IN RE: SANDRIDGE ENERGY, INC. SHAREHOLDER DERIVATIVE LITIGATION,
TOM L. WARD; JIM J. BREWER; EVERETT R. DOBSON; WILLIAM A. GILLILAND; DANIEL W. JORDAN; ROY T. OLIVER, JR.; JEFFREY S. SEROTA; SPECIAL LITIGATION COMMITTEE OF SANDRIDGE'S BOARD OF DIRECTORS, Defendants - Appellees, PAUL ELLIOT, on behalf of the Paul Elliot IRA R/O, derivatively on behalf of Sandridge Energy, Inc.; LISA EZELL, derivatively on behalf of SandRidge Energy, Inc., Plaintiffs - Appellees, and SANDRIDGE ENERGY, INC., Nominal Defendant-Appellee, and TLW LAND & CATTLE, L.P.; WCT RESOURCES, L.L.C.; 192 INVESTMENTS, L.L.C., Defendants. DALE HEFNER, Objector - Appellant.
from the United States District Court for the Western
District of Oklahoma (D.C. No. 5:13-CV-00102-W)
C. Aguilar, Robbins Arroyo LLP (Jay N. Razzouk, Robbins
Arroyo, LLP, San Diego, California, and Charles F. Alden,
III, Oklahoma City, Oklahoma, with him on the briefs), for
E. McKane, Kirkland & Ellis, LLP, San Francisco,
California, and Reggie N. Whitten, Whitten Burrage, Oklahoma
City, Oklahoma (Michael Burrage and Randa K. Reeves, Whitten
Burrage, Oklahoma City, Oklahoma, Robert N. Kaplan and
Jeffrey P. Campisi of Kaplan, Fox & Kilsheimer, LLP, New
York, New York, with them on the brief), for
B. Snyder, Crowe & Dunlevy, Oklahoma City, Oklahoma, Mark
P. Gimbel and C. William Phillips of Covington & Burling,
LLP, New York, New York, for Independent Directors.
KELLY, MURPHY, and MORITZ, Circuit Judges.
Dale Hefner appeals from the district court's denial of
his motion for settlement-related discovery, approval of the
settlement agreement, and order regarding attorneys'
fees. In re Sandridge Energy Inc., No. CIV-13-102-W,
2015 WL 11899141 (W.D. Okla. Dec. 15, 2015); In re
Sandridge Energy Inc., No. CIV-13-102-W, 2015 WL
11921422 (W.D. Okla. Dec. 22, 2015). Exercising jurisdiction
under 28 U.S.C. § 1291, we affirm.
case concerns the settlement agreement and attorneys'
fees related to two separate shareholder derivative suits on
behalf of SandRidge Energy Inc. ("SandRidge")
against its directors. The first of those actions was filed
in federal district court in January 2013. The federal
derivative suit alleged self-dealing, usurpation of corporate
opportunities, and misappropriation by Tom Ward,
SandRidge's founding CEO, and entities affiliated with
him. See 2 Aplt. App. 247-343. It also claimed that
certain Sandridge officers and directors were complicit and
breached their fiduciary duties. Id.
second derivative suit was filed in Oklahoma state court in
January 2013 by Mr. Hefner. 5 Aplt. App. 1310-58. The
director-defendants moved the state court to stay the action
pending a resolution in the federal case, or in the
alternative to dismiss the suit entirely. Mr. Hefner
objected, and the state court stayed the action but denied
the motion to dismiss. 6 Aplt. App. 1417-18. After further
briefing and a renewed motion to dismiss, the state court
again denied the motion. Id. at 1487. In November
2014, the state court entered a stipulated and agreed to
order granting SandRidge's motion to stay. Id.
October 9, 2015, the federal district court granted its
preliminary approval of a partial settlement in the federal
suit. 4 Aplt. App. 1017-19. On October 30, 2015, Mr. Hefner
filed notice of his intent to appear at the settlement
hearing, object to the settlement, and request additional
settlement-related discovery. Id. at 1025-26. The
federal plaintiffs filed a motion for final approval of the
partial derivative settlement on November 25, 2015. Key terms
of the proposed settlement included (1) that the settling
defendants' insurers would pay $38 million to SandRidge,
"to the extent that funds remain after deducting certain
Designated Litigation Expenses . . . arising from a separate
Securities Litigation, " and (2) the institution of
additional corporate governance measures to prevent future
occurrences of misconduct. Id. at 1047-48.
Additionally, the plaintiffs requested an award of
attorneys' fees and expenses totaling approximately $13
million. Id. at 1069.
response, Mr. Hefner (1) filed a contingent motion for
attorneys' fees and reimbursement of expenses, (2)
objected to the settlement, and (3) requested additional
settlement-related discovery. In his request for
attorneys' fees, Mr. Hefner contended that without his
"successful litigation in the State Action, the
Settlement would not have occurred - and certainly not on the
same terms." 5 Aplt. App. 1266. He also argued that
after the federal case initially was dismissed, he
"helped turn the tide in [the federal] litigation,
beating a motion to dismiss [in state court] on demand
futility grounds" and then cooperated with the federal
litigation by agreeing to temporarily stay his state-court
action. Id. at 1266, 1269.
the proposed settlement, Mr. Hefner argued that the federal
court lacked subject-matter jurisdiction; that the settlement
was for the benefit of the attorneys and insurance companies,
but not of SandRidge itself since the funds would first be
used to pay attorneys, then to pay for separate litigation
(which the insurance companies would otherwise pay for), and
would only then - if there was anything left - accrue to
SandRidge; that the request for $13 million in attorneys'
fees was too large, representing over 34% of the total
settlement fund; and that the proposed agreement would
unfairly settle unique claims brought by Mr. Hefner in the
state-court action. 6 Aplt. App. 1572- 90. In sum, Mr. Hefner
contended that the benefit to SandRidge did not outweigh the
value of continuing litigation and that the settlement should
be rejected. Id. at 1592-93.
district court denied Mr. Hefner's motion for additional
discovery and, after a hearing on the other matters, entered
a final order and judgment approving the proposed partial
settlement and denying Mr. ...