Tenth Circuit Preserves District Court Discretion to Exceed 30% Fee Guideline in Oklahoma Royalty Class Actions
The Tenth Circuit affirmed a $17.3 million attorneys' fee award—33.33% of a $52 million settlement fund—in an Oklahoma royalty underpayment class action, holding that district courts may exceed the 30% guideline established in Strack v. Classen where case complexity and near-complete class certification success warrant departure. The decision rejects objectors' argument that Strack imposed a hard ceiling on percentage-of-fund awards in common-fund fee applications, preserving district court discretion under Oklahoma's statutory fee factors.
Background
Chieftain Royalty Company brought a class action against EnerVest Energy Institutional Fund XIII-A, L.P., alleging systematic underpayment of royalties to Oklahoma mineral interest owners. The case resulted in a $52 million settlement fund, from which class counsel sought attorneys' fees. The district court awarded $17.3 million—precisely one-third of the common fund—triggering objections from class members who argued the fee exceeded permissible limits under Oklahoma law.
The Fee Award Dispute
The central issue on appeal was whether the district court abused its discretion in awarding fees that exceeded the 30% benchmark articulated in Strack v. Classen, a Tenth Circuit decision that established guidelines for percentage-of-fund fee awards. Objectors contended that Strack imposed a hard ceiling on such awards, effectively capping fees at 30% of any common fund regardless of case-specific factors. Class counsel countered that Strack established a guideline, not a mandatory cap, and that the district court properly applied Oklahoma's statutory fee factors to justify the upward departure based on the litigation's exceptional complexity and counsel's success in achieving class certification against vigorous opposition.
The Tenth Circuit's Analysis
The Tenth Circuit affirmed, holding that the district court did not abuse its discretion in exceeding the Strack guideline. The panel emphasized that Strack established a 30% benchmark as a starting point for analysis, not an absolute ceiling. The court found that the district court had properly evaluated Oklahoma's statutory factors governing fee awards, including the complexity of the litigation, the quality of representation, and the degree of success achieved. The panel credited the district court's findings regarding the case's exceptional complexity and class counsel's near-complete success in certifying the class—factors that justified departure from the 30% guideline. The court rejected objectors' interpretation of Strack as imposing a rigid cap, holding that such a reading would improperly constrain district court discretion in applying state-law fee factors to the specific circumstances of each case.