Kay Co. v. Equitable Production Co.
749 F. Supp. 2d 455
S.D.W. Va2010Background
- This SDWV case involves The Kay Company et al. v. Equitable Production Co. regarding a class action settlement and attorney fees.
- Final settlement approved April 28, 2010, creating a common fund estimated at $28–$33 million for Participating Subclass Members.
- Class Counsel sought 25% of the settlement fund as attorneys' fees, plus $96,113.54 expenses and $25,000 incentive awards for six named representatives.
- Defendants agreed not to object to the fee application; the court considered a lodestar cross-check alongside the percentage-of-fund analysis.
- The court ultimately reduced the fee to 20% of the Settlement Fund, citing multiple factors including direct class notice and relative risk.
- Costs were assessed as 0.70% of the Settlement Fund, with $96,113.54 to Class Counsel and the remainder distributed among the six Class Representatives, and incentive awards reduced to $15,000 per representative.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What method should govern attorneys' fees? | Plaintiffs advocate for a percentage of the fund (25%). | Defendants did not object; the court should apply the preferred method (often percentage). | Percentage-of-fund method adopted with lodestar cross-check. |
| What is a reasonable percentage of the common fund? | A 25% fee is reasonable based on market practice and results achieved. | Not applicable; no objection to the request. | 20% of the Settlement Fund approved as reasonable. |
| Should a lodestar cross-check govern the award? | Cross-check supports the reasonableness of the requested percentage. | Not applicable; focus on fund percentage and efficiency. | Court used lodestar cross-check as objective corroboration; still adopts 20%. |
| How should costs and incentive awards be handled? | Costs and incentives align with settlement terms and should be fully funded. | Not applicable; terms already set forth in agreement. | Costs set at 0.70% of fund; $96,113.54 to Class Counsel; remainder to six representatives; incentive awards reduced to $15,000 each. |
Key Cases Cited
- Mohammad v. Nat'l City Mortgage, Inc., 2008 WL 5377783 (S.D.W.Va. 2008) (endorses percentage method with cross-checks for class actions)
- In re Cardinal Health, 528 F. Supp. 2d 752 (S.D. Ohio 2007) (recognizes factors and lodestar cross-check in percentage-based awards)
- In re Microstrategy, Inc. Sec. Litig., 172 F. Supp. 2d 776 (E.D. Va. 2001) (discusses lodestar cross-check and multiplier considerations)
- Teague v. Bakker, 213 F. Supp. 2d 571 (W.D.N.C. 2002) (supports percentage method preference in some contexts)
- In re Cendant Corp. Sec. Litig., 243 F.3d 722 (3d Cir. 2001) (discusses factors for determining attorney's fees in class actions)
- In re Merrill Lynch & Co. Sec., Derivative & ERISA Litig., 249 F.R.D. 372 (S.D.N.Y. 2008) (analyzes complexity and risk considerations in fee awards)
- In re Ahold, N.V. Sec. & ERISA Litig., 461 F. Supp. 2d 383 (D. Md. 2006) (uses percentage approach with case-specific factors)
- Goldberger v. Integrated Resources, Inc., 209 F.3d 43 (2d Cir. 2000) (lodestar cross-check guidance in fee determinations)
- Jones v. Dominion Resources Servs., Inc., 601 F. Supp. 2d 756 (S.D. W. Va. 2009) (factors guiding reasonableness of fees in this district)