A long-running, behind-the-scenes battle between Susman Godfrey and a litigious oil driller over close to $50 million in contingency fees has burst into public view, just as it nears an end.
The U.S. Court of Appeals for the Tenth Circuit on Thursday affirmed a lower court judge’s decision denying a bid by Grynberg Production Corporation to stay enforcement of a judgment in the case. The two sides have been fighting over the fees since 1998, five years after Susman Godfrey helped the company land a multi-million dollar settlement with British Gas. The litigation has unfolded under seal until now.
“I’m thrilled this is finally coming to an end,” said Stephen Susman of Susman Godfrey.
Grynberg Production’s founder, Denver oil tycoon Jack Grynberg, is a well-known in litigation circles for bringing qui tam and mineral concessions cases against various oil companies. His companies have had scrapes with other law firms too, notably Freshfields Bruckhaus Deringer, which Gynberg’s RSM Production Corp. sued for racketeering in 2010. (Grynberg Production general counsel Roger Jatko did not respond to a request for comment.)
In 1992, Grynberg Productions hired Susman Godfrey to sue British Gas after getting in a dispute over oil and gas reserve rights in Kazakhstan. The fee agreement provided for a 30 percent contingency fee, capped at $50 million, if the case settled within a year of its filing.
Eight months after the firm filed the suit in Colorado state court, British Gas cut a deal in which it agreed to pay Grynberg $50 million in mostly quarterly installments, plus 15 percent of its net profits in Kazhakstan and 15 percent of the net proceeds of any sale of its interests in the country.
Grynberg paid Susman $900,000 after getting its first quarterly payment but then refused to pay anything more, according to Thursday’s ruling. The company then sued SusmanGodfrey, claiming the fee agreement was unconscionable and that the firm unjustly enriched itself by not negotiating and drafting the settlement agreement.
Susman Godfrey subsequently moved for arbitration, which the district court granted. The arbitrator, former Third Circuit judge Arlin Adams, determined that the contingency fee provision was not unconscionable. But the arbitrator found that Grynberg was entitled to a $150,000 credit because Susman did not negotiate the settlement agreement, and he reduced the $50 million fee cap to $46.7 million on the grounds that partners Stephen Susman and H. Lee Godfrey hadn’t supervised the litigation as the parties had agreed. The district court confirmed the award in 2000 and the Tenth Circuit affirmed a year later.
That, though, was not the end of the story. In 2005, Grynberg’s dispute with British Gas was revived after it sold part of its Kazakhstan interest and allegedly underpaid the Colorado driller. Susman, which was still awaiting a final payment from Grynberg, moved to enforce the 2001 judgement, Grynberg didn’t pay, and five months later they were back in court.
Grynberg again asserted that Susman did not deserve the $46.7 million fee, but on Thursday the Tenth Circuit rejected that argument. Grynberg’s “repeated attempts to reframe and thereby relitigate decided issues are contrived,” wrote Judge Terrence O’Briene.