Lodestar: Percentage Of Recovery Fee And Incentive Awards Reversed By Tenth Circuit

Lodestar Method Should Have Been Used Instead.

North Star.  Photo:  Udo Kugel.  2001. Wikipedia.  Public domain.

        Chieftan Royalty Co. v. Enervest Energy Institutional Fund XIII-A, No. 16-6022  (10^th Cir. July 3, 2017) (published) was a class action based on diversity jurisdiction where a district judge awarded class counsel fees and a class representative an incentive award based on the percentage of recovery method.  These determinations were reversed on appeal.  Since fee awards are substantive in nature, Erie required application of Oklahoma state law which has adopted the lodestar method for compensation of requested attorney’s fees.  The incentive award was overturned because such awards should not be based on percentage-based formulas but instead upon proof as to the value of the work by the class representative.