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Marilyn Eickenhorst was only a fourth-year lawyer at a Houston trial firm in 1995 when a decidedly unglamorous task fell to her — rooting through records at the Arkansas Public Service Commission. In the end, she never filed suit for the client who had asked her to look at the documents from APSC proceedings stemming from Arkansas Western Gas Co.’s 1990 request for a rate increase. But Eickenhorst, then an associate at Houston’s Clements, O’Neill, Pierce, Nickens & Wilson, stumbled onto some troubling information that led to the dream suit of a career and a $93.2 million judgment that’s the largest-ever affirmed judgment in a state court in Arkansas. The judgment in the class action, which was affirmed June 22 by the Arkansas Supreme Court, totals $109 million with post-judgment interest. With her share of the 35 percent contingent fee, Eickenhorst, a sole practitioner in Houston since January 1996, will earn enough to retire — or not. She’s really not sure what she will do, although she says she will take some time off to travel to recover from the grueling four-year courtroom battle in Fort Smith, Ark. “I gambled my whole career on this case,” Eickenhorst says. “I was on the partnership track at Clements, O’Neill [but] what I’ve been doing is contract work. If I had lost this case, I don’t know what I would have been doing.” But Eickenhorst did know the information she discovered while looking at the documents at the APSC would support a strong suit. She continued to research it after she left Clements O’Neill, and in May 1996, she filed a class action against Southwestern Energy Co. and its wholly owned subsidiaries, AWG and SEECO Inc., on behalf of about 7,000 royalty owners who claimed they were underpaid. “I knew I would never [again] get facts like this. It was once in the lifetime,” she says. “You have the defendants put in the documents basically everything you need to take the case.” CLOSE REVIEW The law is a second career for the 46-year-old Eickenhorst, a CPA who went to law school at the University of Houston Law Center with thoughts of doing ERISA litigation. But commercial litigation and bankruptcy work sounded more interesting, so she sent out some r�sum�s to Houston firms and ended up starting work at Clements O’Neill in January 1992, months before she graduated from law school and passed the bar. Eickenhorst says she was working on oil-and-gas litigation at Clements O’Neill when she was asked to look at the records of the APSC hearing for an unrelated matter for a Houston-based corporation. (She does not want to name the client, but defense attorney John Everett says it was a unit of Houston-based Enron Corp.) After AWG asked for a rate increase in 1990, the APSC started looking into the gas utility’s gas-purchasing practices and gas purchases from its sister company, SEECO. According to the Supreme Court’s opinion, the commission issued a ruling in 1993 questioning the propriety of the relationship between AWG and SEECO, which leases gas properties from the royalty owners. The commission found AWG was not in compliance with Arkansas’ least-cost purchasing statutes and ordered a change in the contract between AWG and SEECO. “In reviewing these documents, I saw what I perceived as admissions that SEECO had breached its leases with the royalty owners,” she says. “The companies … took the position that the ratepayers benefited because we never enforced the contract. When I was reading the contract, I said to myself, ‘I can’t believe you are putting this in documents.’” She says evidence in the record suggests about $295 million was not collected under terms of the contract. “When I saw that, I knew I had what I thought was a viable royalty-owners lawsuit,” she says. Eickenhorst says she had decided to leave Clements O’Neill even before she went to Arkansas because she “could not cope with the lock-step mentality” of the litigation firm. But Eickenhorst knew that if she was going to pursue the royalty-owner litigation, she needed help. She first got a referral to an oil-and-gas lawyer in Arkansas who had handled some class actions. He wasn’t interested, but one of his clients, Dallas surgeon David Taylor, called her. He contacted some friends and relatives who also were royalty owners, Eickenhorst says. Taylor did not, by press time on July 13, return a telephone message left at his office. Eickenhorst needed financing and trial expertise, so she called up a lawyer she had worked with before, Benjamin Singletary, a shareholder in Gable & Gotwals in Tulsa, Okla. Singletary says his firm typically takes the defense side in litigation, but the firm signed on to the class action litigation because of the unique fact situation. By that time the plaintiffs’ team had some clients besides Taylor — a pediatrician from Raleigh, N.C., and a couple of royalty owners out of Fort Smith — so they filed the suit, Allen Hales, et al. v SEECO Inc., et al. The royalty owners alleged numerous causes of actions including fraud and alleged they were due unpaid royalties from SEECO. Eickenhorst says the plaintiffs’ lawyers decided to file the suit in Arkansas, instead of in Texas, to get a speedier trial, but the Arkansas Supreme Court ended up hearing three appeals before the suit went to trial. (In Arkansas, appeals in class suits bypass intermediate appeals courts.) In the first, the Supreme Court in 1997 affirmed the class certification granted by Circuit Court Judge Don Langston, but the suit was on hold for a year while the high court considered the appeal. In the second appeal filed by defense attorneys, the Supreme Court upheld Langston’s decision to disqualify one of SEECO’s co-counsel in the litigation, Michael Fitzhugh, who entered an appearance in the suit in March 1998, a week after he announced his candidacy for Langston’s seat on the bench. Langston refused to recuse himself, and the Supreme Court in July 1998 upheld his decision. “The essential facts seeking the disqualification issue are not in dispute, and it appears clear to us from those facts that Mr. Fitzhugh participated in a contrived series of events to force Judge Langston to recuse in this case,” Justice Robert Brown wrote in the opinion. Everett, of the Everett Law Firm in Fayetteville, Ark., says the defense team hired Fitzhugh because it needed local counsel in Fort Smith and had worked with him before — not to recuse Langston. “That’s what the Supreme Court found, but that’s not what we were doing,” he says. Fitzhugh defeated Langston and now holds the seat. In September 1998, the Supreme Court affirmed Langston’s order providing for notice to a subgroup of the class members, paving the way for a trial on Sept. 30, 1998. Following a two-week trial, a jury, by a 9-3 vote, returned a verdict finding the royalty owners proved their claims for breach of the leases, deceit, constructive fraud, fraudulent concealment, interference with a contractual relationship and civil conspiracy. The jury awarded actual damages of $62,136,827, and Langston’s judgment also orders the defendants to pay prejudgment interest, boosting the total to $93,222,157. The Supreme Court, by a 7-0 vote, affirmed the judgment, finding no reversible error in 16 issues raised by attorneys for the energy companies. A motion for reconsideration was denied by the Supreme Court on July 13. A HARD FIGHT For Southwestern Energy, it was truly bet-the-company litigation — the Fayetteville-based company announced on June 26 it would put Arkansas Western Gas up for sale to raise money to finance the judgment. Singletary says the litigation was hard fought every step of the way. Everett agrees with that characterization, saying it was a “snot-slinger.” But Eickenhorst goes a step further, suggesting the defense attorneys tried to force a mistrial. “That is most assuredly not true,” Everett responds. “We were not trying this case in an effort to mistry it.” Everett’s former partner and co-counsel at trial, Thomas Mars, now director of the Arkansas State Police, was out of the office on July 12 and did not return a message. Eickenhorst says the foundation of the plaintiffs’ case was to present sworn testimony taken at the APSC hearing to prove the royalty owners had been underpaid. “If there was anything unusual about this case it’s we made this case with the defendants’ own words,” Singletary says. “I’ve never been involved in a case before where the defendants said as much unfavorable to the lawsuit as they did in this case and that’s because they were in a totally different forum before the PSC,” he says. But Everett says the testimony was taken out of context. “It’s the difference between an administrative hearing and a jury trial,” he says. The way the litigation turned out — with the plaintiffs to receive cash — is an example of how class actions should work, say Eickenhorst and Singletary. “In the end, there’s over $72 million that’s going to be disbursed to the class members,” she says. “It’s not going to be coupons. It’s not going to be vouchers. It’s going to be hard cash that’s going to go to many deserving people.” Eickenhorst will share in that hard cash, along with Gable & Gotwals and local counsel from Fort Smith’s Smith, Maurras, Cohen, Redd & Horan. A 35 percent cut of $109 million is $38.15 million. Eickenhorst wouldn’t say how much of the money she will get, but she says she and Goble & Gotwals will receive roughly the same percentage and the local counsel less. Expenses totaled about $600,000 for the litigation, and Eickenhorst says she put in time valued at about $450,000. Singletary says his firm invested more than $2.5 million. While she’s earning a substantial fee — enough to open up choices in her life — Eickenhorst says the litigation consumed her over the last four-and-one-half years. She says she took countless trips to Fort Smith; she would fly into Fayetteville and take a commuter into Fort Smith or fly into Tulsa and drive over. She maintained a few other clients, but mostly did contract work because the class action took so much time. “It was stressful,” she says — she fought separate litigation challenging her right to file the suit. Notes Eickenhorst, “It’s a life-changing lawsuit, not just for me, but it certainly was for the company.”

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