The Court considered the central issue in this case—whether the subject leases
intended for royalty to be paid on fuel gas, or whether the fuel gas was encompassed by
the language in the leases, allowing gas to be used free of royalty “on the lease
premises”—and the Court ruled in Defendant Energen’s favor. (Doc. 295 at 6-7).
However, the Tenth Circuit disagreed and granted Plaintiff’s appeal. (Doc. 193). This
illustrates the novelty and difficulty of the questions in this case. Additionally, as Class
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Counsel notes, class certification of oil and gas royalty cases is somewhat rare in New
Mexico. (Doc. 295 at 7).
3.
Skill Requisite to Perform the Legal Service Properly
Oil and gas litigation, especially in the area of royalty interests in oil and gas, is
highly specialized, as Class Counsel notes in the Motion for Fees. (Doc. 295 at 7).
Further, lead counsel for the Class has practiced in the area for thirty years, litigating
against some of the most skilled oil and gas litigators nationally and internationally. Id.
4.
Preclusion of Other Employment by the Attorney Due to
Acceptance of the Case
As Class Counsel detailed in the Motion for Fees, and as stated above, the
attorneys representing the Class spent over 2,500 hours on this case, across eight
years. These are 2,500 hours that counsel was unable to spend on other legal matters.
5.
Customary Fee
Class Counsel is requesting a fee of 40% of the Settlement Fund. (Doc. 295-1 at
2). Customarily, courts in this District award fees in the range of 30% to 40% of any
amount recovered, which places Class Counsel’s request within the customary fee
range. See Montgomery, 2021 WL 1339305, at 7, n.5-6.
Moreover, Class Counsel’s lodestar cross-check for attorney fees came to
30.3%, which means Class Counsel’s request of 40% amounts to only a multiplier of
0.33. (Doc. 295 at 7). This multiplier is far less than the multiplier of 1.3, which the Tenth
Circuit recently permitted in a similar case. See Wells v. Best Buy Co. (In re Samsung
Top-Load washing Mach. Mktg., Sales Practices & Prods. Liab. Litig.), 997 F.3d (10th
Cir. 2021). In fact, counsel who reviewed the fee request on behalf of Class Counsel,
and opined on its reasonableness, stated that his “experience and research indicates
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that a lodestar percentage multiplier in class cases of this nature in New Mexico go up
to a multiplier of 4.0.” (Doc. 297-1). In its finding under this factor, the Court will
incorporate by reference the Declaration in Support of Plaintiff’s Motion for Attorney
Fees and Litigation Costs, (Doc. 297-1).
6.
Any Prearranged Fee
The fee in this case was contingent upon the outcome. (Doc. 295 at 7). In other
words, as Class Counsel notes in the Motion for Fees, Class Counsel spent thousands
of hours over eight years working on this case, understanding they may not recover the
$102,661.43 they paid in out-of-pocket expenses. Id. Moreover, as Class Counsel
stated at the motion hearing, Class Counsel and the Tatum Living Trust agreed to a
40% fee at the outset of this litigation.
7.
Time Limitations Imposed by the Client or the Circumstances
This Court imposed various time limitations concerning discovery and motion
practice, and the Tenth Circuit imposed time limitations in the briefing of Plaintiffs’
appeal.
8.
Amount Involved and Results Obtained
As this Court explained in the PFRD recommending preliminary approval of the
proposed Settlement Agreement, Class Counsel secured a settlement of 100% of the
principal damages and nearly 100% of interest on the class-certified Colorado fuel gas
claim. See (Doc. 290 at 6); (Doc. 295 at 8).
9.
Experience, Reputation, and Ability of the Attorneys
As noted above, lead counsel for the Class has practiced in the area of oil and
gas law for thirty years, litigating against some of the most skilled oil and gas litigators
17
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nationally and internationally. (Doc. 295 at 8). Moreover, Class Counsel has appeared
before courts in this District dozens of times. Id. And Counsel has settled and obtained
monies for royalty owners in excess of $200,000,000. Id.
10.
Undesirability of the Case
The parties have litigated this case for over eight years, requiring thousands of
hours of work by counsel. Id. That, as Class Counsel explains in the Motion for Fees,
was the central undesirable aspect of this case. Id. Additionally, the case required Class
Counsel to seek class certification in a state—New Mexico—that has not recognized
“the marketable condition rule” as part of the implied covenant to market. See Anderson
Living Trust v. Energen Resources Corp., 886 F.3d 826, 839-40 (stating that “the New
Mexico Supreme Court has not included the marketable condition rule in the implied
duty to market, despite having the opportunity to do so . . .”).
11.
Nature and Length of the Professional Relationship with the Client
Class Counsel has represented the Tatum Living Trust for over eight years in this
case, and lead counsel for the Class “has represented Jack Anderson and various
trusts from the Bank of Oklahoma for decades in numerous royalty owner actions.”
(Doc. 295 at 8).
12.
Awards in Similar Cases
As stated above, the settlement award in this case falls within the range of
awards in similar cases. See Montgomery, 2021 WL 1339305, at *7, n.5-6.
Thus, The Court finds each of the twelve Johnson factors weighs in Class
Counsel’s favor, supporting a finding that Class Counsel’s fee request is reasonable.
The Court will therefore find that the attorney fees and other fees requested are
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reasonable, and it will recommend that Chief Judge Johnson grant Plaintiff’s Motion for
Fees.
IV.
Conclusion
The undersigned therefore RECOMMENDS the Court order as follows:
1.
The Settlement Agreement, (Doc. 283-1), is finally APPROVED as fair,
reasonable, and adequate;
2.
Barbara A. Ley, P.C., is APPOINTED as Class Administrator for all
purposes necessary to implement the Settlement Agreement;
3.
The parties shall take any and all necessary steps to implement the
Settlement Agreement according to its terms;
4.
The Class’ Released Claims (as defined in paragraph 7 of the Settlement
Agreement) are fully and completely settled, discharged, and released.
Distribution of the Settlement Amount shall be conducted pursuant to
paragraph 6 of the Settlement Agreement, and Class Members are
deemed conclusively to have released and settled the Class’ Released
Claims. All such members of the Plaintiff Class are barred and
permanently enjoined from commencing or prosecuting, either directly,
representatively, derivatively, or in any capacity, any of the Settled Claims,
against the Energen Released Parties (as that term is defined in
paragraph 7 of the Settlement Agreement);
5.
The following fees and expenses shall be paid to the Class
Representative, the Class Administrator, and Class Counsel from the
Settlement Amount defined in paragraph 2 of the Settlement Agreement:
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Case 1:13-cv-00909-WJ-CG Document 301 Filed 07/21/21 Page 20 of 21
a.
Class Representative the Tatum Trust shall be AWARDED a
service fee award of $5,000.00;
b.
Class Administrator Barbara A. Ley, P.C. shall be AWARDED
current and anticipated administrative costs in the amount of
$150,000.00;
c.
Class Counsel shall be AWARDED reasonable attorney fees in the
amount of 40% of the gross Settlement Fund ($2,244,000.00), and
litigation expenses in the amount of $102,661.43; and
6.
Class Counsel shall provide to the Court by no later than October 25,
2021, a Joint Status Report, including a final accounting of the actual
administrative costs to be awarded to Class Administrator Barbara A. Ley,
P.C., or an update on the status of such a final accounting.
Generally, a party may file written objections with the Clerk of the District Court
within 14 days after that party is served with a copy of a proposed findings and
recommended disposition. See 28 U.S.C. § 636(b)(1). However, at the July 19, 2021
motion hearing, the parties waived the objections period set forth in § 636(b)(1), so that
this case may be finalized expeditiously. See (Doc. 299).
For the foregoing reasons, the Court RECOMMENDS that the parties’ Joint
Motion and Brief in Support of Final Approval of Class Settlement, Notice and Plan of
Allocation, (Doc. 294), be GRANTED; Plaintiff’s Motion for Attorney Fees, Litigation
Costs, Class Representative Service Fees, and Anticipated Administrative Costs from
the Settlement Fund and Memorandum in Support Thereof, (Doc. 295), be GRANTED;
and Plaintiff’s Supplement to Motion for Attorney Fees and Litigation Costs—Hearing
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July 19, 2021 at 10:00 AM Via Zoom Before Chief Magistrate Judge Garza, (Doc. 297),
be GRANTED, and the settlement be finally APPROVED.
________________________________
THE HONORABLE CARMEN E. GARZA
CHIEF UNITED STATES MAGISTRATE JUDGE
21
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