Brewer v. Southern Union Co.

• Decision Date: 21 September 1984
• Docket Number: Civ. A. No. 83-F-1173,83-F-1174.
• Citation: 607 F. Supp. 1511
• Parties: Sheila BREWER, Mark Fleisher, Ramon Huerta, Marie Loague, Jay Miller, Vodene Patterson and Eliu R. Romero, on behalf of themselves and others similarly situated, Plaintiffs. v. SOUTHERN UNION COMPANY and Southern Union Gathering Company, Defendants. STATE OF NEW MEXICO, ex rel., DEPARTMENT OF FINANCE AND ADMINISTRATION, et al., Plaintiffs, v. SOUTHERN UNION COMPANY and Southern Union Gathering Company, Defendants.
• Court: U.S. District Court — District of Colorado

607 F. Supp. 1511

Sheila BREWER, Mark Fleisher, Ramon Huerta, Marie Loague, Jay Miller, Vodene Patterson and Eliu R. Romero, on behalf of themselves and others similarly situated, Plaintiffs. v. SOUTHERN UNION COMPANY and Southern Union Gathering Company, Defendants.

STATE OF NEW MEXICO, ex rel., DEPARTMENT OF FINANCE AND ADMINISTRATION, et al., Plaintiffs, v. SOUTHERN UNION COMPANY and Southern Union Gathering Company, Defendants.

Civ. A. Nos. 83-F-1173, 83-F-1174.

United States District Court, D. Colorado.

September 21, 1984.

COPYRIGHT MATERIAL OMITTED

J.E. Gallegos, Arturo L. Jaramillo, Steven Tucker, Jones, Gallegos, Snead & Wertheim, Santa Fe, N.M., for plaintiff in the Brewer and State cases.

Russell Moore, Keleher & McLeod, Albuquerque, N.M., for plaintiff Public Service Co. of N.M.

Robert F. Hill, Hill & Robbins, Denver, Colo., for plaintiffs.

Robert F. Hanley, Kenneth Fimberg, Melanie Vogl, Morrison & Foerster, Denver, Colo., James Brosnahan, Thomas Lee, Cedric Chao, Morrison & Foerster, San Francisco, Cal., Victor R. Ortega, Montgomery & Andrews, Santa Fe, N.M., Hal Sanders, Strasburger & Price, Dallas, Tex., Walter

A. Steele, White & Steele, Denver, Colo., for Southern Union defendants.

MEMORANDUM OPINION AND ORDER AWARDING ATTORNEYS' FEES AND LITIGATION EXPENSES ORDER NO. 1984-39

SHERMAN G. FINESILVER, Chief Judge.

BEFORE THE COURT is a Final Petition of Plaintiffs' Counsel for Allowance of Attorneys' Fees and a Final Report and Petition for Reimbursement of Litigation Costs, both filed on June 15, 1984. This action is prompted by a recent court-approved settlement between the parties and several prior settlements between plaintiffs and other defendants.

This immediate litigation and resulting settlement is unique in that it marks an unusual set of facts not found in other antitrust or price fixing litigation. In its settlement of this price fixing suit brought by plaintiffs (past and present consumers of natural gas in New Mexico) and Public Service of New Mexico, Defendant Southern Union Co. agreed to sell its New Mexico gas supply operation to Public Service Co.

In essence, Public Service will purchase the operation for approximately $173.5 million —$51.5 million less than book value. Out of the money Public Service Co. will save by purchasing the gas supply operation at less than book value, Public Service Co. will pay $32.6 million to the consumer class and $2.3 million to the State Plaintiffs.

This distinctive, far-reaching, three-way arrangement and the hard fought extensive negotiations leading up to it, coupled with the overall irregular course of the litigation with all defendants, must be considered in our award of attorneys' fees and costs.

This litigation encompasses three separate but closely related antitrust cases initially filed in the United States District Court for the District of New Mexico.¹ Early in the proceedings the three cases were consolidated for pretrial and discovery procedures with two other similar cases filed in the United States District Court for the Northern District of Texas. All five cases alleged violations of section one of the Sherman Act, 15 U.S.C. § 1. The plaintiffs asserted that the defendants and others conspired to fix the wellhead price of natural gas in the San Juan Basin region of the State of New Mexico.

In the four years since the first case was filed several settlements were negotiated which resolved the Texas cases. In addition other settlements eliminated the claims against all defendants in the three New Mexico cases, save those against Southern Union Company and Southern Union Gathering Company ("Southern Union").²

On April 12, 1984 the parties to the remaining cases informed the court that a settlement had been reached which would, if approved, resolve all remaining claims and end this protracted litigation. The parties are plaintiffs — Brewer class members, State of New Mexico and Public Service of New Mexico and defendant Southern Union Company. The three plaintiff groups are: (1) the Brewer class — past and present New Mexico natural gas consumers; (2) various New Mexico state agencies and educational entities; and (3) Public Service Company of New Mexico. The other parties to the agreement are the Southern Union Company and the Southern Union Gathering Company, the remaining defendants in this litigation. On April 17, 1984 the court conducted a hearing to determine whether the proposed settlement should be given preliminary approval under Rule 23(e) of the Federal Rules of Civil Procedure ("F.R.C.P."). On April 20, 1984 the court granted preliminary approval to the settlement as proposed.³

On June 29, 1984 the court held a second hearing to determine whether the settlement should be given final court approval. Thereafter, on August 1, 1984 the court issued orders granting final approval and dismissing the three related cases.⁴ 607 F.Supp. 1491.

Having granted final approval to this last settlement, it is now appropriate to consider plaintiffs counsels' petitions seeking an award of attorneys' fees and litigation expenses for the immediate and earlier settlements.

I. SUMMARY OF ORDER

The plaintiffs in case number 83-F-1173 are some 350,000 past and present residential consumers of natural gas served by Southern Union within the State of New Mexico. On January 27, 1981, Chief Judge Howard Bratton of the United States District Court for the District of New Mexico entered an order pursuant to Rule 23 of the F.R.C.P. certifying a class to represent all similarly situated residential consumers.⁵

The settlements negotiated between the plaintiff class (the "Brewer class") and the various defendants have resulted in the accumulation of a class settlement fund in the amount of $74,800,000. It is from this common fund that any award of attorneys' fees to class counsel will be paid. Pursuant to an employment agreement entered into between the class representatives and counsel the amount of attorneys fees awarded shall be as provided by law and determined by the court.

The plaintiffs in case number 83-F-1174 are various New Mexico State governmental agencies and educational entities. The total amount of all settlements reached between these plaintiffs and all defendants is $5,028,000. Pursuant to certain employment agreements entered into between the plaintiffs and their counsel, attorneys' fees shall be paid out the settlement funds as awarded by the court in an amount that is fair and reasonable considering all the circumstances.⁶

In accordance with the terms of the settlement between the Brewer and State plaintiffs and the Southern Union defendants, these plaintiffs are to be paid $750,000 for reimbursement of litigation expenses upon closing of the settlement.⁷ Counsel for the Brewer and State plaintiffs have filed a petition for reimbursement of litigation costs accrued from inception of the lawsuits through May 31, 1984.

We have carefully reviewed the Final Petition for Allowance of Attorneys' Fees as well as the supporting memorandum and affidavits of counsel. It is our view that the attorneys' fees awarded to class counsel must be calculated based on the so-called "lodestar" approach appropriately modified to take into account other factors and circumstances. Further, the fees to be paid counsel for the state plaintiffs should be calculated in the same manner to assure uniformity and consistency in the two related awards.⁸

Having carefully considered the number of hours expended on the cases, the reasonable hourly rates and other factors discussed below, we award attorneys' fees to Brewer and State attorneys as follows:

                Brewer Case 83-F-1173
                  Jones, Gallegos, Snead &amp
                  Wertheim:                             $7,551,575.97
                  Hill & Robbins:       $260,473.08
                State Case 83-F-1174
                  Jones, Gallegos, Snead &amp
                  Wertheim:                               $209,438.40
                  Hill & Robbins:        $17,364.87
                

The amounts listed above reflect attorneys' fees awarded for the period from March of 1978 through April 17, 1984. The fees awarded have been reduced by the amount of interim awards previously allowed by the court.

The court has also reviewed the petition for reimbursement of litigation costs incurred during the course of the representation of the Brewer and State plaintiffs. After a thorough analysis we are of the view that the full amount requested should be awarded to plaintiffs' counsel as follows:

Litigation Expenses 83-F-1173/83-F-1174:

Jones, Gallegos, Snead & Wertheim: $722,768.58

This amount reflects all expenses incurred through May 31, 1984 less payments received through that date.

Below we discuss the methods and rationale used to arrive at the amounts awarded. In addition, a schedule for payment is also outlined as well as the procedure to be followed to seek payment for future fees and expenses.

We recognize that, at first glance, the amount of attorneys' fees allowed in this litigation might appear high. On closer inspection and analysis, however, the fees awarded represent less than 14¢ of every dollar returned to the plaintiffs through the efforts of counsel. By the settlement, the consumer class has virtually made full recovery for monies lost as a result of alleged price fixing activities of Defendant Southern Union and other defendants. In addition, the non-monetary benefits conferred upon the plaintiffs are substantial and must also be weighed in considering whether the fee awarded lacks fairness. These non-monetary benefits, as discussed below, are significant and will be beneficial to New Mexico natural gas consumers for years to come. We strongly believe that when one considers all the benefits inurring to the plaintiffs as well as the other facts and circumstances unique to this case, the fee awarded is fair and reasonable.

II. REPRESENTATION OF PLAINTIFFS

The Brewer class plaintiffs have been represented from the outset of this litigation by the law firm of Jones, Gallegos, Snead &...