A recent Law 360 story by Melissa Daniels, “10^th Circ. Nixes $17.3M Fee Award in Royalties Settlement,” reports that a Tenth Circuit panel set aside a $17.3 million attorneys’ fees award in a published decision that found the district court incorrectly calculated the award in a $52 million settlement over gas well royalty payments by failing to use the lodestar method of calculation.

Class counsel in the Oklahoma federal court action moved for a fees award of 40 percent, but two class members objected to the request.  The court settled on an award of about $17.3 million, or a third of the fund, plus an incentive award of half a percent for lead plaintiff Chieftain Royalty Company.

The panel reversed the awards and remanding the case.  In a 26-page opinion, the panel observed that class counsel didn’t provide necessary records about their hours to be used in a lodestar calculation, which could end up preventing it from getting fees at all.  Any figures about hours worked were “mere estimates,” the panel said.

“The district court will have to decide in the first instance whether any award can be made in light of the absence of contemporaneous time records,” the panel said.  “It is unfortunate that class counsel did not do the necessary homework on Oklahoma law.”

Chieftain had filed the state-law putative class action against EnerVest Energy Institutional Fund in 2011, alleging the oil and gas company underpaid lease royalties on gas from wells in Oklahoma.  The $52 million settlement, meant to benefit around 21,000 class members, netted final approval about four years later.

The panel said that while the circuit had no binding precedent on whether federal courts must follow state laws governing how to calculate attorney fees, it found a consensus among five other circuits who’ve considered the issue.  “When state law governs whether to award attorney fees, all agree that state law also governs how to calculate the amount,” the panel said.

The decision also nixed the $260,000 incentive award for Chieftain, saying the percentage-based award is unsupported by the record.  “When discussing the time [Chieftain president Robert] Abernathy had expended on the case, counsel did not provide detailed contemporaneous records but offered only approximations and generalities,” the panel said.

The case is Chieftain Royalty et al. v. EnerVest Energy et al., case number 16-6022, in the U.S. Circuit Court of Appeals for the Tenth Circuit.