Appeals Court Awards|$8.6M to Attorneys

     FORT WORTH (CN) – A Texas appeals court awarded $8.6 million in attorney’s fees to attorneys for a class of XTO Energy shareholders who contested its $41 billion merger with ExxonMobil.



     The ruling more than doubles the $3.9 million in fees awarded in Fort Worth State Court.
     In a 2-1 decision, a three-judge panel of the Court of Appeals for the 2nd District of Texas agreed with the plaintiffs’ argument that the trial court abused its discretion by failing to apply certain enhancement factors in determining the reasonableness of the request for attorneys’ fees.
     “After a hearing in which no live witnesses or other additional evidence were presented, the trial court issued its final judgment granting plaintiffs’ request for $188,355.66 for expenses, but awarding only $3,972,367.75 of the requested $8,611,644.34 for attorneys’ fees,” the opinion states. “The trial court issued a letter ‘to clarify some of the reasons for the court’s ruling.’ In it, the trial court noted several problems with the evidence supporting the award. Specifically, the trial court noted a lack evidence that the hours worked and rates billed were reasonable. The trial court also expressed concern that some of the factors to be considered in granting a multiplier ‘would not be appropriate across the board’ because of the firms’ differences in size, location, specialization, and degree of involvement with the case.”
     Writing for the majority, Judge Lee Gabriel said the trial court’s assumption was not based on presented evidence, was without reference to the “guiding rules and principles,” and resulted in an award that is not just.
     He wrote the unenhanced award of $3.9 million does not reflect the “exceptional results achieved by plaintiffs’ counsel, the undesirability of this litigation, the high risk borne by its contingent nature, or the fact that the fee award requested is comparable to that awarded in similar class action litigation, all of which were directly established by uncontradicted evidence.”
     Gabriel said the court was obligated to consider the adjustment based on that evidence and other factors and that it was an abuse of discretion to fail to do so based on an unsubstantiated assumption.
     “We hold that the requested multiplier of 2.17 is appropriate in this case. The lodestar of $3,968,277.25 multiplied by 2.17 equals an award of $8,611,161.63, which we hold to be an appropriate and reasonable award,” Gabriel wrote.
     In dissent, Judge Bill Meier wrote that the majority focused on just on a phrase in the trial court’s letter as opposed to the entire document.
     Meier wrote that “the lynchpin of the majority opinion states ‘it appears that the trial court did not complete the required steps.’ Because I would treat the … letter as nothing more than what the trial court stated in the opening paragraph of the letter – ‘This letter attempts to clarify some of the reasons for the court’s ruling, but it should not be considered an exhaustive or complete discussion of all considerations given to the Motion for Final Certification prior to the court’s ruling thereon.’ – I do not read the letter to support an appellate ruling that ‘the trial court did not complete the required steps.’ To the extent that we permit the trial court’s letter to function as rule of civil procedure 42(h)(3) findings of fact and conclusions of law, reviewing the letter in its entirety – instead of considering one short phrase contained within the letter in isolation – reveals that the trial court declined to adjust the presumptively reasonable lodestar because it had already accounted for relevant Johnson factors in determining the lodestar. For these reasons, I dissent.”

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