Chieftain Royalty Company v. SM Energy Company, et al.Chieftain Royalty Company v. SM Energy Company, et al.
CHIEFTAIN ROYALTY COMPANY, on its behalf and as representative of a class of similarly situated royalty owners,
Plaintiff - Appellee,
v.
SM ENERGY COMPANY, including predecessors, successors and affiliates; ENERVEST ENERGY INSTITUTIONAL FUND XIII-A, L.P.; ENERVEST ENERGY INSTITUTIONAL FUND XIII-WIB, L.P.; ENERVEST ENERGY INSTITUTIONAL FUND XIII-WIC, L.P.; ENERVEST OPERATING, LLC; FOURPOINT ENERGY, LLC,
Defendants - Appellees.
------------------------------
C. BENJAMIN NUTLEY, as personal representative of the Estate of Charles David Nutley,
Objector - Appellant,
and
DANNY GEORGE,
Objector - Appellant.
Bradley E. Beckworth of Nix Patterson, LLP, Austin, Texas (Jeffrey J. Angelovich, Susan Whatley, Lisa P. Baldwin, Trey Duck, Andrew G. Pate, and Nathan B. Hall of Nix Patterson, LLP, Austin, Texas, and Robert N. Barnes, Patranell Britten Lewis, and Emily Nash Kitch of Barnes & Lewis, LLP, Oklahoma City, Oklahoma, with him on the briefs), for Plaintiff - Appellee.
Eric Alan Isaacson of the Law Office of Eric Alan Isaacson, La Jolla, California (C. Benjamin Nutley of the Law Office of C. Benjamin Nutley, Kamuela, Hawaii and John W. Davis of the Law Office of John W. Davis, Tampa, Florida, with him on the briefs), for Objector-Appellant Nutley.
John J. Pentz of the Law Office of John Pentz, Wayland, Massachusetts, for Objector-Appellant George.
Before TYMKOVICH, MORITZ, and ROSSMAN, Circuit Judges.
ROSSMAN, Circuit Judge.
This case originated as a class action dispute about the underpayment of oil and gas royalties due on wells in Oklahoma. Plaintiff-Appellee Chieftain Royalty Company (Chieftain) sued non-party SM Energy Company, the operator of the wells, under various tort theories, including fraud, breach of contract, and breach of fiduciary duty. In 2015, those underlying claims settled for approximately $52 million.
Following settlement, counsel for Chieftain (Class Counsel) moved for attorneys’ fees, and Chieftain, as named plaintiff and class representative, sought an incentive award for its CEO, Robert Abernathy (also called class representative). Two class members objected—Appellants C. Benjamin Nutley1 and Danny George (collectively, Objectors)—and appealed the awards. We affirmed the settlement but reversed the attorneys’ fees and incentive awards, remanding to the district court for further proceedings.
The re-awarded fees and incentive award are now before us in this appeal. Exercising jurisdiction under
I
A
In 2015, the parties in the underlying class action settled for a cash payment of $52 million, “to be distributed pro rata to the class members after payment of expenses and fees.”2 Chieftain Royalty Co. v. EnerVest Energy Inst. Fund XIII-A, L.P. (Chieftain I), 888 F.3d 455, 458 (10th Cir. 2017) (amended Apr. 11, 2018), cert. denied, 139 S. Ct. 482 (2018). The parties moved for preliminary approval of the class action settlement, which the court granted, and the court set a final fairness hearing for November 30, 2015.
The motion for preliminary approval contained a proposed notice to the class, titled “Notice of Proposed Settlement, Motion for Attorneys’ Fees, and Fairness Hearing” (the 2015 Class Notice). The 2015 Class Notice gave the class information about the proposed settlement and notice that Class Counsel “would seek an award of attorneys’ fees in an amount not to exceed forty percent (40%) of the Settlement Cash Amount and reimbursement of Litigation Expenses in an amount not to exceed $900,000.”3 Joint App. at 129. The 2015 Class Notice further stated the class representative, Mr. Abernathy, would seek a “Case Contribution Award,” also called an “incentive award,” of 1% of the settlement amount. The 2015 Class Notice warned:
Unless otherwise ordered by the court, any class member who does not object in the manner described herein will be deemed tо have waived any objection and shall be forever foreclosed from making any objection to the proposed settlement and the application for attorneys’ fees and expenses and case contribution awards and will not be allowed to present any objections at the fairness hearing.
Supp. App. vol. 2 at 129–30. The fairness hearing was set for November 30, 2015, with objections to the proposed settlement due a few weeks in advance.
The 2015 Class Notice identified a website for the litigation, and the website contained “a copy of the Settlement Agreement, as well as other relevant documents.” Supp. App. vol. 2 at 131. The 2015 Class Notice was mailed to the class on October 9, 2015. A few days later, local
The parties moved for final approval of the settlement on October 26, 2015. Class Counsel also moved for attorneys’ fees, costs, and an incentive award (the 2015 motion). Two class members lodged timely objections: Mr. Nutley and Mr. George.4
After the final fairness hearing in late November 2015, the district court approved the $52 million cash settlement. Chieftain I, 888 F.3d at 458. The district court awarded Class Counsel 33 1/3% of the fund ($17,333,333.33) as attorneys’ fees and awarded Mr. Abernathy 1/2% ($260,000) as an incentive award. Id. at 458, 464. The district court determined notice “was given to all Settlement Class Members who could be identified with reasonable effort.” Joint App. at 128. The “form and method” of the 2015 Class Notice, the district court explained, was “the best notice practicable under the circumstances, constitute[d] due and sufficient notice to all persons and entities entitled to receive such notice, and fully satisfie[d] the requirements of Rule 23 of the Federal Rules of Civil Procedure and due process.” Id. at 128–29.
Objectors timely appealed. We affirmed the settlement but reversed the attorneys’ fees and incentive awards.5 Chieftain I, 888 F.3d at 470. We held Oklahoma state law, nоt federal law, governed whether attorneys’ fees or an incentive award were warranted and how to calculate them. Id. at 462 (attorneys’ fees), 468–69 (incentive award). Citing Burk v. Oklahoma City, 598 P.2d 659 (Okla. 1979), we reasoned Oklahoma law does not permit the percentage-of-the-common-fund method for calculating attorneys’ fees—the method the district court used when it awarded attorneys’ fees of 33 1/3% of the settlement fund. Chieftain I, 888 F.3d at 459–64. Instead, we found the lodestar method would produce a reasonable attorneys’ fee award under Oklahoma law. Id. at 459, 469; see also Strack v. Continental Resources, Inc., 507 P.3d 609 (Okla. 2021) (“The lodestar method for calculating fees is to (1) determine the compensation based on the hours spent multiplied by an hourly rate, and (2) enhance or decrease the fee through consideration of the factors outlined in Burk.“). Finally, we made an Erie guess6 that Oklahoma would disapprove of the district court‘s percentage-of-the-fund method for determining the incentive award. Chieftain I, 888 F.3d at 468. We concluded Mr. Abernathy‘s incentive award should have been calculated using “a reasonable rate for reasonable time expended on services rendered that were helpful to the litigation.” Id. at 469.
B
On remand, Class Counsel filed two motions in the district court: (1) a motion for attorneys’ fees in the amount of
In support of the 2018 motions, Class Counsel “compiled an extensive evidentiary record” not previously presented to the district court. Joint App. at 673. The new evidence included time records and declarations supporting attorney hours and rates along with records documеnting Mr. Abernathy‘s time and the nature of his contributions. See id. at 673–74. Class Counsel did not notify the class of the 2018 motions.
Objectors Nutley and George again objected. Objectors contended the request for attorneys’ fees was unreasonable because “the hours claimed by the attorneys and their hourly rates [were] excessive” and “their legal work [was] not properly documented.” Joint App. at 674. They also opposed an incentive award “in excess of a very modest amount,” with Objector Nutley suggesting a $5,000 figure and Objector George suggesting a $10,000 award. Id. at 531–32, 611–12. Objector George also claimed, under
While the 2018 motions were pending, the Oklahoma Supreme Court decided Strack v. Continental Resources, Inc., 507 P.3d 609 (Okla. 2021), which addressed certain questions unanswered at the time of Chieftain I. Strack held “both the lodestar and percentage[-of-the-fund] method[s] [are] potentially permissible” methods of determining an attorneys’ fee award. Id. at 616. Examining the language of Oklahoma‘s class action attorneys’ fees statute, the Oklahoma Supreme Court held “the statute suggests that either or both the lodestar or percentage methods of fee calculation are appropriate, depending on which methodology best arrives at a reasonable award given the circumstances of the particular case.”8 Id. (emphasis added).
As for incentive awards, Strack held “the weight of authority warns against arbitrarily awarding incentive awards, such as with a percentage based method.” Id. at 620. “Oklahoma courts should . . . use a method to calculate an incentive award similar to the lodestar method.” Id. Specifically, “[c]ourts should grant incentive
On remand, the district court, guided by Strack, granted the 2018 motions in separate orders. The district court rejected Objector George‘s contention that Rule 23(h)(1) required class-wide notice of the 2018 motion for attorneys’ fees. The court next considered the thirteen factors in Oklаhoma‘s class action attorneys’ fees statute9 and again concluded an award of 33 1/3% of the common fund, or $17,333,333.33, in attorneys’ fees “is entirely reasonable under the facts of this case.” Joint App. at 680. The district court then conducted a lodestar calculation to cross-check the reasonableness of the amount generated by the percentage-of-the-fund method. Having found the lodestar cross-check confirmed the reasonableness of the percentage-based fee awarded to class counsel, the district court awarded class counsel $17,333,333.33 in attorneys’ fees, or 33 1/3% of the common fund.
As to the 2018 motion for an incentive award, the court found “[Mr. Abernathy‘s] entitlement to an [incentive] award . . . cannot reasonably be questioned.” App. at 48. No party argued otherwise. The Objectors agreed some incentive award was appropriate; the only open question was how much.
The district court first rejected Objectors’ arguments challenging the time Mr. Abernathy spent on the case. Based on its own experience with the litigation—over seven years by that point—the district court found this case was complex, involved significant discovery, and Mr. Abernathy was a critical player whose “expertise and advocacy for royalty owners both conceived and drove this litigation.” Id. at 50. “A review of Mr. Abernathy‘s time records,” the district court reasoned, “confirms that his activities throughout the litigation were appropriate to Plaintiff‘s role as the class representative in this type of case.” Id. The court found Mr. Abernathy spent 774.8 compensable hours performing services “reasonably expended on behalf of the class and helpful to the litigation.” Id. at 51–52.
The district court next considered Mr. Abernathy‘s hourly rate. Chieftain maintained Mr. Abernathy should be compensated at $335.58 per hour. Chieftain arrived at this figure by dividing the requested incentive award amount ($260,000) by the total hours Mr. Abernathy exрended on the case (774.8). The court described Chieftain‘s approach as “odd” and “designed solely to preserve the Court‘s initial award.” Id. at 53. Still, Mr. Abernathy had “considerable knowledge of the oil and gas industry and the law regarding royalty payments,” the court reasoned, so his compensation as class representative should be “at an hourly rate that recognizes this unique
To determine a reasonable hourly rate for Mr. Abernathy, the district court looked to five other Oklahoma class action settlements where Mr. Abernathy had served as class representative. In those cases, he had received incentive payments at hourly rates ranging from $142 to $400. The district court then calculated $300 as the average hourly rate for Mr. Abernathy‘s time across those five cases and found that rate “reasonable” here. Id. at 54–55. The district court held Mr. Abernathy was entitled to an incentive award of $232,440—the result of multiplying Mr. Abernathy‘s 774.8 total hours by the $300 hourly rate.
Objectors timely appealed.
II
In Case Nos. 22-6124 and 22-6125, Objectors appeal the district court‘s award of attorneys’ fees. In Case No. 22-6069, Objector George appeals the district court‘s grant of an incentive award. We consider each appeal in turn.
A
Objector George contends the class should have been notified of the 2018 attorneys’ fees motion, and the district court erroneously concluded otherwise.10 We agree.
As a general matter, challenges to the sufficiency of a class notice under Rule 23(h) are reviewed for an abuse of discretion. See In re Integra Realty Res., Inc., 262 F.3d 1089, 1111 (10th Cir. 2001) (reviewing form and content of class notice for an abuse of discretion); In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988, 993 (9th Cir. 2010) (reviewing Rule 23(h) challenge to class notice for abuse of discretion). “A district court abuses its discretion when it bases its decision on . . . an erroneous conclusion of law[.]” Vallario v. Vandehey, 554 F.3d 1259, 1264 (10th Cir. 2009). And “[w]e review de novo the district court‘s interpretation of the Federal Rules of Civil Procedure.” Esposito v. United States, 368 F.3d 1271, 1275 (10th Cir. 2004).
As we explain,
1
As an initial matter, Chieftain asserts Objector George has waived any argument regarding class-wide notice. According to Chieftain, the 2015 Class Notice included language warning class members that failure to object to the proposed settlement and application for attorneys’ fees by November 9, 2015 would result in waiver of any future objections. Chieftain maintains Objector George did not challenge the propriety of the 2015 Class Notice in the district court or in Chieftain I and
Chieftain‘s waiver argument proceeds from a flawed premise. Contrary to Chieftain‘s understanding, Objector George does not challenge the sufficiency of the 2015 Class Notice. Rather, he contends Rule 23(h)(1) required the class to receive notice of the 2018 motion for attorneys’ fees. This same argument was made in the district court. Objector George argued Rule 23(h)(1) “requires that notice of [the 2018 motion for attorneys’ fees], and all supporting memoranda and declarations, be directed to all class members in a reasonable manner.” Joint App. at 510. The district court found unpersuasive Objector George‘s reliance on Allen v. Bedolla, 787 F.3d 1218, 1225–26 (9th Cir. 2015), where the class notice required class members to file objections before the attorneys’ fees motion was filed. Under those circumstances, the Ninth Circuit determined the class was denied “an adequate opportunity to review and prepare objections to class counsel‘s completed fee motion” in violation of Rule 23(h). Id. at 1225 (quoting In re Mercury, 618 F.3d at 994–95). Here, unlike in Allen, the district court reasoned, “class counsel‘s fee motion was filed and made available to class members before the objection deadline [in November 2015], and the reasonableness of the [2015 Class Notice] has been affirmed.” Joint App. at 676.
Accordingly, Objector George‘s Rule 23(h)(1) argument was both “pressed” and “passed upon” in the district court, so it is preserved. See Tesone v. Empire Mktg. Strategies, 942 F.3d 979, 992 (10th Cir. 2019).
2
Objector George contends Rule 23(h) obligated the district court to direct class-wide notice of the 2018 attorneys’ fees motion. He argues the 2018 attorneys’ fees motion constituted a “new” fee petition made under Oklahoma law, involving a lodestar calculation, a request covering $3 million-worth of appellate services, and voluminous supporting documents not previously provided to the class. See George Opening Br. at 11. In Objector George‘s view, this new fee motion “trigger[ed] a new Rule 23(h) notice requirement.” Id. at 14. We agree.
Rule 23(h)(1) provides “[a] claim for an [attorneys’ fees] award must be made by motion . . . . Notice of the motion must be served on all parties and, for motions by class counsel, directed to class members in a reasonable manner.”
This circuit has not addressed whether Rule 23(h) requires that a class receive notice of a “renewed” motion for attorneys’ fees after having received notice of an initial motion for attorneys’ fees. However, under the plain text of Rule 23(h)(1), class members were entitled to notice of the motion filed in 2018. “Because members of the class have an interеst in the arrangements for payment of class counsel whether that payment comes from the class fund or is made directly by another party,” the Advisory Committee notes explain, “notice is required in all instances.”
Chieftain resists this conclusion, however. The 2015 Class Notice satisfied Rule 23(h), Chieftain says, and therefore, no new class-wide notice was required in 2018.13 See Resp. Br. at 46. We are not persuaded.
The 2018 motion—filed nearly three years after the initial motion in 2015—was an altogether different motion for attorneys’ fees. The 2018 motion sought a different amount (33 1/3% of the settlement fund) than did the 2015 motion (40% of the settlement fund), expressed the award sought as a dollar amount and not a percentage, and for the first time, supported the attorneys’ fees request with evidence. As the district court explained, “class counsel did not present evidence [with its initial motion for attorneys’ fees] that permitted the use of a lodestar method.” Joint App. at 673. By contrast, in support of their 2018 motion for attorneys’ fees on remand, “class counsel . . . compiled an extensive evidentiary record . . . that includes time records for each attorney, paralegal, and legal assistant whose work is included in a lodestar computation, and declarations from the individual attorneys.” Id. at 673–74. Under these circumstances, we cannot say the 2015 Class Notice provided the class with notice of the 2018 motion for attorneys’ fees, even if
A contrary conclusion would run afoul of Rule 23(h)(2), which provides class members an opportunity to “object to the motion” for attorneys’ fees.
“The most important issue in terms of the timing of fee petitions in class suits is that sufficient time must be given to class members to object to the petition, as Rule 23(h)(2) guarantees class members that opportunity.” Newberg & Rubenstein, § 15:13; see also In re Volkswagen, 895 F.3d at 615 (explaining “[w]hat matters [for
Here, the 2015 Class Notice set an objection deadline a few weeks before the final fairness hearing on November 30, 2015. The 2015 Class Notice provided “written objection[s] must be filed in and received by the Court . . . no later than November 9, 2015” and explained objecting entailed does so before the objections period expires. Say that amended motion is, in all material respects, identical to the original fee motion. In such a case, there could be an argument the original notice already informed the class of “the motion” pending before the court and thus
“telling the Court that you do not like something about the Settlement.” Supp. App. vol. 3 at 19. The objections contemplated by the 2015 Class Notice were thus in reference to what was then pending before the district court: the motion for final approval of the proposed class action settlement and the 2015 motion for attorneys’ fees and an incentive award. Nothing in the 2015 Class Notice, however, provided class members with any indication that the litigation may develop such that nearly three years later, Class Counsel might file a different motion for attorneys’ fees. Without notice of the 2018 motion for attorneys’ fees, thе class lacked an opportunity to object to the new attorneys’ fee request or scrutinize the supporting evidence previously unavailable. This result cannot be reconciled with the requirements of
We will not speculate to find the error harmless.16 On the record before us, we decline to make assumptions about how thousands of class members would have viewed the 2018 attorneys’ fees motion had they been properly notified under
In Morrison, this court considered the harmlessness of allegedly erroneous jury instructions. Id. at 1236. In our analysis, we determined the appellant had failed to provide a sufficient record to permit meaningful appellate review of the alleged error and allow us to determine whether the appellant was prejudiced. Id. at 1238. We also faulted the appellant for failing to make any “basic ‘contention’ essential to any conclusion that the error prejudiced its substantial rights.” Id. at 1239. Under these circumstances, we reasoned, the court would have had to “speculate baselessly” to find prejudice. Id.
But here, only a finding of harmlessness requires baseless speculation. The record is fully developed and shows the 2018 attorneys’ fees motion provided—for the first time in the litigation of this case—a significant volume of evidence pertaining to class counsel‘s work. Had
First, the dissent raises and resolves arguments on harmlessness that Chieftain never made. And in doing so, the dissent fashions and applies its own legal test, because Chieftain has provided no framework for assessing its conclusory assertion that the
Second, the dissent is wrong on the merits of the harmlessness inquiry. According to the dissent, Objector George “adequately (if not identically) represented [class-wide] interests,” and “comprehensively, if not exhaustively, addressed the relevant concerns about the 2018 motion.” Dissent at 8, 10 n.7. This is pure conjecture. We see no basis to conclude Objector George‘s views on the attorneys’ fees motion can stand in for those of the entire class. Unlike thе dissent, we refuse to speculate that Objector George‘s objections “reflect the collective concerns of the class” or that “no other relevant objections could have reasonably been raised [by the class] in this context even if more notice had been given.” Dissent at 1, 18 n.12. It is our role to review the appellate record, not to guess what it might have shown. The dissent also faults Objector George for failing to present an argument to the district court that “issuing another round of notice would have elicited further objections . . . . [or that] any such objections could have materially impacted the fees the district court ultimately awarded.” Dissent at 12. But the dissent cites no authority establishing such an obligation in this context, nor are we aware of any. To the extent the dissent suggests Objector George has not sufficiently shown the district court ruling caused harm, we disagree. On the record before us, the
The district court abused its discretion by not requiring notice of the 2018 motion for attorneys’ fees. On remand, the district court should direct notice of the 2018 attorneys’ fees motion to the class in a reasonable manner that provides a meaningful opportunity to object to the motion and its supporting documentation.18
Next, in Case No. 22-6069, we consider Objector George‘s19 challenge to the incentive award. Objector George does not dispute
1
Before we turn to the merits of Objector George‘s appeal, we first address a potential jurisdictional issue. Citizens Concerned for Separation of Church & State v. City & Cnty. of Denver, 628 F.2d 1289, 1301 (10th Cir. 1980) (“A federal court must in every case, and at every stage of the proceeding, satisfy itself as to its own jurisdiction . . . .“). Our appellate jurisdiction extends to “appeals from all final decisions of the district courts.”
The issue before us is whether the district court‘s order granting the 2018 incentive award motion was final and appealable when Objector George noticed his appeal of that order. To answer this question, we first must provide some procedural background. We ultimately conclude we have jurisdiction to hear the incentive award appeal.
Following remand in Chieftain I, the district court issued two separate orders: on March 31, 2022, the court entered an order on class representative‘s incentive award (the March 31 order); and on June 22, 2022, it entered an award on Class Counsel‘s attorneys’ fees (the June 22 order).22 On April 29, 2022, Objector George noticed an appeal of the March 31 order granting the incentive award. At that time, the motion for attorneys’ fees was still
On appeal, Objector George contends we have jurisdiction to review the March 31 order. He acknowledges “[a]t the time of the appeal, the district court still had pending before it a . . . motion for attorney‘s fees following this Court‘s [Chieftain I] remand.” Opening Br. at 5. But even if his notice of appeal was premature whеn filed, he explains, it ripened when the district court resolved the motion for attorneys’ fees on June 22 and thereby “conclud[ed] all matters in the case.” Id.25 We agree.
“Mandates from single appeals are not separable.” Zinna v. Congrove, 755 F.3d 1177, 1182 (10th Cir. 2014). Our mandate in Chieftain I involved remand proceedings for both the incentive award and the attorneys’ fees award. See Chieftain I, 888 F.3d at 458 (holding “[t]he district court failed to compute attorney fees under the . . . method . . . required by Oklahoma law” and concluding “the incentive award is unsupported by the record“). Accordingly, the district court‘s rulings on remand were not appealable until the district court “fully and finally adjudicated . . . our singular mandate.” Zinna, 755 F.3d at 1182. That did not happen until June 22, when the district court resolved both the attorneys’ fees and incentive awards. Under these circumstances, Objector George‘s notice of appeal from the district court‘s March 31 order was premature when filed.
“[A] premature notice of appeal may ripen upon the conclusion of the district court proceedings if we have not yet dismissed the premature appeal[.]” In re Syngenta AG MIR 162 Corn Litigation, 61 F.4th at 1174 (internal quotation marks and alteration omitted). Here, Objector George‘s premature notice of appeal ripened when the district court‘s June 22 order entered, thus satisfying our singular mandate in Chieftain I. See Zinna, 755 F.3d at 1182 (explaining the district court‘s disposition became “final” once it satisfied the entirety of this court‘s mandate for remand). Having determined we have jurisdiction over the incentive award appeal, we now consider the merits.
2
“We review a district court‘s grant of an incentive award for abuse of
“Courts regularly grant incentive awards to compensate named class representatives for the work they performed—their time and effort invested in the case.” Strack, 507 P.3d at 620 (citing Chieftain I, 888 F.3d at 468). These awards are permissible under Oklahoma law “as payment for reasonable services rendered by class representatives on behalf of the class that were helpful to the litigation.” Id. However, “the request for an incentive award must be supported by sufficient evidence in the record,” and the use of a percentage-based method to calculate an incentive award is “disfavored, if not altogether forbidden.” Id. (quoting Newberg & Rubenstein, § 17:16).
In Strack, the Oklahoma Supreme Court instructed “Oklahoma courts should . . . use a method to calculate an incentive award similar to the lodestar method.” Id. This means an award should be “based on the actual time expended on services rendered and other factors similar to those outlined in Oklahoma‘s class action attorney fee statute pertinent to an incentive award.” Id. (citing
Here, the district court found Mr. Abernathy should receive an incentive award of $232,400. To arrive at this amount, the district court multiplied the number of hours Mr. Abernathy spent working on the case by what the court determined was a reasonable hourly rate for Mr. Abernathy‘s time. To arrive at the number of hours worked, the district court included time Mr. Abernathy spent on the appeal in Chieftain I, finding this time was “reasonably expended on behalf of the class and helpful to the litigation.” App. at 51–52. In selecting a reasonable hourly rate, the district court looked to the incentive awards Mr. Abernathy received in five other class action settlements in Oklahoma, noted the hourly rate in each, and then averaged those hourly rates to $300 for Mr. Abernathy‘s services as class representative. Id. at 54–55 (collecting cases).26
a
Mr. Abernathy has expended 774.8 hours on this litigation.27 His work on Chieftain I constitutes approximately 160.5 hours of this time. Mr. Abernathy‘s time on Chieftain I should not have factored into the incentive award, Objector George insists, because those 160.5 hours “related solely to protecting his own incentive bounty and Class Counsel‘s outsized fee.” Opening Br. at 9, 15–16. A lead plaintiff becomes “adverse to the class he represents at the stage where he requests an incentive award,” Objector George explains. Id. at 13. And therefore, “a lead plaintiff may not be compensated for any time devoted to defense of an appeal of his incentive award, let alone an unsuccessful one.”28 Id.
Chieftain recognizes that, under Oklahoma law, Mr. Abernathy may be compensated only for time on Chieftain I that was “helpful to the litigation.” See 22-6069 Resp. Br. at 16 (quoting Strack, 507 P.3d at 620). And here, Chieftain asserts, Mr. Abernathy‘s time was helpful. Chieftain I was not just about litigating fee awards, as Objector George claims; it involved defending against a challenge to the validity of the settlement. Id. at 10. Mr. Abernathy‘s efforts on appeal were helpful to that aspect of the litigation, Chieftain maintains, and thus properly included in the lodestar
“[I]ncentive awards are justified as payment for reasonable services rendered by class representatives on behalf of the class that were helpful to the litigation.” Strack, 507 P.3d at 620. A review of the litigation history confirms Chieftain I resolved more than the attorneys’ fees and incentive awards—the decision in that appeal affirmed the finality and validity of the class settlement itself.
As originally published, Chieftain I‘s disposition stated only that “[w]e REVERSE the attorney-fee and incentive awards and REMAND for further proceedings consistent with this opinion.” Supp. App. vol. 1 at 201. Soon after, Chieftain filed a petition for panel rehearing and rehearing en banc. Chieftain observed that both objectors had appealed the district court‘s order approving the settlement, yet the panel‘s opinion failed to state whether the underlying class settlement was final and approved. Chieftain argued the panel‘s opinion “should be amended . . . to reflect that the district court‘s judgment was affirmed to a significant extent, and . . . revised to clarify that appellants’ challenge to the settlement was rejected.” Id. at 172.
We denied rehearing and rehearing en banc. But we amended the original opinion sua sponte in Chieftain I to clarify: “[w]e AFFIRM the district court‘s Order and Judgment Granting Final Approval of Class Action Settlement.” See Chieftain I, 888 F.3d at 470.29
Our amended opinion thus demonstrates Chieftain I involved a direct attack on, and successful defense of, the settlement itself, which ultimately secured a significant benefit for the class—$52 million. Chieftain I explicitly upheld that settlement. Under these circumstances, we do not doubt Chieftain‘s appellate efforts were “helpful to the litigation” and expended “on behalf of the class.” Strack, 507 P.3d at 620.
The question remains, however, whether Mr. Abernathy contributed to these efforts in a way that was “helpful to the litigation.” Id. The district court found Mr. Abernathy‘s “continued efforts to effectuate the settlement agreement [on appeal] plainly benefit[ted] the class as a whole” and determined “the services performed by Mr. Abernathy were rendered on behalf of the class and helpful.” App. at 51–52. On appeal, Objector George contends Mr. Abernathy‘s time largely duplicated that of Class Counsel. And therefore, Objector George insists the hours Mr. Abernathy spent on Chieftain I are not compensable. Having reviewed the record, we cannot say the district court clearly erred. See Flying J Inc. v. Comdata Network, Inc., 405 F.3d 821, 829 (10th Cir. 2005) (“A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.“).
On remand, Chieftain “supplied [the district court with] evidence of [Mr. Abernathy‘s] services through [his] declaration and time records and the declaration of Plaintiff‘s counsel describing the assistance [he] provided.” App. at 49. Much of this evidence demonstrates Mr. Abernathy‘s value-add was during the district court litigation—not during the appellate proceedings—when settlement talks and negotiations werе still ongoing.30
Still, Class
b
But that is not the end of the analysis. We must still consider whether, as Objector George contends, the district court abused its discretion by arriving at a $300 hourly rate for Mr. Abernathy‘s services as class representative. As we explain, we cannot say the district court erred on this record.
The district court found Class Counsel “utilized Mr. Abernathy‘s considerable knowledge of the oil and gas industry . . . for the benefit of the class as a whole, and [Mr. Abernathy] should be compensated at an hourly rate that recognizes this unique level of skill, experience, and advocacy.” App. at 53. But, as the district court acknowledged, this calculus was no easy task. According to the district court, it would be “odd” to quantify a reasonable hourly rate for Mr. Abernathy‘s services simply by dividing the requested amount ($260,000) by the number of hours expended on this case (774.8). Id. This method, therefore, was rejected. The district court observed that Chieftain, other than pointing to a different case where Mr. Abernathy received an incentive award, made “no attempt to provide an objective measure of the value of Mr. Abernathy‘s time, for examрle, by reference to his compensation as its president or as an industry expert or advocate.” Id. Similarly, Objector George proposed “a rate of $25/hour is more than reasonable for . . . this case” but otherwise provided no metric for calculating a reasonable hourly rate for Mr. Abernathy‘s services. Id. at 39.
Given the limited information provided by the parties, the district court looked to incentive awards given to Mr. Abernathy for his services as class representative in four class action cases in Oklahoma between 2019 and 2022. The district court considered those four cases, and the one referenced by Chieftain, and taking “all these cases . . . together,” determined the average hourly rate was $300, which it found “is a reasonable hourly rate for this case as well.” Id. at 55.
On appeal, Objector George contends the district court used an “utterly arbitrary . . . method” to calculate Mr. Abernathy‘s hourly rate. Opening Br. at 19. By averaging the hourly rates of compensation in five oil and gas class action settlements where Mr. Abernathy served as class representative—“[r]ather than insisting on evidence of the actual value of
Mr. Abernathy‘s time” in this case—Objector George contends the district court erroneously
This is a closer question, but we discern no abuse of discretion. Importantly, the district court‘s approach comported with Strack. That case instructs district courts to grant incentive awards “based on the actual time expended on services rendered and other factors similar to those outlined in Oklahoma‘s class action attornеy fee statute pertinent to an incentive award.” 507 P.3d at 620 (citing
The district court‘s incentive award analysis also specifically considered Mr. Abernathy‘s “unique level of skill, experience, and advocacy,” “zealous and extremely fruitful” pursuit of this litigation, “active[] involve[ment] in this Litigation from its inception . . . . [and while it] was pending on [the district court‘s] active docket for more than seven years,” and the case‘s “highly technical and complicated” nature. App. at 48–50, 53. These observations bear on other factors enumerated in the Oklahoma attorney fee statute, specifically, “the amount in controversy and the results obtained,” “the experience, reputation and ability of the [representative],” “the nature and length of the professional relationship,” “the novelty and difficulty of the questions presented by the litigation,” and “the skill required to perform the . . . service properly.”
III
We AFFIRM the district court‘s award of a $232,400 incentive award to Mr. Abernathy. We VACATE the district court‘s award of attorneys’ fees and REMAND for the district court tо direct the issuance of class-wide notice of the 2018 motion for attorneys’ fees and re-open the period for objections, consistent with the requirements of
The essential question before us is whether, following our decision in Chieftain I, the district court erred when it refused to direct new notice under
But even if we conclude that the district court erred in applying
After correctly identifying the defect, however, the panel apparently assumed that it needed to “speculate baselessly about prejudice.” Morrison Knudsen Corp. v. Fireman‘s Fund Ins. Co., 175 F.3d 1221, 1239 (10th Cir. 1999). Apparently, to find the error harmless would require making “assumptions about how thousands of class
Yet “if this court is unable, for whatever reasons, to determine whether an error was prejudicial or harmless, which party must lose?” Morrison Knudsen Corp., 175 F.3d at 1239. In this circuit, “that party is the appellant.” Id. So even if the district court erred, the panel‘s refusal to speculate does not justify reversal. Indeed, either uncertainty in the record or unwillingness to review the record would “require us to affirm.” Id. at 1241 (emphasis added). Moreover, by declining to decide whether the error prejudiced any party‘s substantial rights, the panel must either presume the error harmful or speculate to find it harmful. This is necessary to justify reversing the district court based on the legal error. See In re Syngenta AG MIR 162 Corn Litigation, 61 F.4th at 1179 (“Even if we find a legal error, we will only reverse and remand if the error prejudiced the party‘s substantial rights.“);
We instead should “directly ask[] the harmless-error question,” Shinseki, 556 U.S. at 408, that the law requires. See
With that understanding, I conclude that the district court‘s decision to decline to issue more notice here, even if erroneous,
First, while individual class members lacked information during the original objection period, the record shows that a fellow class member with identical interests raised relevant objections to the district court when the information became available. Objector George ensured “the class” could “flush out any objections that might arise” and present them to the district court. Tennille v. W. Union Co., 785 F.3d 422, 440 (10th Cir. 2015) (quoting DeJulius v. New England Health Care Emps. Pension Fund, 429 F.3d 935, 946 (10th Cir. 2005)). The district court here was tasked with evaluating a motion predicated on the lodestar method of analysis. The Supreme Court has noted that there is a “‘strong presumption’ that the lodestar figure is reasonable, which ‘may be overcome in those rare circumstances in which the lodestar does not adequately take into account a factor that may properly be considered in determining a reasonable fee.‘” Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 553–54 (2010).
At the district court, Objector George contested the lodestar evidence and contended that the attorneys’ fees request was unreasonable because “the hours claimed by the attorneys and their hourly rates [were] excessive” and that the “legal work [was] not properly documented.” Joint App. at 674.5 Those objections suffice
Second, the record does not show that consideration of the motion was not “approached in a sufficiently adversarial manner.” Juris, 685 F.3d at 1318. When undertaking a lodestar analysis, the trial judge becomes “an arbiter in an adversarial setting.” Brown v. Phillips Petroleum Co., 838 F.2d 451, 456 (10th Cir. 1988). Objector George does not argue that the failure to provide notice to the class resulted in an insufficiently adversarial setting. To be sure, “[a] common-fund beneficiary is less incentivized to scrutinize her attorney‘s lodestar-based fee petition because she is one of many receiving a small slice of the collective pie.” In re Syngenta AG MIR 162 Corn Litigation, 61 F.4th at 1192. But Objector George was motivated, and his objections—that “legal work [was] not
Nor has anyone argued that the district court was deprived of the class objections necessary to perform its duty as arbiter. Cf. Huffman v. Saul Holdings Ltd. P‘ship, 262 F.3d 1128, 1134 (10th Cir. 2001) (ruling that district court could not have done its job to assess the reasonableness of fees without certain information about time diaries). The district court, after seven years of this litigation, rejected Objector George‘s contention that the “legal work [was] not properly documented.” And “there is no question that a district court may rely on its general experience as well as its closer familiarity with a case to evaluate the parties’ arguments on a fees issue.” Robinson v. City of Edmond, 160 F.3d 1275, 1285–86 (10th Cir. 1998). Because the district court was “presented with adequate, and adequately-tested, information to evaluate the reasonableness of [the] proposed fee,” In re Mercury Interactive Corp. Securities Litigation, 618 F.3d at 994, and no other objection that could have been relevant to the district court decision has been identified, we can conclude that any further potential objections relevant to, and properly considered in, the lodestar context were “specifically considered and rejected” by the district court. DeJulius, 429 F.3d at 946.
Third, and finally, whether the 2018 attorneys’ fees motion was more “benefi[cial],” Aple. Br. at 49–50, to the class than the 2015 attorneys’ fees motion is a fact relevant to the harm question in this specific case. See, e.g., In re Integra Realty Resources, Inc., 262 F.3d at 1111 (holding
Nor has Objector George satisfied his burden on appeal. See Palmer v. Hoffman, 318 U.S. 109, 116 (1943) (“He who seeks to have a judgment set aside because of an erroneous ruling carries the burden of showing that prejudice resulted.“).8 To demonstrate entitlement to reversal, Objector George shoulders “a heavy burden.” Naylor Farms, Inc., 923 F.3d at 793 (quoting Richison, 634 F.3d at 1130). He “‘must come ready both to show’ that the district court erred and ‘to explain why no other grounds’ will allow us to affirm the district court‘s decision.” Id. But given the record of the district court proceedings, that was a difficult showing for Objector George to make. Not only did “Class Counsel as[k] for less money” and “suppl[y] more information” to support the 2018 motion, Aple. Br. at 49, but also the district court employed the lоdestar method to evaluate the 2018 motion—which considers “most, if not all, of the relevant factors constituting a ‘reasonable’ attorney‘s fee” and “adequately compensates” the attorney. Pennsylvania, 478 U.S. at 566 (emphasis added). See also Perdue, 559 U.S. at 551–52 (“[T]he lodestar method produces an award that roughly approximates the fee that the prevailing attorney would have received if he or she had been representing a paying client who was billed by the hour in a comparable case.“). What is more, the Supreme Court has explained that the lodestar calculation is “‘objective,” and so the method “cabins the discretion of trial judges, permits
To be sure, failing to direct another class-wide notice after relevant and unanticipated information emerges may well constitute legal error under
Relying on the Advisory Committee notes to
In any event, “it is the Rule itself, not the Advisory Committee‘s description of it, that governs.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 363 (2011). Under
Yet the panel concludes that “procedural rigor” requires implicitly adopting and applying a per se rule that any change to the arrangements for payment of class counsel—whatever the specifics and no matter the circumstances—mandates new and additional notice to protect class interests—whatever the specifics and no matter the circumstances—and the failure to issue new and additional notice is harmful—whatever the specifics and no matter the circumstances.11 Not only is this sweeping proposition rooted in an overly expansive reading of the Advisory Committee‘s description—rather than the text—of
All told, the Court‘s opinion focuses almost exclusively on the differences between the 2015 and 2018 motions and not on what makes these differences material and harmful to the substantial rights of class members given the procedural history in this specific case to warrant remanding for new additional notice. To be sure, the panel identifies the importance of the error here: the class members‘—besides Objector George—access to information to make meaningful objections. But the cases relied on for this understanding
In sum, I agree with the panel that the introduction of a new basis for the fee calculation was a significant change, materially altering which motion was the appropriate reference point for notice purposes under the plain text of
Notes
That said, Chieftain adequately presented its arguments and “explain[ed] why” we should hold the error here harmless. Bronson v. Swensen, 500 F.3d 1099, 1104 (10th Cir. 2007). As the panel recounts, “Chieftain asks us to find any error under Rule 23(h) harmless.” For that argument, Chieftain contended that “evidence shows” that: (1) the motion “was more ‘benefi[cial]’ to the class;” (2) “[t]o this day, [the Objectors] are the only persons who have objected to Class Counsel‘s fees;” (3) “Class Counsel [have] asked for less money and supplied more information in support” of the motion; and (4) “[t]he facts show this additional lodestar information did nothing if not engender more support for Class Counsel.” Aple. Br. at 49 (citing various portions of the appendix). On that basis, Chieftain concluded “there was certainly no harm“—a proposition it supported with “case law.” Bronson, 500 F.3d at 1104. See, e.g., Aple. Br. at 49 (citing Keil v. Lopez for the proposition that notice error was “harmless” because “district court would have awarded the same fee” based on evidence presented); Aple. Br. at 49 (citing In re Integra Realty Resources, Inc. for the proposition that there was “no way that the court‘s failure to provide new notice risked harming class members or their ability to object where post-notice changes to settlement benefited the class.“). Since it is not the case that Chieftain failed to “submit any argument, cite relevant case law, or alert us to any part of the record” regarding harmlessness, Gross v. Burggraf Const. Co., 53 F.3d 1531, 1547 (10th Cir. 1995), it is not the case that “we readily could have found the harmless error argument ‘inadequately presented.‘”
In assessing whether and how that decision prejudiced class members’ substantial rights, it is not “pure conjecture” to start from the premise that objections raised by class members regarding the motion for attorney‘s fees would necessarily relate to the motion for attorney‘s fees. See
Apply that logic here. The key facts present in the record are that the class members generally knew that class counsel made a claim for fees under Rule 23(h), no class members (except Objector George) objected to the 2015 motion, Objector George had access to the lodеstar evidence, and Objector George objected to the 2018 motion based on his understanding and analysis of the lodestar evidence. Therefore, we need only examine Objector George‘s “views” on the claim for an award of attorneys’ fees (i.e., objections) given the new lodestar evidence and calculation method and decide whether Objector George‘s objections reasonably represented those of the class in this specific case. In my judgment, Objector George‘s objections comprehensively, if not exhaustively, addressed the relevant concerns about the 2018 motion, given the new lodestar evidence and calculation method.
In such a situation, I agree that “there could be an argument the original notice already informed the class of ‘the motion’ pending before the court and thus