                      COURT OF APPEALS
                       SECOND DISTRICT OF TEXAS
                            FORT WORTH

                           NO. 02-10-00483-CV


WILLIAM D. STRATTON                                 APPELLANT

                                    V.

XTO ENERGY INC., BOB R.                             APPELLEES
SIMPSON, WILLIAM H. ADAMS III,
LANE G. COLLINS, PHILLIP R.
KEVIL, JACK P. RANDALL, SCOTT
G. SHERMAN, HERBERT D.
SIMONS, KEITH A. HUTTON,
VAUGHN O. VENNERBERG II,
LOUIS G. BALDWIN, TIMOTHY L.
PETRUS, GARY D. SIMPSON,
EXXON MOBIL CORPORATION,
AND EXXON MOBIL INVESTMENT
CORPORATION


                                 ----------

         FROM THE 352ND DISTRICT COURT OF TARRANT COUNTY

                                 ----------

                      MEMORANDUM OPINION1
                                 ----------


     1
     See Tex. R. App. P. 47.4.
      In this shareholder class action, appellant William D. Stratton, the lead

plaintiff and representative of the class members (the Plaintiffs), appeals the trial

court‘s order awarding $3,972,367.75 in attorneys‘ fees.        We affirm the trial

court‘s judgment as modified.

                                I. Background Facts

      In late 2009, ExxonMobil Corporation (ExxonMobil) and XTO Energy, Inc.

(XTO) announced that they had entered into an agreement that resulted in one of

the largest mergers in U.S. history. Public shareholders of XTO filed a total of

sixteen putative class actions in a Texas state court, a Delaware chancery court,

and a Texas federal court. The Plaintiffs alleged that the XTO Board of Directors

breached their fiduciary duty to the shareholders by, among other things, failing

to make full and fair disclosures and failing to maximize shareholder value in the

merger.

      On April 21, 2010, after two months of intensive discovery, the parties

agreed to a settlement. As part of the relief, ExxonMobil agreed, subject to court

approval, to pay ―up to‖ $8,800,000 in attorneys‘ fees and expenses.               In

September 2010, with their motion for final certification of the settlement class

and final approval of the settlement, Plaintiffs‘ counsel filed their application for

attorneys‘ fees. Plaintiffs requested an award of $188,355.66 for expenses and a

lodestar of $3,972,367.75 and a multiplier of 2.17, for an award of $8,611,644.34

in attorneys‘ fees (a total award of $8,800,000). Counsel attached affidavits of all

twenty-one law firms attesting to the work done by each firm and the hours and


                                         2
rates of their attorneys, and the affidavit of William Kelly Puls, which detailed the

history of the action, including the negotiations that lead to the settlement, the

terms of the settlement, and the benefits to Plaintiffs. Because the request was

within the range agreed upon in the settlement, the defendants did not object.

      After a hearing in which no live witnesses or other additional evidence

were presented, the trial court issued its final judgment granting Plaintiffs‘ request

for $188,355.66 for expenses, but awarding only $3,972,367.75 of the requested

$8,611,644.34 for attorneys‘ fees. The trial court issued a letter ―to clarify some

of the reasons for the court‘s ruling.‖ In it, the trial court noted several problems

with the evidence supporting the award. Specifically, the trial court noted a lack

evidence that the hours worked and rates billed were reasonable. The trial court

also expressed concern that some of the factors to be considered in granting a

multiplier ―would not be appropriate across the board‖ because of the firms‘

differences in size, location, specialization, and degree of involvement with the

case. The trial court concluded,

      [D]espite the concerns set forth above regarding the sufficiency of
      the evidence and gaps in proof, the court accepted the billed
      amounts as the lodestar on the assumption that the Johnson factors
      have already been applied to justify the unusually high rates and
      declined to increase that amount by any multiplier.

      Plaintiffs filed a motion to modify the judgment and to supplement the

record. They attached twenty-one affidavits from Plaintiffs‘ counsel attesting to

the reasonableness of their respective firms‘ rates; an affidavit from Professor

Geoffrey P. Miller, an expert on attorneys‘ fees in class actions; and an affidavit


                                          3
from Professor Arthur R. Miller, a member of the Advisory Committee on Civil

Rules of the Judicial Conference of the United States.        At a hearing on the

motion to modify, Plaintiffs presented live testimony by Professor Geoffrey Miller

and Craig Enoch and submitted an exhibit comparing the rates of Plaintiffs‘

counsel with other firms in Texas and nationwide. The trial court took no action

on Plaintiffs‘ motion and it was denied by operation of law. The trial court did not

file findings of fact and conclusions of law.      See Tex. R. Civ. P. 42(h)(3).

Plaintiffs then filed this appeal.

                               II. Standard of Review

      In Texas, the amount of an attorneys‘ fee award in a class action is at the

sound discretion of the court, which determines what is reasonable under the

circumstances.     See Cnty. of Dallas v. Wiland, 124 S.W.3d 390, 403 (Tex.

App.—Dallas 2003), rev’d and remanded on other grounds, 216 S.W.3d 344

(Tex. 2007). To determine whether a trial court abused its discretion, we must

decide whether the trial court acted without reference to any guiding rules or

principles; in other words, we must decide whether the act was arbitrary or

unreasonable.      Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007); Cire v.

Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004). An appellate court cannot

conclude that a trial court abused its discretion merely because the appellate

court would have ruled differently in the same circumstances. E.I. du Pont de

Nemours & Co. v. Robinson, 923 S.W.2d 549, 558 (Tex. 1995); see also Low,

221 S.W.3d at 620. An abuse of discretion does not occur when the trial court


                                         4
bases its decisions on conflicting evidence and some evidence of substantive

and probative character supports its decision. Unifund CCR Partners v. Villa,

299 S.W.3d 92, 97 (Tex. 2009); Butnaru v. Ford Motor Co., 84 S.W.3d 198, 211

(Tex. 2002).

                                  III. Discussion

      In their third issue, Plaintiffs complain that the trial court abused its

discretion by failing to apply the lodestar enhancement factors in determining the

reasonableness of their request for attorneys‘ fees.

      Texas Rule of Civil Procedure 42(i)(1) states

      In awarding attorney fees, the court must first determine a lodestar
      figure by multiplying the number of hours reasonably worked times a
      reasonable hourly rate. The attorney fees award must be in the
      range of 25% to 400% of the lodestar figure. In making these
      determinations, the court must consider the factors specified in Rule
      1.04(b), Tex. Disciplinary R. Prof. Conduct.

Tex. R. Civ. P. 42(i)(1). Those factors are:

      (1) the time and labor required, the novelty and difficulty of the
      questions involved, and the skill requisite to perform the legal service
      properly;

      (2) the likelihood, if apparent to the client, that the acceptance of the
      particular employment will preclude other employment by the lawyer;

      (3) the fee customarily charged in the locality for similar legal
      services;

      (4) the amount involved and the results obtained;

      (5) the time limitations imposed by the client or by the
      circumstances;




                                         5
      (6) the nature and length of the professional relationship with the
      client;

      (7) the experience, reputation, and ability of the lawyer or lawyers
      performing the services; and

      (8) whether the fee is fixed or contingent on results obtained or
      uncertainty of collection before the legal services have been
      rendered.

Tex. Disciplinary Rules Prof‘l Conduct R. 1.04(b), reprinted in Tex. Gov‘t Code

Ann., tit. 2, subtit. G, app. A, art. 10 § 9 (West Supp. 2011). The factors are very

similar, but not identical, to the factors articulated in Johnson v. Georgia Highway

Express, Inc., 488 F.2d 714, 717–19 (5th Cir. 1974).2

      In its letter, the trial court expressed concern that ―many of the hourly rates

charged seemed excessive on their face.‖ It stated that in order for the trial court

to consider the high rates to be reasonable, ―Johnson factors would have to be

applied to the rates themselves.‖ It then explained that its award of attorneys‘

fees was ―on the assumption that the Johnson factors have already been

applied‖ to the lodestar.

      2
         The Johnson factors are: (1) the time and labor required for the litigation;
(2) the novelty and difficulty of the questions presented; (3) the skill required to
perform the legal services properly; (4) the preclusion of other employment by
the attorney due to acceptance of the case; (5) the customary fee; (6) whether
the fee is fixed or contingent; (7) time limitations imposed by the client or the
circumstances; (8) the amount involved and the result obtained; (9) the
experience, reputation and ability of the attorneys; (10) the ―undesirability‖ of the
case; (11) the nature and length of the professional relationship with the client;
and (12) awards in similar cases. Johnson, 488 F.2d at 717–19. Plaintiffs‘
counsel and the trial court refer to the Rule 1.04(b) factors and the Johnson
factors interchangeably. Because they are so similar, we will do the same and
will rely on cases applying the Johnson factors.


                                         6
      Texas law is clear that the trial court is required to complete two distinct

steps in awarding attorneys‘ fees. First, the court must calculate the lodestar by

multiplying the number of hours reasonably worked by a reasonable hourly rate.

Tex. R. Civ. P. 42(i)(1). Some Johnson factors may be used to determine the

lodestar. Guity v. C.C.I. Enter., Co., 54 S.W.3d 526, 529 (Tex. App.—Houston

[1st Dist.] 2001, no pet.) (citing Shipes v. Trinity Indus., 987 F.2d 311, 320 (5th

Cir. 1993)). Second, the court must apply a multiplier between .25 and 4.0 based

on any Johnson factors not already considered in the lodestar. Tex R. Civ. P.

42(i)(1); see Dillard Dep’t Stores, Inc. v. Gonzales, 72 S.W.3d 398, 412 (Tex.

App.—El Paso 2002, pet. denied) (―If some of [the Johnson] factors are

accounted for in the lodestar amount, they should not be considered when

making adjustments.‖).

      Considering the record as a whole and the trial court‘s explanation in its

letter, it appears that the trial court did not complete the required steps. 3

Particularly, in view of the clear, direct, and uncontradicted evidence presented in

support of the motion to modify the judgment, Plaintiffs met their burden of

showing an adjustment was needed to arrive at a reasonable fee. Instead of

calculating the lodestar itself based on what it determined to be the reasonable

      3
        As the dissent points out, the trial court‘s letter states that it ―should not be
considered an exhaustive or complete discussion of all considerations given to
the Motion for Final Certification prior to the court‘s ruling thereon,‖ and it was not
intended to be findings of facts and conclusions of law. It is, however, the only
insight in the record into the court‘s reasons for its judgment and we consider it
for what usefulness it provides.


                                           7
amount of hours worked and a reasonable rate for those hours, and then

determining whether the Johnson factors warranted an increase or a decrease of

that amount, the trial court ―assumed‖ that the Johnson factors were accounted

for in Plaintiffs‘ calculation. Although the letter does not make clear what value

the trial court placed on each Johnson factor, it is clear, after considering the

letter in conjunction with the complete record, that the trial court ignored the

uncontroverted evidence that (1) the suggested lodestar was calculated without

enhancement by the Johnson factors and (2) that an enhancement was

warranted by the facts of the case. The trial court‘s assumption was not based

on the evidence presented, was without reference to the guiding rules and

principles, and resulted in an award that cannot be said to be just. 4 Because the

trial court did not follow the steps as articulated in rule 42(i)(1), it abused its

discretion by failing to calculate an appropriate lodestar and adjusting it as

warranted. See Forbush v. J.C. Penney Co., 98 F.3d 817, 823 (5th Cir. 1996)

(holding that it would not reverse the decision of a court that fails to discuss a

Johnson factor ―so long as the record clearly indicates that the district court has

utilized the Johnson framework as the basis of its analysis, has not proceeded in

a summary fashion, and has arrived at an amount that can be said to be just


      4
      Plaintiffs‘ fourth issue challenges the award as failing to consider the
undisputed evidence that the requested amount was reasonable. As we stated
above, we agree that the trial court ignored the uncontroverted evidence on the
reasonableness of the requested award. Thus, we could alternatively reverse
the award on the grounds asserted in Plaintiffs‘ fourth issue.


                                        8
compensation‖) (quoting Cobb v. Miller, 818 F.2d 1227, 1232 (5th Cir. 1987));

Copper Liquor, Inc. v. Adolph Coors Co., 624 F.2d 575, 584 (5th Cir. 1980)

(noting that ―we should go slow in finding that‖ a trial judge abused his discretion

but holding that ―the district court abused its discretion by failing to attach

appropriate significance to the Johnson criteria most pertinent to reasonable

attorneys‘ fees and by neglecting to develop fully the reasons for his award‖).

      The dissent would have us remand the case for further proceedings. In

this case, however, we do not think remand is necessary. See Tex. R. App. P.

43.3 (―When reversing a trial court‘s judgment, the court must render the

judgment that the trial court should have rendered, except when: (a) a remand is

necessary for further proceedings . . . .‖). The record before us contains all of the

affidavits and records submitted in support of the request for attorneys‘ fees, and

the testimony presented was not contradicted by any other witness or attendant

circumstances but instead was clear, positive, and free from circumstances

tending to cast suspicion thereon. In the interest of judicial economy and our

duty to render judgment unless remand is necessary, we review the evidence

and render the appropriate judgment. See id.; Ragsdale v. Progressive Voters

League, 801 S.W.2d 880, 882 (Tex. 1990) (rendering a judgment on attorneys‘

fees ―[i]n the interest of judicial economy‖); see also Louisiana Power & Light Co.

v. Kelstrom, 50 F.3d 319, 325–26 (5th Cir. 1995) (choosing to exercise its option

to modify an award of attorneys‘ fees ―[b]ecause the record contains sufficient

information to allow a fair determination of a reasonable fee‖); Sidag


                                         9
Aktiengesellschaft v. Smoked Foods Prods. Co., 960 F.2d 564, 566–67 (5th Cir.

1992) (rendering instead of remanding when sufficient evidence existed in the

record because ―no useful purpose would be served by further delaying [the

case‘s] final disposition, not to mention exposing the parties and this court to yet

[another] appeal‖).

A. Calculating the lodestar

      The lodestar is calculated by multiplying the number of hours reasonably

spent by counsel on the matter by a reasonable hourly rate. Dillard Dep’t Stores,

72 S.W.3d at 412; Guity, 54 S.W.3d at 528–29. Plaintiffs submitted roughly

7,370 hours at various rates from $200 to $845 per hour for a lodestar of

$3,972,367.75. We will review the evidence supporting both the number of hours

and the hourly rates requested.

      1. Hours

      With their application for attorneys‘ fees, Plaintiffs‘ counsel presented no

evidence in the twenty-one attached affidavits by the attorneys that their hours or

their rates were reasonable. With their motion to modify, Plaintiffs submitted

twenty more affidavits from the attorneys.5 In all but five of those affidavits, the

attorneys testified that the hours spent by their firm on the case were reasonable




      5
      One firm that had submitted an affidavit with the application did not submit
a second affidavit with the motion to modify.


                                        10
and necessary.6 All of the firms detailed in their affidavits the tasks that the

attorneys accomplished, such as researching, drafting, and filing; reviewing

documents; responding to discovery requests; conducting depositions; and

negotiating the settlement.

      Plaintiffs also submitted the affidavits of expert witness Geoffrey P. Miller.7

Miller and Craig Enoch also testified at trial. In his affidavit, Miller opined that

based on his review of the hours billed by the attorneys, ―[t]he hours spent

appear reasonable for the tasks accomplished.‖ He further stated, ―Considering

the huge amount of work done as described in the submissions in support of the

fee application, this time is, in my experience, consistent with the time needed to

properly litigate a case of this type and magnitude.‖ He noted that ―expertise of

the Plaintiffs‘ firms contributed to efficiency and reduced hours‖ and that,

      Where practical and appropriate, work appears to have been
      performed by associates, paralegals[,] and law clerks. By far, the
      overwhelming bulk of the work was done by attorneys with the
      appropriate, but not excessive, seniority to handle level-appropriate
      aspects of the Actions. In sum, based on my review of the affidavits
      of counsel submitted with the Final Approval Motion and wit[h] this
      Motion, my analysis indicates that Plaintiffs‘ counsel put in the time
      necessary to achieve a successful result but did so in an efficient
      manner.


      6
       Of the 7,369.9 hours submitted, the number of hours without direct
testimony supporting their reasonableness and necessity equaled 386.35, or
5.2% of the total hours submitted.
      7
      Plaintiffs also submitted the affidavit of expert witness Arthur R. Miller.
Arthur Miller, however, did not state an opinion specifically as to the
reasonableness or necessity of the hours billed.


                                         11
At trial, Miller testified again that the hours billed were reasonable in light of the

―extraordinary intensity of the litigation.‖   Enoch also testified at trial that the

hours billed were reasonable.

      Plaintiffs provided evidence, by way of expert testimony, that the hours

billed were reasonable and necessary. And although neither Miller nor Enoch

reviewed line by line each task billed, Texas courts have repeatedly held that an

itemized bill is not necessary to support an award of attorneys‘ fees. La Ventana

Ranch Owners’ Ass’n v. Davis, No. 03-09-00452-CV, --- S.W.3d ---, 2011 WL

2162886, at *16 (Tex. App.—Austin June 3, 2011, no pet.) (holding that the

evidence was factually sufficient to establish the reasonableness of the time

spent ―[e]ven without an itemized billing statement or testimony regarding the

reasonableness and necessity of the amount of time spent on each particular

task‖ when the attorney and an expert witness testified that the amount was

reasonable and the attorney listed the various tasks he accomplished); Burnside

Air Conditioning & Heating, Inc. v. T.S. Young Corp., 113 S.W.3d 889, 898 (Tex.

App.—Dallas 2003, no pet.) (upholding fee award absent any itemized billing

statement based solely on attorney‘s testimony regarding his customary hourly

rate, total hours spent on the case, his experience and expertise, and complexity

of the case). There is thus sufficient evidence before us to determine that the

number of hours billed were reasonable.

      Plaintiffs stated in their application for attorneys‘ fees that the total amount

of hours equaled 7,369.55.       However, in adding up the hours listed in the


                                         12
affidavits, we arrived at 7,369.9 total hours submitted. In examining the amounts

submitted, we discovered two additional errors. First, one attorney at Baron &

Budd, P.C. submitted 47.25 hours at a rate of $700 per hour (a total of $33,075 in

fees), but requested only $23,100, which would be the correct fee for 33 hours of

work. Second, an attorney at Grant & Eishenhofer, P.A. submitted 592.8 hours

at $295 per hour (a total of $174,876 in fees) but requested only $174,787.50,

which would be the correct fee for 592.5 hours of work. Because it is unclear

that the higher number of hours for the two attorneys is appropriate, we hold

there is support for 7,355.3 hours of work reasonably expended. See Stewart

Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10 (Tex. 1991) (noting that as a general

rule, a party seeking to recover attorney‘s fees carries the burden of proof to

establish that it is entitled to them).

       2. Rates

       All twenty-one of the attorneys‘ affidavits attached to the original

application for attorneys‘ fees stated merely that the rates requested were the

firms‘ ―regular rates that [the] firm[s] charge[] both hourly clients and contingent

clients alike for [their] services.‖8 In the twenty affidavits submitted with their

motion to modify, all but six attorneys testified that the rates charged by their firm


       8
       All of the affidavits in which a firm requested expenses also contained the
same language that their expenses were ―reasonable under the circumstances
and were necessary to achieve the settlement reached in this case.‖ The trial
judge awarded all of the requested $188,355.66 in expenses. The Plaintiffs do
not contest that part of the award.


                                          13
were reasonable in comparison with the rates charged for similar work in their

communities. Although the customary fees charged in the local legal community

for similar legal services is helpful in determining the reasonableness of the fees

requested, it is not fatal to an attorney‘s application for fees if it is not included.

See In re A.B.P., 291 S.W.3d 91, 98 (Tex. App.—Dallas 2009, no pet.) (noting

that a trial court is not required to receive evidence of each of the factors that

should be considered in determining the reasonableness of an award of

attorneys‘ fees); Burnside Air Conditioning & Heating, 113 S.W.3d at 897–98

(same). All of the rates charged by those six firms fall within the range of hourly

rates charged by other attorneys in this case with similar experience. Four firms

also noted that their rates have been approved by other Texas courts.             One

affiant attached The National Law Journal‘s survey of firm billing rates for 2007,

2008, and 2009, which showed that all of the rates requested were within the

range of rates billed by other firms in their state. Further, in their motion for

reconsideration, Plaintiffs cite a number of cases demonstrating that the high

rates for the New York law firms were not out of line with the customary rates of

the area. See In re Comverse Tech. Secs. Litig., No. 06-CV-1825(NGG)(RER),

2010 WL 2653354, at *4 (E.D.N.Y. Jun. 24, 2010) (noting hourly rates from $125

to $880); In re Marsh ERISA Litig., 265 F.R.D. 128, 146 (S.D.N.Y. 2010) (hourly

rates of $125 to $775); In re Telik, Inc. Secs. Litig., 576 F. Supp. 2d 570, 589–90

(S.D.N.Y. 2008) (hourly rates of $300 to $750); In re Gilat Satellite Networks,

Ltd., No. CV-02-1510(CPS)(SMG), 2007 WL 2743675, at *17 (E.D.N.Y. Sept. 18,


                                          14
2007) (hourly rates of $325 to $725); In re Merrill Lynch & Co. Research Reports

Secs. Litig., No. 02-MDL-1484(JFK), 2007 WL 313474, at *22 (S.D.N.Y. Feb. 1,

2007) (hourly rates of $515 to $850).

      Enoch testified at the hearing that the rates charged by the attorneys in

this case were ―eminently reasonable‖ based on ―the quality of the lawyers that

are in this representation here and my familiarity with the fees that are generally

charged for this type of complex litigation.‖ He testified that he saw no ―bonus or

premium embedded‖ in the rates charged by the attorneys.           Geoffrey Miller

opined in his affidavit that ―the rates charged by Plaintiffs‘ counsel in the three

actions are commensurate with the rates prevailing in their respective

communities for attorneys who practice in the same areas in which these

attorneys specialize or concentrate.‖ Miller noted that the average hourly rate

requested in this case was $539 per hour for all attorneys and compared that to a

study that ―found that the average hourly rate based on attorneys‘ fees awarded

in 277 securities cases settled from 1973 to 2003 was $1,370 in 2003 dollars.‖

We therefore hold that the rates submitted by the attorneys in this case are

reasonable.




                                        15
      3. Lodestar

      As discussed above, we hold that a reasonable number of hours expended

in this litigation is 7,355.3.    Multiplying the hours by the respective rates

submitted by the attorneys results in a lodestar of $3,968,277.25.9

B. Applying a multiplier

      Once the lodestar is calculated, rule 42(i)(1) requires the court to award an

amount ―in the range of 25% to 400% of the lodestar figure.‖ Tex. R. Civ. P.

42(i)(1). Plaintiffs requested an award of 217% of the lodestar. In determining

whether this is a reasonable award, the court is required to consider the factors

listed in Texas Disciplinary Rule of Professional Conduct 1.04(b). Id.

      1. The time and labor required, the novelty and difficulty of the
         questions involved, and the skill requisite to perform the legal
         service properly

      Enoch testified at the hearing on Plaintiffs‘ motion to modify that he

believed a multiplier should be used in this case because the ―intensity of the

issue‖ called for a lot of time and labor. Geoffrey Miller testified that the ―Actions

involved a plethora of difficult, unsettled, and novel issues of law.‖ He opined,

―[T]here can be no question that the magnitude, complexity and novelty of the

issues presented in this litigation favor a substantial risk multiplier.‖ Miller also



      9
       The attorney at The Briscoe Law Firm, PLLC submitted 45.25 hours at
$525 (a total of $23,756.25 in fees) but requested $27,756.25 in fees. We see
no justification for the additional $4,000. See Stewart Title Guar. Co., 822
S.W.2d at 10.


                                         16
testified to the added risks of a class action such as getting class certification.

From his research he concluded that

      Multipliers in securities actions tend to be higher than multipliers in
      statutory fee-shifting or other types of less complex or costly class
      actions. This fact reflects reality that cases pursued on a class basis
      are among the most difficult to litigate, require a high degree of
      sophistication, are defended invariably by capable and sophisticated
      law firms, and involve risks in terms of dedication of resources,
      expenditure of time and potential for non-payment.

      2. The likelihood, if apparent to the client, that the acceptance of the
         particular employment will preclude other employment by the
         lawyer

      Enoch described this type of fast-paced litigation as ―all-hands-on-deck‖

and noted that the document-intensive discovery and short deadlines means that

―when someone is asking you to do this[,] they recognize they‘re calling on all

your people to be available on this one item or this one project.‖

      3. The fee customarily charged in the locality for similar legal
         services

      As noted above, the hourly rates charged by the attorneys in this case are

within the range of rates charged by other attorneys in their respective localities.

We do note that the rates charged in some of the larger markets, such as New

York, are higher than those charged in Tarrant County.

      4. The amount involved and the results obtained

      In his affidavit, expert witness Arthur Miller testified that that the results that

Plaintiffs‘ counsel obtained were excellent. He believed that the supplemental

disclosures that resulted from the litigation provided vital information to the



                                          17
Plaintiffs and supported the requested attorneys‘ fee award.        He noted that

discovery in this case revealed that the defendant companies had not provided

the financial advisor who was responsible for valuing XTO and opining on the

fairness of the merger with all the necessary documents to make a fully-informed

opinion, and he detailed the value of the information gleaned from the litigation in

his fifteen-page affidavit. Miller also noted that in his research he found only one

other instance of plaintiffs‘ counsel ―achieving a similar type and level of

disclosure.‖ That case was a New York case concerning a $9 billion merger and

the attorneys‘ fee award was $8.5 million. The merger that formed the basis of

this litigation was valued at $41 billion—as Geoffrey Miller described it, ―one of

the most important mergers in American history.‖ Enoch testified, ―The results

being sought [were] to assure full, accurate information. It seemed to me that

was a very good result here, and that‘s a positive.‖ Enoch testified that the value

of the disclosures was significant and went on,

      But it seems to me there was even greater benefit here, where the
      specialist, the financial advisers that were advising on the deal, were
      directed to consider further information and then report on that. It
      seems to me it says—it‘s greatly valuable to have the
      confirmation. . . . So it seemed to me this was tremendously
      beneficial in the concept of what this is all about, which is to make
      sure the voters are informed at the time they‘re casting their vote.

      In William Kelly Puls‘s affidavit attached to the application for attorneys‘

fees, he noted that ―overwhelmingly positive reaction of the Class members to

date further illustrates the excellence of the Settlement.‖      Plaintiffs‘ counsel




                                        18
estimated the percentage of class members who objected to the settlement to be

roughly .002 percent.

         5. The time limitations imposed by the client or by the circumstances

         Because Plaintiffs filed for a temporary injunction to halt an upcoming vote

by the XTO shareholders on the merger, the parties to this case agreed on an

expedited discovery schedule. In the roughly four months of discovery, Plaintiffs‘

attorneys reviewed hundreds of thousands of pages of public filings, financial

analyst reports, business media articles, and about 65,000 pages of confidential

documents. At the hearing, Enoch testified that this kind of intensive document

review is stressful and time consuming.          He described cases with a short

deadline and complex issues as ―all-hands-on-deck and it‘s full speed ahead for

a very short period of time.‖ Geoffrey Miller opined that highly compressed

timelines ―strongly favor[] a substantial lodestar enhancement.‖

         6. The nature and length of the professional relationship with the
            client

         This was a contingency fee case in which Plaintiffs‘ attorneys represented

a large class of shareholders who held approximately 584 million shares of XTO

stock.     179,618 copies of notice of the suit were mailed to potential class

members. As Geoffrey Miller opined,

         Unlike hourly billing attorneys, there was little likelihood that
         Plaintiffs‘ counsel would be retained on an hourly basis by members
         of the plaintiff class based on their representation of the class in a
         class action. Thus the concept of undertaking a potentially less
         economically beneficial retention as a ―loss leader‖ plays no role in
         cases such as this.


                                          19
      7. The experience, reputation, and ability of the lawyer or lawyers
         performing the services

      With ninety different attorneys performing work on this case, the amount of

experience and ability will naturally vary. Some of the senior partners had thirty

or forty years of experience.        There were also young associates with little

experience. Overall, there were many firms with good reputations and national

practices. Enoch testified that this factor ―gets a lot of weight from me. . . .

You‘re talking about pretty significant litigation. . . . [I]t‘s a significant transaction.

. . . [T]he quality of the lawyer in here is a critical piece of it, and that should get

a positive.‖ Geoffrey Miller testified that the favorable settlement ―evidences the

superior quality of their work.‖

      8. Whether the fee is fixed or contingent on results obtained or
         uncertainty of collection before the legal services have been
         rendered

      Geoffrey Miller stated in his affidavit, ―The contingent nature of the fee

arrangement is, without doubt, the most important factor in a lodestar/multiplier

analysis.‖ All of the firms‘ fees were on a fully contingent basis. Enoch noted,

―[T]here is a recognition of an additional value for the services performed in

exchange for running the risk that there [will] be no recovery at all.‖ Increasing

the lodestar for contingent work, he said, is ―about trying to attract quality lawyers

to work in this field and assure that their risk is carefully accounted for.‖ He

testified, ―[T]he straight lodestar does not take into account the risk, the

evaluation of the . . . economic value of the lawyer taking on the risk of not being


                                            20
paid at all.‖ All of the attorneys testified that the hourly rates they submitted were

the ―regular rates that [the] firm[s] charge[] both hourly clients and contingent

clients alike.‖ See El Apple I, Ltd. v. Olivas, 324 S.W.3d 181, 193–94 (Tex.

App.—El Paso 2010, pet. granted) (upholding the application of a multiplier

based in part on the contingent nature of the fee ―[b]ecause there is no indication

the trial court considered the contingency factor more than once in its calculation‖

when the attorneys testified that they did not adjust their hourly fee because of

the contingent nature of the case). We also note that Texas courts consistently

allow the use of a multiplier based upon the contingent nature of a fee under

Texas statutes allowing recovery of attorney‘s fees. Toshiba Mach. Co., Am. v.

SPM Flow Control, Inc., 180 S.W.3d 761, 783 (Tex. App.—Fort Worth 2005, pet.

granted, judgm‘t vacated w.r.m.); Dillard Dept Stores, 72 S.W.3d at 412; Guity,

54 S.W.3d at 529; Borg-Warner Protective Servs. v. Flores, 955 S.W.2d 861, 870

(Tex. App.—Corpus Christi 1997, no pet.); Crouch v. Tenneco, 853 S.W.2d 643,

648 (Tex. App.—Waco 1993, writ denied).

      Miller also opined that ―Plaintiffs‘ counsel was entitled to a substantial risk

multiplier for their efforts in the Actions‖ and that the requested multiplier ―is both

fair and reasonable under the law of Texas and under the circumstances of the

Actions.‖ In his opinion, a multiplier of 2.17 is ―eminently fair based on how the

courts generally handle cases of this type‖ and that even a multiplier ―at or near

the upper limit . . . would not have been unreasonable.‖ A multiplier of 2.17 is not

unusual in large, complex, and expedited cases. See Dillard Dep’t Stores, 72


                                          21
S.W.3d at 413 (upholding a multiplier of 2 based on the novelty and difficulty of

the issues, the contingent nature of the fee, the time limitations imposed by the

circumstances, and the preclusion of other employment); Flores, 955 S.W.2d at

870 (upholding use of a 1.5 multiplier when plaintiff prevailed on all issues and

―was required to pierce numerous layers of corporate bureaucracy in order to

bring her case to trial‖).

       The trial court ordered attorneys‘ fees paid in the amount of the

unenhanced lodestar based on the assumption that the Johnson factors were

applied in justifying the hourly rates requested. The unenhanced lodestar does

not reflect the exceptional results achieved by Plaintiffs‘ counsel, the

undesirability of this litigation, the high risk borne by its contingent nature, or the

fact that the fee award requested is comparable to that awarded in similar class

action litigation, all of which were directly established by uncontradicted

evidence. The court was obligated to consider the adjustment based on that

evidence and the Johnson factors, and it was an abuse of discretion to fail to do

so based on an unsubstantiated assumption.            We hold that the requested

multiplier of 2.17 is appropriate in this case.      The lodestar of $3,968,277.25

multiplied by 2.17 equals an award of $8,611,161.63, which we hold to be an

appropriate and reasonable award.

       Because we sustain Plaintiffs‘ third issue and because we have

determined an appropriate award of attorneys‘ fees, we need not reach the rest

of Plaintiffs‘ issues. See Tex. R. App. P. 47.1.


                                          22
                                   Conclusion

      Having sustained Plaintiffs‘ third issue and holding that we do not need to

reach their other issues, we modify the trial court‘s award of attorneys‘ fees to be

$8,611,161.63 and affirm the trial court‘s judgment as modified.




                                                   LEE GABRIEL
                                                   JUSTICE

PANEL: WALKER, MEIER, and GABRIEL, JJ.

MEIER, J., filed a dissenting opinion.

DELIVERED: February 9, 2012




                                         23
                      COURT OF APPEALS
                       SECOND DISTRICT OF TEXAS
                            FORT WORTH

                           NO. 02-10-00483-CV


WILLIAM D. STRATTON                                 APPELLANT

                                    V.

XTO ENERGY INC., BOB R.                             APPELLEES
SIMPSON, WILLIAM H. ADAMS III,
LANE G. COLLINS, PHILLIP R.
KEVIL, JACK P. RANDALL, SCOTT
G. SHERMAN, HERBERT D.
SIMONS, KEITH A. HUTTON,
VAUGHN O. VENNERBERG II,
LOUIS G. BALDWIN, TIMOTHY L.
PETRUS, GARY D. SIMPSON,
EXXON MOBIL CORPORATION,
AND EXXON MOBIL INVESTMENT
CORPORATION


                                 ----------

         FROM THE 352ND DISTRICT COURT OF TARRANT COUNTY

                                 ----------

              DISSENTING MEMORANDUM OPINION1

                                 ----------


     1
     See Tex. R. App. P. 47.4.
      The lynchpin of the majority opinion states ―it appears that the trial court

did not complete the required steps.‖ Because I would treat the October 8, 2010

letter as nothing more than what the trial court stated in the opening paragraph of

the letter—―This letter attempts to clarify some of the reasons for the court‘s

ruling, but it should not be considered an exhaustive or complete discussion of all

considerations given to the Motion for Final Certification prior to the court‘s ruling

thereon.‖—I do not read the letter to support an appellate ruling that ―the trial

court did not complete the required steps.‖ To the extent that we permit the trial

court‘s letter to function as rule of civil procedure 42(h)(3) findings of fact and

conclusions of law, reviewing the letter in its entirety—instead of considering one

short phrase contained within the letter in isolation—reveals that the trial court

declined to adjust the presumptively reasonable lodestar because it had already

accounted for relevant Johnson factors in determining the lodestar. For these

reasons, I dissent.

      Our rules of civil procedure contain detailed requirements for class action

lawsuits, including procedures for determining an award of attorneys‘ fees. See

Tex. R. Civ. P. 42(h). After a motion for attorneys‘ fees and a hearing, ―[t]he

[trial] court must state its findings and conclusions in writing or orally on the

record.‖ Tex. R. Civ. P. 42(h)(3) (emphasis added). Rule 42 ―is patterned after

Federal Rule of Civil Procedure 23; consequently, federal decisions and

authorities interpreting current federal class action requirements are persuasive

authority.‖ Sw. Ref. Co. v. Bernal, 22 S.W.3d 425, 433 (Tex. 2000). Federal rule


                                          2
of civil procedure 23(h)(3) provides that the trial court may hold a hearing on

attorneys‘ fees in a class action suit but, similar to our rules, ―must find the facts

and state its legal conclusions under Rule 52(a).‖ Fed. R. Civ. P. 23(h)(3). The

Fifth Circuit requires that ―[w]hen a district court awards attorneys‘ fees it must

explain how each of the Johnson factors affects its award.‖ See In re High Sulfur

Content Gasoline Prods. Liab. Litig., 517 F.3d 220, 228 (5th Cir. 2008). ―[T]he

district court‘s findings and reasons must be ‗complete enough to assume a

review which can determine whether the court has used proper factual criteria in

exercising its discretion to fix just compensation.‘‖ Id. at 229 (citing Brantley v.

Surles, 804 F.2d 321, 325–26 (5th Cir. 1986)).

      The trial court‘s October 8, 2010 letter specifically warns at the outset that

it ―attempts to clarify some of the reasons for the court‘s ruling, but it should not

be considered an exhaustive or complete discussion of all considerations given

to the Motion for Final Certification prior to the court‘s ruling thereon.‖ Thus, on

its face, the letter purports to acknowledge its own inherent incompleteness. 2

The trial court did not explain how each of the Johnson factors affected its award,

and we are left to speculate as to the findings that are not contained in the letter.

As an appellate court reviewing an award of attorneys‘ fees in a complex class

action suit involving ―one of the largest mergers in U.S. history,‖ we should not

follow the analysis advocated by Stratton in his third issue and rely upon the


      2
       The majority even seems to acknowledge this.


                                          3
incomplete letter as a substitute for rule 42(h)(3) findings and conclusions. This

is because, unless the trial court provides a reasonably specific explanation of

the fee determination, ―adequate appellate review is not feasible, and without

such review, widely disparate awards may be made, and awards may be

influenced . . . by a judge‘s subjective opinion regarding particular attorneys or

the importance of the case.‖ See Perdue v. Kenny A. ex rel. Winn, 130 S. Ct.

1662, 1676 (2010). The trial court‘s letter meets neither the Supreme Court‘s nor

the Fifth Circuit‘s standards for explaining an award of attorneys‘ fees.

Accordingly, I would either abate this appeal and remand the case to the trial

court for entry of findings and conclusions as required by rule 42(h)(3) or reverse

the trial court‘s judgment as to attorneys‘ fees and remand the case for further

proceedings.

      To the extent that we construe the October 8, 2010 letter as sufficiently

identifying the trial court‘s findings and conclusions and proceed to address

Stratton‘s third issue, the trial court did not abuse its discretion by awarding

attorneys‘ fees in the amount of $3,972,367.75.          The lodestar creates a

presumptively reasonable fee. Id. at 1673. ―While the lodestar is relevant to

determining a fee award, it is not the sole basis for determining that award; the

Johnson factors are applicable to deciding whether the lodestar is reasonable, as

well as to adjusting that award by a multiplier once the lodestar is calculated.‖

In re Enron Corp. Sec., Derivative & ERISA Litig., 586 F. Supp. 2d 732, 755 (S.D.

Tex. 2008); see Hensley v. Eckerhart, 461 U.S. 424, 434 n.9, 103 S. Ct. 1933,


                                        4
1940 n.9 (1983) (―The district court also may consider other factors identified in

[Johnson] though it should note that many of these factors usually are subsumed

within the initial calculation of hours reasonably expended at a reasonable hourly

rate.‖).   Indeed, four of the Johnson factors are presumably included in the

lodestar calculation (the novelty and complexity of the issues, the special skill

and experience of counsel, the quality of representation, and the results obtained

from the litigation), and the Fifth Circuit has reasoned that two other factors are

generally subsumed in the lodestar (the time limitations and the circumstances

and preclusion of other employment). See Enron Corp., 586 F. Supp. 2d at 756–

57 (citing Shipes v. Trinity Indus., 987 F.2d 311, 321–22 (5th Cir.), cert. denied,

510 U.S. 991 (1993)); see also Perdue, 130 S. Ct. at 1673 (reasoning that the

―lodestar includes most, if not all, of the relevant factors constituting a

‗reasonable‘ attorney‘s fee‖). The time and labor involved and the customary fee

may also be considered in calculating the lodestar. See, e.g., Nassar v. Univ. of

Tex. Sw. Med. Ctr., No. 3:08-CV-1337-B, 2010 WL 3000877, at *6 (N.D. Tex.

July 27, 2010) (mem. op.).      But while these factors may be considered in

calculating the lodestar, it is well established that the lodestar may not be

adjusted in consideration of a Johnson factor if that factor was already accounted

for in arriving at the lodestar; ―to do so would be impermissible double counting.‖3



       3
       An upward adjustment of the lodestar based on factors that are
presumably included in the lodestar amount is still permissible, but ―such
modifications are proper only in certain rare and exceptional cases supported by

                                         5
Saizan v. Delta Concrete Prods. Co., 448 F.3d 795, 800 (5th Cir. 2006); see

Perdue, 130 S. Ct. at 1673 (recognizing that the Court has ―held that an

enhancement may not be awarded based on a factor that is subsumed in the

lodestar calculation‖).

      The trial court concluded its letter by stating that it had ―accepted the billed

amounts as the lodestar on the assumption that the Johnson factors have

already been applied.‖ From this snippet, the majority concludes that ―it appears

that the trial court did not complete the required steps‖ because the trial court

―‗assumed‘ that the Johnson factors were accounted for in Plaintiffs‘

calculations.‖ Maj. Op. at 7. This is a misconstruction of the letter and of the trial

court‘s attorneys‘ fees award.      The mistake made by the majority is that it

construes the letter‘s final sentence in isolation and apart from the remainder of

the letter, which unambiguously indicates that the trial court had numerous

concerns about the reasonableness of both the rates charged and the hours

expended by the plaintiffs‘ attorneys. After explaining some of its concerns about

the rates and hours, the trial court stated,

      Texas law seems clear that when Johnson factors are already
      accounted for in determining the reasonable rates (the lodestar
      amount), they should not again be considered when making
      adjustments. To rely on Johnson factors both to justify high rates
      and to justify the application of a multiplier would result in a
      duplicative award of fees.


both specific evidence on the record and detailed findings by the lower courts.‖
Shipes, 987 F.2d at 320.


                                          6
At the request of Stratton, the trial court conducted an exhaustive hearing on

December 17, 2010, and thereafter declined to modify the original Order and

Final Judgment.

      Considering the letter as a whole, the trial court did not decline to adjust

the lodestar because it merely ―assumed‖ that the Johnson factors had already

been accounted for in the lodestar; rather, it did take into account certain

Johnson factors—and possibly all of the Johnson factors—in arriving at the

presumptively reasonable lodestar and then either (1) refused to double count

those same factors in considering a multiplier or (2) considered certain Johnson

factors not addressed in calculating the lodestar as irrelevant for purposes of the

multiplier. The trial court‘s inaction after permitting Stratton to supplement the

record—thus maintaining an award of 100% of the lodestar, an amount within the

range prescribed by rule 42(i)(1)—supports this conclusion.         In light of the

introductory warning that the letter was meant to clarify only ―some of the

reasons for the court‘s ruling,‖ we have no way of knowing what Johnson factors,

if not all of them, were considered in calculating the lodestar and what factors, if

any, the trial court thought were irrelevant in considering a multiplier.     What

evidence we do have, however, does not demonstrate an abuse of discretion.

Accordingly, to the extent that we address Stratton‘s third issue, I would affirm

the trial court‘s judgment.




                                         7
     For the foregoing reasons, I respectfully dissent.




                                                  BILL MEIER
                                                  JUSTICE

DELIVERED: February 9, 2012




                                        8
