Maywalt v. Parker & Parsley Petroleum Co.

• Decision Date: 03 October 1994
• Docket Number: No. 92 Civ. 1152 (RWS).,92 Civ. 1152 (RWS).
• Citation: 864 F. Supp. 1422
• Parties: Mary Ann MAYWALT, Mary White, John Vosefski and Vivienne Galligan, J. Richard Aboud DDS, Inc. Defined Benefit Pension Plan, on behalf of themselves and all others similarly situated, Plaintiffs, v. PARKER & PARSLEY PETROLEUM COMPANY, Smith Barney, Harris, Upham & Co., Barrie M. Damson, William T. Ouzts, Robert F. Carr, III, J. William Pierce, Robert S. Rose, Jerol M. Sonosky, Garth M. Ramsay, Scott D. Sheffield, Herbert C. Williamson, Timothy M. Dunn, James D. Moring, Robert J. Castor, A. Frank Kubica, Defendants.
• Court: U.S. District Court — Southern District of New York

864 F. Supp. 1422

Mary Ann MAYWALT, Mary White, John Vosefski and Vivienne Galligan, J. Richard Aboud DDS, Inc. Defined Benefit Pension Plan, on behalf of themselves and all others similarly situated, Plaintiffs, v. PARKER & PARSLEY PETROLEUM COMPANY, Smith Barney, Harris, Upham & Co., Barrie M. Damson, William T. Ouzts, Robert F. Carr, III, J. William Pierce, Robert S. Rose, Jerol M. Sonosky, Garth M. Ramsay, Scott D. Sheffield, Herbert C. Williamson, Timothy M. Dunn, James D. Moring, Robert J. Castor, A. Frank Kubica, Defendants.

No. 92 Civ. 1152 (RWS).

United States District Court, S.D. New York.

October 3, 1994.

COPYRIGHT MATERIAL OMITTED

Kaplan & Kilsheimer (Robert N. Kaplan, Richard J. Kilsheimer, of counsel), New York City, Sullivan, Hill, Lewin & Markham (David R. Markham, Michael A. LaBazzo, of counsel), San Diego, CA, Bradford & Decker (Donald R. Bradford, John R. Decker, of counsel), Tulsa, OK, Wolf Popper Ross Wolf & Jones (Stephen D. Oestreich, Roy L. Jacobs, of counsel), New York City, for plaintiffs.

William C. House, New York City, Young & Bearden (Warren F. Young, of counsel), Tulsa, OK, for Objecting Class Representatives.

Stroock & Stroock & Lavan (Melvin Brosterman, of counsel), New York City, Johnson & Gibbs, P.C. (Lewis T. Leclair, Lori A. Leu, of counsel), Dallas, TX, for defendants Parker & Parsley Petroleum Co., Scott D. Sheffield, Herbert C. Williamson, III, Timothy M. Dunn, James D. Moring, Robert J. Castor, and A. Frank Kubica.

Lynn, Stodghill & Melsheimer, L.L.P. (Michael P. Lynn, of counsel), Dallas, TX, Meister, Leventhal & Slade (Jeffrey C. Slade, of counsel), New York City, for defendants Barrie M. Damson and William T. Ouzts.

O'Melveny & Myers (Eugene Hanson, Andrew Frackman, of counsel), New York City, for defendants Robert F. Carr, III, J. William Pierce, Robert S. Rose, Jerol M. Sonosky and Garth M. Ramsay.

OPINION

SWEET, District Judge.

This class action (the "Maywalt Action") arises out of a transaction (the "Transaction") by which oil and gas limited partnerships were consolidated into a new entity pursuant to an exchange agreement. Former limited partners of these partnerships (the "Plaintiffs" or "Class Members") bring this action against the general partner, the new company created through the exchange agreement, various individual officers and directors of the general partner, and the investment banking firm which rendered a fairness opinion regarding the Transaction. The Plaintiffs allege various federal securities and common law claims.

The Plaintiffs and the Defendants Parker & Parsley Petroleum Company ("Parker & Parsley"), Scott D. Sheffield, Herbert C. Williamson, Timothy M. Dunn, James D. Moring, Robert J. Castor, and A. Frank Kubica (collectively, the "Parker & Parsley Defendants") have moved for an Order granting final approval of the proposed stipulation of settlement among the parties (the "Proposed Settlement") filed with this Court on April 12, 1994. A number of objections to the Proposed Settlement have been received, most notably, by certain of the Class Representatives.

Also before the Court are two fee applications —one from the law firms that represented the plaintiff class ("Class Counsel") and another from Thomas Olick ("Olick"), a Class Member who claims to have incurred consulting fees and expenses on behalf of the class.

Olick has also moved for an extension or re-opening of the deadline for the filing of Notices of Claims.

For the reasons set forth below, the settlement is fair, reasonable, and adequate and the motion to approve the Proposed Settlement is granted. The fee application of Class Counsel is granted without the requested application of a multiplier. Olick's fee application is denied, except as noted below, as is his motion to extend or re-open the Notice of Claim deadline.

The Parties

The Plaintiffs, former investors in oil and gas limited partnerships, brought this action as individuals and as class representatives for a class of investors who formerly held interests in one or more of five limited partnerships organized by the Damson Oil Corporation ("DOC") and in which DOC served as general partner. These partnerships (collectively, the "Damson Limited Partnerships") were Damson Energy Company, L.P. ("Damson Energy"), Damson Institutional Energy Limited Partnership ("Damson Institutional"), Damson Income Energy Limited Partnership ("Damson Income"), Damson 1983-84 Oil & Gas Income Fund-Series 1985-1 ("Damson 1985-1"), and Damson 1984-85 Institutional Oil & Gas Income Fund-Series 1985E-1 ("Damson 1985E-1").

Defendants Barrie M. Damson, William T. Ouzts, Robert F. Carr, III, J. William Pierce, Robert S. Rose, Jerol M. Sonosky, and Garth M. Ramsay were officers and directors of DOC ("DOC Defendants").

Parker & Parsley is the company formed by the consolidation of the Damson Limited Partnerships with certain other partnerships ("Parsley & Parker Partnerships"), and it is this transaction, culminating in the creation of Parker & Parsley, that gave rise to the claims in this action. Officers and directors of Parker & Parsley named as individual defendants are Scott D. Sheffield, Herbert C. Williamson, III, Timothy M. Dunn, James D. Moring, Robert J. Castor, and A. Frank Kubica.

Prior Proceedings and Facts

The prior proceedings in this action are set forth in the previous opinions of this Court, familiarity with which is presumed. See Maywalt v. Parker & Parsley Petroleum Co., 808 F.Supp. 1037 (S.D.N.Y.1992) (dismissing all claims against Defendant investment bankers Smith Barney Harris Upham ("Smith Barney") and disposing of various other motions) ("Maywalt I"); Maywalt v. Parker & Parsley Petroleum Co., 147 F.R.D. 51 (S.D.N.Y.1993) (certifying class pursuant to Rule 23(a)(4), Fed.R.Civ.P.) ("Maywalt II"); Maywalt v. Parker & Parsley Petroleum Co., 155 F.R.D. 494 (S.D.N.Y.1994) (denying Class Representatives' motion to discharge Class Counsel) ("Maywalt III").

The first settlement hearing in the Maywalt Action took place on June 22, 1994, the same day this Court issued Maywalt III, denying the Class Representatives' motion to discharge Class Counsel. An eleventh hour notice appealing that denial was filed by the Class Representatives late in the afternoon of Friday, July 15, 1994.¹ At the continuation of the settlement hearing, on Tuesday, July 19, 1994, the Court ruled that an order denying a motion to discharge Class Counsel was not immediately appealable pursuant to 28 U.S.C. § 1291 (1985). See Hearing Trans. of July 19, 1994 at 28-30 (making reference to Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176, 179 (2d Cir.1990), cert. denied, 498 U.S. 1025, 111 S.Ct. 675, 112 L.Ed.2d 667 (1991)); Richardson-Merrell Inc. v. Koller, 472 U.S. 424, 430-32, 105 S.Ct. 2757, 2760-62, 86 L.Ed.2d 340 (1985) (O'Connor, J.) (clarifying Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 101 S.Ct. 669, 66 L.Ed.2d 571 (1981) (holding orders denying motions to disqualify counsel in civil cases not appealable as final decisions under § 1291 or under the "collateral order" doctrine as set forth in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949))).

Only those facts relevant to the Settlement process are presented below.

Settlement Negotiations

Settlement negotiations concerning the New York State Supreme Court companion action, Lindenauer v. Damson, Index No. 5582/91 (the "Lindenauer Action"), commenced prior to the actual filing of the Maywalt Action. The Lindenauer Action was filed before the closing of the Transaction and was the only action by Damson investors pending for some time. Apparently at the numerous phone and in-person settlement conferences² various settlement proposals were discussed, including the notion of issuing warrants for Parker & Parsley common stock to putative Class Members. Notwithstanding these lengthy negotiations, no agreement for the Lindenauer Action was reached.

In February of 1992, Class Counsel filed the Maywalt Action in this Court. According to the DOC Defendants, during the pending settlement negotiations in the Lindenauer Action between LeClair and Jacobs, the Parker & Parsley Defendants are said to have offered $3,000,000 to the Lindenauer plaintiffs. In the ensuing months, Parker & Parsley upwardly revised their settlement proposal to an amount between $5,000,000 and $6,000,000, but only if such a settlement would fully release the Defendants from all claims in both the Lindenauer and Maywalt Actions.

From the summer of 1992 and into 1993, the settlement negotiations continued to no avail. At this point, David Markham and Michael LaBazzo of Sullivan, Hill, Lewin & Markham entered the settlement fray, as putative Class Counsel for the Maywalt Plaintiffs. In early 1993, this Court then suggested that the settlement process be supervised, and, as a result, Magistrate Judge Leonard Bernikow was designated to oversee the ensuing settlement negotiations. The first settlement conference before Magistrate Judge Bernikow occurred in June of 1993. Ultimately the parties participated in five in-person and 17 telephone settlement conferences as well as conducted numerous other negotiations outside the presence of Magistrate Judge Bernikow. Throughout this period rigorous discovery was conducted. Numerous depositions were taken and hundreds of documents produced.³

I. The Proposed Settlement

The Proposed Settlement provides the following benefits to the Class: first, the Defendants will make a total of $8,250,000 in cash payments, which sum has been earning interest since March 10, 1994; second, the Defendants will pay the costs of notifying the Class of this Proposed Settlement, estimated to be approximately $60,000; and third, the Defendants will pay the costs of administering the Proposed Settlement, which could be as much as $350,000 plus the out of pocket disbursements of the Claims Administrator.

The...