City of O'Fallon v. CenturyLink, Inc.
| Decision Date | 29 March 2016 |
| Docket Number | ED 102562 |
| Citation | 491 S.W.3d 276 |
| Parties | City of O'Fallon, Missouri, City of Troy, Missouri, and City of Orrick, Missouri, on behalf of themselves and all others similarly situated, Plaintiffs/Respondents, and City of Butler, Missouri, Appellant, v. CenturyLink, Inc., CenturyTel of Missouri, L.L.C. d/b/a CenturyLink, CenturyTel Long Distance, L.L.C. d/b/a CenturyLink Long Distance, Embarq, Missouri, Inc., Spectra Communications Group, L.L.C., Embarq Communications, Inc., and CenturyLink Communications, L.L.C., Defendants/Respondents. |
| Court | Missouri Court of Appeals |
John W. Hoffman, Douglas R. Sprong, One US Bank Plaza, Suite 3600, St. Louis, MO 63101, Howard Paperner, Co-counsel, 9322 Manchester Road, St. Louis, MO 63119, John F. Mulligan, Jr., Co-counsel, 101 S. Hanley Road, Suite 1280, St. Louis, Mo 63105, For Plaintiffs/Respondents.
Daniel G. Vogel, David A. Streubel, Margaret C. Eveker, 333 S. Kirkwood Road, Suite 300, St. Louis, Mo 63122, For Appellant.
Stephen R. Clark, Adam S. Hochschild, 7733 Forsyth Blvd., Suite 625, St. Louis, MO 63105, Mark B. Leadlove, Co-counsel, 211 N. Broadway, Suite 3600, St. Louis, MO 63102, For Defendants/Respondents.
, J.
The City of Butler, Missouri (Appellant) appeals from the trial court's December 12, 2014 judgment awarding attorney's fees to class action counsel (Class Counsel), and denying Appellant's motion for attorney's fees. We dismiss.
The class action underlying this appeal involved cities or municipalities in Missouri that were serviced by CenturyLink, Inc.; CenturyTel of Missouri, L.L.C. d/b/a CenturyLink; CenturyTel Long Distance, L.L.C. d/b/a CenturyLink Long Distance; Embarq, Missouri, Inc.; Spectra Communications Group, L.L.C.; Embarq Communications, Inc.; and CenturyLink Communications, L.L.C. (Defendants) in various telephonic and telecommunication capacities. These cities imposed business license taxes on income Defendants derived from the provision of such services that Defendants neglected to pay. Plaintiffs were represented throughout negotiations by Class Counsel. The negotiations ended in a favorable settlement for Plaintiffs.
The three named plaintiffs, also referred to as the class representatives, were the City of O'Fallon, the City of Troy, and the City of Orrick. On May 10, 2012, the petition filed by Class Counsel on behalf of the named plaintiffs and all others similarly situated alleged Defendants underpaid license taxes in connection with the provision of telephone services to certain Missouri municipalities. Defendants denied Plaintiffs' allegations and alleged various defenses. After removal to the U.S. District Court for the Eastern District of Missouri at Defendants' request, the federal court remanded it to the circuit court of St. Louis County. On March 21, 2013, the case was reopened from mandate in the circuit court and Judge Joseph S. Dueker was assigned. The parties began to engage in settlement discussions and negotiations which continued for over one and one-half years. In addition to the three named plaintiffs, Class Counsel entered appearance on behalf of municipalities in twelve other counties in Missouri.
On August 14, 2014, Cunningham, Vogel and Rost, P.C. (“CVR”) entered their appearance in the action on behalf of putative class members, the cities of Aurora, Cameron, Harrisonville, Oak Grove, and Wentzville (“the Aurora 5”).
After extensive settlement negotiations between Plaintiffs by Class Counsel and Defendants, facilitated and overseen by Judge Dueker, the parties reached an agreement on material terms and submitted a preliminary proposed settlement to Judge Dueker. Plaintiffs and Defendants jointly moved for preliminary approval of the class settlement. A hearing was held on August 22, 2014, at which time Judge Dueker preliminarily approved the settlement and certified the following settlement class:
[A]ll Municipalities in the State of Missouri that, on or before August 22, 2014, have imposed a Business License Tax and in which Defendants or any of them derived gross receipts from the provision of telephone, exchange telephone, public utility, or telecommunications services, or related services. Excluded from the Settlement Class are the City of Aurora, Missouri, the City of Cameron, Missouri, the City of Harrisonville, Missouri, the City of Oak Grove, Missouri, and the City of Wentzville, Missouri (collectively, the “Aurora Plaintiffs”) [the Aurora 5] and the City of Jefferson, Missouri.
On September 3, 2014, CVR entered appearance on behalf of the cities of Columbia, Joplin, Butler, Warrenton, Platte City, Saint Joseph, Cape Girardeau, Liberty, Overland, Monett, Warson Woods, Webster Groves, Fenton, Green Park, and Lee's Summit (“Unnamed Class Members”). CVR also again entered their appearance on behalf of the Aurora 5. CVR also filed a motion to vacate the preliminary settlement and stay the proceedings, and a motion to shorten time.
On September 5, 2014, the court held a hearing. The court denied CVR's entries of appearance and the motions to vacate, stay, and shorten time. Also at this hearing, Judge Dueker ordered a first-class mailing of notices and claim forms to all municipalities in the State of Missouri. The notices sent to every municipality in Missouri on September 5, 2014, set out all of the terms included in the preliminary settlement; including a settlement amount, the amount of Class Counsel's attorney's fees, and formulas and methods for determining both; and advice of class members' right to counsel and to voice objections at the final fairness hearing, or to simply opt out of the proceeding if so desired. The notice also included the criteria for participating in the class action settlement and a claim form to be filled out and returned confirming the particular municipality's qualifications to participate by fulfilling the definition of a class member. The notice gave participating class members 60 days from the date of mailing notice to respond and confirm their qualifications, i.e., that Defendants serviced their city; they imposed by ordinance a license tax which Defendants did not pay; and they agreed to be bound by the terms of the settlement or to voice objections to portions with which they did not agree. The notices also notified the recipients they had 45 days to opt out of the entire proceeding. Finally, the notice included the judge's order that a final fairness hearing regarding the preliminary settlement was scheduled for December 12, 2014.
In September 2014, the City of Columbia and 17 other municipalities (“the Columbia 18”), represented by CVR, filed multiple objections to the settlement while reserving the right to exclude itself from the settlement class. Appellant Butler did not join in these objections. They filed notices of their intentions to appear, motions for a hearing on their objections, motions to amend the protective order Defendants had in place, motions to compel disclosure of information from Defendants, and motions to stay the proposed settlement. CVR filed another entry of appearance on behalf of the Columbia 18. Plaintiffs and Defendants formally opposed the motions. On September 26, 2014, the trial court heard the motions, and rejected every motion and objection filed by CVR except that the court authorized supplemental notices to be sent to purported class members more closely tracking the required language of Rule 52.08(c)(2)1 with regard to entering an appearance via counsel, to-wit: that class members have a right to have a lawyer appear for them until and unless they opt out.
The court also confirmed the new objection/opt out deadline was October 27, 2014, because the initial notices sent by Defendants to potential class members wrongly indicated the deadline for objections/opt outs was October 27, despite the court's order which correctly provided that the deadline was October 20.2 The trial court further noted that class members, i.e ., Columbia, cannot make objections to the settlement and reserve the right to opt out because these are mutually exclusive positions.
On October 22, 2014, eighteen3 of twenty-four municipalities represented by CVR withdrew their objections and opted out of the settlement proceedings. On October 27, 2014, CVR's Butler, Buckner, Maryville, Platte City, and Warrenton (“the Butler 5”) reasserted their previously filed objections4 as well as filed new ones, to-wit: (1) the “clear sailing” attorney's fee provision in the proposed preliminary settlement is cause for concern because it indicates collusion between Class Counsel and Defendants, (2) the requested attorney's fee for Class Counsel is too high and should be reduced, and (3) the settlement agreement unfairly requires class members to file objections before the application for attorney's fees and expenses and briefing in support is filed, and before the order and judgment is entered.5 Interestingly, in conjunction with these objections to the settlement, CVR indicated they would withdraw their objections in return for Binding Unilateral Agreements (BUA), which would provide that Defendants shall not enforce ordinance exclusions against CVR cities, Defendants shall pay additional attorney's fees to CVR, and the agreements shall not apply to CVR cities that object or opt out. These agreements were found by the court in its December 12, 2014 Order and Judgment overruling the Objections to the Class Settlement to afford preferential treatment to CVR cities in return for staying in the class and to be motivated by CVR's self-interest rather than any genuine desire to improve the class settlement.
On November 11, 2014, the Butler 5 objectors filed a Supplement to Objections, to-wit: “The Cities of Buckner, Butler, Maryville, Platte City, and Warrenton, Missouri state that they...
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...of the hourly rate of Parkway’s attorneys, as well as the work done to prepare for litigation. See City of O'Fallon v. CenturyLink, Inc., 491 S.W.3d 276, 285-86 (Mo. App. E.D. 2016) ("the [trial] court is an expert on the question of attorney[s'] fees"). In addition, the trial court noted t......
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