Petition for Writ of Certiorari — Phillips Petroleum Co. v. Brown
Supreme Court brief1988
Ask Donna
What actually matters in this document.
Text
{i \ supreme Court, Us }
87-1] | FILED
d a9 MAY 31 198g 86 ff
No.
IN THE
Supreme Court of the United States
OCTOBER TERM, 1987
PHILLIPS PETROLEUM COMPANY,
AMOCO PRODUCTION COMPANY and
CITIES SERVICE OIL AND GAS CORPORATION,
y. Petitioners,
OLIVER S. BRowN, et al.,
Respondents.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
ARTHUR R. MILLER
1545 Massachusetts Avenue
Cambridge, MA 02138
(617) 495-4111
STEPHEN F. GATES RICHARD S. HITE
Mary S. HASKINS STEVEN D. GOUGH *
Amoco Production Company KAHRS, NELSON, FANNING,
1670 Broadway HITE & KELLOGG
P.O. Box 800 200 West Douglas, Suite 630
Denver, Colorado 80201 Wichita, Kansas 67202
(303) 830-4681 (316) 265-7761
Attorneys for Amoco Production Company
JOSEPH W. KENNEDY
JOHN L. WILLIFORD ROBERT W. COYKENDALL
Don L. JEMISON Morris, LAING, EVANS, BROCK
PHILLIPS PETROLEUM & KENNEDY, Chartered
COMPANY 200 West Douglas
1262 Adams Building Wichita, Kansas 67202
Bartlesville, Oklahoma 74004 (316) 262-2671
(918) 661-4743
Attorneys for Phillips Petroleum Company
GRAYDON D. LUTHEY CRAIG A. COULTER
CITIES SERVICE OIL AND JOHN A. RAYLL, JR.
GAS CORPORATION COULTER & RAYLL
P.O. Box 300 1602 South Main Street
Tulsa, Oklahoma 74102 Tulsa, Oklahoma 74119
(918) 585-8800
Attorneys for Cities Service Oil and Gas Corporation
* Counsel of Record
WILSON - EPES PRINTING Co., INC. - 789-O096 - WASHINGTON, D.C. 20001
QUESTIONS PRESENTED
1. Did the Tenth Circuit correctly hold that this Court
in Blum v. Stenson, 465 U.S. 886 (1984), authorized per-
centage attorney fee awards in common fund class ac-
tions without reference to the market value of the attor-
ney services, even though the chosen percentage resulted
in an award in excess of $10 million, and even though
four other Circuits have rejected the percentage ap-
proach?
2. Is it consistent with a federal court’s fiduciary duty
to class members under Federal Rule 23(e) to award
attorney fees based upon an arbitrary percentage of a
common fund that far exceeds the market value of the
services performed, and deny class members the protec-
tion against excessive attorney fees afforded to wrong-
doing defendants in statutory fee cases?
3. Is the application of two totally different methods
of calculating fee awards, the lodestar in statutory fee
cases and a percentage of the recovery in common fund
cases, consistent with the decisions of this Court holding
that fee awards in the two types of cases should be “gov-
erned by the same standards?”
(i)
ii
LIST OF PARTIES
Petitioners are Phillips Petroleum Co., Cities Service
Oil and Gas Corporation and Amoco Production Com-
pany. Their statements pursuant to Rule 28.1 are re-
printed in the Appendix begi: ning on App. p. 44a. Par-
ties to the Consolidated Heiium cases include three
groups:
A. Helex Group; *
B. The lessee/producer group representing a class who
supplied gas to pipeline companies; ” and
C. The landowners group representing a class of roy-
alty owners."
The United States intervened as a party in the litiga-
tion, but did not appear at the trial level or before the
Court of Appeals on the issue of attorney fees.
@ Panhandle Eastern Pipeline Company and National Helium Cor-
poration (Panhandle); Northern Natural Gas Company, Northern
Helex Corporation and Northern Natural Gas Products Company;
Cities Service Gas Company, Cities Service Helex, Inc. and Cities
Service Cryogenices, Inc. Since this appeal involved the payment
of attorney fees from a settlement fund created by Panhandle, this
Helex Group was disinterested in the questions presented by this
appeal, and did not participate in it.
> Other named lessee/producers are Cabot Corporation; Helmerich
& Payne, Inc.; Texaco Inc.; Ashland Oil & Refining Company;
Dorchester Gas Producing Company; Mobil Oil Corporation; Gulf
Oil Corporation; Diamond Shamrock Corporation; Superior Oil
Company; Mapco Production Company; and Atlantic Richfield
Company.
¢ The landowner group was represented by, among others, Oliver
S. Brown. The landowners had no interest in the payment of
attorney fees from the lessee/producer funds. This group did not
participate in the appeal of this question.
TABLE OF CONTENTS
yy bo ER gt) ty 4 | a ee
cas scatinoencertnesensnoninencaenueinsonecaaniaanss
ST MET MGDEEE Dh END ciara coosceecnorsecccosnashebescnemaceaes
i ccasconsshdtninenanacuasonscaceaoanennineetinnnnns
JURISDICTION
STATUTORY PROVISIONS INVOLVED
STATEMENT OF THE CASE
REASONS FOR GRANTING THE WRIT
I. Certiorari Must Be Granted To Resolve The
Conflict Among The Federal Courts Concerning
The Standards To Be Applied In Awarding
Fees In Common Fund Cases And As To The
Meaning Of Footnote 16 In This Court’s Opinion
II.
In Blum v. Stenson
A.
The fee methodology applied below directly
conflicts with standards required by other
Courts of Appeals
. Certiorari must be granted to resolve con-
flicting interpretations of footnote 16 in
Blum v. Stensen
The Decision Below Represents A Radical De-
parture From The Usual Course Of Judicial
Proceedings In Determining Fee Awards Re-
quiring The Exercise Of This Court’s Super-
visory Authority
(iii)
10
13
iv
TABLE OF CONTENTS—Continued
A. Certiorari must be granted to enforce the
district court’s fiduciary obligation under
Federal Rule 23(e) to protect absent class
members from excessive fee awards in com-
wins Gem CII acces nsteccantetictensersetenticnsemnsemnainece
B. Certiorari must be granted to reverse the
district court’s arbitrary and unreviewable
Bites IE ciccsinciinnnsatcbsinnseneenmeinaneiienstinnaiaeensioann’
C. Certiorari must be granted because the dis-
trict court’s award amounts to an “accom-
plishment fee” that is inconsistent with this
+ Ree nner
III. Certiorari Must Be Granted To Reverse The
Court Below Because Unfettered Allowance Of
A Percentage Of Recovery As A Fee In Com-
mon Fund Cases Undermines The Standards
Applied In Statutory Fee Cases And Destroys
The Equivalence Between Statutory And Other
Fee Awards That Congress Intended -...............
CONCLUSION ..nn--2nn.--.n----a----nnoenncnnenccenononnnennnoncnssonnnssnnnss
Page
13
16
20
21
24
Vv
TABLE OF AUTHORITIES
Cases: Page
In re Agent Orange Product Liability Litigation,
611 F. Supp. 1296 (E.D.N.Y. 1985), aff’d in
part, reversed in part, 818 F.2d 226 (2d Cir.),
cert. denied, U.S. ——, 108 S. Ct. 289
CHIR bate a ee 15
In re Agent Orange Product Liability Litigation,
818 F.2d 226 (2d Cir.), cert. denied, USS.
SF 3) Fi. yf Spe een ae 11, 15, 18
Basile v. Merrill, Lynch, Pierce, Fenner & Smith,
640 F. Supp. 697 (S.D. Ohio 1986) 0.000... 10
Bebchick v. Washington Metropolitan Area Transit
Commission, 805 F.2d 396 (D.C. Cir. 1986) ........ 18
In re Beverly Hills Fire Litigation, 639 F. Supp.
S36 Chi. - ta See mecca 18
Blum v. Stenson, 465 U.S. 886 (1984) _......... 6, 10, 21, 22
Boeing Co. v. Van Gemert, 444 U.S. 472 (1980)... 15
Bogosian v. Gulf Oil Corp., 621 F. Supp. 27 (E.D.
WU BOD -<tsinissientenssnseasicttecneeba ae 18
Brewer v. Southern Union Co., 607 F. Supp. 1511
ti | | eran ee ns es ees 8). 11, 18
In re Burlington Northern, Inc. Employment
Practices Litigation, 810 F.2d 601 (7th Cir.
1986), cert. denied, —— U.S. ——, 108 S. Ct.
SED CRIED dnckicesanstbesdiseiicainasasedceiadee ae 18, 22
Centrai Railroad & Banking Co. v. Pettus, 113
8 Se) | ne he Kel 5, 6, 9, 20
Cities Service Gas Company v. Mobil Oil Corpora-
tion, Civ. Actions No. KC 1945, KC 1946, KC
1947, KC 1948, KC 1969, Order on Applications
for Expenses and Fees (unpublished D. Kan.
PY De | i ne ye A ny 7
City of Detroit v. Grinnell Corp., 495 F.2d 448
(26 Cle. 1096) ec ee 6,8
City of Riverside v. Rivera, 477 U.S. 561 (1986).. 22
Cohens v. Virginia, 19 U.S. (6 Wheat.) 264
COED cxiissisnsicnninaiaieadietsteistop ties ee net 12
In re Continental/Midlantic Shareholders Litiga-
tion, Civ. A. No. 86-6877 (E.D. Pa. 1987) ....... 10
vi
TABLE OF AUTHORITIES—Continued
Page
Dunn v. H. K. Porter Co., 602 F.2d 1105 (3d Cir.
BOTOD ceenceecensssnsnseiinnsssiciniecsersicehantniamenensiananeassaaainas 13
Edmonds v. United States, 658 F. Supp. 1126
(DB. SGBUD cmon 10
Fickinger v. C1. Planning Corp., 646 F. Supp.
622 (E.D. Pa. 1986) ........ 11
Grunin v. International House of Pancakes, 513
F.2d 114 (8th Cir.), cert. denied, 423 U.S. 884
CRT) cccnesvicsinscesiisnciccenatnimaaaaaaaes 9
Harmsen v. Smith, [1985-1986 Transfer Binder]
Fed. Sec. L. Rep. (CCH) § 92379 (S.D. Cal.
OSERIED cchinndininamae 18
Hasbrouck v. Texaco, Inc., 631 F. Supp. 258 (E.D.
WH, RGD cccnssceesecentecteenseees 18
Hawkes v. Hamill, 288 U.S. 52 (1933) —.................. 12
Hensley v. Eckerhart, 461 U.S. 424 (1983) _...... passim
Howes v. Atkins, 668 F. Supp. 1021 (E.D. Ky.
BOT) cacercircsserscvcisitesisertienteineintaadandaiaauaaannee 11
Illinois v. Harper & Row Publishers, 55 F.R.D. 221
CRE. T. BOGE cccmunsiineeweaiueenee 16
Johnson v. Georgia Highway Express, Inc., 488
A bei el Ty | ee ea 9
Lightfoot v. Walker, 826 F.2d 516 (7th Cir.
ROT cacecccecencessssceasttontinsatintdendsscshianaeeneaeaee 18
Lindy Brothers Builders, Inc. of Philadelphia v.
American Radiator & Standard Sanitary Corp.,
Poof § Rt Ot: | eR 6,8
Litton Systems, Inc. v. American Tel. & Tel. Co.,
613 F. Supp. 824 (S.D.N.Y. 1985) ...................... i8
In re MGM Grand Hotel Fire Litigation, 660 F.
Summ. GER (BD. Wee.. SES e)- ances 18
Malchman v. Davis, 761 F.2d 893 (2d Cir. 1985),
cert. denied, 475 U.S. 1143 (1986)
Milwaukee Towne Corp. v. Loew's, Inc., 190 F.2d
561 (7th Cir. 1961) ............... ie deal stickaeaeiaaiee 15
National Treasury Employees Union v. Niron,
521 F.2d 317 (D.C. Cir. 1975)
vii
TABLE OF AUTHORITIES—Continued
Page
Northern Natural Gas Co. v. Grounds, 441 F.2d
704 (10th Cir. 1971), cert. denied, 404 U.S. 951
EUPITLD , <xisinnisbeesnctzennieinadineliedibiesangenkaleiaialdne aan 12
Pavlidis v. New England Patriots Football Club,
Inc., 675 F. Supp. 707 (D. Mass. 1987) _.......... 10
Pennsylvania v. Delaware Valley Citizens Coun-
cil For Clean Air, 478 U.S. 546 (1986) 22
Pennsylvania v. Delaware Valley Citizens Coun-
cil For Clean Air, 483 U.S. ——, 107 S. Ct.
RRR NIRA De Ie in nN OA 17, 21
Pray v. Lockheed Aircraft Corp., 644 F. Supp.
ERECT on ane OTT Bk OM 10
Ramos v. Lamm, 632 F. Supp. “376 (D. Colo.
ETE cestgenciteieetctgusionincieipepiaiah ial ii eB 18
Rogers v. Okin, 821 F.2d 22 (ist Cir. 1987), cert.
denied, U.S. , 108 S. Ct. 709 (1988)... 18
sierra v. Greenough, 105 U.S. (15 Otto) 527
Mseens A Century-For Film Corp. v. Brookside
Theatre Corp., 194 F.2d 846 (8th Cir.), cert.
denied, 343 U.S. 942 (1952) 0... 19, 20
In re Warner Communications Securities Litiga-
tion, 618 F. Supp. 735 (D.C.N.Y. 1985), aff’d
other grounds, 798 F.2d 35 (2d Cir. 1986)... 10
In re Wicat Securities Litigation, 671 F. Supp.
8 Rs RR 11
Weiss v. York Hospital, 628 F. Supp. 1392 (M.D.
SE PRR ene edsridatadaotanteaiaide aici 18
Other Authorities:
ees Oe CED cpl a 1
Federal Rules of Civil Procedure 23(b) (1) (A)
EE EE couse seccesncosdiniacdeaee a nS 2
Federal Rule of Civil Procedure 23(e) ...........2, 3, 13, 15
Dawson, Lawyers and Involuntary Clients: At-
torney Fees From Funds, 87 Harv. L. Rev.
RT SERED cestinctcttesenctngtesnusbictedgtaiee etek 14
viii
TABLE OF AUTHORITIES—Continued
Page
Dawson, Lawyers and Involuntary Clients In
Public Interest Litigation, 88 Harv. L. Rev.
Se ID scocitcctacnccidshabedntninauneambhinneiaenne ..6, 15, 19
M. F. Derfner & A. D. Wolf, Court Awarded At-
torney Fees § 15.01 (1988) ... ll
H. Newburg, Attorney Fee Awards §2.08
IIIUED | satis ciccinetneiamelionssbeiemadecinene 11
Report ef the Third Circuit Task Force, Court
Awarded Attorney Fees, 108 F.R.D. 237
I hii tceenesnslnnininnsnapean Ss 11
IN THE
Supreme Court of the United States
OCTOBER TERM, 1987
No.
PHILLIPS PETROLEUM COMPANY,
AMOCO PRODUCTION COMPANY and
CITIES SERVICE OIL AND GAS CORPORATION,
“ Petitioners,
OLIVER S. BRowN, et al.,
Respondents.
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
OPINIONS BELOW
The opinion of the Court of Appeals for the Tenth
Circuit is reported at 838 F.2d 451 and is reprinted at
page la ui the appendix. The orders of the district court
are unreported but are reproduced at pages 12a and 21a
of the appendix.
JURISDICTION
The opinion of the Court of Appeals for the Tenth
Circuit was entered February 3, 1988. A timely petition
for rehearing was filed, but was denied March 2, 1988.
This petition is filed within 90 days of that date. The
jurisdiction of this Court is invoked pursuant to 28
U.S.C. § 1254(1).
A REE eee Ee
2
STATUTORY PROVISIONS INVOLVED
Federal Rule of Civil Procedure 23(e) provides:
A class action shall not be dismissed or compro-
mised without the approval of the court, and notice
of the proposed dismissal or compromise shall be
given to all members of the class in such manner
as the court directs.
STATEMENT OF THE CASE
This action was initiated in the early 1960’s and was
consolidated with other similar actions, all of which
sought to adjudicate questions surrounding the extrac-
tion of helium from natural gas. Classes of royalty own-
ers and lessee/producers claiming entitlement to com-
pensation for helium extracted from natural gas were
formed by court orders in 1967. The lessee producer
class was certified pursuant to Federal Rule of Civil
Procedure 23(b)(1)(A) and (B). After three trials
and two appeals, settlement was reached with one helium
extractor, resulting in that extractor depositing approxi-
mately $91 million into the court registry. This fund,
with additional interest, was apportioned so that $16
million was reserved for a class of royalty owners and
$76 million for a class of lessee ‘producers.
The claimant attorneys who prosecuted this action on
behalf of their oil company clients had billed those clients
periodically throughout the litigation and were paid for
work performed in this case at rates up to $200 per
hour. Although these claimants characterized these fees
as “minimal” or “subsistence,” these payments repre-
sented their customary hourly rate for complex litiga-
tion. Indeed, when the district court examined one of
the counsel’s financial relationships with its client it
found that the client had compensated the counsel for
“all services rendered.” App. p. 19a.
3
The settlement agreement was submitted to the dis-
trict court on October 16, 1984. Notice under Rule 23(e)
was given to class members advising that attorney fees
would be awarded and a hearing to approve the settle-
ment would be held March 5, 1985. That notice made no
mention of the amount of the fees class counsel would
seek. Between February 20 and March 1, 1985, certain
counsel filed fee applications that were not served on un-
named class members. These counsel submitted no de-
tailed time records in those applications or at the March 5
hearing, relying instead on estimates of time expended in
this litigation—claimed to be 18,000 hours.' Although
counsel initially sought to justify their claims for com-
pensation for all hours since 1963 by a computation
utilizing hourly rates between $150 per hour and $200
per hour with multipliers of between three and four,
counsel primarily relied in the district court upon the
“nercentage of the fund” approach to justify the re-
quested multi-million dollar award.
Named class representative lessee ‘producers, Amoco
Production Company (Amoco) and Mobil Oil Company,
as well as the two largest beneficiaries of the class, Phil-
lips Petroleum Company (Phillips) and Cities Service
Oil and Gas Corporation (Cities) opposed the fee re-
quests. Over their objection, the district court awarded
16.5 percent of the lessee producer fund—over $12.5 mil-
lion—in attorney fees and expenses.” After reimbursing
‘This claimed time includes adjustments, such as one counsel
increasing his estimated time by 22 hours per month from June
1963 to April 1969 and an additional two hours per month for the
remainder of the litigation, and another counsel adding 75 hours
per year for each of the 20 years of this litigation because that
time “probably wasn’t recorded” or “could possibly not be billed.”
The district court found the claimed hours to be “reasonably ac-
ceptable” and although petitioners challenged this conclusion before
the Tenth Circuit, that court did not address the point.
2$1.8 million of this amount was paid to the various lessee/
producers who previously had paid attorney fees or advanced ex-
4
the class members that funded the litigation, class coun-
sel was awarded in excess of $10.7 million in fees from
the fund. The district court made the award, which was
in addition to the contemporaneous fees paid throughout
the litigation, without the district court performing a
lodestar calculation or scrutinizing the individual efforts
of class counsel. Instead, the court simply decided that
16.5 percent of the fund was “reasonable” without provid-
ing any explanation. Amoco, Phillips and Cities appealed.
The Tenth Circuit upheld the district court’s percent-
age approach. Although it noted that the percentage
method likely would be unacceptable if used to set a fee
that a wrongdoing defendant would have to pay an in-
jured plaintiff under a statutory fee provision, it found
the process acceptable for assessing fees against a “‘com-
mon fund.” Thus, the Tenth Circuit has granted dis-
trict courts power to award attorney fees in all common
fund cases completely unconstrained by the market value
of an attorney’s services as measured by multiplying the
hours reasonably expended by a fair hourly rate. It
awarded these attorneys a substantial portion of the
class recovery, without even mentioning the fact that
these attorneys received compensation as the litigation
progressed."
penses to the claimant counsel. The court required no itemization
of these expenses. It awarded these parties twice the amount
claimed to have been advanced. Phillips objected to the complete
absence of any evidence to show what the expenses consisted of and
how they benefited the class, but this point was ignored by both the
district court and the Tenth Circuit.
3 The Tenth Circuit also failed to mention a position advanced by
Cities. Cities was a named defendant lessee-producer in this action
and always was represented by its own separate counsel. Class
counsel refused to permit Cities to participate with them because
Cities as lessor/producer was a sister company of Cities Helex, the
helium extractor. Cities questioned whether it was proper to force
it to pay fees of counsel who refused to represent it, when it was
5
The holding below has widespread implications.* At-
torney fee awards from common funds occur in a va-
riety of cases, such as product liability, mass tort, and
toxic substance litigation, as well as in actions brought
under statutes that provide for an attorney fee award
when the case settles and creates a fund.
REASONS FOR GRANTING THE WRIT
An allowance of attorney fees from a common fund is
an exception to the American Rule on attorney fees.
That doctrine was set forth in Trustees v. Greenough,
105 U.S. (15 Otto) 527 (1882), and amplified in Cen-
tral Railroad & Banking Co. v. Pettus, 113 U.S. 116
(1885). The rationale underlying an award from a fund
is that a party who receives a benefit without paying a
share of the expenses of producing that benefit is en-
riched unjustly. An award to the party supporting the
litigation, as in Greenough, or an award to an attorney
who is not compensated fully by a named client, as in
Pettus, allocates the burdens of the action to the parties
that properly should bear them.’ Any award under that
denied any recompense for the fees of the counsel it was required
to employ to protect its interests as a named defendant lessee-
producer.
* The Tenth Circuit’s largess already has paid dividends to these
same attorneys. Judgments against the remaining extractors in the
Consolidated Helium cases have created a fund in favor of the
lessee/producers in an amount of $130.5 million. The district court
held that the present decision was “binding” and awarded the same
percentage of the fund for fees. It did so even though class mem-
bers entitled to over 77 percent of the fund objected to the award.
Combined with the award now before this Court, these attorneys
will receive nearly $30 million in fees from the helium funds,
in addition to the hourly fees they received as the litigation
progressed.
5 The present case contains elements of both Greenough and
Pettus, since the award compensates both the parties that supported
the litigation and the attorneys that prosecuted it.
6
doctrine is to be made with “moderation, and a jealous
regard to the rights of those who are interested in the
fund.” 105 U.S. at 536.
In common fund class actions, the court exercises con-
trol over an attorney fee award under Rule 23. Court
scrutiny is designed to protect class members since any
award “harms the unrepresented claimant by reducing
his net recovery.” Lindy Brothers Builders, Inc. of Phil-
adelphia v. American Radiator & Standard Sanitary
Corp., 487 F.2d 161, 169 (3d Cir. 1973). Because a court
is called upon to award the funds of an unrepresented
claimant to an attorney, fee awards draw public atten-
tion and are seen as reflecting on the court’s “integrity,
the integrity of the legal profession, and the integrity
of Rule 23 * * *.” City of Detroit v. Grinnell Corp.,
495 F.2d 448, 469 (2d Cir. 1974).
By approving the percentage of the funds approach,
the Tenth Circuit refused to protect class members
against excessive fees by requiring that an award be
predicated on hours worked at a reasonable hourly rate.
That protection has been extended to class members by
the Second, Third, Eighth, and District of Columbia Cir-
cuits. This refusal was based entirely upon the Court of
Appeal’s interpretation of a footnote in Blum v. Stenson,
465 U.S. 886 (1984). That footnote has given rise to
controversy as to the correct standards to apply to deter-
mine fee awards in common fund cases, with courts reach-
ing inconsistent results. Certiorari should be granted to
resolve the conflict among the circuits as to the fee
methodology in common fund cases and to eliminate the
confusion created by this Court’s footnote in Blum.
A percentage award departs from the equitable cost
spreading ideas underlying Greenough and Pettus. Per-
centage awards prompted one commentator to remark
that it was “in the calculation of fees that ideas derived
from the Greenough case have wandered out into the
open seas, out of sight of all known landmarks.” Daw-
7
son, Lawyers and Involuntary Clients In Public Interest
Litigation, 88 Harv. L. Rev. 849, 870 (1975). The
methodology employed by the court below only will ac-
celerate that drift. Certiorari should be granted so that
this Court can reiterate that the purpose of common
fund awards is to defray the expenses of litigation, and
not merely to enrich counsel.
The award in this case is outrageous by any standard.
Class counsel were given in excess of $10 million for this
part of the Consolidated Helium litigation. This award
established a precedent for them to receive an additional
$19 million in the remaining portion of the Consolidated
Helium litigation—a total of nearly $30 million. Cities
Service Gas Company v. Mobil Oil Corporation, Civ. Ac-
tions No. KC 1945, KC 1946, KC 1947, KC 1948, KC
1969, Order on Applications for Expenses and Fees (un-
published D. Kan. April 27, 1988). These amounts were
in addition to the regular hourly fees they collected from
their clients as this case progressed. Class members
were required to pay not only these amounts, but also
to reimburse the named clients for all amounts they had
paid these attorneys. The Tenth Circuit’s approval of the
percentage approach, resulting in such a huge fee award,
heralds a return to the almost quixotic and unreviewable
fee award practices of the past that engendered public
criticism and loss of confidence. It constitutes such a
departure from the accepted and usual course of judicial
fee awards as to require this Court to grant certiorari
to exercise its supervisory authority over the lower
courts.
The Tenth Circuit’s approach is inconsistent with this
Court’s holdings on statutory fee awards, which seek to
award fees that objectively reflect the market value of
services. By increasing the award that counsel can re-
cover in fund cases, the court below undermined the
holdings of this Court seeking to equate statutory fee
awards with awards in other complex federal cases.
Certiorari should be granted so that this Court ean clar-
8
ify that its holding governing the standards for “reason-
able” statutory fee awards are applicable to “reasonable”
fee awards from funds.
I. Certiorari Must Be Granted To Resolve The Conflict
Among The Federal Courts Concerning The Standards
To Be Applied In Awarding Fees In Common Fund
Cases And As To The Meaning Of Footnote 16 In This
Court’s Opinion In Blum v. Stenson.
A. The fee methodology applied below directly con-
flicts with standards required by other Courts of
Appeals.
In Lindy Brothers Builders, Inc. of Philadeiphia v.
American Radiator & Standard Sanitary Corp., 487 F.2d
161 (3d Cir. 1973), the Third Circuit reversed a district
court’s application of the percentage approach to a fee
award from a common fund. That court recognized the
purpose of an award was “to compensate the attorney
for the reasonable value of services benefiting the un-
represented claimant.” 487 F.2d at 167. It held that
the product of reasonable hourly rates and reasonable
time expended, adjusted for certain additional factors,
represents “the only reasonably objective basis for valu-
ing an attorney’s services.” Id.
In City of Detroit v. Grinnell Corp., 495 F.2d 448
(2d Cir. 1974), the Second Circuit reversed an award
that was 15 percent of a settlement, finding that
[t]he starting point of every fee award, once it is
recognized that the court’s role in equity is to pro-
vide just compensation for the attorney, must be a
calculation of the attorney’s services in terms of the
time he has expended on the case. Anchoring the
analysis to this concept is the only way of approach-
ing the problem that can claim objectivity, a claim
which is obviously vital to the prestige of the bar
and the courts.
495 F.2d at 470.
9
In Grunin v. International House of Pancakes, 513
F.2d 114 (8th Cir.), cert. denied, 423 U.S. 883 (1975)
and National Treasury Employees Union v. Nixon, 521
F.2d 317 (D.C. Cir. 1975), two more courts expressly
recognized that the lodestar calcuiation provides the nec-
essary objective basis for determining the value of an
attorney’s services in common fund cases.
The Tenth Circuit’s decision reached the opposite con-
clusion, stating that an attorney’s fee award can be de-
termined on a percentage basis by evaluating the 12 fac-
tors identified in Johnson v. Georgia Highway Express,
Inc., 488 F.2d 714 (5th Cir. 1974). The Court held that
“the ‘time and labor involved’ factor need not be evalu-
ated using the lodestar formulation.” It permitted a dis-
trict court to set a fee simply by reciting that one is
reasonable—no objective basis was required. Instead of
striving to determine the value of services, the court be-
low expressly held that a court need not even look to the
value of those services as shown in a lodestar calcula-
tion.
It allowed a court to dismiss the time and labor factor
if the court believed that the “result obtained” justified
a different award. The Tenth Circuit, however, did not
view the results obtained by evaluating the settlement in
light of the requested relief, as this Court did in Hensley
v. Eckerhart, 461 U.S. 424 (1983). Rather, it equated
“results obtained” with the size of the fund. Under the
holding below, counsel is rewarded not on the basis of
labor expended or even on the basis of a job well done.
The sole determinant seems to be the size of the fund re-
covered for the class members. This approach is con-
trary to the requirements of four other courts of appeal
and has absolutely no basis in the equitable principles
underlying fee awards from funds enunciated in Green-
ough and Pettus.
The existence of conflicting standards among the cir-
cuits on the measure of attorney fees gives counsel a
personal stake in selecting a forum that will apply the
10
percentage approach. This Court must grant certiorari
to eliminate the obvious inconsistency of treatment among
the courts of appeal and the incentive to forum shop that
the decision below created.
B. Certiorari must be granted to resolve conflicting
interpretations of footnote 16 in Blum y. Stenson.
The sole support offered by both the Tenth Circuit and
the district court for abandoning the lodestar calculation
is a passage in a footnote to the majority opinion of
Justice Powell in Blum v. Stenson, 465 U.S. 886, 900,
n.16 (1984), stating:
Unlike the calculation of attorneys’ fees under the
“eommon fund doctrine,” where a reasonable fee is
based on a percentage of the fund bestowed on the
class, a reasonable fee under Section 1988 reflects
the amount of attorney time reasonably expended
on the litigation.
The Tenth Cireuit read this footnote as a determination
by this Court that “a percentage calculation [is] a ‘rea-
sonable fee’ in those cases.’”’ App. p. 4a.
The Blum footnote has led to considerable confusion,
and inconsistency of interpretation by the lower federal
courts. Several district courts have read it as establish-
ing a separate standard for attorney fees in common
fund cases." Some courts have utilized the percentage
6 E.g., Pavlidis v. New England Patriots Football Club, Inc., 675
F. Supp. 707 (D. Mass. 1987); Edmonds v. United States, 658
F. Supp. 1126 (D.S.C. 1987); Pray v. Lockheed Aircraft Corp., 644
F. Supp. 1289 (D.D.C. 1986); Basile v. Merrill, Lynch, Pierce,
Fenner & Smith, 640 F. Supp. 697 (S.D. Ohio 1986); In re Warner
Communications Securities Litigation, 618 F. Supp. 735, 749 (D.C.
N.Y. 1985), aff'd other grounds, 798 F.2d 35 (2d Cir. 1986). See
also In re Continental/Midlantic Shareholders Litigation, Civ. A.
No. 86-6877 (E.D. Pa. 1987) (available in Westlaw) (“the Supreme
Court has also indicated, albeit in dicta, that a different rule [from
the lodestar] should govern attorney’s fees awards under the com-
mon fund doctrine” ).
11
approach to limit awards when a lodestar award would
consume too great a portion of the fund.* But other
courts, including the Second Circuit, have declined to
read this Court’s footnote as changing the manner of
ealeulating attorney fees in common fund class cases.*
One court that did not interpret it as authorizing a per-
centage award noted that the percentage approach “has
been heavily criticized and no recent cases have utilized
it.” *® Another court noted the confusion surrounding the
footnote, but still used the lodestar as the starting
point.’°
Commentators do not agree on the meaning of the
footnote. It has been cited as a clear endorsement of the
percentage method of computing attorney fees in com-
mon fund cases.'' Another commentator termed the foot-
note a “misconstruction of current fee law rather than a
considered dismissal of the Lindy methodology for com-
mon fund cases * * *.”'? The Third Circuit Task Force
on Court Awarded Attorney Fees cited this footnote as
recognizing the differences between fund and statutory
fee cases'* but recommended the use of a percentage
T Howes v. Atkins, 668 F. Supp. 1021 (E.D. Ky. 1987); Fiekinger
v. CI. Planning Corp., 646 F. Supp. 622 (E.D. Pa. 1986).
8 In re Agent Orange Product Liability Litiqatien, 818 F.2d 226
(2d Cir.), cert. denied, U.S. ——, 108 S. Ct. 289 (1987);
Brewer v. Southern Union Co., 607 F. Supp. 1511 (D. Colo. 1984).
® Brewer v. Southern Union Co., 607 F. Supp. 1511, 1519 (D. Colo.
1984).
10 In re Wicat Securities Litigation, 671 F. Supp. 726 (D. Utah
1987).
11H. Newburg, Attorney Fee Awards § 2.08, at 52 (1986).
12M. F. Derfner & A. D. Wolf, Court Awarded Attorney Fees
| 15.01, at 15-12 (1988).
13 Report of the Third Circuit Task Force, Court Awarded At-
torney Fees, 108 F.R.D. 237, 250-51 (1985).
ee
12
award only when it was agreed to by the parties after
court supervised negotiations at the beginning of litiga-
tion.
Petitioners believe that an examination of the footnote
in context shows that the Tenth Circuit’s utilization of it
in this case clearly was improper. “The statement is not
considered dictum but is ‘comment merely obiter,’ see
Hawkes v. Hamill, 288 U.S. 52, 59 |1933] * * *.” North-
ern Natural Gas Co. v. Grounds, 441 F.2d 704, 712 (10th
Cir. 1971), cert. denied, 404 U.S. 951 (1971). This Court
has warned repeatedly of the pitfall of elevating dictum
to authority. Chief Justice Marshall in Cohens v. Vir-
ginia, 19 U.S. (6 Wheat.) 264, 399-400 (1821), advised
that such statements “may serve to illustrate [the ques-
tion before the Court], are considered in their relation
to the case decided, but their possible bearing on all other
cases is seldom completely investigated.”
Certiorari should be granted so that the confusion
created by the footnote can be ended. A decision by this
Court on the proper procedure for computing awards of
attorney fees in common fund cases is needed and will
impact thousands, if not millions, of individuals, and will
determine the payment of millions of dollars. Common
fund cases include mass tort cases, many antitrust cases,
securities litigation, shareholder derivative actions, and
many other categories of federal court litigation. Vir-
tually all class actions seeking monetary damages give
rise to “funds” and spawn litigation over attorney fees.
By setting a uniform standard for attorney fee awards
this Court can reduce the amount of fee litigation and
prevent excessive fee awards, which reflect adversely
upon the integrity of the bar, the judiciary, and the class
action device.
EE
13
Il. The Decision Below Represents A Radical Departure
From The Usual Course Of Judicial Proceedings In
Determining Fee Awards Requiring The Exercise Of
This Court’s Supervisory Authority.
A. Certiorari must be granted to enforce the district
court’s fiduciary obligation under Federal Rule
23(e) to protect absent class members from exces-
sive fee awards in common fund cases.
An allowance from a common fund is based upon the
equitable notion that a party who benefits from litigation
should contribute its proportionate share to the expenses
of that litigation. In a class action a fee petition pre-
sents unique problems that impose special burdens on a
federal court. At the time a petition is presented to a
district court, the defendant that created the fund no
longer cares about its allocation. Absent class members
—few of whom are ever before the court—-typically are
dispersed widely, have little knowledge about the action,
and have a relatively small financial interest. Dunn v.
H. K. Porter Co., 602 F.2d 1105, 1109 (3d Cir. 1979).
The attorney that represented the beneficiaries is in
a direct financial conflict with the beneficiaries at this
point.’* That attorney occupies “essentially an adver-
sarial relation to their clients who face a reduced award
to the extent that counsel fees are maximized.” Jd. As a
result, there is no adversarial process that can be relied
upon to establish a reasonable fee. The only protection
available is the proper discharge by the district court of
its obligation under Rule 23(e). Even the Tenth Cir-
cuit recognized the “fiduciary” role of the district court
in protecting class members from excessive awards. App.
p. 9a.
14 In cases such as this one in which the named parties also are
seeking fees from the fund, they too may possess a direct financial
conflict with the absent class members. At the very least, the
pendency of such a claim may well decrease the incentive these class
representatives would have to oppose an attorney fee award.
ais
14
Because the task of assessing litigation expenses arises
outside the normal adversarial context, it is imperative
that courts adhere to guidelines for determining a rea-
sonable award. Rather than providing guidance to dis-
trict courts to ensure that class members are protected,
the Tenth Circuit abdicated to district courts the power
to give away a portion of the fund to class attorneys in
an arbitrary fashion, without regard to the value of
their services."*
The Tenth Circuit has freed the district courts from
any duty to anchor an award in a determination of the
market value of the attorney's services and has relaxed
the obligation to make specific objective findings to sup-
port the fee award. This has shifted the burden of proof
away from the fee claimants to establish that the fee
sought is reasonable, and imposed a burden upon the
class members to prove that the requested fee is clearly
unreasonable. The absence of any objective criteria,
coupled with the discretion accorded a district court by
the decision below. affords a class member with no pro-
tection against an excessive award to overreaching coun-
sel.'° The class member is at the mercy of a whimsical
selection of a percentage generated by the subjective
fancy of the district judge that happens to hear the case.
15 This approach threatens to give credence to one distinguished
critic’s view that the primary purpose of common fund fee awards
is “to augment the income of lawyers.” Dawson, Lawyers and In-
voluntary Clients: Attorney Fees From Funds, 87 Harv. L. Rev.
1597, 1653 (1974).
16 The size of the fund magnifies the impact of a percentage
award. In this portion of the Consolidated Helium cases, cach per-
centage point awarded reduces the class removery by $760,000.
Notwithstanding the impact that even a small adjustment in the
percentage awarded has on the class, the court below required no
specific explanation how a particular percentage was reached. If all
the Consolidated Helium cases are considered, a one percent award
of the lessee producer fund reduces the class recovery more than
$2 million.
ee
15
To allow counsel to recover fees based solely upon an
arbitrary percentage unconstrained by the market value
of the attorneys’ services changes the class attorney’s
role. Under the ruling below, a class attorney automat-
ically claims a portion of the recovery, and is likely to be
among the largest beneficiaries of the lawsuit. Basing
class counsels’ fees on the extent of damages suffered by
the class does not further the historic purpose of com-
mon fund awards—to prevent unjust enrichment of per-
sons who obtain the benefit of a lawsuit without contrib-
uting to its costs. See Boeing Co. v. Van Gemert, 444
U.S. 472, 478 (1980). To the contrary, it reinforces the
conception of the lawyer as “an independent profitmaking
entrepreneur” and allows counsel to receive much more
than the true market value of the services at the expense
of the class members. See Dawson, Lawyers and Invol-
untary Clients in Public Interest Litigation, 88 Harv. L.
Rey. 849, 853-54 (1975).
One might agree with judicial expressions of dis-
may over fee disputes, since these conflicts almost uni-
versally are regarded as “delicate, embarrassing, and dis-
turbing.” Milwaukee Towne Corp. v. Loew's Inc., 190
F.2d 561, 569 (7th Cir. 1951). Nevertheless, this Court
should not permit the lower federal courts to avoid their
obligation under Rule 23 by simply awarding an arti-
trary percentage, thereby declaring open season on class
members who typically will be unrepresented at the fee
stage of the litigation.
Paying attorneys more that the market value of their
work for prosecuting common fund class actions undoubt-
edly will lead to a proliferation of these cases. The pros-
pect of making more by these common fund cases will
“fuel the filing of nuisance litigation ‘in which settlement
becomes the main object and attorney fee awards an over-
powering motivating force.” Jn re Agent Orange Prod-
uct Liability Litigation, 818 F.2d 226, 235 (2d Cir.),
cert. denied, US. , 108 S. Ct. 289 (1987),
16
quoting In re Agent Orange Product Liability Litigation,
611 F. Supp. 1296, 1311 (E.D.N.Y. 1985). To permit a
fee award measured by the size of the action is to en-
courage races to Bhopal because the more clients a law-
yer can gather, the greater his fee. Class actions in-
creasingly will become “a fruit tree planted in a lawyer’s
garden.” Illinois v. Harper & Row Publishers, 55 F.R.D.
221, 224 (N.D. Ill. 1972).
In Hensley v. Eckerhart, 461 U.S. 424 (1983), this
Court sought to afford wrongdoing defendants in statu-
tory actions a degree of protection against excessive fees
comparable to that enjoyed by any other attorney’s client.
“Tt would be inconceivable that the prevailing party should
not be required to establish at least as much to sup-
port a [fee] claim * * * as a lawyer would be required
to show if his own client chailenged the fees.”’ 461 U.S.
at 440 (Burger, C.J. concurring!. By refusing to apply
these standards in common fund cases, the decision below
stripped the involuntary, innocent class members of these
protections this court has accorded wrongdoing defend-
ants in statutory actions.
This question, although of great importance and fre-
quently at issue in the lower courts, rarely will reach
the Courts of Appeal, let alone this Court. That will
happen only when a class member takes an active part
in the fee hearing and has a great enough stake to jus-
tify prosecuting an appeal. Because this case is one of
those unusual instances and the questions are graphically
presented, certiorari should be granted to enable this
Court to give guidance to the lower courts.
B. Certiorari must be granted to reverse the district
courl’s arbitrary and unreviewable fee award.
The touchstone of any fee award is “reasonableness.”
This Court has held that this requires more than a sub-
jectively reasonable award. “To be ‘reasonable,’ the
method for calculating a fee award must be not merely
17
justifiable in theory but also objective and nonarbitrary
in practice.” Pennsylvania v. Delaware Valley Citizens
Council for Clean Air, 483 U.S. , 107 S. Ct. 3078,
3090 (1987) (Delaware Valley IJ) (O’Connor, J., con-
curring in part and concurring in the judgment). The
Tenth Circeuit’s upholding of an arbitrary, multi-million
dollar percentage fee is inconsistent with the require-
ment that a reasonable award be “objective and nonarbi-
trary.”
The award below is one of the most munificent awards
made in any reported case. Its generosity is difficult to
rationalize since the reasons customarily given for mak-
ing extraordinary awards simply are not present here.
Counsel received compensation during the course of this
litigation making augmentation for risk inappropriate.”
The size of the fund, which the Court below equated with
“results obtained,” reflects the span of the litigation more
than the achievements of counsel since the fund largely
consists of interest. Nor is working for large oil com-
panies for hourly compensation likely to be shunned by
many attorneys. The contract and utility regulation is-
sues upon which this case turned, although complicated,
were not particularly complex, since those issues involved
the type of work attorneys normally perform.
Although the Tenth Circuit purported to justify the
district court’s 16.5 percent award by comparing it to
percentages of other funds awarded as attorney fees, in
truth the award is not comparable if it is viewed in terms
of the value of the services provided. Compared with
other lengthy and complex cases—in all of which attor-
ney fees were entirely contingent and no contemporary
fees were paid counsel—awarding the attorneys $10.7
million for 18,000 claimed hours tn addition to the hourly
fees they collected and retained during the litigation is
17 The Tenth Circuit did not justify the award on the basis that
counsel risked not being compensated.
18
unsupportable and shows the arbitrary character of the
district court’s action.’* Although the attorneys in the
Consolidated Helium cases claim to have worked approxi-
mately the same hours as all attorney time allowed in Jn
re Agent Orange Product Liability Litigation, the per-
centage award of the $206.5 million fund in all the Con-
18 Recent complex cases have compensated counsel at less than
$200 per hour: Jn re Agent Orange Product Liability Litigation,
818 F.2d 226 (2d Cir.), cert. denied, U.S. ——, 108 S. Ct. 289
(1987) (39,300 hours, $7.61 million award); Lightfoot v. Walker,
826 F.2d 516 (7th Cir. 1987) (6,600 hours, $710,000 award); Rogers
v. Okin, 821 F.2d 22 (1st Cir. 1987), cert. denied, U.S. —
108 S. Ct. 709 (1988) (approx. 9000 hours, $870,000 award); Jn re
Burlington Northern, Inc. Employment Practices Litigation, 810
F.2d 601 (7th Cir. 1986), cert. denied, —— US. - , 108 S. Ct. 82
(1987) (12,200 hours of attorney time, 5,200 hours of paralegal
time, award $2.18 million); Malchman v. Davis, 761 F.2d 893 (2d
Cir. 1985), cert. denied, 475 U.S. 1148 (1986) (10,283 hours, $1.91
million award); Ramos v. Lamm, 632 F. Supp. 376 (D. Colo. 1986)
(9,522 hours, $1.06 million award); Hasbrouck v. Texaco, Inc., 631
F. Supp. 258 (E.D. Wash. 1986) (12,452 hours, $1.7 million award) ;
Litton Systems, Inc. v. American Tel. & Tel. Co., 613 F. Supp. 824
(S.D.N.Y. 1985) (9,788 attorney, 6,000 paralegal, $1.5 million
award); Bogosian v. Gulf Oil Corp., 621 F. Supp. 27 (E.D. Pa.
1985) (32.758 attorney hours, 15,460 clerk /paralegal time, $5.8 mil-
lion award). Other complex cases have compensated counsel at
between $200 and $300 per hour: Bebchick v. Washington Metro-
politan Area Transit Commission, 805 F.2d 396 (D.C. Cir. 1986)
(6,000 hours expended over 22 years of litigation resulted in $1.675
million award); Jn re MGM Grand Hotel Fire Litigation, 660
F. Supp. 522 (D. Nev. 1987) (57,000 hours attorney time, 20,500
paralegal clerk time, $15.6 million fee); Weiss v. York Hospital,
628 F. Supp. 1392 (M.D. Pa. 1986) (11,785 hours, $3.2 million
award) ; Harmsen v. Smith, [1985-1986 Transfer Binder] Fed. Sec.
L. Rep. (CCH) £ 92379 (S.D. Cal. 9/30/85) (12,421 hours, $3.5
million award). Two reported cases have awarded attorney fees
approaching $400 per hour: Jn re Beverly Hills Fire Litigation, 639
F. Supp. 915 (E.D. Ky. 1986) (10,477.58 hours, $4.12 million
award); Brewer v. Southern Union Co., 607 F. Supp. 1511 (D. Colo.
1984) (22,190 attorney hours, 17,865 paralegal clerk hours, 6,019
research consultant hours, $10.5 million award). None of these
cases approaches the award of six or seven hundred dollars per
hour in this action.
SS
19
solidated Helium cases generates a fee that is four times
the amount awarded to all counsel in Agent Orange.
This disparity does not even account for the regular
hourly compensation, at rates up to $200 per hour, that
these attorneys collected from their clients as this litiga-
tion progressed.
Moreover, computing fees upon a percentage basis fol-
lowing a subjective review of some Johnson factors
eliminates any opportunity for meaningful appellate re-
view. Without a lodestar analysis or any objective cri-
teria as a yardstick, “the subjective nature of the de-
termination a trial judge must make when an award is
not anchored in the seemingly more objective lodestar
formula,” ® can be overturned for an abuse of discretion
only if the amount, or the percentage, is so large as to
“shock the conscience” of the court. Twentieth Century-
Fox Film Corp. v. Brookside Theatre Corp., 194 F.2d
846, 859 (8th Cir.), cert. denied, 343 U.S. 942 (1952).
Dawson, Lawyers and Involuntary Clients In Public In-
terest Litigation, 88 Harv. L. Rev. 849, 930 (1975). The
lack of any objective factors to gauge a percentage award
ill lead to increasing variations in fees from case to
case, and from judge to judge. The lack of any standard
to control these awards will result in massive inconsist-
ency within and among circuits. Allowing huge attor-
neys fee awards to be justified simply by trumpeting
that a percentage is “reasonable” will reinforce the per-
ception by some members of the public that lawyers take
care of their own.
This Court has stressed that “i]t remains important
* * * for the district court to provide a concise but
clear explanation of its reasons for the fee award.”
Hensley v. Eckerhart, 461 U.S. 424, 437 (1983). Nothing
but a rote catechism of factors was offered to justify
the present award. Certiorari must be granted so that
19 App. Pp. 9a.
20
this Court can exercise its supervisory authority to en-
sure that such arbitrary and unreviewable awards will
not be tolerated.
C. Certiorari must be granted because the district
court’s award amounts to an “accomplishment fee”
that is inconsistent with this Court’s decisions.
What the court below awarded appears to be little
more than an “accomplishment fee.”” The award of $10.7
million is more than 13 times the amount these attorneys
charged their clients for prosecuting this case in their
contemporaneous bills and statements. In the free mar-
ket for attorney services, ‘‘accomplishment fees” are some-
times, although rarely, paid by clients in their sole dis-
cretion and out of generosity born of gratitude.
By authorizing an “accomplishment fee’ whenever
favorable results are obtained, and solely for that reason,
the decision below has told district courts in the Tenth
Circuit that an “accomplishment fee” is a legitimate
charge that they can require every class member in every
common fund case to pay. Class members thereby are de-
nied the right of an ordinary client to exercise discretion
in deciding to give financial thanks to an attorney. It is
not a proper judicial function to mandate generosity to
the bar. An “accomplishment fee” that enriches counsel
and bears no relationship to the value of an attorney’s
services can only push the Pettus and Greenough doc-
trines even further from their origins. Such an award
no longer advances the equitable purpose it was designed
to serve.
If “there is no basis for determining the reasonable-
ness of attorney fees by a different standard simply
because they are to be paid by the defendants and not by
counsel’s client,” Twentieth Century-Fox Film Corp. v.
Brookside Theatre Corp., 194 F.2d 846, 859 (8th Cir.),
cert. denied, 343 U.S. 942 (1952), there should be no
basis for a different standard when fees are to be paid
21
by involuntary clients. They should not be denied the
rights afforded both voluntary clients and defendants.
This Court should grant certiorari and unequivocally
announce that class members have as great an interest
in a fund held by a court for their benefit as voluntary
clients or defendants in a statutory fee case have in the
proper computation of the fees they must pay. Innocent
class members should be entitled to the same protections
afforded wrongdoing defendants in statutory fee cases—
attorney fees based upon objective standards and re-
flecting the reasonable value of services rendered.
III. Certiorari Must Be Granted To Reverse The Court
Below Because Unfettered Allowance Of A Percentage
Of Recovery As A Fee In Common Fund Cases Under-
mines The Standards Applied In Statutory Fee Cases
And Destroys The Equivalence Between Statutory And
Other Fee Awards That Congress Intended.
In recent years, this Court has defined clearly the
standards for statutory attorney fee awards, holding
that the starting point is the number of hours reason-
ably expended multiplied by a reasonable hourly rate.
“This calculation provides an objective basis on which to
make an initial estimate of the value of a lawyer’s serv-
ices.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983).
This calculation (the lodestar) has been held to reflect
various factors, including the novelty and complexity of
the issues, Blum v. Stenson, 465 U.S. 886, 896 (1984),
the quality of representation, id. at 899, and even the
results obtained and the benefit conferred, id. at 900.
Although adjustment of the loadstar is possible, see
Hensley v. Eckerhart, supra (results obtained enhance-
ment), Pennsylvania v. Delaware Valley Citizens Coun-
cil for Clean Air, 483 U.S. ——, 107 S. Ct. 3078 (1987)
(contingency enhancement), the Court has required care-
ful articulation of the circumstances justifying the ad-
justment—rejecting “a mere conclusory statement that
22
this fee was reasonable in light of the success obtained.”
Hensley, 461 U.S. at 439, n.15.
In mandating the adjusted lodestar approach as the
way to arrive at a reasonable fee awardable under statu-
tory provisions, this Court has sought to fulfill the Con-
gressional intent “that the amount of fees awarded * * *
be governed by the same standards which prevail in other
types of equally complex Federal litigation, such an anti-
trust cases,” S. Rep. No. 94-1011, p. 6 (1976), cited in
Hensley, 461 U.S. at 430, n.4. That Senate Report was
quoted again in Blum v. Stenson, 465 U.S. 886, 893
(1984), and Congressional intent underpinned the hold-
ing that a reasonable fee is one at prevailing market
rates. This Court has continued to reaffirm a standard
that parallels the private fee market and to equate statu-
tory awards with fees in other complex litigation. City
of Riverside v. Rivera, 477 U.S. 561 (1986); Pennsyl-
vania v. Delaware Valley Citizens Council for Clean Air,
478 U.S. 546 (1986); 483 U.S. , 107 S. Ct. 3078
(1987).
The decision below undermines this Court’s holding
that a lodestar calculation equates statutory fees to fees
in other complex federal litigation. By computing attor-
ney fees in common fund cases without referring to the
value of services rendered, fees from funds no longer
will equate with this Court’s valuation of attorney serv-
ices in statutory fee cases. If fees in federal common
fund cases are not subject to limits created by the market
value of attorney time, fees in statutory cases can be
comparable only if they also are freed from that con-
straint. The Tenth Circuit has relegated attorneys who
litigate under federal statute to a second class status and
assured that they no longer will be compensated on a par
with attorneys who pursue federal common fund litiga-
tion.
The decision below also threatens goals served by statu-
tory fee provisions by creating a strong disincentive to
23
seek statutory fees from a wrongdoing defendant. When-
ever there is a prospect of a large recovery on behalf of
a class under a federal statute that contains a fee pro-
vision, it is in the overwhelming economic self-interest
of the class attorneys to settle the case without including
any payment of their fees by the defendant. That frees
class counsel to petition the district court for an arbi-
trary percentage of the “common fund” in excess of a
reasonable lodestar-based fee. Although that arrange-
ment may still fulfill the Congressional objective of en-
couraging attorneys to take such cases, it removes the
burden of that cost from the wrongdoing defendant, upon
whom Congress imposed it, and transfers it to the in-
jured parties by reducing the settlement fund.
Moreover, since many statutory fee cases will settle
rather than be adjudicated, there will be inconsistency
of fee awards within that category of cases. A_ fee
award in a statutory fee case that goes to trial will be
based on a lodestar analysis; a fee award in a settled
statutory fee case may be based on a percentage of the
recovery. As demonstrated by this case, those amounts
can be vastly different. The inescapable perception will
be that wrongdoing defendants pay much lower fees than
innocent, injured, involuntary clients in class actions.
Permitting allowance of arbitrary fee awards in com-
mon fund eases will lead to greater confusion and more
litigation in both common fund and statutory fee cases.
Certiorari should be granted so that this Court can ar-
ticulate the relationship between fee awards in statutory
and common fund cases and prevent arbitrary awards
in common fund cases from undermining this Court’s
fee award standards in statutory fee cases.
24
CONCLUSION
For the foregoing reasons, certiorari should be granted.
Respectfully submitted,
ARTHUR R. MILLER
1545 Massachusetts Avenue
Cambridge, MA 02138
(617) 495-4111
STEPHEN F. GATES RICHARD S. HITE
Mary S. HASKINS STEVEN D. GOUGH *
Amoco Production Company KAHRS, NELSON, FANNING,
1670 Broadway HITE & KELLOGG
P.Q. Box 800 200 West Douglas, Suite 630
Denver, Colorado 80201 Wichita, Kansas 67202
(303) 830-4681 (316) 265-7761
Attorneys for Amoco Production Company
JOSEPH W. KENNEDY
JOHN L. WILLIFORD ROBERT W. COYKENDALL
DON L. JEMISON Morris, LAING, EVANS, BROCK
PHILLIPS PETROLEUM & KENNEDY, Chartered
COMPANY 200 West Douglas
1262 Adams Building Wichita, Kansas 67202
Bartlesville, Oklahoma 74004 (316) 262-2671
(918) 661-4743
Attorneys for Phillips Petroleum Company
GRAYDON D. LUTHEY CRAIG A. COULTER
CITIES SERVICE OIL AND JOHN A. RAYLL, JR.
GAS CORPORATION COULTER & RAYLL
P.O. Box 300 1602 South Main Street
Tulsa, Oklahoma 74102 Tulsa, Oklahoma 74119
(918) 585-8800
Attorneys for Cities Service Oil and Gas Corporation
* Counsel of Record
Date: May 31, 1988
APPENDICES
la
APPENDIX A
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
Nos. 85-1788, 85-1789, 85-1892 and 85-1912
OLIVER S. BROWN, eft a/..
Plaintifi
PHILLIPS PETROLEUM COMPANY, etc., et al.
De fe nda tse, 1 pp llants.
MOBIL OIL CORPORATION, et a/.,
De Z ida) /
ASHLAND OIL. INC.. ef al..
sefore McKAY, TACHA, and BALDOCK. Cireuit
Judges,
TACHA, Circuit Judge.
r . . . ’ ‘ .
This case arises out of a complex cerik of cas that
has heen in litigation 7 *% +} ; ‘ sly 1OGb0 T} 1? dey-
"4 . . ? . 17
lving Cases INnVOIVe Ger vy] i ne ow? nip ar cls ration
of helium extracted by National Helium Corporation and
sold to the federal government from 1962 to 1973. The
only issues on ppea!l and ero ppea!l in this ease are
(1) whether the trial court abused if discretion in
awarding attorneys’ fees on the basis of a percentage of
2a
a common fund, and (2) whether Ashland Oil is pre-
cluded from recovering a share of the common fund be-
cause of a prior holding of this court. We affirm the
court’s award of attorneys’ fees and hold that Ashland
Oil is not precluded from recovering from the common
fund. We remand for a determination of appropriate
attorneys’ fees in the cross-appeal.
The issues litigated in this series of cases related to
right to payment for and valuation of helium extracted
from natural gas from the Hugoton and Panhandle areas
of Kansas, Oklahoma, and Texas. The parties in this
appeal are members of the class of lessee producers who
obtained judgment in 1983 establishing that they were
entitled to a specified amount for the helium extracted
by National Helium Corporation. National Helium Corp.
v. Panhandle Eastern, No. KC-1980 (D.Kan. Nov. 3,
1983). After appeals were taken from that judgment,
the parties settled the protracted controversy by agreeing
to payment for the helium at a rate of $3.60 per thou-
sand cubic feet plus interest. That settlement agreement
requiring National Helium to pay approximately ninety-
one million dollars was submitted to the court on October
16, 1984. The landowners’ share of the settlement was
approximately sixteen million dollars and the lessee pro-
ducers’ share was approximately seventy-five million dol-
lars. Several law firms that represented various lessee
producers and had represented the class of lessee pro-
ducers through most or all of the class action litigation
filed applications for attorneys’ fees and expenses to be
paid from the lessee producers’ common fund recovery
of seventy-five million dollars. These law firms (class
counsel) represented appellees and cross-appellants in
this case. The fee applications were accompanied by re-
constructed time records and other documentation of time
spent and work performed. The applications sought at-
torneys’ fees in addition to payments the attorneys had
received throughout the course of the litigatio
3a
After appropriate notice to the producer class members
and landowners, the trial court held hearings on a motion
to approve the settlement agreement and on the applica-
tions for attorneys’ fees and litigation expenses. Appel-
lants in this case, three lessee producers, opposed the fee
applications. The district court approved the settlement
agreement and awarded class counsel an amount equal to
16.5% of the lessee producers’ seventy-five million dollar
share of the common fund. Appellants challenge the
courts’ decision to award attorneys’ fees based on a per-
centage of the common fund. They claim that the award
should have been based upon an analysis of the hours
reasonably spent multiplied by a reasonable hourly rate.
|
An award of attornevs’ fees is a matter uniquely
within the discretion of the trial judge who “has intimate
knowledge of the efforts expended and the value of the
services rendered.” United States v. Anglin & Stevenson,
145 F.2d 622, 630 (10th Cir. 1944), cert. denied, 324
U.S. 844, 65 S.Ct. 678, 89 L.Ed. 1405 (1945). We view
the award here in the context of approximately twenty-
five years of litigation including several state and federal
district court cases, at least six appeals to this circuit,
massive discovery and evidentiary development, and sev-
eral thousand docket entries. The total record of related
cases in this matter is among the largest ever amassed
in this cireuit. Perhaps most significantly for the ques-
tions before us, the district court judge who determined
the attorneys’ fee award was involved in substantially
all of this litigation. His experience with and knowledge
about the course of the litigation compels appellate court
deference to his determination in the absence of an abuse
of discretion. Lucero v. City of Trinidad, 815 F.2d 1384.
1386 (10th Cir. 1987).
The fee the trial court establishes must be reasonable.
In statutory fee cases “the most useful starting point for
4a
determining the amount of a reasonable fee is the num-
ber of hours reasonably expended on the litigation mul-
tiplied by a reasonable hourly rate.” Hensley v. Ecker-
hart, 461 U.S. 424, 434, 103 S.Ct. 1933, 76 L.Ed.2d 40
(1983). This formulation, generally known as the lode-
star method, provides the starting point for appellate
court review of statutory fee awards to determine
whether a trial court has abused its discretion. The trial
court in this case expressly did not rely on a lodestar
analysis of class counsel’s fee application. Failure to
rely, to some extent, on a reasonable lodestar analysis
would in most statutory fee cases constitute an abuse of
discretion. Ramos v. Lamm, 713 F.2d 546, 552-57 (10th
Cir. 1983). Here we must first decide whether a fee
award based on a percentage of a common fund, in a case
not involving statutory fees, is per se unreasonable. If it
is not, we must then determine whether the trial court
in this case abused its discretion nonetheless.
The Supreme Court has, in our judgment, answered
the first question presented here. In Blum v. Stenson, a
statutory fee case, the Court stated: “Unlike the calcula-
tion of attorney's fees under the ‘common fund doctrine’
where a reasonable fee is based on a percentage of the
fund bestowed on the class, a reasonable fee under § 1988
reflects the amount of attorney time reasonably expended
on the litigation.” 465 U.S. 886, 900, n. 16, 104 S.Ct.
1541, 1550, n. 16, 79 L.Ed.2d 891 (1984) (emphasis
added). Not only does this language implicitly recognize
basic differences in the rationale for calculating at-
torneys’ fees in common fund cases, but the Court also
explicitly described a percentage calculation as a “reason-
able fee” in those cases. We hold, therefore, that the
award of attorneys’ fees on a percentage basis in a com-
mon fund case is not per se an abuse of discretion
The award of attorneys’ fees is based on substantially
different underlying purposes in a common fund case
than in a statutory fees case. The common fund doctrine
5a
“rests on the perception that persons who obtain the
benefit of a lawsuit without contributing to its costs
are unjustly enriched at the successful litigant’s ex-
pense.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478,
100 S.Ct. 745, 749, 62 L.Ed.2d 676 (1980). Common
fund fees derive in part from the common law premise
that a trustee is entitled to reimbursement from the fund
administered. Trustees v. Greenough, 105 U.S. (15
Otto) 527, 532, 26 L.Ed. 1157 (1881). Fees in common
fund cases are extracted from the predetermined damage
recovery rather than obtained from the losing party.
Thus, common fund fees are neither intrinsically punitive
nor designed to further any statutory public policy. Con-
versely, statutory fees are intended to further a legisla-
tive purpose by punishing the nonprevailing party and
encouraging private parties to enforce substantive statu-
tory rights. See H. Newberg, Attorney Fee Awards,
§ 2.06 (2d ed. 1986); see generally, Report of the Third
Cireuit Task Force, Court Awarded Attorney Fees, 108
FRD 237 (1985). Thus, unlike statutory fees, which
result in a shifting of the fee burden to the losing party,
common fund fees result in a sharing of the fees among
those benefited by the litigation. As the footnote in
Blum recognizes, another important difference is that
normally a large number of people or entities benefit
from a common fund case while the number benefited is
not “a consideration of significance in calculating in the
award of statutory attorneys’ fees.” Blum, 465 U.S. at
900 n. 16, 104 S.Ct. at 1550 n. 160.
Notwithstanding these differences, the percentage re-
flected in a common fund award must be reasonable;
and, as in the statutory fee cases, the district court must
“articulate specific reasons for fee awards to give us an
adequate basis,” Ramos, 713 F.2d at 552, to review the
reasonableness of the percentage and thus the reasonable-
ness of the fee award. To determine reasonableness,
federal courts have relied heavily on the factors articu-
6a
lated by the Fifth Circuit in Johnson v. Georgia High-
way Express, Inc., 488 F.2d 714 (5th Cir.1974), in cal-
culating and reviewing attorneys’ fees awards. See e.g.
Ramos, 713 F.2d at 552. Because these factors measure
the attorneys’ contributions, they are also appropriate
in setting and reviewing percentage fee awards in com-
mon fund cases. The Johnson factors are: (1) the time
and labor involved; (2) the novelty and difficulty of the
questions; (3) the skill requisite 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) 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 abilicy of the attorneys; (10) the undesirability of
the case; (11) the nature and length of the professional
relationship with the client; and (12) awards in similar
eases. 488 F.2d at 717-19.
The trial court in this case found
that the amount represented by this percentage is
reasonable and is required to adequately compensate
such counsel for the legal services performed in this
litigation for the following reasons: The extraordi-
nary complexity and protracted nature of this helium
litigation since July, 1963; the amount of time spent
by each of counsel as reflected in the evidence, which
evidence is accepted by the Court; the high quality
of the service performed; the novelty of the issues;
the number of adverse parties and the quality of
opposing counsel; the vast number of hotly contested
issues at all stages of this litigation; the number of
cases, hearings, appeals and other proceedings con-
ducted by counsel, the vast number of documents,
exhibits, records and other materials required to be
reviewed, analyzed; the vast amounts of legal re-
search required on many novel substantive and pro-
cedural issues; the nature of the arrangements by
7a
such counsel for payment from clients of only mini-
mal or subsistence fees pending conclusion of the
cases and the highly contingent right of recovery
from the interpleader fund in view of the debatable
legal issues relating to liability and valuation; the
skill and tenacity of counsel in conducting settlement
negotiations and in refusing to accept very substan-
tial and appealing, but inadequate, settlement offers
at an earlier time; the enormously beneficial result
conferred thereby upon the members of the Class.
Such legal services were performed without unnec-
essary duplication and in an efficient manner.’
There is ample evidence in the record to support each
of the reasons relied upon by the trial judge. The court
here clearly considered all of the relevant Jolnson fac-
tors and applied them appropriately. The trial judge
considered the time and work involved. The record con-
tains documentation supporting the time claims. The
court records in this litigation attest to the novelty and
difficulty of the questions presented. This trial judge
personally observed many of the relevant stages of this
series of cases and thus was in a unique position to
judge the skill requisite to perform the legal service
properly as well as the experience, reputation, and ability
of the attorneys. The court specifically relied on these
factors in establishing the percentage. The record con-
tains evidence that a substantial portion of the work of
class counsel for many years was devoted to these cases,
and thus precluded or reduced their opportunity for other
employment. The “customary fee’ factor in a common
fund case is the same as the factor suggesting considera-
tion of awards in similar cases. We note that a review
1JIn its final order the district court amended the portion of its
proposed order that contained these findings. The court stated,
however, that it intended only that its final order be “incorporated
and integrated” with the affected part of the proposed order; there
was no intent to supersede these findings and not only are they
unaffected by the final order, but they clearly support it.
8a
of other federal common fund cases demonstrates that
a 16.5% attorneys’ fee award is clearly within the range
of awards deemed reasonable by other courts in similar
or less lengthy and less complex cases.*
The facts underlying both the “time limitations” fac-
tor and the “length of the professional relationship with
the client” factor are evident from the remarkable length
of class counsel’s representation and the litigation itself.
Finally, as we have observed, a decisive factor in this
common fund class action case is the amount involved
and the results obtained. In evaluating this factor the
trial judge appropriately balanced the interests of the
beneficiaries in light of the efforts of counsel on their
behalf.
Although the Johnson factors are relevant in deter-
mining a reasonable fee in a common fund case, the
inherent differences between statutory fee and common
fund cases could justify a trial judge’s decision to as-
sign different relative weights to those factors in the
two types of cases. For example, the first factor—time
and labor required—is an essential touchstone for re-
covery in a statutory fee case where reasonableness is
measured in part by reference to the lodestar analysis.
In a common fund case, however, although time and la-
bor required are appropriate considerations, the ninth
2 See, e.g., In re New York City Municipal Securities Litigation,
{1984 Transfer Binder| Fed.Sec.L.Rep. (CCH), Para 91,419 (S.D.
N.Y.1984) (339°) [Available on WESTLAW, 1984 WL 2411]; In
re Warner Communications Securities Litigation, 618 F.Supp. 735
(S.D.N.Y. 1985), aff'd, 798 F.2d 35 (2d Cir.1986) (24.5%); Murphy
v. Presly Co., {1981 Transfer Binder] Fed.Sec.L.Rep. (CCH), Para.
97,975 (C.D.Cal.1981) (22.7%); Van Gemert v. Boeing Co., 516
F.Supp. 412 (S.D.N.Y.1981) (37.39%); Bullock v. Kircher, 84 F.R.D.
1 (D.N.J.1979) (25.2%); Jezarian v. Csapo, 483 F.Supp. 385 (S.D.
N.Y. 1979) (23.7%); Valente v. Pepsico, Inc., [1979 Transfer
Binder] Fed.Sec.L.Rep. (CCH), Para. 96,921 (D.Del.1979) (27%)
| Available on WESTLAW, DCT database (1979 WL 1229)]; and
Rothfarb v. Hambrecht, 649 F.Supp. 183 (N.D.Cal.1986) (22%).
9a
Johnson factor—the amount involved and the results
obtained—may be given greater weight when, as in this
case, the trial judge determines that the recovery was
highly contingent and that the efforts of counsel were
instrumental in realizing recovery on behalf of the class.
We recognized in Ramos, 713 F.2d at 552, that rarely
are all of the Johnson factors applicable; this is par-
ticularly so in a common fund situation. We hold here
only that in awarding attorneys’ fees in a common fund
case, the “time and labor involved” factor need not be
evaluated using the lodestar formulation when, in the
judgment of the trial court, a reasonable fee is derived
by giving greater weight to other factors, the basis of
which is clearly reflected in the record.®
We are mindful of the subjective nature of the deter-
mination a trial judge must make when an award is not
anchored in the seemingly more objective lodestar for-
mula. The trial judge in a common fund case must “act
as a fiduciary for the beneficiaries” of the fund. Report
of the Third Circuit Task Force, Court Awarded Attor-
ney Fees, 108 F.R.D. 237, 251 (1985). Attorneys’ fees
necessarily reduce the amount that the common fund
beneficiaries recover. Instead of serving as an arbiter
in an adversarial setting, as is the case in a statutory
fee controversy, the trial judge must determine a reason-
able fee by weighing the appropriate interests of the
beneficiaries in light of the efforts of counsel on their be-
half. The need for meaningful appellate review in these
cases requires the trial court to articulate clearly the
3 Even though the “time and labor involved” factor does not
necessarily anchor the determination of reasonable fees in the
common fund situation, it is a relevant factor and the availability
of contemporaneous time records enhances the trial court’s ability
to properly evaluate it. The attorneys in this case did not con-
sistently maintain contemporaneous time records. In part this fail-
ure must be attributed to the fact that such records were neither
generally kept nor required during part of the period this litiga-
tion was pending.
10a
factors and supporting evidence that it relies upon.
The trial judge in this case met this requirement. We
find no abuse of discretion in the award of an amount
equal to 16.5% of the common fund where the relevant
Johnson factors were considered and the court’s deter-
mination is supported by evidence in the record.
Il.
One of the cases not tried by this trial judge and the
subject of the cross-appeal was Ashland Oil, Inc. v. Phil-
lips Petroleum Co., 364 F.Supp. 6 (N.D.Okla. 1973),
which was filed in the Northern District of Oklahoma
and resulted in this court’s en bane decision approving
the workback valuation method for valuing the helium.
Ashland Oil Ine. v. Phillips Petroleum Co., 554 F.2d 381
(10th Cir.1975) ‘en bane), cert. denied, 434 U.S. 921,
98 S.Ct. 396, 54 L.Ed.2d 278 (1977). This method was
then employed in the remainder of the cases that were
tried in the district court in Kansas.
Cross-Appellant, Ashland Oil Co. (Ashland), seeks
reversal of the district court’s determination that Ash-
land is foreclosed from seeking an award of fees and
expenses because of this court’s holding in Ashland I.
That case, however, was in a different posture than the
case on appeal here. We denied an award of attorneys’
fees in 1975 because we construed the litigation at that
time as “plain and simple commercial litigation” involv-
ing two competing parties—one of whom would recover
against the other. Ashland, 554 F.2d at 392 (quoting
F.D. Rich Co. v. Industrial Lumber Co., 417 U.S. 116,
130, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974)) The
posture of the case now is quite different: Ashland is
one of several beneficiaries of a common fund. The
amount of recovery against the liable’ parties is fixed.
Our analysis here of the purposes of attorneys’ fee
awards in common fund cases as a form of fee sharing
rather than fee shifting, demonstrates that a common
lla
fund case is quite different from simple commercial liti-
gation where one party recovers from another and attor-
neys’ fees are generally not recoverable. Here Ashland
is not attempting to recover attorneys’ fees from Phil-
lips in an amount over and above the amount of liabil-
ity—such an attempt is precluded by this court’s Ash-
land I holding. Rather, Ashland is seeking atterneys’
fees out of an amount established as the total award.
Thus, the percentage of the common fund recovery that
Ashland now seeks differs markedly from the fee request
considered by this court in Ashland I. Therefore, we hold
that our Ash/and I holding does not preclude Ashland
from receiving an award of attorneys’ fees and costs in
this case if, in the opinion of the trial court, such an
award is justified and warranted. We therefore reverse
the district court on the cross-appeal and remand for
further proceedings consistent with this opinion.
AFFIRMED IN PART, REVERSED IN PART AND
REMANDED.
12a
APPENDIX B
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
Civil Action No. KC-1980
(Consolidated with Civil Action Nos. KC-1946,
KC-1947, KC-1948, and KC-1969)
NATIONAL HELIUM CORPORATION,
on Plaintiff,
PANHANDLE EASTERN PIPE LINE COMPANY,
Defendant and
Third-Party
Plaintiff,
RALPH GROUNDS and HENRY HITCH,
oo Defendants,
ASHLAND OIL & REFINING COMPANY, et al.,
Third-Party
Defendants.
No. W-4613
OLIVER S. Brown, et al..
” Plaintiffs,
Vs. ;
MoBIL OIL CORPORATION, et a/.. and
CITIES SERVICE GAS COMPANY, et ai.,
Defendants.
SETTLEMENT PROCEEDINGS
LL
l3a
ORDER ON LESSEE-PRODUCERS
ATTORNEYS’ FEES AND EXPENSES
The only question which has hindered the orderly
progress in the execution of the Panhandle-National
Helium Settlement Agreement stems from the objections
interposed by Amoco Production Company ‘“Amoco’’),
Phillips Petroleum Company (“Phillips”), and Cities
Service Oil and Gas Company (“Cities”) to the meth-
odology used in the determination of the amount of rea-
sonable attorneys’ fees and expenses to be awarded to
the class representatives of the lessee-producers and their
counsel out of the lessee-producers’ gross share of the
Panhandle-National Helium Settlement Fund." We must
point out at this juncture that each of these complaining
gas producing companies will receive from this Settle-
ment substantial sums of money from the helex com-
panies * solely by the reason of their being class members
of the lessee-producer class in this long-enduring helium
litigation. Phillips had in fact attempted to withdraw
as a class member by disclaiming any of its rights to
and interests in a recovery, but was unsuccessful. In
1We wholeheartedly share Justice Powell's view who, writing
for the Court in Henseley v. Eckerhart, ——— U.S. ———, 103 8.Ct.
1933, 1941 (1984), stated that “[a] request for attorney’s fees
should not result in a second major litigation.” Irrespective of his
teaching, the dispute stemming from the inability of the parties
to reach an amicable compromise on the amount of attorney’s fees
in this Settlement has, in fact, devedoped into a “second major
litigation.”
2 Phillips will receive approximately $12,000,000, and Cities will
obtain approximately $9,120,000 for each of their 7/8th working in-
terests out of the present Settlement. While Amoco’s recovery in
this Settlement is comparatively smaller, approximately $1,000,000,
its ultimate recovery in the unsettled portion of the Consolidated
Helium Cases now on appeal would exceed $30 million if the judg-
ment is affirmed.
2 See Proceedings May 6, 1966, Dkt. No. 787, Tr. pp. 8, 9; Pro-
ceedings Feb. 15, 1967, Dkt. No. 1186, Tr. pp. 25, 26, 30, 56; Lia-
bility Trial, Tr. Vol. I, p. 44, Dkt. No. 1257; Special Requested
Findings by Phillips March 1, 1968, Dkt. No. 210 in KC-1980.
l4a
their effort to minimize the services rendered by counsel
for the lessee-producer representatives, it is clear that
the primary purpose of Amoco, Phillips, and Cities is
to obtain a larger proportional share of the fund.
The Court heard evidence on the issue of attorneys’
fees and expenses to be allowed to counsel for the lessee-
producer class on March 5, 6 and 7 of 1985. On March
7, 1985, Phillips, joined by Cities and Amoco, sought
leave to adjourn and continue the hearing for the pur-
pose of retaining and presenting expert witnesses for
their opinion testimony on the issue of reasonable attor-
neys’ fees. The Court found that while all parties had
full and complete notice of the hearing on this issue
several months prior to the hearing of March 5, 1985,
the hearing would be continued until March 25, 1985;
and that an interim prehearing conference should be
conducted on March 18, 1985.
An additional plenary hearing was held on the issue
of attorneys’ fees and expenses to be awarded on March
25 and 26 of 1985, when the parties rested. Phillips
continues to contend that there is insufficient evidence
in this record to sustain the Court’s findings for a rea-
sonable attorneys’ fee in this Settlement. The Court has
reviewed the files, heard all f the testimony, examined
all relevant documents submitted into evidence during
the hearing on March 5, 6, 7, 25 and 26 of 1985, and
considered the briefs and arguments of counsel. The
Court now makes the following rulings on the only issues
in dispute for the implementation of this Settlement.
We believe that an award of expenses and attorney fees
in an amount equal to 16.5% of the lessee-producers’
share of the Settlement Fund at this time is a reason-
able and conservative award required to adequately com-
pensate the class representatives and- counsel for the
legal services performed and expenses incurred in this
litigation for the purpose of this Settlement. We fur-
ther find the repayment of the advance expenses to the
}
l5a
lessee-producer class representatives hereinafter named
and the award of attorneys’ fees will place such class
representatives on an equal basis with approximately
500 unnamed class members of the lessee-producer class
who have benefitted by but not contributed financial
support to this class litigation.
The following class representatives of the lessee-
producer class since 1963 have advanced certain sums
for legal fees and expenses to finance and to sustain the
prosecution of the lessee-producers’ claim which even-
tually ripened into this partial settlement. The Court
finds that each of these representatives, under the
tutelage of their counsel, have adequately and diligently
represented all members of the lessee-producer class.
These representatives should be reimbursed from the
Settlement Fund for their individual contributions, to-
gether with an appropriate interest allowance. The in-
terest will be computed on the same basis as that interest
allowed by this Court’s October 18, 1983 Opinion of the
Consolidated Helium Cases, KC-1980. The average in-
terest allowance on these advancements, so calculated,
is approximately the same amount as the principal ad-
vanced. On this basis, the class representatives listed
hereinafter should recover an interest allowance and the
principal as follows:
Amoco Production Co. $110,223.00
(45° of $122,470.00 *) x2
Ashland Oil, Inc. $393,416.70
(45° of $437,129.68 °) x 2
* Amoco has contributed approximately $122,470.00 to the Joint
Expenses Fund, in addition to the periodic payments of attorneys’
fees and expenses it has paid directly to its Wichita counsel of
Gott, Young & Bogel in the total sum of $258,016.97. (Amoco Exh.
9).
5 The Foulston Firm which represents Ashland Oil, Inc., in this
litigation has also claimed 45% of approximately $502,764 for fees
and expenses incurred in the trial of Ashland Oil, Inc. v. Phillips
Petroleum Co., 364 F.Supp. 6, 15 (D.C.Okla. 1973), rev'd, 554 F.2d
l6a
Atlantic Richfield Co. $147,819.32
(45°% of $164,245.69) x 2
Dorchester Gas Producing Co. $ 29,544.04
(45% of $32,826.72) x2
Cabot Petroleum Corp. $170,119.70
(45% of $189,021.88) x 2
Helmerich & Payne Corp. $ 69,593.96
(45% of $77,326.64) x 2
Texaco, Inc. $134,781.86
(45% of $149,757.64) x2
Gulf Oil Corp. $100,769.84
(45% of $111,966.48) x 2
Mobil Oil Corp. $315,158.54
(45% of $350,176.16) x 2
Mapco Production Co. $ 82,879.10
(45% of $92,087.89) x2
Superior Oil Co. $ 32,254.46
(45% of $35,838.29) x 2
Diamond Shamrock $ 49,538.50
(45% of $55,042.78) x 2
381, 392 (10th Cir. 1975) (en banc). See LPX-C revised. For the
purpose of this Settlement, we wish to make plain that the Ashland
case substantively is a direct offshoot of the Consolidated Helium
Cases. The various valuation issues litigated in Ashland Oil were
an integral and interrelated part of, and later were consolidated
with the Kansas cases on appeal in the Circuit Court for the pur-
pose of reviewing the various generic factual and legal issues com-
monly intertwined in these cases. We are of the opinion that the
efforts of Ashland Oil and its counsel directly benefitted the present
settlement fund, and the work of counsel in such interrelated pro-
ceedings should be considered in determining the fees and ex-
penses allowed in this Settlement. We, however, must exclude this
sum of expenses and fees claimed in the Ashland case, supra, be-
cause the Circuit Court has ruled that such an award of fees and
expenses was not appropriate in that case; and thus, they could
not be recovered indirectly in this case.
17a
Panhandle-National has incurred $33,877.10 in pub-
lication expenses, two-thirds of which under the terms
of the Helium Settlement Agreement are to be reim-
bursed from the lessee-producers’ share of the Settle-
ment Fund. The Court finds that it is reasonable to
award Panhandle-Nationa]l $22,584.71 from the share of
the Settlement Fund allocable to the lessee-producers.
Cities Service Oil and Gas Company (successor to
Cities Service Oil Company) has been a member of the
lessee-producer class in W-4613. In KC-1980, it only
acted as a class representative in defending adverse
claims, not as a representative in pursuing a recovery.
In this connection, the only contribution Cities Service
Oil and Gas Company has had was its participation in
replenishing from time to time the Joint Expenses Fund.
The amount of that contribution is allocated to this
Settlement, plus the interest allowance, totals $32,869.78
(45% of $36,521.97) x 2. We find such sum should be
awarded to Cities Service Oil and Gas Company.
The lessee-producer class representatives have incurred
and will incur other expenses estimated at this time to
total $125,000.00. These expenses should be paid from
the lessee-producer class’ share of the Settlement Fund.
The law firm of Foulston, Siefkin, Powers & Eberhart,
as agent for such lessee-producer class, shall, under the
supervision of the Court, pay and account for the neces-
sary bills and expenses so paid, and file an accounting
statement reflecting the payment thereof within thirty
days after the final pay-out of the Fund.
We believe that an allowance of 16.5% is a proper
charge against the lessee-producer class’ share of the
Fund and is a reasonable and fair compensation for the
expenses incurred and services rendered in representing
the lessee-producer class in connection with this Settle-
ment. There is no issue as to the division of attorneys’
fees between the representatives of the class, and we
will not disturb their agreed upon allocation of attor-
18a
neys’ fees allowed after payment of all proper advances
to the class representatives as noted above. The lodestar
formula commonly used in determining the applications
for attorney fees in cases when such an award is author-
ized by a specific statutory provision is not, in our opin-
ion, legally applicable to this “common fund case” and
equitably appropriate under all of the facts and circum-
stances of this litigation, see Blum v. Stenson, —— US.
, 104 S.Ct. 1541, 1549 note 16 (1984). We believe
that the award of attorneys’ fees less expenses on a per-
centage basis from a fund recovered for the benefit of
the class in this case is not inappropriate, see Boeing Co.
v. Van Gemert, 444 U.S. 472, 478-491, 62 L.Ed 2d 676,
681-682 (1980). We point out that if we had attempted
to adopt the lodestar formula, the lessee-producers’ attor-
neys would have met with ease all of the applicable
lodestar standards for the determination of a reason-
able and fair fee for the services rendered to the class,
See Johnson v. Georgia Highway Express, Inc., 488 F.2d
714 (5th Cir. 1974),
In the early phase of this litigation, counsel and their
clients found no necessity to maintain detailed records
for services rendered. The task undertaken to recon-
struct these time records retrospectively for the lodestar
formula calculation was not made any easier when some
of those counsel who sowed the seeds of their labor in
this litigation have not lived to enjoy the fruits of their
toil. We have examined the reconstructed records care-
fully. With this Court’s intimate involvements and ob-
servations from presiding in this litigation since its fil-
ing in 1963, we find the expended hours claimed in the
verified fee applications and the attached affidavits to
be reasonably acceptable as one part of a lodestar for-
mula determination. See Ramos v. Lamm, 713 F.2d 546,
553 note 2 (10th Cir. 1984).
The Amoco’s contention that the payments of attorney
fees to its Wichita counsel of Gott. Young & Bogel in
the total sum of $242,035 during the progress of the
19a
Consolidated Helium Cases for all services rendered by
them is sustained. (Phillips Exh. S-9; Amoco Exh. 5;
Affidavit of Nortorn Standevern; Krol, Tr. of March 26,
1985, at pp. 153-154; Hickman, Tr. of March 26, 1985,
at pp. 163-164.) The Court finds that the Gott, Young
& Bogel firm was employed in this helium litigation by
Amoco pursuant to Amoco’s employment policy of out-
side counsel. Amoco has paid the law firm of Gott,
Young & Bogel for the legal services it rendered to
Amoco from June 23, 1964 through January 31, 1985
in the Consolidated Helium Cases and Brown v. Mobil
Oil Corp., W-4613. (Phillips Exh. S-9). It follows that
such a contention has precluded the reimbursement of
such payments as costs in this Settlement proceeding.
Its payments to the Joint Expenses Fund in this class
action are reimbursable as noted above, however.
The percentage portion of expenses and fees awarded
to lessee-producer class representatives and to their coun-
sel set forth hereinabove shall be deducted and paid from
the Fund to be disbursed to and for the account of the
lessee-producer class members as provided in the Helium
Settlement Agreement. In the event any party should
appeal the assessment of attorneys’ fees and expenses
heretofore determined by this Court, twenty percent
(20%) of that appealing lessee-producer’s share of the
Helium Settlement Fund attributable to its working in-
terest ownership shall be severed and the balance thereof
shall be paid to that lessee-producer. As to the severed
portion of the fund, it shall be retained by the Clerk of
this Court for investment in the U. S. Treasury Bills
for a period not to exceed one (1) year subject to fur-
ther Orders of the Court.
The Court specifically orders that the Helium Settle-
ment Fund, except for the severed portion, shall be paid
out to those parties not objecting to and appealing from
the Court’s Order, in accordance with the time sched-
ules being set forth in the Helium Settlement Agree-
20a
ment. Those parties objecting and appealing the Order
for attorneys’ fees and expenses shall comply with all
procedural requirements for consummation of all pay-
ments and shall pay the royalty interests as provided
heretofore in the Helium Settlement Agreement, not-
withstanding their objections to the attorneys’ fees and
expenses as determined and awarded to the lessee-pro-
ducer class representative and counsel therefor in this
Settlement.
Accordingly. the provisions beginning from paragraph
20 on page 26 to paragraph 21 on page 32 of the Pro-
posed Order Approving Helium Settlement Agreement
are amended. Pursuant to the findings and conclusions
set forth in this Order on Lessee-Producers’ Attorneys
Fees and Expenses, the rulings decreed herein are in-
corporated in and integrated with the Proposed Order
Approving Helium Settlement Agreement. The Proposed
Order Approving Helium Settlement Agreement, having
been amended and conformed accordingly, is approved.
So Ordered.
Date this 13 day of May, 1985.
/3s/ Wesley E. Brown
WESLEY E. BROWN
United States District
Senior Judge
2la
APPENDIX C
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
Civil Action No. KC-1980
(Consolidated with Civil Action Nos. KC-1945,
KC-1946, KC-1947, KC-1948, and KC-1969 )
NATIONAL HELIUM CORPORATION,
Plaintiff,
V.
PANHANDLE EASTERN PIPE LINE COMPANY,
Defendant and Third
Party Plaintiff,
RALPH GROUNDS and HENRY HITCH,
Defendants,
V.
ASHLAND OIL & REFINING COMPANY, et al.,
Third-Party
Defendants.
Civil Action No. W-4613
OLIVER S. BROWN, et al.,
Plaintiffs,
v.
MopsIL OIL CORPORATION, et a/., and
CITIES SERVICE GAS Co., et al.,
Defendants.
Ce
22a
ORDER APPROVING HELIUM SETTLEMENT
AGREEMENT
On the 5th day of March, 1985, there came on for
hearing the Joint Motion for Approval of Helium Settle-
ment Agreement, which motion was filed in the above
captioned cases by those parties who entered into such
agreement as of July 17, 1984, to-wit:
Helex Companies, Panhandle Eastern Pipe Line
Company (Panhandle) and National Helium Cor-
poration (National) ; and Landowners, Robert Lar-
rabee and Vincent Youngren by and through their
counsel, acting individually and as representatives
of the members of Landowner Classes described in
paragraph numbered (2) of the Helium Settlement
Agreement; and Amoco Production Company, Ash-
land Oil, Ine., Atlantic Richfield Company, Cabot
Pe voleum Corporation, Diamond Shamrock Corpora-
tion, Dorchester Gas Producing Company, Hel-
merich & Payne, Inc., Mapco Production Company,
Mobil Oil Corporation, The Superior Oil Company
and Texaco, Ine. by and through their counsel, act-
ing individually and as representatives of the Lessee-
Producer classes as described in paragraph num-
bered (3) of the Helium Settlement Agreement.
Definitions
For the purposes of this Order, the following terms
shall have the meanings indicated, to-wit:
Clerk—means the Clerk of the United States District
Court for the District of Kansas.
Helium Settlement Agreement—means the settlement
agreement entered into as of July 17, 1984, by the
parties as set out above, a copy of which is attached to
the Joint Motion for Approval of Helium Settlement
Agreement.
23a
Helex Companies—means Panhandle, National, Na-
tional Distillers and Chemical Co., a Virginia corpora-
tion, and all of their subsidiaries, affiliates, and the suc-
cessors and assigns of all such companies.
Input Point—means a point on the Panhandle pipeline
system which receives natural gas delivered to it and
ultimately available for processing at the plant of
National.
National—meais National Helium Corporation.
Panhandle—means Panhandle Eastern Pipe Line
Company.
Person—means either a natural individual, concern,
or other legal entity.
The Court Settlement Fund—means the funds which
have been paid or will be paid by Panhandle to the Clerk
as recited in paragraph numbered (5) of the Helium
Settlement Agreement.
KC-1980—means Case No. KC-1980 as appearing on
the caption hereof.
W-4613—means Case No. W-4613 as appearing on the
caption hereof insofar as the case covers severed claims
relating to helium extracted by National’s plant.
Supplier—means a Lessee-Producer who has supplied
helium-bearing natural gas to National’s plant. The
term includes Lessee-Producers and pipeline companies
who supplied gas under exchange agreements.
First-tier Supplier—means a Supplier who supplies
such gas directly to Panhandle.
Second-tier Supplier—means a Supplier who supplies
such gas to a First-tier Supplier.
General Findings
After examining the Court files of the captioned cases,
hearing sworn statements of counsel and evidence offered
eT ee ER eT
24a
by the parties, and considering the arguments and au-
thorities of all parties duly appearing and desiring to be
heard, the Court finds and orders:
1. This Court has jurisdiction of the subject matters
involved in KC-1980 by virtue of 28 U.S.C.A. § 1335,
Fed. R. Civ. P. 22, and related statutes as previously
held by this Court and affirmed by the Circuit Court of
Appeals for the Tenth Circuit. 327 F.2d 1003 (10th Cir.
1964).
2. This Court has previously fully considered and
overruled motions to remand W-4613 to the state court
and has determined that this Court has jurisdiction of
the subject matter involved in W-4613 by virtue of 28
U.S.C.A. § 1441(b) and (c). The Court has severed the
claims in Case W-4613 relating to the helium extracted
by National’s plant. The Court again determines that
it has jurisdiction of the parties and subject matter as |
to these severed claims.
|
3. The Landowner classes previously established and
certified by the Court are the following:
(as described in Civil Action No. KC-1980) :
. . . the persons, firms and corporations owning a
mineral interest in land from which helium has
been, or is being, or will be severed from the ground
in connection with or because of production under
oil and gas leases, which helium has been, is being
or will be taken into possession by the United States
of America in Seward County, Kansas at the de-
livery point described in that certain contract be-
tween the United States of America and plaintiff
in interpleader National Helium Corporation dated
October 13, 1961.
and
(as deseribed in Civil Action No. W-4613) :
and
25a
All persons and concerns who own or have owned
a mineral interest in land as to which helium has
been, is being or will be severed from the ground in
connection with or because of production under oil
and gas leases, which-helium has been, is being, or
will be removed from gaseous streams flowing from
wells productive under such leases, with such re-
moval being done in... [a plant] in Seward...
[County], Kansas, ... owned by National Helium
Corporation, or who have been, are entitled to or
will be entitled as lessors, to royalty payments by
reason of the production or marketing or natural
gas pursuant to such leases since the beginning of
such removal of such helium from such streams in
such ... plant and the heirs, executors, adminis-
trators, trustees and assigns of such persons; the
officers, successors, trustees, and assigns of any such
concern as are existing, dissolved or dormant cor-
porations; the executors, administrators, trustees,
successors and assigns of such persons or concerns
as are or were partners or in partnership; the un-
known guardians, conservators and trustees of such
persons as are minors or are in anywise under
legal disability.
The Lessee-Producer classes previously established
certified by the Court are the following:
(as deseribed in Civil Action No. KC-1980) :
. the persons, firms and corporations denomi-
nated “lessee-producers,” who are the owners of
leasehold interests in the oil and gas leases (from
which gas is produced for delivery to Panhandle
Eastern Pipe Line Company) and who deliver, have
delivered or will deliver helium contained in gaseous
streams directly or indirectly to Panhandle Eastern
Pipe Line Company, which helium has been, is being
or will be removed and delivered by plaintiff as
Interpleader National Helium Corporation into the
26a
possession of the United States of America at the
delivery point described in that certain contract
between the United States and National Helium
Corporation dated October 13, 1961.
and
‘as described in Civil Action No. W-4613)
All persons, firms, corporations, or concerns who are
or have been owners of leasehold interest under the
oil and gas leases covering the mineral interests in
land owned by the members of the Landowner-
Lessor Class above described (in the Landowner
Class definition in Civil Action No. W-4613) or who
are or have been making, or required to make roy-
alty payments to lessors by reason of natural gas
production under such leases since the beginning or
such removal of helium from such streams, or who
are or have been the owners of unleased mineral
interests in land from which and while helium has
been so severed and removed, and the heirs, execu-
tors, administrators, trustees and assigns of such
persons; the officers, successors, trustees and assigns
of any such concerns as are existing, dissolved or
dormant corporations; the executors, administrators,
trustees, successors and assigns of such persons or
concerns as are or were partners or in partnership;
the unknown guardian, conservators and trustees of
such persons as are minors or are in anywise under
legal disability.
By letters dated August 7 and 9, 1984, Gulf Oil Cor-
poration and Phillips Petroleum Company, respectively,
members of the Lessee-Producer classes, ratified and
adopted the Helium Settlement Agreement. Copies of the
letters were identified and received as PEPL Exhibits
Nos. S-1 and S-2.
5. The procedures for giving notice of the settlement
agreement and of this hearing to members of the classes
27a
(including suppliers of gas under exchange agreements)
in person and by publication prescribed by order of the
Court dated October 16, 1984, have been faithfully and
properly carried out by the parties responsible therefor.
As a result, the Court concludes that adequate notice has
been given to all parties to the Helium Settlement Agree-
ment and to members of affected classes.
6. The notices referred to in paragraph number 5
above provide that:
. if any member of such classes wishes to show
cause why his or her interests have not been ade-
quately represented by the named representatives of
the Classes or to object to the proposed settlement,
such cause or objection must be made by the filing
of an appropriate pleading on or before the 19th day
of February, 1985, with the Clerk of this Court.
The Court finds that no such cause or objection has been
filed with the Clerk of this Court.
7. Paragraph numbered (9) of the Helium Settle-
ment Agreement sets out the annual volume of helium
extracted by National for each year as pertains to each
of the captioned cases according to the best knowledge
of the parties. Paragraph numbered (10) provides that
subsequent disagreements which cannot be resolved by
the parties shall be determined by the Court. The parties
have now informed the Court that no such disagreements
exist. Therefore, the Court finds that the volumes set
out in paragraph numbered (9) are correct and shall be
the basis used for the ultimate distribution of the Court
Settlement Fund.
8. The Court previously found that both the Lessee-
Producers and Landowner classes in Case No. KC-1980
met the requirements of Rule 23(b){1)(A) and (B)
Fed R. Civ. P. The Court further finds that this Court
has jurisdiction of the members of the classes described
in paragraphs numbered 3 and 4 above and of all other
28a
parties to the captioned cases so that this Order is bind-
ing on all such persons and parties.
9. This Court has presided over all trial court pro-
ceedings in this litigation since KC-1980 was filed in
1963. The Court has observed counsel in the conduct of
the cases and believes that counsel for all parties are
competent and experienced and have demonstrated dili-
gence and vigor in their advocacy on behalf of their
respective clients. The Court finds that such counsel
were authorized by their clients to negotiate the settle-
ment and that they did so free of any improper coercion
or collusion. The Court gives much weight to the ex-
pression by such counsel that in their opinion the settle-
ment is in the interest of their clients and of the mem-
bers of the classes.
Case No. KC-1980
10. (a) Previous proceedings in KC-1980 in this
Court include a separate trial as to liability and an
origina! trial and further trial upon remand by the Cir-
cuit Court of Appeais for the Tenth Circuit as to re-
maining issues. At the trial on remand from the Circuit
Court, held from November 29, 1982, to December 9,
1982, the evidence on behalf of the Lessee-Producers and
Landowners would indicate wellhead values ranging up |
to $13.71 per Mcf of helium while the evidence offered
by Panhandle and National would indicate a value of
approximately $.04 per Mcf. This Court made extensive
findings of fact and conclusions of law in a memorandum
entered on October 18, 1983, which the Court now adopts
and makes a part hereof by reference. The Court con-
cluded that a fair value of helium at the wellhead for
which the Helex companies should compensate the Lessee-
Producers and Landowners was $3.82 per Mcf of helium
extracted by National at its Liberal, Kansas, plant and
sold to the United States. The Helium Settlement Agree-
ment provides that this amount will be reduced to $3.60
il
29a
per Mcf or a reduction of approximately 5.8% and fur-
ther provides for payment of interest at the rates fixed
by the Court. All issues relating to value and interest
were highly contested. The Court is of the opinion that
this is a reasonable discount or reduction in order to
avoid further delay and the expense and uncertainties
involved in the present appeal to the Cireuit Court and
possibly further trial and appellate proceedings.
‘b) The Court is informed that the United States
who entered the case as an intervenor has consented to
the settlement as required by paragraph numbered (20)
of the Helium Settlement Agreement.
(ec) Threfore, the Court finds that settlement of Case
No. KC-1980, as contained in the Helium Settlement
Agreement is reasonable and fair to all parties and class
members and should be approved.
Case No. W-4613
11. (a) At the time the Helium Settlement Agree-
ment was entered into, pretrial proceedings in Case No.
W-4613 were virtually completed. All discovery had been
completed, the parties had submitted proposed pretrial
orders and the case was set for trial. On January 5,
1984, this Court entered an order determining that the
liability principles of KC-1989 and the other Consolidated
Helium cases were equally applicable to cases involving
private sales. All helium involved in W-4613 was sold
on the private market and was produced in the same
facilities as was the helium in Case No. KC-1980. Both
categories of helium were produced during the same
period of time except, that the time of production in
Case No. W-4613 extended beyond the time of production
in Case KC-1980 by approximately seven (7) months.
Therefore, the cost of extraction of the two categories of
helium would be approximately the same. The average
sales price of the W-4613 helium was approximately
—————————
30a
$14.48 per Mcf while the average sales price of the
KC-1980 helium was $12.56 per Mef. The higher price
received for the W-4613 helium tends to be offset by the
fact that National incurred some additional costs of
sales and of holding in inventory the W-4613 helium.
Panhandle and National have introduced evidence that
the cost of storage, shrinkage, and carrying charges in-
curred in selling the W-4613 helium amounts to an aver-
age of $2.32 per Mcf. Based upon the Court’s findings in
KC-1980 and upon the evidence submitted herein by the
parties, the Court finds that the value of helium involved
in W-4613 is generally comparable to the value of
helium involved in KC-1980.
(b) The Court finds that settlement of Case No.
W-4613, as contained in the Helium Settlement Agree-
ment is reasonable and fair to all parties and class mem-
bers and should be approved.
THEREFORE, IT IS ORDERED, ADJUDGED, and
DECREED that the Joint Motion for Approval of
Helium Settlement Agreement filed in the captioned cases
on October 12, 1984, is hereby granted and the Helium
Settlement Agreement dated July 17, 1984, a copy of
which is attached to such joint motion, is in all things
hereby approved. IT IS FURTHER ORDERED, AD-
JUDGED, and DECREED that after payment to the
Clerk by Panhandle and/or National of all funds re-
quired to be paid by paragraph numbered (5) of the
Helium Settlement Agreement, the Helex companies are
fully discharged of any further liability to the members
of the Landowner and Lessee-Producer classes as a re-
sult of any helium produced at National’s Liberal, Kan-
sas, plant prior to the date of this Order and are further
discharged of any liability to account to the members of
the classes for any sums received by National in the
settlement of its breach of contract action against the
United States in the United States Court of Claims, Case
No. 158-75. The release of liability on the part of the
gla
Helex companies as provided in this paragraph shall not
relieve Panhandle of its obligation to assist in distribu-
tion of the Helium Settlement Fund as provided in para-
graph numbered 17.
Allocation of He lium to Input Points
12. There came on next for consideration the matter
of determining the amount of helium which shall be at-
tributed to each input point for the purpose of deter-
mining the proportionate part of the Court Settlement
Fund which shall be allocated to the persons supplying
natural gas at such input points. The expert witness
James D. Brown, offered by Panhandle, identified PEPL
Exhibit No. S-4, as a computer print-out reflecting, to
the best of the ability of Panhandle, the volumes of
helium extracted by Natural which had been supplied
at each input point. In constructing the exhibit, Pan-
handle determined for each month during which helium
was extracted in National’s plant:
(1) The volume of natural gas, including the mol
percentage helium component thereof, delivered
to Panhandle at each input point on Pan-
handle’s pipeline subsystem ;
(2) The percent, calculated on an annual basis, of
the natural gas delivered into the Kansas,
Texas and Huber-Light subsystems, respec-
tively, which did not become available to Na-
tional’s plant because the gas was sold for agri-
cultural, commercial and other uses, was lost
through equipment failures or was otherwise
diverted or lost from the subsystem (| ‘Diverted
Gas”):
3) The volumes of gas available at National’s
plant from each of the three pipeline subsys-
tems that were processed and that were by-
passed around the plant;
al
32a
(4) The volumes of natural gas delivered to Pan-
handle at certain wellhead input points, which
volumes, in turn, were isolated from other vol-
umes of Panhandle and were redelivered to
Colorado Interstate Gas Company (CIG), who
in turn made the volumes available to the
Alamo helium extraction plant; and
-
(5) The volume of helium extracted and sold by
National.
Panhandle experts first adjusted pipeline input gas vol-
umes by excluding from the printout such volumes which
were isolated from other volumes of Panhandle and were
redelivered by Panhandle through Measuring Station
3934 to CIG for the Alamo plant for processing. The
experts then adjusted volumes at input points on each of
the three pipeline subsystems by reducing volumes by
the percent factor of upstream Diverted Gas and ad-
justed volumes available at National’s plant from each
of the three subsystems to reflect the portion of the avail-
able volumes that were processed in the plant and the
portion that was bypassed around the plant. They then
determined the volume of helium attributed to each input
point and adjusted the volume proportionately so that
the aggregate volume of helium from all input points
would equal the volume of helium which was extracted
by National.
13. Counsel for the Lessee-Producers stated that ex-
perts on behalf of the Lessee-Producers had spent ap-
proximately 1,000 to 1,500 hours examining and verify-
ing the data reflected in PEPL Exhibit No. S-4 and
that they concurred in the results reflected in the ex-
hibit. No objections were offered to the exhibit on be-
half of the Landowner classes or by any party.
THEREFORE, IT IS ORDERED, ADJUDGED, and
DECREED that PEPL Exhibit No. S-4 is approved and
accepted by the Court and that the volumes of helium
33a
reflected on such exhibit as having been supplied at each
input point and extracted by National at its Liberal,
Kansas, plant is adopted as the basis for distributing
the Court Settlement Fund to the Landowners and the
Lessee-Producers entitled thereto.
Distribution of the Court Settlement Fund
14. The Court next considered the mechanism to be
applied in making distribution of the Court Settlement
Fund to the numerous leasehold working interest owners
and royalty owners. Panhandle’s expert, James D.
Brown, identified PEPL Exhibit No. S-6 as a computer
printout reflecting, to the best of the ability of Pan-
handle for the period of time and for all helium that was
produced at National’s plant, in alphabetical sequence,
the name, address and decimal ownership interest of each
supplier of natural gas, and each royalty owner to whom
Panhandle made payment for natural gas, and the vol-
ume of helium allocated to the Supplier’s or royalty own-
er’s interest on a month-to-month basis and totaled by
year and entire period of production. The ownership
reflected on PEPL Exhibit No. S-6 is based upon owner-
ship records maintained by Panhandle in the ordinary
course of its business. The basis for the volume of helium
allocated to the interest owners at each input point is
the allocation of helium reported in PEPL Exhibit S-4.
15. The witness Brown testified that since the initial
production, there have been numerous transfers of inter-
ests in natural gas, including the helium component,
owned by Suppliers and royalty owners as a result of
deaths, assignments and other transfers as to which the
owners of the interests in such natural gas, including
helium, have not supplied information sufficient to make
a determination of the interest owner or the period of
time during which it held that interest. The Court finds
that the most appropriate manner of determining the
actual ownership is to tender payment to the record own-
ee
34a
ers (i.e., those owners who are shown to have had an
ownership interest in wellhead production as produced
during the period from 1963 and through 1973), condi-
tioned upon certification by that recipient of its entitle-
ment to that total distribution. The Court further finds
in the event that a recipient does not certify entitlement
to the total distribution, that recipient should supply
information reasonably available to it that would assist
in the determination of the identity of those interest
owners entitled by the distribution. In cases of death,
assignment or other transfer of the right to receive pay-
ment, the successor interest owner, in order to receive
payment, shall submit proof of succession in ownership.
16. The Court determined that the following proce-
dures will fairly, adequately and reasonably protect each
working interest and royalty owner in receiving his pro-
portionate share of the Court Settlement Fund, and
accordingly the Court directs that such procedures be
carried out.
(a) Within 10 days from the date of this Order, Pan-
handle shall deliver or mail to each First-tier Supplier
a copy of that portion of PEPL Exhibit No. S-6 per-
taining to the First-tier Supplier’s interest. In addi-
tion, Panhandle shall file with the Clerk a certification
that it has made the delivery or mailing to the First-tier
Supplier of the respective portions of PEPL Exhibit No.
S-6 in compliance with this Order.
(b) Within 60 days from the date of this Order, each
First-tier Supplier to whom Panhandle shall have deliv-
ered or mailed its report shall deliver or mail to each
of its Second-tier Suppliers, a report showing on a
month-to-month basis, according to the Supplier’s records
kept in the ordinary course of its business, the decimal
ownership interests of the Second-tier Supplier, and the
volume of helium allocated to the Second-tier Supplier
attributable to each input point. In addition, the First-
tier Supplier shall file with the Clerk, (i) a copy of the
35a
reports delivered or mailed to the Second-tier Suppliers
and (ii) a report showing as to volumes of allocated
helium at each input point attributable to royalty owners
the name, address and decimal ownership interest, and
amount of helium allocated to each royalty owner to
whom the First-tier Supplier made payments.
(ec) Within 90 days of the date of this Order, each
Second-tier Supplier to whom the First-tier Supplier
shall have delivered or mailed its report shall file with
the Clerk and mail to the First-tier Supplier a report
showing as to the volumes of allocated helium at each
point reported by the First-tier Supplier (i) the decimal
ownership interest of the Second-tier Supplier, (ii) the
name, address and decimal percentage ownership of each
supplier to it and (iii) the name, address and decimal
ownership interest of each royalty owner to whom the
supplier made payments.
(d) Suppliers to Second-tier Suppliers, and any
others in the chain of title of Suppliers from the well-
head to National’s plant shall, in like manner, file with
the Clerk reports required to asure distribution of the
Helium Settlement Fund to the persons entitled thereto.
When Panhandle, First-tier Suppliers, Second-tier Sup-
pliers or any other Suppliers mail or deliver reports
described in subparagraphs (a), (b) and (c) above, such
report shall be accompanied by the following: (i) a copy
of this Order, and (ii) a copy of the Helium Settlement
Agreement.
(e) For good cause shown, the Court may extend the
time to make the reports and filing required by this
Order or otherwise modify the procedure for distribution
for any specific Lessee-Producer. However no portion of
the Court Settlement Fund shall be distributed to a Sup-
plier who has not filed the report required by this Order,
certified and warranted entitlement to the amount
claimed and certtified and demonstrated that it will de-
liver or mail distribution of the share thereof to the other
36a
entitled Suppliers and Landowners within 10 days of
receipt of the distribution.
17. After time for appeal from this final judgment
has expired without such an appeal having been made,
or as provided in paragraph 21, infra, and after pay-
ment of expenses and attorney fees as allowed in para-
graphs 19 and 20 hereof, the Clerk or such other entity
as shall be designated by the Court, shall distribute the
Court Settlement Fund in the proportion that helium is
allocated to each input point in PEPL Exhibit No. S-4
to those persons who have heretofore been responsible
for making payment of leasehold working interests and
royalties for natural gas delivered to each input point.
The distribution to each such person shall be calculated
in the same manner as the calculation of the liability of
National and Panhandle for principal and interest under
paragraph numbered (7) of the Helium Settlement
Agreement reduced proportionately by the amount of ex-
penses and attorney fees allowed by the Court. The
persons receiving such funds shall promptly distribute
the funds as agents of the Court to leasehold working
interest owners and royalty owners entitled thereto.
Each Lessee-Producer is authorized at its option to with-
hold from distribution any amounts for which is may be
liable for severance or production taxes to any state
taxing authority until its liability for such tax is deter-
mined. In the event any Lessee-Producer dees so with-
hold, then it must proceed with diligence to seek a final
determination of such liability. Although the parties are
of the opinion that no such liability exists, this provision
is included merely as a precaution.
18. The Court retains jurisdiction over each person
to whom a distribution is made and over all funds dis-
tibuted until received by the ultimate beneficiary. Each
Supplier shall file with the Clerk within sixty (60) days
of such distribution or tender thereof a report showing
that it has made or tendered distribution in compliance
37a
with this Order. Money distributed into pre-existing
suspense accounts need not be returned to the Clerk at
the end of the 60-day period as long as the Supplier
certifies to the Clerk that it is diligently attempting to
determine the new ownership, or otherwise abate the
reason distribution is suspended, or, unless on showing
of good cause, the Court orders the return of the share
to the Clerk. Following this, each Supplier who is unable
to effectuate complete distribution to one or mere persons
entitled thereto shall return to the Clerk of this Court
by July 1, 1986, all funds which were not effectively
distributed by that time. Such Supplier shall accompany
the return of such funds with a final report specifying
the reason why funds owing to each person having a
royalty or other interest have not been effectively paid
and distributed to such person. The Clerk will retain all
such funds, and other unclaimed or unpaid funds, in an
interest-bearing escrow account, to abide the further
order of this Court.
Attorney Fees and Expenses
There came on next for consideration the applications
of counsel for the Landowners and Lessee-Producers and
representatives of the classes for allowance of attorneys’
fees and expenses to be paid from the Court Settlement
Fund.
19. The Court has conducted the complex and_ pro-
tracted Consolidated Helium Litigation for the past
twenty-two years since the cases were instituted in this
District. KC-1980 was one of such consolidated cases,
which commenced in 1963. W-4613 was commenced in
1971 in state court and was removed to this Court that
same year. Based upon the Court’s knowledge of the
intensely litigated issues in these cases and of the filings
. and proceedings herein, upon the testimony and evidence
adduced at this hearing, and upon the court’s knowledge
of the role played by various counsel, the Court makes
the following findings:
|
38a
(a) The legal services performed and the expenses
incurred in the severed portion of W-4613 and in KC-
1980 cannot be segregated from the services rendered in
the remaining consolidated cases and the nonsevered por-
tion of W-4613. Based upon volumes of extracted helium
subject to this settlement as compared to total volumes
of helium involved in the consolidated cases, and based
upon the relative value of the helium as fixed by the
Court in KC-1980 as compared to the helium extracted
by Cities Service and Northern in the other cases, the
Court finds it reasonable to allocate 45% of the legal
services and expenses of the Lessee-Producers involved in
the consolidated cases to the present settlement of KC-
1980 and W-4613. Since the Helium Settlement Agree-
ment provides that Panhandle will not pay its affiliated
companies in the Lessee-Producer classes, but that those
affiliated companies will pay their Landowner-Lessors,
the Court finds it reasonable to allocate 51.52% of the
expenses of the Landowner class involved in the con-
solidated cases, to the present settlement of KC-1980.
The Court further finds it reasonable to allocate 11.78%
of the expenses of the Landowner-Lessors to the present
settlement of W-4613 covering helium extracted by Na-
tional and sold in the private market. Fees and expenses
of Landowners’ counsel shall be paid out of the royalty
share of the Court Settlement Fund. Fees and expenses
of Lessee-Producers shall be paid out of the working
interest share of the Court Settlement Fund.
(b) Counsel for the Landowner class representatives,
and for the Landowner class, are awarded reasonable
attorneys’ fees and out-of-pocket expenses as follows:
Dale M. Stucky of the firm of Fleeson, Gooing, Coul-
son & Kitch, Wichita, Kansas, has been principal counsel
for the Landowner class. He has been assisted by other
members of his firm; by the firm of Kramer, Nordling,
Nordling & Tate, Hugoton, Kansas, and by counsel from
Oklahoma. The legal services of such counsel have been
39a
of great benefit in securing the recovery on behalf of the
Landowner-Lessor class herein. Reasonable attorneys’
fees for all work performed by these counsel are hereby
awarded in the amount of one-third (13) of the share
of the Court Settlement Fund allocable to members of
Landowner-Lessor classes, after deducting from such
share the reasonable litigation expenses chargeable
against members of Landowner-Lessor classes, when the
amount of the Court Settlement Fund is finally estab-
lished at the time of distribution pursuant to the order
of this Court. Out-of-pocket expenses are awarded in the
amount of $187,450.56.
(c) Panhandle has incurred $33,877.10 in publication
expenses, two-thirds of which under the terms of the
Helium Settlement Agreement are to be reimbursed from
the Lessee-Producers’ share of the Court Settlement
Fund. The Court hereby awards Panhandle $22,584.71
from the share of the Court Settlement Fund awarded to
the Lessee-Producers.
20. The Court heard evidence on the issue of attor-
neys’ fees and expenses to be allowed to counsel for the
Lessee-Producer class on March 5, 6, and 7 of 1985.
On March 7, 1985, Phillips Petroleum Company and
others sought an adjournment and continuance of the
hearings for the purpose of retaining and presenting an
expert witness on the issue of attorneys’ fees. The Court
found that while all parties had full and complete notice
of the hearing on this issue several months prior to the
hearing date of March 5, the hearing would be adjourned
until a further hearing date at 1:30 p.m. on March 25,
1985; and that a prehearing conference would be held at
1:30 on March 18, 1985. Thereupon, on the day of
March, 1985, the Court, having heard the evidence and
arguments presented by the parties, makes the following
findings and orders:
(a) The Court finds that the following Lessee-
Producer class representatives, through their counsel,
40a
have adequately and diligently represented the Lessee-
Producer class, and that these class representatives have
advanced certain litigation expenses and fees which have
assisted in the prosecution of the Lessee-Producer claims
and in the creation of the Lessee-Producer portion of the
Settlement Fund; and that each of such parties should
be reimbursed from the Court Settlement Fund for the
following sums representing such advancements:
Amoco Production Company $171,219.14
Ashland Oil, Inc. 422,952.18
Atlantic Richfield Company 73,909.42
Dorchester Gas Producing Company
(Now Damson Oil Co.) 14,772.02
Cabot Petroleum Corporation 84,384.84
Helmerich & Payne, Inc. 34,796.98
Texaco Inc. 67,390.94
Gulf Oil Corporation 50,384.92
Mobil Oil Corporation 155,733.15
Mapco Production Company 40,880.30
Superior Oil Company 15,931.29
Diamond Shamrock Corp. 24,573.45
TOTAL $1,156,928.50
(b) The Lessee-Producer class representatives have
incurred and will incur other miscellaneous expenses es-
timated to total $125,000.00 which should also be paid
from the Lessee-Producer share of the Court Settlement
Fund, to the law firm of Foulston, Siefkin, Powers &
Eberhardt, Wichita, Kansas, as agent for such Lessee-
Producers, under the supervision of the Court. Such law
firm shall pay necessary bills and file an accounuting
with the Court within 30 days after final pay-out of the
Fund. The total amounts specified in this subparagraph
20(b) and in subparagraph 20‘a) above amount to ap-
proximately 1.7% of the Court Settlement Fund. These
amounts shall be deducted in that percentage figure
(1.7%) from the funds prior to being disbursed to the
Lessee-Producer class members, or at such percentage
figure as may be calculated at the time of payout.
4la
(c) Based upon the verified applications for attorneys’
fees filed by counsel for the Lessee-Producer class repre-
sentatives prior to March 5, 1985; upon the evidence
adduced at the hearings hereon; upon the findings and
for the reasons stated by the Court at there hearings,
the Court rules that the counsel for such Lessee-Producer
class representatives shall be paid —-————— percent of
the Lessee-Producer portion of the Court Settlement
Fund above. The Court specifically finds from the evi-
dence that the amount represented by this percentage is
reasonable and is required to adequately compensate such
counsel for the legal services performed in this litigation
for the fllowing reasons: The extraordinary complexity
and protracted nature of this helium litigation since July,
1963; the amount of time spent by each of counsel as
reflected in the evidence, which evidence is accepted by
the Court; the high quality of the services performed;
the novelty of the issues; the number of adverse parties
and the quality of opposing counsel; the vast number of
hotly contested issues at all stages of this litigation; the
number of trials, hearings, appeals and other proceedings
conducted by counsel; the vast number of documents,
exhibits, records and other materials required to be re-
viewed, analyzed; the vast amounts of legal research
required on many novel substantive and procedurel issues;
the nature of the arrangements by such counsel for pay-
ment from clients of only minimal or subsistence fees
pending the conclusion of the cases and the highly con-
tingent right of recovery from the interpleader fund in
view of the debatable legal issues relating to liability and
valuation; the skill and tenacity of counsel in conducting
settlement negotiations and in refusing to accept very
substantial and appealing, but inadequate, settlement
offers at an earlier time; the enormously beneficial result
conferred thereby upon the members of the Class. Such
legal services were performed without unnecessary dupli-
cation and in an efficient manner. While the amount
above allowed as fees is fully supported by the alter-
42a
native lodestar methodology presented in the applications
for fees, the Court finds that this is a common fund case,
not a statutory fee case, and that the amount represented
by the above percentage award is legally and equitably
appropriate under all the facts and circumstances of this
case. These Lessee-Producer counsel have agreed to the
following allocation among themselves of the foregoing
fee award, which agreed allocation the Court approves
for purposes of payment from the Lessee-Producer por-
tion of the Court Settlement Fund:
Foulston, Siefkin, Powers & Eberhardt 60%
Gott, Young & Bogle 11%
Hershberger, Patterson, Jones & Roth 25%
James B. Diggs 4%
100%
(d) The percentage portion of expenses and fees
awarded to Lessee-Producer class representatives and to
their counsel in subparagraphs 20(a), 20(b), and 20(c)
shall be deducted and paid from the funds to be dis-
bursed to an for the account of the Lessee-Producer class
members; and the remaining balance shall be paid to the
Lessee-Producer class members as hereinabove provided.
21. The Court hereby severs from the Court Settle-
ment Fund to he paid out as above provided that portion
of the Fund to which any Lessee-Producer member of
the class is entitled by reason of its share of helium
attributable to its working interest ownership and as to
which such Lessee-Producer objects to the assessment of
the attorneys’ fees or expenses hereinabove settled by the
Court, and further the Court severs the issues relating
to such severed portions of the Court Settlement Fund
from all other issues in this case. As to such severed
portion of the Fund, no funds attributable to the interest
owned by such Lessee-Producer shall be paid out. Rather,
such severed funds shall be retained by the Clerk of this
Court for investment in U.S. Treasury Bills for a period
43a
not to exceed one (1) year, subject to further order of
the Court; provided, that if an objecting Lessee-Producer
fails to timely appeal the order of this Court, the severed
funds of such party shall be paid out along with the
remainder of the Court Settlement Fund. The Court
specifically orders that the Court Settlement Fund, except
for the severed portion, shall be paid out to those parties
not objecting and appealing from the Court’s order, in
accordance with the time schedule herein contained.
Those parties objecting and appealing the order for at-
torneys’ fees and expenses shall comply with all proce-
dural requirements for consummation of all payments
and shall pay the royalty interests as herein required,
notwithstanding their objections to the attorneys’ fees
and expenses as awarded herein.
DATED AND ENTERED at Wichita, Kansas, this
day of —————-,, 1985.
WESLEY E. BROWN
Senior Judge
United States District Court
44a
APPENDIX D
RULE 28.1 LIST
PHILLIPS PETROLEUM COMPANY'S DIRECT
AND INDIRECT SUBSIDIARIES AND AFFILIATES
OWNED LESS THAN 100% *
Alyeska Pipeline Service Company
Arctic LNG Transportation Company
Biosciences Corporation of Texas (BIOTX)
Bissendorf Biosciences GmbH
Canada Western Cordage Company, Limited
Canyon Reef Carriers, Inc.
Chisholm Pipeline Company
Cochin Refineries Limited
Colonial Pipeline Company
Dixie Pipeline Company
East Texas Salt Water Disposal Company
Explorer Pipeline Company
Great Yarmouth Port Labour Company Limited
Heat Transfer Research, Inc.
Incinatrol Ine.
Insurance and Reinsurance Brokers ( Burmuda) Limited
Iranian Marine International Oil Company—Iminoco
Kenai LNG Corporation
Long Beach Oil Development Company
Multinational Gas and Petrochemical Company
Multinational Gas and Petrochemical Services Limited
Norland GmbH fur Grundbesitz und Industrieanlagen
Norpipe, A.S.
Norpipe Petroleum UK Limited
Norsea Gas A'S
Norsea Gas GmbH
Norsea Pipeline Limited
* Does not include companies required to issue one or more shares
to directors or officers.
45a
Oil Insurance Limited
Papago Chemicals, Inc.
Phillips Carbon Black Limited
Phillips Petroleas Chile, S.A.
Phillips Petroleum Chemicals
Phillips Petroleum International Andina, S.A.
Phillips Petroleum International Finance N.V.
Phillips Petroleum Singapore Chemicals | Private)
Limited
Phillips Petroleum Tanker Management, Limited
Phillips Petroleum Toray Ine.
Phillips-Imperial Petroleum Limited
Polar LNG Shipping Corporation
Porteina Brasileira Ltda.
Renolit-Haus GmbH
Solar Gas, Ine.
SPODCO Limited
SPODCO-USA, Ine.
The Salk Institute Biotechnology Industrial Associates.
Inc.
Venezoil, C.A.
Wadley Biosciences Corporation
Western Desert Operating Petroleum Company
(WEPCO;
46a
AMOCO PRODUCTION COMPANY
The following companies represent Amoco Production
Company’s affiliates pursuant to Rule 28.1:
Amoco Corporation
Amoco Company
Amoco Credit Corporation
Analog Devices, Inc.
Cetus Corporation
CITIES SERVICE OIL AND GAS CORPORATION
Cities Service Oil and Gas Corporation is a wholly-
owned subsidiary of Cities Service Company, which is,
in turn, a wholly-owned subsidiary of Occidental Petro-
leum Corporation. Its non-wholly-owned affiliates are:
Canadian Occidental of California, Ine.
IBP, Inc.
Cain Chemical Inc.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.