Filed Memo in Support - 1091332609

ELECTRONICALLY FILED - 2019 Apr 29 10:09 AM - HAMPTON - COMMON PLEAS - CASE#2017CP2500335
STATE OF SOUTH CAROLINA IN THE COURT OF COMMON PLEAS
COUNTY OF HAMPTON FOR THE FOURTEENTH JUDICIAL

CIRCUIT
Richard Lightsey, LeBrian Cleckley, Phillip

Cooper, et al., on behalf of themselves and all
others similarly situated, Civil Action No. 2017-CP-25-00335
Plaintiffs,
Vs. OBJECTORS’ MEMORANDUM OF

LAW IN SUPPORT OF OBJECTIONS
South Carolina Electric and Gas Company, a AND IN SUPPORT OF MOTION TO
Wholly Owned Subsidiary of SCANA, INTERVENE
SCANA Corporation and the State of South
Carolina,
Defendants,
South Carolina Office of Regulatory Staff,
Intervenor.
1
SECTION TABLE OF CONTENTS PAGES
SUMMARY OF ARGUMENT AND OBJECTIONS 3-5
ARGUMENT 5-61
I. The Settlement Agreement should not be approved because 5-6
absent class members’ procedural due process rights are not
protected and the Class Notice is deficient.
A Legal Standard for Due Process in the Class Action Notice. 6-8
B The class notice provides information that is misleading and 8-20
inaccurate. It claims 2 billion dollars in perspective rate relief but this
perspective rate relief was the result of SCE&G’s merger with
Dominion Energy that was approved in a separate action.
C The Class Notice omits critical information that should have been 21-25
provided to absent class members including expected amounts of
recovery for individual class members and the amount of attorneys’
fees claimed by Class Counsel.
II. Basic fairness dictates that the court reject the proposed 25-26
settlement. The benefits to absent class members are minimal
and will likely amount to less than five cents on the dollar. The
proposed settlement is plagued by other problems that reduce
benefits to the class members.
A Legal Standard for final court approval of the Settlement Agreement. 26-29
B On its face the settlement provides less than ten cents on the dollar in 29-31
refunds for the failed V.C. Summer expansion; in reality once
expenses, costs and attorneys’ fees are paid, the class members will
likely receive less than five cents on the dollar.
C The real estate transfers that are a part of the settlement pose 31-39
significant problems and these problems devalue their benefit to the
class.
III. Class Counsels’ claim for over $63,450,000 in attorneys’ fees is 39
outrageously high and patently unreasonable. Such a request
should not be approved by the court.
A Legal Standard for Attorney’s Fees in Class Actions. 39-41
B The nature, extent and difficulty of this case does not warrant 41-43
attorneys’ fees of over $63,450,000.
C The time Class Counsel devoted to this case does not support 43-53
attorneys’ fees of over $63,450,000.
D The benefits obtained by Class Counsel are significantly less than 53-55
what they claim and do not justify attorneys’ fees of $63,450,000.
E The customary legal fees for similar services do not support Class 55-59
Counsel’s claim for over $63,450,000 in attorneys’ fees.
F Class Counsels’ claim for reimbursement of $864,912.40 in litigation 59-61
costs is not verified and should not be approved by the court unless
and until substantiated and made publically available to class
members.
CONCLUSION AND REQUEST FOR RELIEF 61-63
2
SUMMARY OF OBJECTIONS AND ARGUMENTS
The Class Notice is constitutionality deficient in three important aspects and does not
provide absent class members with procedural due process. First, the Class Notice provides
erroneous information to absent class members about the benefits of the settlement. Specifically,
it tells absent class members that a benefit of the settlement is 2 billion dollars in future rate
relief. This future rate relief was not the result of this lawsuit. Rather, future rate relief was the
result of Dominion Energy’s merger with SCE&G that was approved in a separate action before
the Public Service Commission. Providing this misinformation discourages opt-outs and
objections because the Class Notice specifically states, “If you exclude yourself, you will not
receive any payments or other benefits from the settlement...” In reality, all current SCE&G
ratepayers will receive future rate relief whether they opt out of the settlement or remain a
member of the class.
The Class Notice is also constitutionally deficient because it does not tell absent class
members what money they may expect to receive. While the Class Notice tells absent class
members of the 115 million dollar cash payment and land transfers it does not tell absent class
members about the actual recovery for the average customer or ratepayer. Such information
could and should have been provided to absent class members to protect their due process rights.
The Class Notice fails to provide absent class members with sufficient information about
the costs and attorneys’ fees Class Counsel seek from the Common Benefit Fund. Providing a
general basis for costs and attorneys’ fees is insufficient and constitutionally deficient. Absent
class members should have been told well in advance of the objection deadline that Class
3
Counsel sought over $64,000,000 dollars in costs and attorneys’ fees. Instead, the Fee Petition
was not filed until a week before the objection deadline.
The material terms of the settlement are fundamentally unfair, unreasonable and should
be approved by the court. Under the terms of the Settlement Agreement absent class members
will get back less than five cents on the dollar compared to what they lost because of the failed
V.C. Summer expansion. Meanwhile, Class Counsel seek over 55% of the cash in the Common
Benefit Fund as costs and attorneys’ fees.
The real estate transfers that are also a part of the Settlement Agreement are problematic
and may be of little or no value to the class. The real estate itself is probably worth far less than
what the parties claim. Moreover, the parties have provided no information that verifies their
own estimates. Even if the real estate is worth what the parties estimate, it is probably worth far
less to the absent class members because of all the costs associated with selling the property.
SCE&G has been trying to sell this real estate for years without success. It is unlikely Class
Counsel will have any greater success. Thus, class members may get very little if anything from
the real estate transfers.
Class Counsel’s claim for over $64,000,000 in costs and attorneys’ fees is unreasonable,
unjustified and unprecedented. This amounts to over 55% of the total cash SCE&G is paying to
the class. This case lasted less than 16 months from the time it was filed until the time the
Settlement Agreement was signed. Class Counsel are seeking attorneys’ fees that would amount
to nearly $4,000,000 a month or $135,867 a day since the case was filed until the Settlement
Agreement was signed.
Class Counsel attempt to justify this fee by arguing for a percentage of the recovery. In
so doing they grossly overvalue the benefits they provided to the class by claiming that the 2
4
billion dollars in future rate relief was the result of this litigation. It was not. The 2 billion
dollars in future rate relief was because of Dominion’s merger with SCE&G and a separate
action in the PSC. Regardless of whether this court approves or disapproves the settlement,
ratepayers will get the same future rate relief. Class Counsel should not be able to base their fee
off of future rate relief that ratepayers would have gotten even if this lawsuit was never filed.
ARGUMENT
I. The Settlement Agreement should not be approved because absent class

members’ procedural due process rights are not protected and the Class
Notice is deficient.
The Class Notice is deficient and does not afford absent class members procedural due
process. The Class Notice fails to provide absent class members with accurate information about
the terms of the settlement. The Class Notice claims that the Settlement Agreement provides for
2 billion dollars in prospective rate relief as a benefit of the lawsuit and settlement. This
information is not accurate and is misleading because the 2 billion dollars in prospective rate
relief was the result of Dominion Energy’s (hereinafter Dominion) merger with SCE&G that was
approved in a separate action before the Public Service Commission (hereinafter “PSC”). In
other words, even without this lawsuit, ratepayers would have received over two billion dollars
in rate relief because of the approved merger. It is misleading to characterize the 2 billion dollars
of rate relief as a benefit of this lawsuit when ratepayers would have gotten those same benefits
because of the approved merger.
This aspect of the Class Notice is particularly problematic because it discourages class
members from opting out or objecting as opposed to merely providing them with necessary
information to make an informed decision. This is because the Class Notes states, “If you
exclude yourself, you will not receive any payments or other benefits from the settlement...”
5
Based on the wording of the Class Notice class members may be discouraged from opting out or
objecting fearing that they will not receive future rate relief or that their bills will rise if they opt
out or object.
The Class Notice is also defective and constitutionally deficient because it fails to
provide critical information to absent class members which would allow them to make
reasonable and informed decisions about opting out of the settlement or objecting to the
settlement. The Class Notice fails to provide absent class members with estimates about the
expected monetary benefit they will receive (i.e. a reasonable estimate of the expected monetary
benefit to the average SCE&G customer/ratepayer). It also fails to provide absent class members
with sufficient information about what Class Counsel claim in costs and attorneys’ fees from the
Common Benefit Fund.
A. Legal Standard for Due Process in the Class Action Notice.
Resolution of an absent individual’s claim is a taking of property that triggers due
process protection including the right to notice. Mullane v. Central Hanover Bank & Trust Co.,
339 U.S. 306, 313 (1950). Notice “must contain information that a reasonable person would
consider to be material in making an informed, intelligent decision of whether to opt out or
remain a member of the class and be bound by the final judgment.” Faught v. American Home
Shield Corp., 668 F.3d 1233, 1239 (11th Cir. 2011) quoting In re Nissan Motor Corp. Antitrust
Litigation, 552 F.2d 1088, 1104-1105 (5th Cir. 1977).
In Hospitality Management Associates, Inc., et. al. v. Shell Oil, 356 S.C. 644, 654 591
S.E.2d 611, 616 (2004), cert. denied, citing Phillips v. Shutts , 472 U.S. 797 (1985), the South
Carolina Supreme Court observed:
... in order to provide minimal due process, absent class plaintiffs must receive notice plus
an opportunity to be heard and participate in the litigation, whether in person or through
6
counsel. The notice must be the best practicable, “reasonably calculated, under all the
circumstances, to apprise interested parties of the pendency of the action and afford them
an opportunity to present their objections.” . . . . The notice should describe the action and
the plaintiffs' rights in it. Additionally, . . . . due process requires at a minimum that an
absent plaintiff be provided with an opportunity to remove himself from the class by
executing and returning an “opt out” or “request for exclusion” form to the court. Finally,
the Due Process Clause of course requires that the named plaintiff at all times adequately
represent the interests of the absent class members.
Phillips v. Shutts, 472 U.S. 797, 812 (1985). Hospitality at 644.
In Hege Aegon USA, LLC, 780 F. Supp. 2d 416 (D.S.C. 2011) the U.S. District Court
described the requirements necessary for a class notice to meet procedural due process:
The notice provided to class members “must be the best practicable, ‘reasonably
calculated, under all the circumstances, to apprise interested parties of the pendency
of the action and afford them an opportunity to present their objections.’” Shutts,
472 U.S. at 812, 105 S.Ct. 2965 (quoting Mullane v. Cent. Hanover Bank & Tr.
Co., 339 U.S. 306, 314–15(1950)). A “fully descriptive notice” that describes the
action and the plaintiffs' rights satisfy the notice prong of due process. Id. On the
other hand, if the class members are not provided with enough information to make
an informed choice, the notice is constitutionally deficient. See In re Fed. Skywalk
Cases, 97 F.R.D. 365 (D.Mo.1982); 7B Federal Practice and Procedure § 1797.6
(“A proposed notice that is incomplete or erroneous or that fails to apprise the
absent class members of their rights will be rejected as it would be ineffective to
ensure due process . . . . Only if sufficient information is provided will the recipient
be able to determine whether to object to the proposal or, if permitted, to opt out of
the compromise.”).
Hege at 430.
Among specific requirements, a settlement notice should “provide information that will
enable class members to calculate or at least estimate their individual recoveries…” Manual for
Complex Litigation, Fourth, § 21.312. See also Greer v. Shapiro & Kreisman Eyeglasses, 2001
WL 1632135 (E.D. Pa. 2001).
Information regarding a claim for costs and attorney’s fees by Class Counsel should also
be provided to absent class members. “Absent class members have a protected right to object to
a fee petition and that right is only meaningful if they are provided complete documentation
7
supporting any fee request (including the full fee petition) at least 14 to 30 days in advance of
any deadline to object.” Newberg on Class Actions § 15.15. The seminal rule is that “class
members ought to have the opportunity to review the full fee motion and object to it in writing,
particularly in common fund cases where they are paying the fee themselves. Knowing the level
of the fee alone is a weak substitute for reviewing the full fee petition as the latter ought to
provide more detail about counsel’s time and efforts, precisely the detail that would make the
opportunity to object meaningful.” Newberg on Class Actions, § 8:24. See also In re Mercury
Interactive Corp. Securities Litigation, 618 F.3d 988, 994-96.
B. The class notice provides information that is misleading and inaccurate. It

claims 2 billion dollars in perspective rate relief but this perspective rate
relief was the result of SCE&G’s merger with Dominion Energy that was
approved in a separate action.
The Settlement Agreement should not be approved because the Class Notice provides
information that is misleading and inaccurate. The Class Notice claims that “Pursuant to the
proposed settlement, Defendants will… provide up to two billion dollars ($2,000,000,000.00) in
prospective (future) rate relief for the benefit of the Class Members over a period of time
established in the PSC proceedings.” This information is misleading and inaccurate because
future rate relief was not the result of this litigation. Instead, ratepayers are getting prospective
rate relief because of SCE&G’s merger with Dominion that was approved in a separate PSC
case. Claiming any prospective benefit to ratepayers from this litigation is inaccurate, false, and
misleading.
This is evidenced by the actual wording of the Settlement Agreement. Paragraph 2 of the
Settlement Agreement provides the 2 billion dollars in prospective rate relief outlined in the
Class Notice. However, in the very next paragraph, paragraph 2.a., the Settlement Agreement
provides SCE&G with “a credit of up to two billion dollars ($2,000,000,000.00) toward their
8
Settlement obligation in the amount of the rate relief to inure to the benefit of the Class Members
over a period of time established in the contemporaneous proceeding pending before the PSC.”
In paragraph 2 of the Settlement Agreement SCE&G agrees to provide the two billion
dollars in prospective rate relief outlined in the Class Notice. In the very next paragraph,
SCE&G claims a credit back of two billion dollars. With one hand, SCE&G gives two billion
dollars of prospective rate relief to the class. With the other hand, SCE&G takes back the two
billion dollars of prospective rate relief it just gave. The Class Notice is misleading. It only
provides absent class members information related to the claim of 2 billion dollars in prospective
rate relief without also telling them that SCE&G is claiming a 2 billion dollar credit from the
relief provided in the separate PSC action. Thus, absent class members are led to believe they
are getting 2 billion dollars in prospective rate relief from the class action lawsuit when in reality
that prospective rate relief was not the result of this litigation or this lawsuit. These types of
“material inaccuracies regarding benefits of remaining in the class” is exactly what the District
Court warned of in Hege Aegon USA, LLC, 780 F. Supp. 2d 416 (D.S.C. 2011).
These material inaccuracies are particularly problematic in this case because they actually
discourage class members from opting out or objecting to the settlement. A class member could
easily read the Class Notice and conclude that if he opts out or objects he will not get future rate
relief or his electric bills may actually rise. The Class Notice says that very thing: “If you
exclude yourself, you will not receive any payments or other benefits from the settlement...”
(emphasis added). In truth, anyone who might opt out or object will get the same future rate
relief as all other ratepayers. However, this isn’t clear based on the wording of the Class Notice.
Indeed, it is “erroneous” and therefore “ineffective to ensure due process.” Hege, 780 F. Supp.
9
2d at 430. “[N]otice that is incomplete or erroneous or that fails to apprise the absent class
members of their rights will be rejected as it would be ineffective to ensure due process.” Id.
To understand why the Settlement Agreement is worded this way and to understand why
this lawsuit and this litigation did not actually produce the rate relief claimed in the Class Notice,
it is helpful to understand what happened after SCE&G announced its intention to abandon the
failed V.C. Summer reactors.
During the summer of 2017 SCE&G announced its intention to abandon the expansion at
the V.C. Summer nuclear plant. In January, 2018 Dominion announced a deal to buy SCE&G
for 7.9 billion dollars. See Exhibit 1, Joint Application and Petition of South Carolina Electric
& Gas Company and Dominion Energy, Inc.; Exhibit 2, SCE&G’s Notice of Filing and Hearing
and Prefiled Testimony Deadlines in PSC action; Exhibit 3, Direct Testimony of James R.
Chapman on Behalf of Dominion Energy, Inc. in PSC action, pp. 8-16; Exhibit 4, Direct
Testimony of Thomas F. Farrell, II on Behalf of Dominion Energy, Inc. in PSC action pp. 4-9;
Exhibit 5, Direct Testimony of Allen W. Rooks on Behalf of South Carolina Electric & Gas
Company in PSC action pp. 3-6. As part of the buyout, Dominion agreed to a “Customer
Benefits Plan” that provided a “one-time rate credit totaling $1.3 billion.” Exhibit 1 at
paragraph 57a. See also Exhibit 2, pp. 1-2; Exhibit 3, pp. 8-16; Exhibit 4, pp. 4-9; and Exhibit
5, pp. 3-8. The Customer Benefits Plan also provided future “bill reduction of approximately
5%.” Exhibit 1 at paragraph 57a. See also Exhibit 2, pp. 1-2; Exhibit 3, pp. 8-16; Exhibit 4,
pp. 4-9; and Exhibit 5, pp. 3-8. The 5% bill reductions totaled 575 million dollars in prospective
rate relief. Exhibit 3, p. 3; Exhibit 4, p. 7; Exhibit 5, p. 5. The Customer Benefits Plan was
widely reported in the national and local media. The plan provided the average ratepayer a
$1,000 refund and prospective rate relief of approximately $7.00 a month for the average
10
SCE&G customer. See e.g. https://money.cnn.com/2018/01/03/investing/dominion-energy-
scana-merger-customer-refund/index.html and https://thetandd.com/business/scana-mergering-
with-dominion-energy-sce-g-customers-to-receive/article_b42ed521-7b27-517e-bf23-
17ee97083df7.html.
In an effort to tout the benefits of the merger, Dominion launched an aggressive
advertising campaign outlining the benefits to ratepayers contained in its buyout offer. See e.g.
https://www.youtube.com/watch?v=ETbGakJAxjk&feature=youtu.be. and
https://www.thestate.com/opinion/op-ed/article197552579.html. Dominion’s proposal was
criticized by a wide range of groups including a number of State Legislators.
Whether Dominion’s original buyout proposal was fair and reasonable is not the issue
now before this court. The issue is the actual benefits provided to the class as a result of this
lawsuit and this litigation. As to this issue it is clear: Dominion did not offer to buy SCE&G
because of this lawsuit. Contrary to what the parties would now have this court believe,
corporations do not buy struggling companies to give money away. Rather, Dominion saw a
business opportunity and the opportunity to make a profit despite SCE&G’s troubles and despite
the pending litigation. Refunding some money to customers for the failed V.C. Summer
expansion and agreeing to reduce electric rates in the future was simply a means toward that
end. The point for this court to recognize is that Dominion was offering benefits to ratepayers
before the parties to this lawsuit even considered serious settlement negotiations. Exhibit 1 at
paragraph 57a. See also Exhibit 2, pp. 1-2; Exhibit 3, pp. 8-16; Exhibit 4, pp. 4-9; and Exhibit
5, pp. 3-8. Dominion was not offering those benefits as a charitable act or because of this
litigation. Rather, Dominion was offering those benefits so its deal to buy SCE&G would be
11
approved by the PSC and other regulatory bodies. This lawsuit and litigation had nothing to do
with that. However, the Class Notice leads absent class members to think it did.
Early in 2018 it was clear that Dominion’s buyout offer faced an uphill battle. In 2018,
the Legislature passed laws that temporarily reduced customer bills. See Exhibit 6, Order and
Opinion of Honorable J. Michelle Childs dated July 26, 2018 pp. 6-7 in an action captioned
South Carolina Electric & Gas Company v. Whitfield et. al. docket no.: 3:18-cv-01795 JMC.
Faced with these rate reductions, SCE&G sued the State of South Carolina and others claiming
the passage of these laws was unconstitutional. Exhibit 7, Verified Complaint for Declaratory
Judgment and Temporary, Preliminary, and Permanent Injunctive Relief in action captioned
South Carolina Electric & Gas Company v. Whitfield et. al. docket no.: 3:18-cv-01795 JMC.
SCE&G moved to enjoin enforcement of the new laws. Exhibit 7. In August, 2018 the United
States District Court denied SCE&G’s motion for a temporary restraining order and the
temporary rate cuts went into effect shortly thereafter. Exhibit 8, Findings of Fact, Conclusions
of Law, and Order and Opinion Denying SCE&G’s Motion for Preliminary Injunction dated
August 8, 2018 in action captioned South Carolina Electric & Gas Company v. Whitfield et. al.
docket no.: 3:18-cv-01795 JMC.
In October, 2018, with public pressure and pressure from the Legislature mounting,
SCE&G and Dominion offered an “Alternative Customer Benefits Plan.” Exhibit 9,
Supplemental Rebuttal Testimony of Prabir Purohit on Behalf of Dominion Energy in PSC
Action; Exhibit 10, Supplemental Rebuttal Testimony of Thomas F. Farrell, II on Behalf of
Dominion Energy, Inc. in PSC Action; Exhibit 11, Joint Applicants’ Pre-Hearing Brief.
SCE&G and Dominion continued to advocate for the original Customer Benefits Plan that
provided a 1.3 billion dollar refund/$1,000 per customer refund coupled with 575 million dollars
12
in future rate cuts, but they also offered an Alternative Customer Benefits Plan. Exhibit 9, p. 3.
The Alternative Customer Benefits Plan was fundamentally different from the original Customer
Benefits Plan because it made no upfront payment/customer refunds (i.e. it completely
eliminated the 1.3 billion dollar/$1,000 upfront refund) but it provided 1.91 billion dollars in
future rate relief. Exhibit 9 and 10. The original Customer Benefits Plan only provided 575
million dollars in future Rate Relief. Exhibits 1-5. In other words, Dominion took the 1.3
billion dollar upfront payment and shifted it to the backend thus providing 1.91 billion dollars in
future rate relief. However, under the Alternative Customer Benefits Plan customers would not
get the original upfront refund promised to them early on. Exhibits 9 and 10. In short, under
the Alternative Customer Benefits Plan ratepayers had to forgo any upfront payment in favor of
rate reductions that totaled approximately 1.91 billion dollars. Exhibits 9 and 10.
For this court’s consideration, there are two points that are the most important. First,
SCE&G and Dominion were offering and advocating for rate reductions well before the
Settlement Agreement in this action was ever reached. Second, the testimony and other evidence
in the separate PSC action demonstrate SCE&G and Dominion were advocating for these future
rate reductions for reasons wholly unrelated to this lawsuit.
To illustrate these points it is helpful to review the testimony and other evidence SCE&G
and Dominion offered in the separate PSC action. In October, 2018 SCE&G and Dominion
began submitting testimony and evidence to the PSC related to the Alternative Customer
Benefits Plan if the merger was approved. Exhibits 9 and 10. In that testimony, there is no
mention of offering the Customer Benefits Plan or the Alternative Customer Benefits as a result
of the pending litigation in the class action lawsuit before this court. To the contrary, testimony
submitted by SCE&G and Dominion make clear that the benefits associated with the Customer
13
Benefits Plan and Alternative Customer Benefits Plan were the result of the PSC action, not the
action before this court. For example, on October 25, 2018 Prabir Purohit, Director of Mergers
and Acquisitions and Financial Analysis at Dominion Energy testified:
On August 14, 2018 the South Carolina Office of Regulatory Staff (“ORS”)
filed its testimony in this docket and recommended a plan that provides
no upfront cash refund to customers, but instead provides lower bills going
forward. Since that time, a number of parties to the case have expressed an
interest in seeing an alternative plan from us that does something similar to the
ORS plan; that is, lower bills over time in lieu of upfront cash refunds. As a
result, we developed the Alternative Customer Benefits Plan (the “Alternative
Plan”). We have shared this Alternative Plan with several parties on a confidential
basis. As was noted in the rebuttal testimony of Company Witness Thomas F.
Farrell, II, Dominion Energy continues to believe that the original Customer
Benefits Plan is most advantageous to SCE&G ratepayers, and Dominion Energy
continues to stand behind that proposal. However, the Alternative Customer
Benefits Plan has been developed in response to the suggestions of other parties
within South Carolina, and we have developed it in a way that preserves the
merger economics of the Customer Benefits Plan.
Exhibit 9, p. 2. Thomas F. Farrell, II, Chairman, President and CEO of Dominion Energy also
testified about the “rationale of an alternative plan (“Alternative Plan”) to the original Customer
Benefits Plan…” Exhibit 10, p. 1. Farrell testified in the separate PSC action as follows:
Several interested parties to this proceeding have, in their testimony and

otherwise, suggested the development of a plan which focuses more directly on
long-term permanent bill relief, as opposed to up-front customer refunds. In
response to those suggestions, the Alternative Plan was developed by the
Company.
Exhibit 10, p. 2. Significant in this court’s analysis is the fact that neither SCE&G nor
Dominion were offering the Alternative Customer Benefits Plan in response to the pending
lawsuit. Rather, the Alternative Customer Benefits Plan was being offered in connection with
the merger at issue in the separate PSC action.
As the PSC action continued, the parties in that action continued to advocate for different
plans that reduced rates in the future. As noted in Prabir Purohit’s testimony, the Office of
14
Regulatory Staff (hereinafter “ORS”) had its own plan called the “Optimal Ratepayer Benefits
Plan.” Exhibit 12, Order Addressing South Carolina Electric and Gas Nuclear Dockets in PSC
action dated December 21, 2018 (hereinafter PSC Order), pp. 62-66. The ORS plan would have
mandated even greater rate reductions going forward but Dominion executives indicated they
would not proceed with the merger if that plan was adopted. Exhibit 12. However, Dominion
agreed to slightly increase the rate reductions going forward from 1.91 billion dollars to 2.039
billion dollars. Exhibit 12, pp. 58-62.
Thus, by the time the PSC decided the issues before it, including the merger and
including future rate reductions for customers, it had a total of four plans or proposals to choose
from. Exhibit 12. “Plan A” was the 1.3 billion refund/$1,000 per customer coupled with 575
million dollars in prospective rate cuts. Exhibit 12, p. 9. This was the same plan SCE&G and
Dominion offered in January, 2018. Exhibit 1. “Plan B” included the 1.91 billion dollars of
prospective rate relief going forward but had no upfront payment. Exhibit 12, p. 11. “Plan B –
Levelized” (or what the PSC refers to as “Plan B-L”) provided for 2.039 billion dollars in
prospective rate relief. Exhibit 12, p. 60. Like Plan B, Plan B-L had no upfront payment.
Finally, ORS had its own “Optimal Ratepayer Benefits Plan” but Dominion executives indicated
Dominion would not merge with SCE&G if the PSC adopted that plan. Exhibit 12. Ultimately,
the PSC approved the merger and approved Plan B-L. Exhibit 12. This decision by the PSC
was the result of the separate action before the PSC and had nothing to do with the action
pending in this court.
While the parties to the pending litigation may attempt to argue that the PSC’s Order was
issued almost a month after the Settlement Agreement was signed in this action, such an
argument is hollow and meaningless because the merger offers Dominion made were made
15
months in advance of the Settlement Agreement in this case. To be clear, SCE&G and
Dominion were urging and advocating for the PSC to approve one of its three plans long before
this case was settled. This included Dominion and SCE&G advocating for Plan B-L that
provided the 2.039 billion dollars in prospective rate relief that was ultimately approved in the
separate PSC action. This happened before the Settlement Agreement in this action was ever
reached. The 2 billion dollars in perspective rate relief was not something Class Counsel had to
negotiate from SCE&G. To the contrary, it was something that SCE&G and Dominion openly
and publically advocated for in the PSC action. On November 20, 2018 Purohit gave a second
supplemental testimony advocating for the PSC to adopt Plan B-L. He testified:
The Plan B-L, in particular, is being offered in response to suggestions from

key stakeholders that the temporary rate in Act 258/H. 4375 is an optimal target,
and on which has, to date, withstood legal challenge.
Exhibit 13, Second Supplemental Rebuttal Testimony of Prabir Purohit on behalf of Dominion
at PSC action, p. 11. Purohit’s testimony leaves little doubt – Dominion and SCE&G offered the
$2.039 billion in prospective rate relief because they wanted the merger between Dominion and
SCE&G to go through. And, they were making this offer so the Legislature would not intervene
and act on its own initiative as they did earlier in the year in passing laws that temporarily
reduced customers’ rates. See generally Exhibits 6-8.
The testimony and PSC Order are clear – SCE&G and Dominion were openly advocating
for the $2.039 in prospective rate relief so the merger would be approved. They advocated for
this prospective rate relief before this case was settled. Class Counsel didn’t negotiate the
$2.039 billion dollars in prospective rate relief in Plan B-L. Thus, claiming any prospective
relief as a class benefit of this lawsuit is nothing but a mirage and illusion designed to sell the
benefits to the class, to the public and to this court. However, it is simply not true. From day
16
one when Dominion offered to buy SCE&G it offered ratepayers money and future rate relief
without any negotiation with Class Counsel. In fact, the same week that Dominion made its first
merger offer that included the Customer Benefits Plan, SCE&G was in this Court arguing that
the current lawsuit should be dismissed because the proper forum for Plaintiffs’ claims was the
PSC. See Hearing Transcript from January 8, 2018 and Exhibit 1. But in the PSC action,
SCE&G and Dominion were advocating themselves for essentially the same prospective rate
reductions the parties claim as a benefit of this lawsuit.
To be clear, future rate relief was never a part of this lawsuit. To see how this is true all
the court has to do is look at the prayer for relief in the Consolidated Complaint. Class Counsel
never asked for the future rate relief they are now claiming as benefit of this lawsuit. Instead,
that future rate relief was Dominion and SCE&G’s effort to appease the Legislature’s concerns
about future utility rates. The Legislature had already passed laws that reduced rates and
Dominion and SCE&G knew full well they would act again if Dominion and SCE&G did not
reduce rates going forward.
The suggestion that Class Counsel is responsible for 2 billion dollars in prospective rate
relief from its efforts in this lawsuit is inconsistent with what actually happened when Dominion
merged with SCE&G. For due process analysis, class members are told something in the Class
Notice that is misleading and simply not true – that they are being provided with 2 billion dollars
of prospective rate relief as a direct benefit of this lawsuit. In truth, they would have received the
same rate relief had this lawsuit never been filed. Just as importantly and just as troubling, the
Class Notice tells class members that if they opt out they will not receive this benefit. The Class
Notice specifically states, “If you exclude yourself, you will not receive any payments or other
benefits from the settlement...” This statement in the Class Notice is false and erroneous. Every
17
ratepayer will get future rate relief based on the merger that was approved by the PSC. Exhibit
12. Thus, the “erroneous” Class Notice must “be rejected as it would be ineffective to ensure
due process…” Hege, 780 F. Supp. 2d at 430.
This misinformation to the class is rooted in the wording of the Settlement Agreement
itself. The last sentence of paragraph 2.a. of the Settlement Agreement states: “It is expressly
agreed by the Parties that the benefit conferred in the PSC was provided as a direct result of this
Litigation.” This is simply not true and is an illusory benefit of the Settlement Agreement. To
understand why it is helpful to review and read the PSC’s Order. Exhibit 12. Little mention is
made in the PSC Order about the Lightsey v. SCE&G litigation. Exhibit 12. In fact, the PSC
only references this case one time in describing the history of the failed V.C. Summer project
and aftermath that followed. Exhibit 12, p. 9. Of the dozens of attorneys involved in the PSC
action, Class Counsel aren’t among them. Exhibit 12, pp. 34-35. Most importantly, there is
simply no mention in the PSC Order that Class Counsel in this action were instrumental in
helping the PSC reach a decision that resulted in 2.039 billion dollars of prospective rate relief.
There is most certainly no conclusion in the PSC Order that the 2.039 billion dollars of
prospective rate relief “was provided as a direct result of this Litigation [Lightsey v. SCE&G].”
To further understand the misleading nature of the phrase: “It is expressly agreed by the
Parties that the benefit conferred in the PSC was provided as a direct result of this Litigation”
consider what would happen if this court were to disapprove the settlement. In that scenario
nothing would change as far as prospective rate relief for SCE&G customers. Ratepayers would
still get the prospective rate relief provided for in the PSC Order. Similarly, if this court were to
issue an order approving the settlement, the 2.039 billion dollars of prospective rate relief
provided for in the PSC Order would not change. Respectfully, nothing this court does with
18
regard to approval or disapproval impacts the future rate relief that ratepayers get. That is
because this action is separate and different from the PSC action. Even if this lawsuit had never
been filed the ratepayers would have gotten the same prospective relief they are now getting.
The problem this misinformation creates is real and tangible. A class member could read
the Class Notice and reasonably believe that in order to get future rate reductions they must
remain in the class and cannot opt out or object. Class members are specifically told in the Class
Notice: “Pursuant to the proposed settlement, Defendants will provide… up to two billion dollars
($2,000,000,000) in prospective (future) rate relief for the benefit of the Class Members…” The
Class Notice also apprises absent class members that they “will not receive any payments or
other benefits from the settlement” if they opt out. Based on what is written a class member
could believe that their only option for future rate relief is to remain a member of the class and
not exercise their opt-out rights. However, based on the PSC action and Order (Exhibit 12
hereto) Class members who opt out will get the same rate relief as those that remain in the class.
However, absent class members are not provided with this information and the Class Notice is
constitutionally deficient because they are not provided this information.
Each of the parties and their attorneys have reasons for claiming “that the benefit
conferred in the PSC was provided as a direct result of this Litigation.” For its part, SCE&G,
like most defendants to a lawsuit wants the matter against it dismissed with prejudice. As noted
above, regardless of the outcome in this court, ratepayers are still going to get the rate relief
outlined in the PSC order. Thus, including such language in the Settlement Agreement does not
adversely impact SCE&G and allows it to settle the case without providing any real monetary
benefit from such language. As for Plaintiffs’ Counsel they want what most attorneys want –
fees and money. By claiming a larger benefit than what is actually provided in this litigation,
19
Class Counsel can claim a larger share of the actual cash in the Common Benefit Fund.
Regardless of the motivation for such inaccurate statements they simply do not match reality.
Just as importantly, this misinformation is provided to absent class members through the Class
Notice. In the Class Notice, absent class members are provided information about the benefits of
the settlement that simply do not match the reality of the situation.
This misinformation about the benefits of the settlement violate absent class members’
procedural due process rights. “[D]ue process does require that the notice not be materially
misleading.” Hege, 780 F. Supp at 430. In Hege, the Court found that the description of
“benefits” provided to Plaintiffs was materially misleading. Specifically, the court found that the
notice afforded to Plaintiffs misinformed absent class members of the value of their rights if they
opted out and the relative value of remaining in the settlement. As such the notice was
materially misleading and violated procedural due process. Hege at 430-431. The same analysis
applies here: Absent class members are told something that is not accurate and is not true. Even
if class members opt out of the settlement, they will still get the same future rate relief as every
other SCE&G customer. The reason for this is simple – future rate relief is guaranteed as result
of the PSC action.
The problem is absent class members are given the impression in the Class Notice that
the 2 billion dollars in perspective relief was the result of this litigation and this lawsuit. It was
not. Far from providing “information reasonably necessary to make a decision [whether] to
remain a class member and be bound by the final judgment or opt out of the action” the Class
Notice confuses the issue by claiming benefits that were the result of the PSC action. Faught,
668 F.3d at 1239 quoting In re Nissan Motor Corp., 552 F.2d at 1104. At best, absent class
members are left with confusion about the benefits they are receiving in this case.
20
C. The Class Notice omits critical information that should have been provided
to absent class members including expected amounts of recovery for
individual class members and the amount of attorneys’ fees claimed by Class
Counsel.
In addition to providing misleading and inaccurate information, the Class Notice omits
critical information that should have been provided to absent class members: (1). An expected or
estimated amount of recovery for individual class members and (2). The amount of attorneys’
fees and costs claimed by Class Counsel. Such information is critical for any reasonable person
deciding whether to opt out or object. Failing to provide such information violates absent class
members’ due process rights.
The Manual for Complex Litigation provides that among other requirements, class notice
should “provide information that will enable class members to calculate or at least estimate their
individual recoveries…” Manual for Complex Litigation, Fourth, § 21.312. In Greer v. Shapiro
& Kreisman Eyeglasses, 2001 WL 1632135 (E.D. Pa. 2001), for example, the District Court
withheld final approval of a class action settlement because the Court found the Class Notice
provided inaccurate information to absent class members about their expected recovery.
In the case now before this court such information was omitted altogether. While absent
class members are informed about the total 115 million dollar payment from Defendants and are
informed of land transfers totaling approximately 85 million dollars for a total settlement of 200
million dollars, absent class members are never provided reasonable estimates about what these
numbers mean to the average ratepayer. In short, the Class Notice should tell absent class
members of their expected recovery but it fails to do so.
Such information could have been easily provided. In the separate action before the PSC,
the PSC’s Order approving the merger and setting rates specifically discusses what the rate cuts
mean for the average customer. See Exhibit 12. Moreover, from the moment Dominion began
21
its campaign to buy SCE&G, it openly advertised what its proposal would mean to the average
ratepayer. For example, when Dominion initially offered ratepayers 1.3 billion dollars in refunds
it openly advertised and campaigned on the fact that this would have resulted in around $1,000
for the average SCE&G customer. There is no reason the same type of information could not
have been provided here.
In addition to not providing adequate notice to class members regarding their expected
recovery, the Class Notice fails for another reason: It does not provide adequate notice to absent
class members regarding the attorneys’ fees and costs Class Counsel seek out of the Common
Benefit Fund. Such information should have been provided but was not.
“Absent class members have a protected right to object to a fee petition and that right is
only meaningful if they are provided complete documentation supporting any fee request
(including the full fee petition) at least 14 to 30 days in advance of any deadline to object.”
Newberg on Class Actions § 15.15. “The normal practice is that class counsel files a motion for
the award of attorney’s fees in conjunction with moving for final approval of a proposed class
action settlement.” Newberg on Class Action, § 15.10.
In the case now before this court the “normal practice” was not followed. Nor were
absent class members provided “14 to 30 days in advance of any deadline to object.” Instead,
Class Counsel submitted their Fee Petition 7 days before the objection deadline. 1 It is also
significant that Class Counsel first posted their Fee Petition to the settlement website less than a
week before the objection deadline. Exhibit 14, Contents of Settlement website on April 24,
2019. Given this lack of transparency, the only way for absent class members to learn what
1
According to electronic filing, the Application for Reimbursement of Expenses and a Contingency Fee
Award was filed on April 19, 2019 after 1:00 p.m. Since this was Good Friday, the Application was not posted
online until the Monday after Easter Sunday.
22
Class Counsel was claiming in fees would have been to check the settlement website in the 5 day
window between when the Fee Petition was posted on the settlement website and the objection
deadline. It is also significant that the settlement website never mentions that Class Counsel are
seeking over $64,000,000 in attorneys’ fees and costs from the $115,000,000 cash payment.
Exhibit 14. To obtain that information, absent class members would have to visit the settlement
website, discover the newly posted Fee Petition and pour through the 65 page self-laudatory
document.
Notice to absent class members about the costs and attorneys’ fees is a classic case of
hide the ball. The ball is first hidden by not telling absent class members up front what dollar
amount Class Counsel actually seek. Instead, the Class Notice is cleverly worded by drawing a
distinction between the “Common Benefit” and “Common Benefit Fund.” This is a distinction
that would be lost on most attorneys much less on the vast majority of absent class members.
Next, the parties grossly overinflate the benefits to the class. Coupled with grossly overinflating
the benefits to the class, Class Counsel makes what appears on its face to be a reasonable and
modest request for costs and attorneys’ fees in “an amount not to exceed 5% of the Common
Benefit.” Class Notice. In fact, such a request is not reasonable because, inter alia, it amounts
to over 55% of the total money SCE&G is paying to the Common Benefit Fund. See discussion
infra. Continuing to hide the ball, Class Counsel waits until the midnight hour to file its Fee
Petition, filing it the afternoon of Good Friday so it is not available until the following Monday,
a mere week before the objection deadline. In a final sleight of the hand, Class Counsel waits
less than a week before the objection deadline to post the Fee Petition to the settlement website.
Such a lack of transparency does not meet even minimal due process requirements.
23
Class Counsel had over five months to prepare their Fee Petition. Absent class members,
the general public, objectors and their counsel had a week to respond and object. Even in the
most routine cases attorneys get at least ten days to respond to virtually any motion. In this case
with over $63,000,000 in claimed attorneys’ fees at stake and absent class members largely
unaware of what was going on because of the constitutionally deficient Class Notice, Class
Counsel play a masterful game of hide the ball. “A lawsuit is not a children’s game, but a
serious effort on the part of adult human beings to administer justice.” Griffin v. Capital Cash,
310 S.C. 288, 292, 423 S.E.2d 143, 146 (Ct. App. 1992)(quoting United States v. A. H. Fischer
Lumber Co., 102 F.2d 872 (4th Cir. 1947). Respectfully, this court cannot allow such legal
gamesmanship.
Once the Fee Petition was finally filed, Class Counsel withheld vitally important
information from public scrutiny – their timesheets and time records. Much in the same way
SCE&G withheld the Bechtel Report by attempting to claim legal privilege, Class Counsel have
not produced their timesheets or time records with a similar claim. However, as one court has
noted: “Attorney’s fees, after all, are not state secrets that will jeopardize national security if
they are released to the public.” In re High Sulfur Content Gasoline Products Liab., 517 F.3d
220, 230 (5th Cir. 2008). In the case now before this court Class Counsel is effectively hiding
from public scrutiny information on attorneys’ fees that should have been provided in the Class
Notice. This court should exercise “traditional judicial standards of transparency, impartiality,
procedural fairness, and ultimate judicial oversight” and should not allow these practices to
stand. Id. at 234. “Class Counsel should be compelled to provide all billing information in as
much detail as possible, to allow for a full, transparent analysis…” Exhibit 26, Affidavit of
David Paige, Esquire, paragraph 24.
24
The irony of Class Counsel’s current position in seeking settlement approval and in
seeking attorneys’ fees should not be lost on the court. Class Counsel openly argued that the
BLRA was unconstitutional because it did not provide “adequate and sufficient notice and a
meaningful opportunity to be heard.” To quote Class Counsel more precisely, at the April 30,
2018 hearing, Class Counsel argued:
Turning first to procedural due process, we believe that the BRLA fails to supply
adequate and sufficient notice and a meaningful opportunity to be heard.
Hearing Transcript from April 30, 2018 hearing, p. 97. The same legal standard must apply here.
Absent class members should be advised about the true and real benefits provided by the
settlement. Absent class members should be told what their expected recovery will be. Absent
class members should be told what their attorneys are seeking in costs and attorneys’ fees.
Finally, absent class members should be provided: “adequate and sufficient notice and a
meaningful opportunity to be heard” just as Class Counsel advocated for last year.
II. Basic fairness dictates that the court reject the proposed settlement. The
benefits to absent class members are minimal and will likely amount to less
than five cents on the dollar. The proposed settlement is plagued by other
problems that reduce benefits to the class members.
This court should not grant final approval to the Settlement Agreement. The proposed
settlement is fundamentally unfair and unreasonable to absent class members. As noted above, it
does not provide the robust settlement benefits it proclaims. See discussion supra. Instead it
provides absent class members with two material benefits: (1). A one-time 115 million dollar
cash payment and (2). Real estate that the parties estimate has a value of 85 million dollars. On
its face, this 200 million dollars would amount to less than 10 cents on the dollar for what the
class was overcharged by SCE&G for the failed V.C. Summer expansion. That 10 cents on the
dollar comes at a steep price – absent class members give up their right to challenge the
25
constitutionality of the BLRA; the class is so broadly defined that it encompasses virtually all
SCE&G ratepayers meaning no SCE&G ratepayer would have standing to challenge the
constitutionality of the BLRA; the class gives up RICO claims against SCE&G that are pending
in the U.S. District Court; and all of absent class members’ state law claims are dismissed.
Just as importantly, the real estate component of the settlement poses significant
problems. Specifically, the court can’t determine what value the class members will get from the
real estate transfers. While the parties estimate that the transferred real estate is worth between
60 and 85 million dollars they have provided nothing to the court to substantiate their claim. The
probable reason for this oversight and omission is that the real estate probably does not have the
kind of value to the class that the parties claim. There are multiple reasons for this – (1). the real
estate is probably not worth what the parties now claim it is worth; (2). the real estate will be
difficult to sell as evidenced by the fact that SCE&G has tried but failed to sell most of it
already; (3). while the real estate is being marketed for sale there will be significant carrying
costs including marketing, advertising, realtors’ fees, closing costs, taxes, insurance,
maintenance and upkeep; (4). when the real estate is sold there will likely be rollback taxes that
must be paid out of the class’ share of the proceeds.
Under these facts and circumstances, the court should not approve the Settlement
Agreement.
A. Legal Standard for final court approval of the Settlement Agreement.
In considering approval of a class action lawsuit, the court “is charged with acting as a
fiduciary for the absent class members.” Newberg on Class Actions §13.1 (5th ed.). The court’s
role as a fiduciary is rooted in the fact that its decision to approve a settlement binds absent class
members who are not parties. “[S]o central is the protection of absent class members’ rights that
26
the court is said to have a ‘fiduciary duty’ toward absent class members during the settlement of
a class suit.” Newberg on Class Actions §13.40 (5th ed.). See also Ehrheart v. Verizon Wireless,
609 F.3d 590, 593 (3d Cir. 2010)(holding that in reviewing a proposed class action settlement the
court “evaluates the agreement as a fiduciary for absent class members”); In re Corrugated
Container Antitrust Litigation, 643 F.2d 195, 225 (5th Cir. 1981)(holding “reason the court is
called on to review settlement is to protect the rights of the many absent class members who
were not involved in the negotiations leading to settlement”); Reynolds v. Beneficial Nat. Bank,
288 F.3d 277, 279-280 (7th Cir. 2002)(holding “We and other courts have gone so far as to term
the district judge in the settlement phase of a class action suit a fiduciary of the class, who is
subject therefore to the high duty of care that the law requires of fiduciaries.”); Figueroa v.
Sharper Image Corp., 517 F. Supp. 2d 1292, 1320 (S.D. Fla. 2007)(holding “Court’s role in
reviewing a settlement agreement is akin ‘to the high duty of care’ that the law requires of
fiduciaries”)(citations omitted); Ross v. Lockheed Martin Corp., 267 F. Supp. 3d 174, 193
(D.D.C. 2017)(holding “court is said to have a fiduciary duty toward absent class members
during the settlement of a class suit.”); Kullar v. Root Locker Retail, Inc., 168 Cal. App. 4th 116,
129 (1st Dist. 2008)(holding “The court has a fiduciary responsibility as guardians of the rights of
the absentee class members when deciding whether to approve a settlement agreement.”
(citations omitted).
In its fiduciary role, the court “must determine that the settlement terms are fair, adequate
and reasonable.” Manual for Complex Litigation, Fourth § 21.61. “Counsel for the class and the
other settling parties bear the burden of persuasion that the proposed settlement is fair,
reasonable and adequate.” Manual for Complex Litigation, Fourth § 21.631. This burden of
proof is a significant one. “Judicial review must be exacting and thorough.” Manual for
27
Complex Litigation, Fourth § 21.61. “Because there is typically no client with the motivation,
knowledge, and resources to protect its own interests, the judge must adopt the role of a skeptical
client and critically examine the class certification elements, the proposed settlement terms, and
the procedures for implementation.” Manual for Complex Litigation, Fourth § 21.61.
Because the law favors settlements over lengthy trials and appeals, some courts have
treated a preliminary approval order as providing a presumption of fairness for final approval.
See generally Newberg on Class Actions §13.45 (5th ed.). However, “this presumption should
not be overstated.” Newberg on Class Actions §13.46 (5th ed.). As correctly noted by one court,
the preference for settlement:
is only half the story. It is also true that “district judges must therefore exercise
the highest degree of vigilance in scrutinizing proposed settlements of class
actions to consider whether the settlement is fair, adequate and reasonable and
not a product of collusion.” Mirfashi v. Fleet Mortg. Corp., 450 F.3d 745, 748
(7th Cir. 2006) This is because “the district judge in the settlement phase of a
class action suit [is] a fiduciary of the class, who is subject therefore to the high
duty of care that the law requires of fiduciaries.” Reynolds v. Beneficial
Nat. Bank, 288 F.3d 277, 280 (7th Cir. 2002).
Vought v. Bank of America, N.A., 901 F. Supp. 2d 1071, 1083 (C.D. Ill. 2012).
In its role as a fiduciary for absent class members “[c]ourts will also look to ensure that
the class itself shares in the overall value, and that the benefits are not primarily directed to
particular plaintiffs, class representatives, or class counsel.” Newberg on Class Actions §13.49
(5th ed.). In this regard, there are “red flags in proposed settlements” which should trigger strict
scrutiny of a proposed settlement. Newberg on Class Actions §13.56 (5th ed.). These include
settlements that provide “illusory” benefits to the class members and settlements that set
attorney’s fees “unrealistically” high based on nonmonetary benefits. Newberg on Class Actions
§13.56 (5th ed.). See also Manual for Complex Litigation, Fourth § 21.61.
Generally speaking, all of the red flags have at their heart the concern that the class’s
28
attorneys have sold out the class settling the class members’ claims for too little in
return for a guaranteed attorney’s fee. Since it is unlikely that the class’s lawyers
will explain that they have sold out the class – nor, in fairness, will they likely ever
believe that they have – the red flags operate as a series of warnings, puzzling aspects
of a settlement that require some explanation.
Manual for Complex Litigation, Fourth § 21.61. “[R]egardless of the experience of counsel and
the strength of their convictions in recommending the settlement, the court is not, therefore,
absolved of its task of independently determining its fairness.” Newberg on Class Actions
§13.53 (5th ed.). “The court must be assured that the settlement secures an adequate recovery for
the class in return for the surrender of the class members’ rights to litigate against the
defendants.” Newberg on Class Actions §13.49 (5th ed.).
B. On its face the settlement provides less than ten cents on the dollar in refunds
for the failed V.C. Summer expansion; in reality once expenses, costs and
attorneys’ fees are paid, the class members will likely receive less than five
cents on the dollar.
As discussed in detail above, the proposed Settlement Agreement does not provide a
benefit of 2.2 billion dollars to the class. The 2 billion dollars in prospective rate relief was
provided in the separate PSC action as part of SCE&G’s merger with Dominion. To claim
otherwise, as the Settlement Agreement states, is an illusory benefit to class members.
Regardless of this court’s ruling in either approving or disapproving the Settlement Agreement,
absent class members will get over 2 billion dollars in perspective rate relief. For brevity, these
arguments will not be repeated but are incorporated by reference because they also bear on the
overall fairness (or lack thereof) of the proposed Settlement Agreement.
The actual benefits to the class are a one-time 115 million cash payment and real estate
with an estimated value between 60 and 85 million dollars. The real estate is to be sold with the
net proceeds going into the Common Benefit Fund for class members. In short, the gross
recovery to the class is estimated to be between 175 million to 200 million dollars. On its face,
29
such gross amounts may seem large but when compared with what ratepayers in South Carolina
have already paid for the failed V.C. Summer expansion, these numbers are a drop in the bucket.
One has to dig deep to compare the benefits to the class from the proposed settlement
versus the actual damages to the class. This is difficult because absent class members have never
been provided with an expected or estimated amount they will receive if the settlement is
approved. See discussion supra. However, in the Consolidated Complaint Class Counsel write:
“Defendant SCE&G billed customers in excess of two billion dollars ($2,000,000,000.00)
justified solely by the promise of constructing the aforementioned nuclear plant.” Taking Class
Counsel at their word the proposed settlement amounts to less than ten cents on the dollar.
Of course, that ten cents on the dollar is a gross recovery for class members, not a net
recovery. The net recovery for absent class members is significantly less but a footnote on page
30 in the Settlement Agreement sheds light on the expected net recovery. According to the
footnote:
[I]f the cash to be distributed is $100,000,000, and the total advanced financing
costs paid by all Class Members who do not opt out are $2,000,000,000, a
Class Member who paid $1000 in advance financing costs will receive $50.
In other words, class members get five cents on the dollar for what they were overcharged.
Given that “the value of a settlement to the settling plaintiffs is the most important factor in the
court’s decision to approve or disapprove a settlement” such a small recovery suggests this court
should disapprove the settlement. Newberg on Class Actions §13.49 (5th ed.).
Absent class members are giving up a lot for such a small recovery. They are giving up
their right to challenge the constitutionality of the BLRA despite the fact that the Attorney
General’s Office formally opined that the BLRA was “constitutionally suspect.” Without ever
issuing a formal ruling this court also suggested that the BLRA was unconstitutional. However,
30
the Addendum to Settlement Agreement, if finally approved by this court, would effectively
wipe out the right of absent class members to challenge the constitutionally of the BLRA.
Moreover, since the class is so broadly defined to include all ratepayers who do not opt out, it is
unlikely that any other person would have legal standing to challenge the constitutionality of the
BLRA, even though it is “constitutionally suspect” according to the Attorney General’s Office.
In addition, absent class members are giving up their rights to pursue RICO claims in a
pending Federal Court action brought by some of the same Class Counsel. Ironically, it was
Defense Counsel who raised the issue of adequacy at the April 30, 2018 hearing. Specifically,
Defense Counsel noted the adequacy problems of bifurcating claims between state and federal
court. The fact that Defense Counsel is now abandoning those arguments in favor of a
settlement suggests that is was Defendants who got the bigger benefits from the proposed
Settlement Agreement.
C. The real estate transfers that are a part of the settlement pose significant
problems and these problems devalue their benefit to the class.
The proposed Settlement Agreement provides for real estate transfers that the parties
estimate total between 60 and 85 million dollars. The real estate is described in Exhibit A to the
proposed Settlement Agreement. It consists of 13 separate properties. The real estate is located
in five different counties – Richland, Lexington, Charleston, Georgetown, and Aiken. The
proposed Settlement Agreement assigns “Swap Value” to each parcel of real estate. Under
certain circumstances, the 13 parcels can be individually swapped for other real estate owned by
SCE&G listed in Exhibit B to the proposed Settlement Agreement. However, the proposed
Settlement Agreement does not give the fair market values of any parcel of real estate.
For settlement what is important is the net value to the class. There is absolutely no
information provided to make this calculation. In other words, there is no information that
31
would allow the court or anyone else to determine how the parties estimated the value of the real
estate. There is not, for example, a real estate appraisal for any parcel of real estate which would
allow the court or absent class members to decipher how the parties calculated the estimated
value of between 60 and 85 million dollars. An absent class member or this court might
reasonably ask: “What is the basis for claiming that the real property being transferred is worth
60 to 85 million dollars?” To date, there is nothing filed with the court that would allow anyone
to answer this important question. Ironically, the “Swap Value” for the 13 parcels of land is
only, $65,192,469, far below the estimated $85,000,000 in the proposed Settlement Agreement.
When the Swap Values are compared with publicly available information such as
property tax assessments there are significant reasons to doubt the estimated values of the
parties. Exhibit 15 to this Memorandum compares the Swap Value in Exhibits A to tax
assessment values. See also Exhibit 16, Publicly Available Property Tax Information on
Transferred Properties. As the court can see, the assessed value of the real estate being
transferred is only $41,256,643. That figure is generous because several of the properties being
transferred are only portions or parts of the property the various county assessors used in their
assessments. In other words, the assessed value for some of the real estate includes larger
parcels than those being transferred in the proposed Settlement Agreement. Regardless,
$41,256,643 is well below the 60 to 85 million estimated by the parties.
Just as importantly in this court’s evaluation of whether to approve the Settlement
Agreement, is the lack of information provided by the parties to substantiate the estimated value
of the transferred property. The Motion for Preliminary Approval, supporting Memorandum of
Law and attached exhibits are devoid of any information which would allow this court or anyone
else to ascertain the true value of the 13 parcels of real estate that are being transferred. The only
32
thing the parties have provided are their own valuations. The record before the court contains
nothing that supports these valuations. The parties could have submitted expert affidavits from
real estate appraisers or other qualified experts about the estimated value of the transferred
property. However, the parties submitted nothing like this. The only thing the parties have
submitted to date is a single page spreadsheet where the parties themselves have estimated the
value of the transferred property. Without more, however, no one, including His Honor, can
determine if these estimated values are fair, reasonable, adequate or accurate.
Even if the transferred property has a fair market value of 85 million dollars it has
significantly less value to the class members because of the difficulty associated with selling the
property and the costs associated with those sales. For years, SCE&G has been trying to sell
most of the Real Estate it is now transferring to the Real Estate Trust as part of the proposed
Settlement Agreement. To date, it has been unsuccessful in its attempts. There is little reason to
believe Class Counsel or those that Class Counsel hire to manage the Real Estate Trust will have
any greater success in selling the property than SCE&G. The unique nature of real estate in
general and the unique nature of this real estate in particular, make it difficult to liquidate and
sell quickly. It is for this very reason that SCE&G has been unable to unload the property it is
now attempting to transfer as part of the proposed Settlement Agreement.
For example, 141 Meeting Street in Charleston has been for sale for years. See e.g.
https://www.postandcourier.com/business/sce-g-buildings-in-downtown-charleston-are-up-for-
sale/article_00584e5c-7dfa-11e7-837e-bbb427c262c5.html. To date, it has not been sold
probably because it is in an extremely flood prone area. By way of another example, Ramsey
Grove is an old plantation property along the Black River. SCANA and SCE&G used the
property for retreats and duck hunting for top executives. See e.g.
33
https://www.thestate.com/news/politics-government/article223325180.html. There is little
reason to believe that property can be sold quickly or easily. Another example are the parcels of
property listed on Exhibit A as Otarre Center, Otarre Point or Otarre Village. Most of this
property is vacant land in and around the SCANA campus in West Columbia. Like some of the
other property SCE&G is trying to unload as part of the settlement, the Otarre property has been
for sale for years. See e.g. https://www.sceg.com/about-us/doing-business-with-us/real-estate-
sales/otarre-development. There is no reason for the court to believe that Class Counsel or those
that Class Counsel might hire will have any greater success at selling all this property than
SCE&G.
The sale of the transferred property comes with significant costs to the class members. In
order to sell the property, Class Counsel (or those they hire) will have to advertise and market the
property. There will be realtor fees, closing costs and the like. Under the proposed Settlement
Agreement, class members and SCE&G ratepayers bear the brunt of these costs. Despite such
costs, none of the parties have provided the court with any information that would enable the
court to reasonably estimate these costs. Such information is critically important in the court’s
determination of whether to approve the proposed Settlement Agreement. What class members
actually get from the settlement is at the heart of whether the settlement is “fair, adequate and
reasonable.” Manual for Complex Litigation, Fourth § 21.61. “The court must be assured that
the settlement secures an adequate recovery for the class in return for the surrender of the class
members’ rights to litigate against the defendants.” Newberg on Class Actions §13.49 (5th ed.).
Respectfully, the court cannot adequately ensure fairness to absent class members because the
parties have not submitted sufficient information to the court.
34
Another significant problem with the land transfer is rollback taxes. As noted above and
as noted on Exhibit A to the proposed Settlement Agreement, much of the real estate that
SCE&G is attempting to transfer is rural land. At least some of that rural land is taxed at
agricultural tax rates. See Exhibit 16. Under South Carolina law, if the land is sold and
converted to non-agricultural use rollback taxes would be owed. Rollback taxes would be
calculated by taking the new tax rate, looking back five years and then assessing taxes based on
the new tax rate for those five years. 2 At this point in time, what those rollback taxes might be is
impossible to determine. However, that is the very point – it is impossible to determine. The
parties have not provided the court with any information to assess the impact of rollback taxes to
the class members. Without this information the court cannot “protect the rights of the many
absent class members who were not involved in the negotiations leading to settlement.” In re
Corrugated Container Antitrust Litigation, 643 F.2d 195, 225 (5th Cir. 1981).
As it pertains to fairness and the proposed Settlement Agreement, it is not just a matter of
selling the property and the costs associated with those sales, it is also a matter of the carrying
costs of the property while attempts are made to sell it. Under the terms of the proposed
Settlement Agreement those carrying costs, which will likely include local property taxes,
insurance, repairs and maintenance, etc., come out of the money given to the class members. As
2
§ 212.3. of the DOR Handbook provides: Change in Use - Rollback Taxes. When agricultural real property
is applied to a use other than agricultural, it is subject to additional taxes, referred to as rollback taxes. The amount
of the rollback taxes is equal to the sum of the differences, if any, between the taxes paid or payable on the basis of
the fair market value for agricultural purposes and the taxes that would have been paid or payable if the real property
had been valued, assessed, and taxed as other real property in the taxing district (except the value of standing timber
is excluded), for the current tax year (the year of change in use) and each of the immediately preceding 5 tax years.
SC Code §12-43-220(d) and 10 SC Regs. 117-1780.3. Any property that becomes exempt from property taxes under
SC Code §12-37-220(A)(1) (property owned by the state or a local taxing authority and used exclusively for public
purposes) or SC Code §12-37-220(B)(41) (economic development property during the exemption period as provided
in Chapter 44, Title 12 of the SC Code) is not subject to rollback taxes. See SC Code §12-43-220(d)(6) and the
discussion at §712 below regarding fees in lieu of property taxes.
35
with other aspects of the settlement, the parties have provided inadequate information that would
allow the court to assess these carrying costs.
In fact, the proposed Settlement Agreement does not set a time to conclude the land sales.
If these take a long time, the class is saddled with all the property taxes, hazard insurance, flood
insurance, maintenance, utility bills, etc. The source of funds to pay these expenses is class
members’ settlement money. Since the proposed Settlement Agreement requires sales to be at
fair market value, each sale would also require a fair market analysis, the costs of which come
out of the class proceeds.
The proposed settlement creates an administrative nightmare for the court in overseeing
the sale of the transferred property and the distribution of any sales proceeds. More importantly,
for settlement approval it also adds to the costs of the case and thus adds to the money coming
out of class members’ settlement proceeds. To understand the administrative nightmare and how
it impacts the class, it is useful to consider what happens when the property is eventually sold.
As suggested above, it is likely that the property will be sold off in various parcels at various
times. In this regard, the following questions come to mind:
• When would class members be paid once a parcel of land sells?

• Would absent class members be paid after the sale of individual parcels or at other
intervals?
• During the gap between disbursement(s), what would happen if absent class members
die or cannot be located?
• What efforts would be required to locate absent class members and how much money
would be spent out of the Common Benefit Fund locating absent class members?
• What happens if carrying costs such as property taxes, insurance, maintenance and
the like, strip all available funds out the Real Estate Trust?
Regardless of how these questions are answered, there are significant costs associated with the
administration of real estate transfers and the sale of the real estate. Under the proposed
Settlement Agreement, it is ultimately the ratepayers who pay these costs. However, the parties
to this lawsuit have provided nothing that would allow the court to reasonably estimate these
36
costs. Without such information the court can’t fulfill its “high duty of care that the law requires
of fiduciaries…” Figueroa v. Sharper Image Corp., 517 F. Supp. 2d at 1320.
There are other problematic aspects of the proposed Settlement Agreement that add to the
administrative nightmare for the court. The proposed Settlement Agreement gives Class Counsel
six months to swap out the property listed in Exhibit A for other property owned by Defendant
and listed in Exhibit B to the proposed Settlement Agreement. More specifically, “Within six
months after Final Judicial Approval, upon Class Counsel’s instruction, the Claims
Administrator may transfer any property set forth in Exhibit A back to Defendants in exchange
for a property of no more than equal Swap Value as set forth in Exhibit B.” Settlement
Agreement, paragraph 2(b)(iii). Since the Real Estate Trust will hold title to the land, how will
this work? What transfer costs, including taxes, will be associated with this? What guidelines
are there for Class Counsel to determine a swap is required or warranted? And, what role in
overseeing these decisions will the court play?
There is a significant risk that the class members will receive little or no benefit from the
land transfers. In addition to the speculative nature of real estate, these particular transfers come
with even bigger risks. More specifically, if there are any environmental hazards on the
property, SCE&G has no liability for those hazards. Settlement Agreement, paragraph 17. For
example, if there is a claim under CERCLA, or other environmental laws, the Real Estate Trust
will have to use class funds to defend the suit and pay any settlement or judgment. Under the
Settlement Agreement environmental risks are now borne by the class members and ratepayers
through the Real Estate Trust. It is impossible to determine how big this risk is or if this risk can
be mitigated with insurance. The reason it is impossible to determine how big this risk is or if it
can be mitigated with insurance is because of the lack of information provided by the parties.
37
The parties simply have not provided the court with sufficient information that would assist the
court in evaluating this risk or the other risks discussed above. Given that judicial review of a
proposed settlement must be “exacting and thorough” the parties cannot sustain “the burden of
persuasion that the proposed settlement is fair, reasonable and adequate.” Manual for Complex
Litigation, Fourth §§ 21.61. and 21.631.
It is significant that Class Counsel have taken on very little of this risk themselves. In
fact, they have attempted to insulate themselves from this same risk borne by absent class
members under the proposed Settlement Agreement. Under the proposed Settlement Agreement
“Within ten business days after the Effective Date of Settlement, approved attorneys’ fees and
expenses shall be deducted from the Common Benefit Fund and paid to Class Counsel.”
Settlement Agreement, paragraph 50. Under the proposed Settlement Agreement Class Counsel
would be paid 100% of their approved fees and costs from the 115 million dollars cash in the
Common Benefit Fund ten days after approval. 3 Absent class members may wait years to see
any benefits from the real estate transfers, if they see any benefit at all.
At most under the proposed settlement absent class members will get back about five
cents on the dollar. In reality, they will get less than that. And, it may take years for absent class
members to see any benefit from the land transfers, if they even see a benefit. Meanwhile, under
the proposed Settlement Agreement Class Counsel will be paid within ten days of approval and
seek over $63,000,000 of the 115 million dollar cash payment for what amounts to less than 16
months of work. Under these facts and circumstances, the parties cannot sustain their burden of
3
In their Fee Petition, Class Counsel indicate they will only take a fee on the real estate transfers when
property is actually sold. This provides little benefit to the class because even under their new proposal Class
Counsel attempts to front load over 95% of the total attorneys’ fees they seek.
38
proof. Accordingly, this court should deny final approval of the proposed Settlement
Agreement.
III. Class Counsels’ claim for over $63,450,000 in attorneys’ fees is outrageously
high and patently unreasonable. Such a request should not be approved by
the court.
Class Counsel’s claim for over $63,450,000 in attorney’s fees is unprecedented,
unjustified and unreasonable. This is over 55% of the total cash paid by SCE&G to the Common
Benefit Fund. This case lasted less than 16 months from the date it was originally filed until it
was settled. During the pendency of the litigation there was never a trial and never an appeal on
the merits that was briefed and argued. 4 Class Counsels’ claim for attorneys’ fees amounts to
nearly $4,000,000 a month during the pendency of this case. Put another way, Class Counsel
seek attorneys’ fees that amount to $135,867.24 per day for each day the case was pending until
the Settlement Agreement was signed. There is simply no precedent in South Carolina for this
court to allow such a high fee.
A. Legal Standard for Attorney’s Fees in Class Actions.
“[S]o central is the protection of absent class members’ rights that the court is said to
have a ‘fiduciary duty’ toward absent class members during the settlement of a class suit.”
Newberg on Class Actions §13.40 (5th ed.). Courts have routinely held that the court’s fiduciary
role in protecting absent class members specifically extends to its review and approval of
attorney fees, particularly when those fees are being paid by absent class members out of a
common benefit fund. See Rodriquez v. West Publishing Corp., 563 F.3d 948, 968 (9th Cir.
2010)(holding “the district court has a fiduciary role for the class” when approving attorneys’
4
As this Court is aware, SCE&G appealed this court’s denial of its motion to dismiss. That appeal was
dismissed by the Court of Appeals as procedurally improper because it was interlocutory. It was dismissed before it
was ever briefed or argued on the merits.
39
fees from a common benefit fund)(citations omitted); MBA v. World Airways, Inc., Fed. Appx.
194, 198 (2d Cir. 2010)(holding “a court is ‘to act as a fiduciary who must serve as a guardian of
the rights of absent class members’” when ruling on attorney’s fee petition)(quoting Central
States Southeast and Southwest Areas Health and Welfare Fund v. Merck-Medco Managed Care,
L.L.C., 504 F.3d 229, 249 (2d. Cir. 2007).
The court’s role as a fiduciary in common benefit fund cases stems from the fact that
absent class members have property rights in a common benefit fund. See generally, Mullane v.
Central Hanover Bank & Trust Co., 339 U.S. 306, 313 (1950). “When courts employ the
percentage method in common fund cases, a primary concern is that the resulting fee might be a
windfall to class counsel. The primary means of guarding against a windfall is for a court to
compare the proposed percentage award to counsel’s lodestar, which consists of the time they
have spent on the case multiplied by their hourly billing rates.” Newberg on Class Actions
§15.52 (5th ed.).
South Carolina courts follow this general approach. In South Carolina “the overriding
benchmark for awards of attorney’s fees under both the state action statute and the general
premise of the common fund doctrine is that attorney’s fees must be ‘reasonable.’” Layman v.
State, 376 S.C. 434, 455 658 S.E.2d 320, 331 (2008) citing Pennsylvania v. Del. Valley Citizens’
Council for Clean Air, 478 U.S. 546, 562, 106 S. Ct. 3088, 3097 (1986). In considering what is
reasonable “contingency fee agreements… are not binding on the court.” S.C. Dept. of Transp.
v. Revels, 411 S.C. 1, 13, 766 S.E.2d 700, 706 (S.C. 2014). Rather, “a contingency fee
agreement is part of the determination of reasonableness as it reflects the ‘basis’ for the fee
charged; however, it is neither the sole basis for the award nor the controlling factor in the
determination.” Revels, 411 S.C. at 14; 766 S.E.2d. at 706 citations omitted.
40
“The following six factors should be considered when determining reasonable attorney’s
fees: ‘(1) the nature, extent, and difficulty of the case; (2) the time necessarily devoted to the
case; (3) professional standing of counsel; (4) contingency of compensation; (5) beneficial
results obtained; and (6) customary legal fees for similar services.” Jackson v. Speed, 326 S.C.
289, 308, 486 S.E.2d 750, 760 (1997). For clarity, each of these criteria with the exception of (3)
and (4) are discussed at length below. 5 Class Counsel’s claim for $864,912.40 in costs is also
discussed below.
B. The nature, extent and difficulty of this case does not warrant attorneys’ fees
of over $63,450,000.
Suing any corporate giant like SCE&G is difficult. However, Class Counsel were aided
significantly by other peoples’ work and by this court’s guidance through the litigation process.
The Attorney General’s Office concluded early on that the BLRA was unconstitutional.
In September, 2017 the Attorney General’s office issued a 57 page letter to various state
legislators that concluded “portions of the Base Load Review Act are constitutionally suspect.”
Attachment to Answer to Consolidated Complaint of Defendant State of South Carolina. That
letter essentially briefed the constitutional arguments surrounding the BLRA and provided Class
Counsel with a significant foundation to build on. At the hearing on January 8, 2018 Robert
Cook, the author of the 57 page opinion on the constitutionality of the BLRA, took the lead in
arguing that the BLRA was unconstitutional. Class Counsel were essentially allowed to piggy
back on the arguments and legal research already performed by the Attorney General’s Office.
At a bare minimum, the Attorney General’s Office significantly aided Class Counsel in the
prosecution of this case.
5
This objection does not challenge the professional standing of Class Counsel or challenge that Class
Counsel accepted this case on a contingent basis.
41
In addition to the Attorney General’s Office, Class Counsel were assisted in their efforts
by the Office of Regulatory Staff. As this Court is aware, the ORS intervened in the current
action and supported the positions advanced by Class Counsel. In depositions, attorneys for
ORS often took the lead in questioning witnesses. See Exhibit 17, Excerpts from Deposition
Terry Elam dated October 15, 2018; Exhibit 18 Excerpts from Deposition of George Wenick
dated October 2, 2018; Exhibit 19, Excerpts from Deposition of Kevin Marsh dated October 29,
2018; Exhibit 20, Excerpts from Deposition of Ronald Alan Jones dated October 16, 2018;
Exhibit 21, Excerpts from Deposition of Daniel Magnarelli dated October 12, 2018. Moreover,
ORS was a party in the pending PSC action. Class Counsel did not represent parties in that
action. Exhibit 12. Having the support, assistance and resources of both the Attorney General
and the ORS helped Class Counsel significantly in advancing their claims and legal arguments.
Just as importantly, this court’s guidance through the litigation process played a
significant and pivotal role in the proposed settlement. The Supreme Court designated this case
and others as complex and assigned His Honor to hear all these cases. This court closely
monitored the cases and issued a series of scheduling orders and other directives that ensured
timely and expedient resolution of pending issues. Most importantly, it was this court’s
anticipated ruling holding the BLRA act unconstitutional that prompted settlement negotiations
that eventually resulted in the Settlement Agreement. As noted by the Supreme Court in
Layman, “Although counsel’s efforts were certainly commendable, counsel is not entitled to sole
credit for the overall efficiency of the case when it was also counsel’s compliance with this
Court’s instructions that yielded this judicious result.” Layman, 376 S.C. at 457, 658 S.E.2d at
332. The same logic applies here. It was this court’s announced and anticipated ruling on the
constitutionality of the BLRA that brought Defendant to the bargaining table. And, it was the
42
Attorney General’s Office and ORS staff that effectively assisted with the prosecution of this
case.
C. The time Class Counsel devoted to this case does not support attorneys’ fees
of over $63,450,000.
Class Counsel have not submitted sufficient time records that would allow the court or
any reasonable person an opportunity to properly evaluate the time they spent working on the
case. Exhibit 26. In this regard, the only submission is the Affidavit of John R. Alphin who
stated: “Class Counsel spent 26,778.58 hours of attorney and paralegal time in pursuit of this
litigation, and companion litigation.” Alphin then provides only a summary of the hours of
attorneys with varying levels of experience and how those hours were billed for each law firm
involved. Such conclusory summations without itemized statements of time are wholly
insufficient under South Carolina law.
In Revels the Supreme Court remanded a case to the Circuit Court because “Petitioners’
counsel failed to submit an ‘itemized statement…’” Revels, 411 S.C. at 14, 766 S.E.2d at 707.
As noted by the Supreme Court, “the court must consider the itemized statement submitted by
the landowner’s attorney in support of the requested amount of litigation expenses.” Id. Courts
have routinely noted the importance of itemized and detailed time records. See Layman, 376
S.C. 434, 658 S.E.2d 320 (utilizing detailed time records in awarding attorneys’ fees); Monster
Daddy v. Monster Cable Products, Inc., 2014 WL 278033, (D.S.C. June 19, 2014)(analyzing
detailed time records before awarding attorney fees). LOP Capital LLC v. Cosimo LLS, 2013
WL 1901231, (D.S.C. May 7, 2013)(cutting attorney hours for fees requested that were outside
of what was recoverable); Uhlig, LLC v. Shirley, 895 F.Supp.2d 707 (D.S.C. 2012)(Cutting
attorneys’ fees awarded where judicial review of detailed time records showed excessive hours,
block billing, unnecessary and duplicative work).
43
The pending motion for attorneys’ fees and the Alphin Affidavit demonstrate the need for
the court to review itemized time and billing records before awarding attorneys’ fees. As noted
above, the Alphin Affidavit states: “Class Counsel spent 26,778.58 hours of attorney and
paralegal time in pursuit of this litigation, and companion litigation.” In a footnote, Alphin states
what “companion litigation” is:
Companion litigation includes Class Counsel’s efforts to: (1) intervene in the declaratory
judgment brought by SCE&G before the federal court concerning an amendment to the
Base Load Review Act (BLRA), South Carolina Electric & Gas Company v. Swain E.
Whitfield, et al, 3:18-cv-01795; (2) (assist the Office of Regulatory Staff (ORS) in the
then-pending matter before the Public Service Commission (PSC), 2017-370-E; and (3)
file the Racketeer Influenced and Corrupt Organization Act (RICO) action in federal
court, Glibowski v. SCANA Corp., et al 18-cv-00273-TWL.
Class Counsel were not successful in any of these cases and cannot claim time worked in those
cases as a basis for fees in the pending action. “[W]hen a party achieves partial success, courts
will typically compensate only those hours spent on the prevailing claims.” Newberg on Class
Actions §15.46 (5th ed.). The courts in this state have consistently cut attorney fees for hours that
were not necessarily related to the underlying claim. For example, in Uhlig, LLC v. Shirley, 895
F.Supp.2d 707 (D.S.C. 2012) the District Court reduced requested attorneys’ fees by sixty
percent. The District Court noted attorney’s fees could not be awarded for third-party claims.
Uhlig seeks fees that it incurred in pursuing claims against third parties.
Although the court recognizes that Uhlig would not have litigated claims
against the third parties absent Defendants’ conduct, the court cannot
overlook the fact that those claims rested on allegations separate and
independent from the claims against Defendants.
Id. at 715. Put another way the court “should subtract fees for hours spent on unsuccessful
claims…” Monster Daddy, 2014 WL2780331 at *11. See also LOP Capital LLC, 2013 WL
1901231 at *2 (cutting attorney hours for fees requested that were outside of recoverable
attorneys’ fees).
44
SCE&G v. Whitfield 3:18-cv-01795-JMC related to the temporary rate cuts passed by the
Legislature in 2018. SCE&G sued the State of South Carolina and others claiming legislation
mandating temporary rate cuts was unconstitutional. Exhibit 7. Class Counsel in this case
moved to intervene in Whitfield, “to protect the rights of SCE&G’s customers.” Exhibit 22,
State Court Proposed Class Plaintiffs’ Motion to Intervene. In an Order and Opinion dated July
18, 2018 the Honorable J. Michelle Childs denied the Motion to Intervene. Exhibit 23. As this
court can see, Class Counsel did not prevail in Whitfield. Nonetheless, Class Counsel claim
hours from that case as a basis for fees in this case.
In the PSC action and as noted above, Class Counsel did not represent any party and class
members in this action should not be taxed with attorneys’ fees where Class Counsel was not
retained and did not represent a party in the PSC action. Just as importantly and corresponding
to Class Counsel’s claim for a contingency fee, ORS was not successful in the action at the PSC.
As noted above, ORS proposed its own “Optimal Ratepayer Benefits Plan” in the PSC action.
Exhibit 12. The PSC Order rejected ORS’s “Optimal Ratepayer Benefits Plan” in favor of a
different plan. Exhibit 12. The PSC adopted “Plan B – Levelized.” Exhibit 12. “Plan B –
Levelized” effectively made the Legislature’s temporary rate cuts from the Summer of 2018
permanent. Exhibit 12 and Exhibit 13. As note above “Plan B – Levelized” was something
SCE&G and Dominion supported and advocated for themselves.
Most important for this court’s consideration are two facts. First, Class Counsel did not
represent parties in the ORS action. Exhibit 12. Of the written fee agreements attached to the
Fee Petition there is not a fee agreement with ORS. The Rules of Professional Conduct mandate
that all contingency fee agreements be in writing: “A contingent fee agreement shall be in
writing signed by the client…” S.C. Prof. Conduct Rules, Rule 1.5(c). Class Counsel cannot
45
claim a contingency fee based on work they claim they did for ORS when ORS never hired
them, never retained them and never signed a contingency fee agreement.
Second, the ORS wasn’t successful in the PSC action. Exhibit 12. As discussed above,
ORS proposed an alternative Customer Benefit Plan to what SCE&G and Dominion proposed.
ORS advocated for the Optimal Ratepayer Benefits Plan. SCE&G and Dominion opposed this
plan. SCE&G and Dominion had three different plans they advocated for. ORS opposed these
three plans in favor of their own Optimal Ratepayer Benefits Plan. The PSC adopted SCE&G
and Dominion’s Plan B-L that ORS opposed. Exhibit 12; See also discussion supra. In short,
the ORS didn’t win; they lost. Thus, Class Counsel cannot claim a contingency fee for
assistance they claim they provided the ORS because the PSC ruled against ORS and did not
adopt the Optimal Ratepayer Benefits Plan it sought.
In Glibowski v. SCANA Corporation (Docket No.: 9:18-cv-00273-TLW), Class Counsel
are pursuing RICO claims against SCANA, SCE&G and other defendants related to the failed
V.C. Summer nuclear expansion. Exhibit 24, Second Amended Class Action Complaint. As
part of the Settlement Agreement in this case, RICO claims against SCE&G in Glibowski will be
dismissed. Settlement Agreement, pp. 21-22. In Lightsey, Class Counsel cannot claim
attorneys’ fees for time spent working on the Glibowski case for two reasons. First, as it pertains
to SCE&G, class members are not getting a benefit. Therefore, Class Counsel was not
successful in that case and cannot recover attorneys’ fees from the Common Benefit Fund in this
case. 6 Second, as to other defendants in the Glibowski case those claims remain active and
6
To the extent Class Counsel attempt to claim or argue that their claims in Glibowski were successful based
on the settlement in this case, then their Motion for Attorneys’ Fees and costs related to work and time associated in
Glibowski should be brought and heard by the District Court where that action is pending. Since the District Court
has been involved in that case from the beginning, it would have jurisdiction to hear that claim and would have more
knowledge of the reasonable hours worked related to that case. Moreover, to the extent Class Counsel attempt to
claim success against SCE&G related to their efforts Glibowski, any success in the form of a settlement would need
46
ongoing. Class Counsel cannot tax the class members in this case based on claims against
separate defendants in a separate action that is still ongoing.
Itemized and detailed time and billing records are also necessary because there are other
pending actions which have not been resolved in plaintiffs favor. Class Counsel in this case
cannot recover fees and costs associated with cases that are still pending. One of those cases
started in the South Carolina state court system but was removed to Federal Court. 7 In Lightsey
v. Toshiba (Docket No. 9:18-cv-00190) Class Counsel sued Toshiba related to its role in the
failed V.C. Summer expansion. That case is being actively litigated. In fact, the United States
District Court issued an Order on March 4, 2019 that dismissed certain causes of action but
allowed plaintiffs to pursue another cause of action. Exhibit 25. In short, Lightsey v. Toshiba
continues to be litigated.
In another case, Cook v. South Carolina Public Service Authority (Santee
Cooper)(Docket No.: 2017-CP-25-00348), His Honor retains jurisdiction and there are pending
motions in that case. 8 That case has not been settled or resolved in plaintiffs favor. Judicial
review of itemized and detailed time and billing records are necessary to ensure class members
in this case are not being effectively charged with work done in Lightsey v. Toshiba or Cook v.
Santee Cooper.
Itemized and detailed time and billing records are also required to ensure that the time
claimed by Class Counsel was reasonable, necessary and can be effectively charged to absent
class members. Courts have cut attorneys’ fees for excessive, duplicative or otherwise suspect
to be approved through the United States District Court that has exclusive jurisdiction over that action. See
generally, Fed. R. Civ. Pro. 23.
7
Before removal to the District Court, the state court caption was Richard Lightsey and Jessica Cook v.
Toshiba Corporation, docket number 2017-CP-25-00414.
8
A companion case, Edwinda Goodman, et. al. v. SCANA Corporation, docket number 2017-CP-20-00300,
is also pending.
47
time entries. In Uhlig, LLC, the District Court reduced a requested attorney fee award by sixty
percent. In that case, the court noted that counsel “spent an inordinate amount of time on
unnecessary and/or duplicative motions.” Uhlig, 895 F.Supp.2d at 712. The court also noted
that the “time records include significant block billing”, that counsel submitted “many
duplicative time entries for interoffice conferences” and that “many time entries contain vague
descriptions.” Id. at 712, 713, 715. See also Monster Daddy 2014 WL 2780331 (noting that the
Court had previously reduced a claim for attorney’s fees by twenty percent “to account for
unnecessary duplication of efforts, and overstaffing associated with the matter”). Id. at *11.
Without itemized time records the court cannot act as an effective fiduciary for absent class
members.
Based on the extremely limited information provided in the Fee Petition there are reasons
the court should require Class Counsel to produce its actual and complete time records. In
paragraph 4 of the Alphin Affidavit (Exhibit 2 to Fee Petition) Alphin states that the Strom Law
Firm, LLC incurred 7,257.5 hours working on this case and Speights & Solomon, LLC incurred
4,981.90 working on this case. Taking paralegal time out and based on the attorneys listed on
pages 45 through 51 of the Fee Petition as having worked on the case, this would mean that
every attorney at the Strom Law Firm worked an average of 7.17 hours per work day on this case
and every attorney at Speights & Solomon worked an average of 7.39 hours per work day on this
case. Exhibit 26, Affidavit of David Paige, Esquire (See Exhibit 5 to Affidavit). Given what
John P. Freeman attests to in his Affidavit that “All counsel involved are extremely busy
professionals” (paragraph 25) it is has hard to see how these lawyers and law firms had so much
time to devote to one case. This is particularly true when the court considers that these same
lawyers and law firms are pursuing other cases in this court and in the District Court with
48
significant time commitments. At a bare minimum, Objectors, their counsel, the general public
and most importantly, absent class members, should have a full and fair opportunity to review
pertinent time records. After all, Class Counsel had months to prepare its Fee Petition and
supporting documentation. Absent class members should be given a fair and reasonable
opportunity to review the pertinent information and to respond appropriately.
Even with the limited information available to Objector’s Counsel and extremely limited
time to file the objection to the Fee Petition, there is sound evidence to suggest that not all of the
time spent was reasonable and necessary. For example, at the Deposition of Kevin Marsh on
October 29, 2018, Class Counsel had six lawyers present. No other party had more than two
lawyers present. Exhibit 19. At the Deposition of Stephen A. Byrne on August 14, 2018, Class
Counsel had five lawyers and a support staff present. No other party had more than two lawyers
present and no other party had support staff attend. Exhibit 29. In other depositions, one
attorney would take the depositions while other attorneys would telephone in to gin up hours.
Exhibits 17, 18 and 21. These examples would suggest overstaffing that was not reasonable or
necessary. At a bare minimum these overstaffing concerns strongly suggest “Class Counsel
should be compelled to provide all billing information in as much detail as possible, to allow for
a full, transparent analysis of efficiency under the Jackson factors.” Exhibit 26, paragraph 24.
Class Counsel had over five months to prepare its Fee Petition and have its expert witnesses
review any documents necessary in their “analysis.” Objectors and their counsel should have a
fair and reasonable opportunity conduct their own analysis based on objective evidence – Class
Counsel’s time records.
Judicial review of itemized and detailed time records is vital for another important
reason: A lodestar cross check to ensure fees are reasonable. “When courts employ the
49
percentage method in common fund cases, a primary concern is that the resulting fee might be a
windfall to class counsel. The primary means of guarding against a windfall is for a court to
compare the proposed percentage award to counsel’s lodestar, which consists of the time they
have spent on the case multiplied by their hourly billing rates.” Newberg on Class Actions
§15.52 (5th ed.). See also DeWitt v. Darlington Cty., S.C., No.: 4:11-CV-00740-RBH, 2013 WL
6408371, at *7 (D.S.C. Dec. 6, 2013)(“Many courts that have used the percentage-of-the-fund
method also use a modified form of the lodestar method to perform a ‘cross-check’ to ensure that
the percentage award is fair and reasonable.”); Faile v. Lancaster County, South Carolina, C/A
No. 0:10-cv-2809-CMC (D.S.C. Mar. 28, 2012)(Dkt. No. 50)(“Numerous district courts within
the Fourth Circuit have used the percentage-of-the-fund method, and many have also employed
the lodestar cross-check, in setting attorney’s fees in class action settlements.”). A lodestar
cross-check is vitally important in a case like this where Class Counsel seek over 55% of the
cash Defendant is paying to the Common Benefit Fund.
While Class Counsel advocate for a percentage of the Common Benefit Fund that
amounts to over 55% of the cash paid by Defendants, even Class Counsel engage in their own
lodestar analysis. See Affidavit of John Alphin, paragraphs 5 and 6. However, Class Counsel’s
lodestar analysis is highly questionable, suspect and unreliable. A lodestar analysis requires the
court to consider the reasonable and necessary time Class Counsel spent working on the case and
multiply that time by the reasonable hourly rates. The court may then add a positive or negative
multiplier to account for unique aspects of the case. Class Counsel’s lodestar analysis is highly
questionable, suspect and unreliable for two reasons.
First, and as noted above, Class Counsel have failed to produce itemized time records that
would allow this court or anyone else to determine the reasonable and necessary hours devoted
50
to this litigation. Exhibit 26. As discussed more thoroughly above, Class Counsel have
included hours that were not devoted to this case. In the hours they claim, Class Counsel have
included time spent working on cases where they were not successful. Regardless, however, in
conducting a lodestar analysis it is necessary and proper to review the itemized and detailed time
records.
Just as importantly, Class Counsel’s own lodestar analysis is based on hourly billing rates
that far exceed hourly rates in South Carolina. Class Counsel claims the hourly rates are based
on the Laffey Matrix which they claim is “often used by civil divisions of the United States
Attorney’s Offices throughout the nation.” Alphin Affidavit, footnote 2. This statement is
misleading for multiple reasons. First, the United States Attorney’s Offices uses a different
matrix with significantly lower hourly rates than those used in the Laffey Matrix. Exhibit 27,
USAO Attorney’s Fees Matrix – 2015-2019. Second, the rates in the USAO Attorney’s Fees
Matrix – 2015-2019 and Laffey Matrix reflect hourly rates in and around the District of
Columbia. Billing rates in and around the District of Columbia are obviously higher than those
in South Carolina.
The Laffey Matrix utilized by Class Counsel is actually a knockoff of USAO Attorney’s
Fees Matrix. It was developed by an economics professor who is apparently retired and is
currently living in Hawaii. Exhibit 28, www.laffeymatrix.com cited in Alphin Affidavit. See
also Eley v. District of Columbia, 793 F.3d 97, 101 (D.C. Cir. 2015). As the court can see, the
Laffey Matrix currently utilizes the following hourly rates:
Paralegals and Law Clerks $202
Attorneys 1-3 years experience $371
51
Attorneys 20+ years experience $894
Exhibit 28. The hourly rates in the Laffey Matrix far exceed the hourly rates typically seen in
South Carolina. See Layman, 376 S.C. 434, 658 S.E.2d 320 (utilizing hourly rates of $350-$600
per hour for partners, $200-250 per hour for associates and $70-$80 per hour for paralegals and
law clerks); Uhlig at 895 F.Supp.2d 717 (D.S.C. 2012)(utilizing hourly rates of between $135-
$320 per hour for attorneys and $80 per hour for paralegals); Monster Daddy, 2014 WL 2780331
at **9-10 (utilizing a $330 hourly rate for attorneys and $150 hourly rate for paralegals); Sauders
v. South Carolina Pub. Serv. Auth., 2011 WL 1236163 (D.S.C. 2011)(utilizing a $600 hourly
rate for Edward Bell, $150-$350 for other attorneys and $80 per hour for paralegals).
Even when the hourly rates utilized in the Laffey Matrix are reduced by 10% as Alphin
claims he did, they produce hourly rates that are considerably higher than those in South
Carolina. Exhibit 26, Affidavit of David Paige, Esquire, Exhibit 5. In the limited time available
and with the limited information provided in the Fee Petition, Objectors’ expert, David Paige,
Esquire, estimated that based on Alphin’s lodestar analysis using the Laffey Matrix, Class
Counsel’s hourly rate was over $750 per hour. Exhibit 26, Affidavit of David Paige, Esquire,
Exhibit 3. As the court can see, Paige used Alphin’s total lodestar amount of $18,609,189.
Paige also used Class Counsel’s claimed number of hours. Paige deducted out paralegal time
using Class Counsel’s total paralegal time and a $100 rate per hour for paralegals. That left
$18,381,360 for attorney time and Paige divided this total by the total attorney hours Class
Counsel claimed through the Alphin Affidavit. This resulted in an effective hourly rate of
$750.25 per hour for each and every attorney who worked on the case. That would include even
52
the most junior attorneys with little to no experience. As this court is well aware, attorneys in
South Carolina don’t bill at $750 an hour. Even the most seasoned and accomplished attorneys
such as Edward Bell don’t command that much per hour. See Sauders v. South Carolina Pub.
Serv. Auth., 2011 WL 1236163 (D.S.C. 2011)(utilizing a $600 hourly rate for Edward Bell).
Associate attorneys in South Carolina don’t command anywhere near the hourly rates utilized by
Class Counsel or utilized by Alphin in his Affidavit. Exhibit 26.
Even within the District of Columbia the Laffey Matrix has been widely rejected and
criticized by the courts as imprecise and “somewhat crude.” Eley v. District of Columbia, 793
F.3d 97, 101 (D.C. Cir. 2015)(reversing lower court’s fee award based on Laffey Matrix rates);
See also Rodriquez v. Sec’y of Health, 632 F.3d 1381 (Fed. Cir., 2011)(affirming special
master’s rejection of hourly rates used in Laffey Matrix); Cox v. District of Columbia, 264 F.
Supp. 3d 131(D. D.C. 2017)(declining to use Laffey Matrix in awarding attorneys’ fees under
lodestar).
Use of the Laffey Matrix artificially inflates the lodestar by a significant amount. These
artificially inflated rates make it even more important for the court to review the itemized time
records of Class Counsel to ensure they are accurate for a lodestar cross-check. A thorough and
complete lodestar cross-check is vitally important here where the fees sought by Class Counsel
would amount to over 55% of the cash SCE&G would pay to the Common Benefit Fund.
D. The benefits obtained by Class Counsel are significantly less than what they
claim and do not justify attorneys’ fees of $63,450,000.
As discussed in detail above Class Counsel did not provide a benefit to the class that was
2.2 billion dollars. The 2 billion dollars in prospective rate relief was provided in the separate
PSC action as part of SCE&G’s merger with Dominion. For brevity, those arguments will not be
repeated here but are incorporated by reference. It is sufficient to say that the proposed
53
settlement does not provide the robust and hardy benefits claimed by Class Counsel or attested to
by Class Counsel’s friends and colleagues. In determining a reasonable fee the focus should be
on the actual benefits to the class that are the direct result of this litigation and not prospective
rate relief that class members will get regardless of the outcome of this case.
The actual benefits to the class are a 115 million cash payment and real estate that may
eventually have some benefit to the class. As argued above, there are numerous problems with
the real estate transfers. For brevity, those arguments will not be repeated here but are
incorporated by reference. In determining a reasonable fee, Class Counsel should not be allowed
to siphon off over 55% of the actual cash in the Common Benefit Fund based on unsubstantiated
property values. If the property is sold and there is a net value to the class, Class Counsel should
be awarded fees after the net value is fully known. After all, it is Class Counsel who argued with
great vigor and gusto that the court award them fees based on a percentage of the recovery. If
this court agrees with that methodology, Class Counsel’s recovery should be from the actual
money recovered. If the real estate transfers have a true net value to the class with significant
monetary value, Class Counsel should receive their money at the same time their clients and
absent class members receive their money. Class Counsel shouldn’t be allowed to effectively
jump to the front of the line ahead of the ratepayers they represent.
With the prior arguments noted, the 115 million dollar cash payment is a benefit to the
class, albeit a small benefit compared to what ratepayers were overcharged. If the court were to
approve the settlement despite the objections noted above, Class Counsel would be entitled to
attorneys’ fees on that 115 million dollar cash payment. Moreover, if the land transfers provide a
net benefit to the class after costs and expenses, Class Counsel would be justified in claiming
those proceeds as a benefit as well but only after the net monetary value to the class is
54
ascertained and actually realized. On the surface, it appears SCE&G is giving a substantial
benefit to the class but scratching past the surface shows how little SCE&G is giving up to settle
this lawsuit.
Part of the debacle at SCE&G giving rise to this case stemmed from gross
mismanagement by top executives. As noted elsewhere in this litigation and in the media,
SCE&G’s executives saw or reasonably should have seen the failure of the V.C. Summer
expansion looming for years. To insulate themselves they created “golden parachutes” through a
mechanism called a Rabbi Trust. Essentially, SCE&G, through artificially high electric and gas
rates, funded “golden parachutes” secured by the Rabbi Trust. In settling this case, SCE&G
broke the Rabbi Trust that was essentially funded by the ratepayers and it gave back that money
as the primary benefit of the settlement. See generally
http://www.live5news.com/2018/11/24/scana-sceg-settles-billion-class-action-lawsuit-failed-vc-
summer-project/
In essence, top executives wrongfully converted SCE&G’s money to fund their own
retirement. To fund the cash portion of the settlement, SCE&G took back this money and
returned it to the ratepayers who ultimately paid it through unreasonably high electric and gas
rates. To fund the real estate portion of the settlement, SCE&G unloaded 13 parcels of real
estate it didn’t need and couldn’t sell. The money was a benefit but it does not justify attorneys’
fees that amount to over 55% of the 115 million dollar cash payment. Nor do the land transfers
(the value of which is currently unknown) justify such high attorneys’ fees.
E. The customary legal fees for similar services do not support Class Counsel’s
claim for over $63,450,000 in attorneys’ fees.
In South Carolina or elsewhere no court has allowed attorneys’ fees that amount to over
55% of the money paid to the Common Benefit Fund under similar circumstances. Just as
55
importantly, no court has allowed Class Counsel to recover over $63,000,000 for less than 16
months of work under like or similar circumstances. In the myriad of cases cited in the Fee
Petition and supporting affidavits, nothing comes close to what Class Counsel currently seek.
Class Counsel and their friends and colleagues do a fine job of cherry picking case law
with the highest fee awards they can find. They cite cases from the four corners of the United
States and virtually everywhere in between, including South Carolina. From this group of
carefully selected cases Class Counsel concludes: “Judicial Consensus Supports a 33.33% Fee in
Non-Mega Class Settlement.” Fee Petition, p. 30 (emphasis in original). As this court is well
aware, there is no “judicial consensus” that “supports a 33.33% Fee in Non-Mega Class
Settlement[s].” Each case must be evaluated separately. Toward that end, a useful starting point
for this court are average awards in common fund class actions with similar monetary values to
this case. Fortunately, there are several useful studies which are helpful.
One study found that where common funds were over $72,500,000 the average attorney
fee award was 18.4% of the common fund. Another study found that the average award in
common fund cases that exceeded $44,625,000 was 20.9% of the common fund. Newberg on
Class Actions §15.81 (5th ed.). Citing In re Prudential Ins. Co. of Am. Sales Practices Litig., 148
F.3d 283 (3d Cir. 1998) the Manual for Complex Litigation, notes fee awards from common fund
cases range from 4.1% to 17.92% when the common fund exceeds $100,000,000. Manual for
Complex Litigation, Fourth. Of course, these are averages. However, if the court overrules the
other objections and awards attorneys’ fees based on a percentage of the common fund the
percentage it awards should be substantially less than 55% of the Common Fund for all the
reasons argued more fully above.
56
It is not clear that the appellate courts in South Carolina still favor a fee award based on a
percentage of the common fund. Increasingly, the courts in South Carolina have turned to a
lodestar evaluation in determining reasonable attorneys’ fees. That trend started in 2008 when
the Supreme Court issued its opinion in Layman v. State. In Layman, the Supreme Court
reversed the lower court’s award of attorneys’ fees based on a percentage of the common fund
because “the circuit judge’s $8.66 million award results in an hourly rate of $6,000 for each
attorney and staff member involved in the litigation…” Layman, 376 S.C. at 457, 658 S.E.2d at
332. As held by the Supreme Court: “We find this fee inconsistent with the Court’s careful
crafting of both procedural and substantive path of this case aimed at minimizing costs for all
involved.” Id. Instead, the Court in Layman reduced attorneys’ fees from $8.66 million to
$1,075,701.74 based on the reasonable hourly rates of counsel, reasonable hours worked
multiplied by a 1.25 enhancement multiplier based on the complexity of the case.
While Layman left open the possibility of a fee award based on a percentage of the
common fund when a state fee shifting statute is not involved, South Carolina courts are
increasingly using a lodestar analysis in awarding attorneys’ fees. For example, in Sauders v.
South Carolina Public Service Authority the United States District Court based its award of
attorney’s fees on a lodestar calculation. Interestingly, one of Class Counsel in this case also
represented the plaintiffs in Sauders. Sauders involved inverse condemnation cases against
Santee Cooper. In that case, the Bell Legal Group sought attorney’s fees of $87,759,983.00
which represented forty-percent of the recovered damages. The District Court held such a claim
was “unreasonable” and awarded attorneys’ fees of $8,573,075 based on a lodestar analysis. An
analysis of the facts and circumstances surrounding attorneys’ fees in Sauders compared with the
facts and circumstances in the current action is revealing. The Sauders litigation lasted twenty
57
five years compared to 15 months before the settlement was reached in this case. Sauders also
involved two separate appeals to the United States Circuit Court of Appeal. The only appeal in
Lightsey was dismissed before briefing and argument because it was an improper interlocutory
appeal. There was a full trial on liability in Sauders. The case before this court was never tried.
In Sauders Plaintiffs’ Counsel argued for a lodestar multiplier of between 3 and 5 based on the
complexity of the case and based on the length of the litigation (25 years). This claim was
rejected by the District Court who used the same 1.25 multiplier utilized by the Supreme Court
in Layman.
In 2016, the South Carolina Supreme Court upheld the lower court’s award of attorney
fees based on a loadstar analysis. Maybank v. BB&T Corp., 416 S.C. 541, 787 S.E.2d 498 (S.C.
2016). Maybank was tried and resulted in a jury verdict of $17,199,306. The Supreme Court
affirmed the lower courts award of attorneys’ fees that totaled $2,654,295 based on fees that
totaled $1,769,530 which the trial court multiplied by 1.5. In finding this award reasonable the
Court noted that the case “was heavily litigated for several years, involved thirty-two
depositions, and produced more than 60,000 pages of documentation. Moreover, there were
numerous motions filed by Appellants including ten separate motions for summary judgment and
seven motions in limine.” In comparison, the case now before this court was never tried and was
settled less than 16 months after it was filed. In comparing the two cases, it is most significant to
note that the discrepancy in attorneys’ fees sought - $2,654,295 in Maybank for a case that was
tried and appealed versus over $63,000,000 now for a case that was settled well short of trial.
Many courts across the country that use a percentage of the common fund approach also
use a lodestar analysis as a cross-check for reasonableness. Newberg on Class Actions §15.88
(5th ed.). This is because “Courts that employ the percentage method must ensure that the
58
particular percentage of the fund counsel seek, and the resulting fee, are reasonable.” Newberg
on Class Actions §15.74 (5th ed.). See also Layman, 376 S.C. at 455, 658 S.E.2d at 331. (holding
“the overriding benchmark for awards of attorney’s fees under both the state action statute and
the general premise of the common fund doctrine is that attorney’s fees must be
‘reasonable.’”)(citations omitted). The lodestar cross-check ensures that overall fee is reasonable
and “the percentage award is not a windfall.” Newberg on Class Actions §15.88 (5th ed.).
In the case now before this court, Class Counsel haven’t provided itemized time
statements or like or similar documents that would allow the court, objectors or their counsel to
perform a meaningful lodestar cross-check. Exhibit 26. Ironically, in most of the cases cited
and relied upon by Class Counsel in their Fee Petition, such records were provided to the court.
This court should also require such records in this case so a meaningful analysis can be made
comparing this case with the customary legal fees in other cases. Exhibit 26.
F. Class Counsel’s claim for reimbursement of $864,912.40 in litigation costs is

not verified and should not be approved by the court unless and until
substantiated and made publically available to class members.
In addition to a claim for attorneys’ fees of over $63,450,000 Class Counsel also seek
reimbursement of litigation costs they claim total $864,912.40. Class Counsel have submitted
nothing to the court that would allow the court to verify and substantiate these costs.
Respectfully, the court cannot fulfill its fiduciary duty to absent class members without first
verifying and substantiating that all of the costs sought were reasonable and necessary in the
prosecution of this matter. In addition, the court should verify that all of these costs were
incurred in the prosecution of this case and were not incurred in the prosecution of other cases
that were either not resolved in plaintiffs favor or have yet to be resolved. See discussion supra.
59
There is no doubt Class Counsel spent money prosecuting this case and this objection
does not challenge costs that were necessary and reasonable in the prosecution of this case. For
example, filing fees, court reporter fees, videographer fees, fees incurred for class notice, and
reasonable and necessary travel expenses would all be legitimate costs. The problem is Class
Counsel have submitted nothing to verify what their costs are. Based on what has been
submitted there are legitimate reasons to question the costs and expenses claimed by Class
Counsel.
For example, in support of their Application for Reimbursement of Expenses and a
Contingency Fee Award, Class Counsel submitted several affidavits from expert witnesses all of
who opined that the fees sought by Class Counsel were reasonable. Were fees for these experts
part of the expenses Class Counsel seek from the class members? Without more information,
neither the court nor absent class members can answer this question.
By way of another example, the parties deposed several witnesses out of state. It is likely
Class Counsel incurred travel expenses related to these depositions. It is also likely that their
claim for $864,912.40 in costs includes these expenses. It is reasonable for the court to review
these costs to ensure they are reasonable and not excessive. To be clear, no one is suggesting
that Class Counsel stay in substandard accommodations or eat substandard food. At the same
time, absent class members should not be required to foot the bill for private air charters, first
class airline travel, expenses at luxury resorts or hotels, or foot the bill for indulgent gourmet
meals. No one is necessarily suggesting this was the case. However, Class Counsel have not
submitted sufficient information to the court to allow the court and absent class members to
evaluate what Class Counsel is claiming in expenses.
60
To adequately fulfill its fiduciary role to absent class members, the court should require
Class Counsel to submit itemized expenses reports that include appropriate supporting
documentation (invoices, receipts, bills, etc.) before approving any costs or expenses.
CONCLUSION AND REQUEST FOR RELEIF

For the reasons set forth above, Objectors request the following relief from the court:
1. Deny final approval of the proposed settlement;
2. In the alternative, issue an Order(s) that disallows the parties from claiming 2 billion
dollars in prospective relief as a benefit of the Settlement Agreement;
3. Additionally and in the alternative, issue an Order(s) that strikes the sentence “It is
expressly agreed by the Parties that the benefit conferred in the PSC was provided as a
direct result of this litigation” from paragraph 2.a. prior to approval;
4. Additionally and in the alternative, issue an Order(s) requiring that Class Members be re-
noticed about the proposed settlement and that the re-notice correct the deficiencies noted
above including the benefits to the class and provide class members with a reasonable
estimate of the expected benefit for the average ratepayer;
5. Additionally and in the alternative, that class members be provided information about
costs and attorney’s fees sought by Class Counsel through a re-notice to the class;
6. Additionally and in the alternative, continue this matter related to Class Counsel’s
Application for Reimbursement of Expenses and a Contingency Fee Award to allow
absent class members, objectors and their counsel a reasonable opportunity and time to
review the Application and related documents which would specifically include all time
sheets, time records, or like or similar documents;
7. In addition and in the alternative, issue an Order(s) requiring Class Counsel or the parties
responsible for the settlement website, www.scegratepayersettlement.com, to
61
prominently post information on the website advising class members of the amount of
costs and attorney’s fees claimed and the basis for such claim;
8. In addition and in the alternative, that Class members be given a full and fair opportunity
to object to Class Counsel’s Application for Reimbursement of Expenses and a
Contingency Fee Award after being given proper notice and sufficient time to review the
Application and supporting documents;
9. In addition and in the alternative, issuing an Order(s) that requires Class Counsel to
submit time sheets, time records, or like or similar documents which show the work they
performed;
10. In addition and in the alternative, issuing an Order(s) that requires Class Counsel to
submit itemized expense reports that include appropriate supporting documentation
(invoices, receipts, bills, etc.) before approving any costs or expenses;
11. In addition and in the alternative, issuing an Order(s) that allows objectors and their
Counsel limited discovery which would include reviewing time sheets, time records, or
like or similar documents; reviewing all discovery in the case; reviewing all written
correspondence between opposing counsel; and deposing any witness who Class Counsel
relied upon in submitting their Application for Reimbursement of Expenses and a
Contingency Fee Award (any witness who submitted an Affidavit);
12. In addition and in the alternative, that the Court reduce Class Counsel’s attorneys’ fees to
reasonable amounts consistent with South Carolina law.
Respectfully submitted,
62
LAW OFFICES OF ROBERT DODSON, P.A.
/s/ Robert D. Dodson

Robert D. Dodson
1722 Main Street, Suite 200
Columbia, SC 29201
Phone: (803) 252-2600
Email: rdodsonlaw@rdodsonlaw.com
SC Bar No. 16205
Palmer Freeman
P. O. Box 8024
Columbia, SC 29202
Phone: (803) 799-9400
Email: pfreeman@attorneyssc.com
S.C. Bar No. 2132
Attorneys for Objecting Class Members

Columbia, South Carolina
This 29th Day of April, 2019
63

Filed Memo in Support - 1091332609

Transféré par

Informations du document

Description originale:

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Filed Memo in Support - 1091332609

Transféré par

Droits d'auteur :

Formats disponibles

ELECTRONICALLY FILED - 2019 Apr 29 10:09 AM - HAMPTON - COMMON PLEAS - CASE#2017CP2500335

STATE OF SOUTH CAROLINA IN THE COURT OF COMMON PLEAS

COUNTY OF HAMPTON FOR THE FOURTEENTH JUDICIAL

Richard Lightsey, LeBrian Cleckley, Phillip

Vs. OBJECTORS’ MEMORANDUM OF

South Carolina Office of Regulatory Staff,

member of the class.

was not filed until a week before the objection deadline.

Benefit Fund as costs and attorneys’ fees.

the real estate transfers.

Agreement was signed.

I. The Settlement Agreement should not be approved because absent class

because of the approved merger.

Common Benefit Fund.

A. Legal Standard for Due Process in the Class Action Notice.

Resolution of an absent individual’s claim is a taking of property that triggers due

consider to be material in making an informed, intelligent decision of whether to opt out or

Litigation, 552 F.2d 1088, 1104-1105 (5th Cir. 1977).

Carolina Supreme Court observed:

Phillips v. Shutts, 472 U.S. 797, 812 (1985). Hospitality at 644.

WL 1632135 (E.D. Pa. 2001).

Interactive Corp. Securities Litigation, 618 F.3d 988, 994-96.

B. The class notice provides information that is misleading and inaccurate. It

proposed settlement, Defendants will… provide up to two billion dollars ($2,000,000,000.00) in

failed V.C. Summer reactors.

scana-merger-customer-refund/index.html and https://thetandd.com/business/scana-mergering-

In an effort to tout the benefits of the merger, Dominion launched an aggressive

https://www.thestate.com/opinion/op-ed/article197552579.html. Dominion’s proposal was

criticized by a wide range of groups including a number of State Legislators.

docket no.: 3:18-cv-01795 JMC.

SCE&G and Dominion offered an “Alternative Customer Benefits Plan.” Exhibit 9,

Supplemental Rebuttal Testimony of Prabir Purohit on Behalf of Dominion Energy in PSC

Action; Exhibit 10, Supplemental Rebuttal Testimony of Thomas F. Farrell, II on Behalf of

Benefits Plan because it made no upfront payment/customer refunds (i.e. it completely

rate reductions for reasons wholly unrelated to this lawsuit.

and Acquisitions and Financial Analysis at Dominion Energy testified:

Several interested parties to this proceeding have, in their testimony and

the merger at issue in the separate PSC action.

billion dollars. Exhibit 12, pp. 58-62.

pending in this court.

The Plan B-L, in particular, is being offered in response to suggestions from

reduced customers’ rates. See generally Exhibits 6-8.

reductions the parties claim as a benefit of this lawsuit.

reduce rates going forward.

due process…” Hege, 780 F. Supp. 2d at 430.

constitutionally deficient because they are not provided this information.

of the PSC action.

members’ due process rights.

members of their expected recovery but it fails to do so.

have been provided here.

action settlement.” Newberg on Class Action, § 15.10.

David Paige, Esquire, paragraph 24.

2018 hearing, Class Counsel argued:

must be paid out of the class’ share of the proceeds.

A. Legal Standard for final court approval of the Settlement Agreement.

the preference for settlement:

defendants.” Newberg on Class Actions §13.49 (5th ed.).

otherwise, as the Settlement Agreement states, is an illusory benefit to class members.

overall fairness (or lack thereof) of the proposed Settlement Agreement.

“Defendant SCE&G billed customers in excess of two billion dollars ($2,000,000,000.00)

$41,256,643 is well below the 60 to 85 million estimated by the parties.

Just as importantly in this court’s evaluation of whether to approve the Settlement