Cline v. Sunoco, Inc. R&M

1

PERRY CLINE, on behalf of himself and all others similarly situated, Plaintiff, v. SUNOCO, INC. R&M, et al., Defendants.

Civil Action No. 6:17-cv-313-JAG

United States District Court, E.D. Oklahoma

March 23, 2023

OPINION

JOHN A. GIBNEY, JR., SENIOR UNITED STATES DISTRICT JUDGE

Oklahoma's Production Revenue Standards Act requires a first purchaser of crude oil- such as Sunoco, Inc. (R&M), and Sunoco Partners Marketing & Terminals, L.P. (collectively “Sunoco”)-to pay promptly for the oil. See OKLA. STAT. tit. 52, §§ 570.1-. 15. If the purchaser pays late, it must pay interest to the owner of the well that produced the oil. This case involved Sunoco's failure to pay that interest to Perry Cline and the class he represents (“Cline” or “the class”). In August 2020, the Court found for Cline and awarded the class compensatory and punitive damages. In November 2022, Sunoco deposited $161,132,229.03 into the Judgment Fund Account. Cline then moved for the approval of a case contribution award, reimbursement for litigation and related expenses, and attorneys' fees. The Court conducted a hearing on the motions on February 28, 2023, and took the matter under advisement. For the reasons stated below, the Court will grant the motions for the case contribution award and reimbursement for litigation and related expenses. The Court will grant in part the motion for attorneys' fees.

I. BACKGROUND

After finding for Cline, the Court entered a Judgment Order on August 17, 2020, awarding the class $80,691,486.00 in actual damages and $75,000,000.00 in punitive damages (the “Judgment Common Fund”). (ECF No. 308.) On October 30, 2020, the Court entered a plan of allocation order, which set forth how the damages would be distributed to the class. (ECF No. 339.)

In the years following the Court's judgment, Sunoco has filed six appeals with the Court of Appeals for the Tenth Circuit and one petition for a writ of mandamus. The Tenth Circuit dismissed five of these appeals and the petition for a writ of mandamus. It will hear oral arguments on the sole surviving appeal on March 21, 2023.^[1] Sunoco unsuccessfully petitioned the Supreme Court for a writ of certiorari, which it denied in October 2022.

On February 7, 2022, the Court entered an order commencing the collection of the judgment and referring the judgment proceedings to United States Magistrate Judge Kimberly West. (ECF No. 370.) On September 12, 2022, Judge West conducted an asset hearing. Shortly thereafter, Cline filed enforcement actions to collect the judgment. The parties then negotiated and stipulated to several agreements, including (1) that the defendants would not attempt to stop the distribution process; (2) that the defendants would reserve any rights pending appeal, including stopping the distribution process; (3) that the plaintiff would dismiss all pending garnishment actions and not file any new enforcement actions; (4) that the defendants would not oppose the plaintiffs schedule for attorneys' fees; and (5) that the defendants would withdraw their motion to enjoin garnishments and enforcement actions. On December 20, 2022, the Court adopted Judge West's Report and Recommendation, which recommended adopting the stipulated agreements. The Court also adopted the plaintiffs proposed schedule for attorneys' fees and scheduled the hearing for February 28, 2023. Before the hearing, the Court received approximately 60 letters from class members providing their positions on Cline's requests. The Court held a hearing on February 28, 2023, and took the matter under advisement.

II. DISCUSSION

A. Motion for Attorneys' Fees

1. Legal Standard

An Oklahoma statute governs the award of attorneys' fees in a class action lawsuit. OKLA. STAT. ANN. tit. 12, § 2023(G). “When state law governs whether to award attorney fees,. . . state law also governs how to calculate the amount.” Chieftan Royalty Co. v. Enervest Energy Inst. Fund XIII-A, L.P., 888 F.3d 455, 461 (10th Cir. 2017). The statute places the court in a fiduciary role to the class and directs courts, “in arriving at a fair and reasonable fee for class counsel,” to consider the following:

(1) time and labor required,

(2) the novelty and difficulty of the questions presented by the litigation,

(3) the skill required to perform the legal service properly,

(4) the preclusion of other employment by the attorney due to acceptance of the case,

(5) the customary fee,

(6) whether the fee is fixed or contingent,

(7) time limitations imposed by the client or the circumstances,

(8) the amount in controversy and the results obtained,

(9) the experience, reputation and ability of the attorney,

(10) whether or not the case is an undesirable case,

(11) the nature and length of the professional relationship with the client,

(12) awards in similar causes, and

(13) the risk of recovery in the litigation.

OKLA. STAT. ANN. tit. 12, §§ 2023(G)(4)(b), (e).

The Oklahoma Supreme Court recently analyzed the appropriate fee award in class action lawsuits. Courts may use either the lodestar or the percentage method to calculate attorneys' fees. Strack v. Continental Res., Inc., 2021 Okla. 21, ¶ 16, 507 P.3d 609, 616 (2021). “The goal in every attorney fee case is not to select a methodology but to arrive at a reasonable fee.” Id. ¶ 17, at 616. Courts should compare the results from each method to check for reasonableness. Id. While “there is a strong presumption that the lodestar method alone will reflect a reasonable attorney fee,” a multiplier may adjust the award. Id. ¶ 26, at 619. The multiplier must demonstrate “the mathematical relationship between the value of the services rendered and the fee award.” Id. Oklahoma courts “rarely permit a multiplier above 1.5.” Id. “Although a 40% contingency fee payment in individual litigation may be normal, such an award in class actions can be excessive.” Id. ¶ 22, at 618. “[T]he attorney's fees awarded in complex class actions are normally 20% to 30% of the recovered fund.” Id. In Strack, the Oklahoma Supreme Court reversed a lower court, which had awarded attorneys' fees of 40% of the judgment with a 3.17 lodestar multiplier in a class action suit involving oil and gas.

2. The Plaintiffs Request

Cline requests attorneys' fees of 40% of the Judgment Common Fund, or at least $64.4 million. (ECF No. 613.) The represents $4,500,000 in stipulated fees paid by the defendants, with the remainder coming from the Judgment Common Fund. (Id.) Class Counsel calculates the lodestar amount as $9,379,078,000 (for past and anticipated hours). (ECF No. 614, at 12.) They report working 12,702 hours at an average hourly rate of $738.39. (Id.) The fee requested equates to a 6.6 lodestar multiplier, which would increase the attorneys' hourly rate to $5,070. Class Counsel has submitted extensive documentation in support of their request, including detailed time-keeping records and declarations.

3. Analysis

a. Objections

The Court received approximately 60 letters in response to the notice of the request for attorneys' fees. Some class members attended the hearing, and no class members raised an objection at the hearing. Many of the written comments on the motion for attorneys' fees reflected a misunderstanding that class members would have to pay the attorneys' fees out of their own pocket. At the hearing, the Court explained that any attorneys' fee award would come from the Judgment Common Fund and not from the class members individually.

b.. Statutory Factors

To “arriv[e] at a fair and reasonable fee for class counsel,” the Court must consider the thirteen statutory factors. OKLA. STAT. ANN. tit. 12, § 2023(G)(4)(e). “Merely referring to the enhancement factors to be considered under § 2023(G)(4)(e) will not sustain a fee that is not established by evidence.” Strack, 2021 Okla. ¶ 30, 507 P.3d at 619. Accordingly, the Court will review those factors for which the evidence supports an enhancement.

First, the Court considers the “time and labor required” for Class Counsel to achieve their results. Id. § 2023(G)(4)(e)(1). Class Counsel reports working 12,702 hours to date and anticipates working an additional 675 hours in the future. (ECF No. 614, at 12.) Class Counsel has provided extensive declarations and time records documenting their time and effort. These hours span almost six years of litigation in a case with a very active motions practice and multiple appeals to the Tenth Circuit. The Court finds that this litigation required significant time and labor to achieve these results. Accordingly, this factor supports an enhancement of the lodestar amount.

Second, the Court considers “the novelty and difficulty of the questions presented by the litigation.” OKLA. STAT. ANN. tit. 12, § 2023(G)(4)(e)(2). Questions posed by this litigation included:

Class Members' entitlement to statutory interest, the propriety of Defendants' practice of awaiting a request prior to payment of statutory interest, the appropriate interest rate, the burden of proof regarding the appropriate rate, the availability of punitive damages, the application of interest to unclaimed property payments, and whether such issues are appropriate for determination on a class-wide basis.

(ECF No. 613-1 ¶ 86.) The parties extensively litigated these questions. (ECF No. 614, at 20.) The Court finds that this litigation presented novel and highly difficult questions, and this factor weighs in favor of an enhancement.

Third the Court considers “the skill required to perform the legal service properly.” OKLA. STAT. ANN. tit. 12, § 2023(G)(4)(e)(3). Given the novel and difficult legal questions in this case, Cline required counsel with substantial experience in oil-and-gas litigation. Class Counsel includes a veritable who's who of experts...