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DERIVATIVE KINDER MORGAN SHAREHOLDERS LITIGATION

DERIVATIVE KINDER MORGAN SHAREHOLDERS LITIGATION

Diane A. Nygaard was co-counsel in this shareholder derivative case that resulted in a $200 million class action settlement on behalf of former stockholders of Kinder Morgan, Inc. (KMI). In Re Kinder Morgan. Inc. Shareholders Litigation, Consol. Case No. 06 C 801, District Court of Shawnee County, Kansas. A buyout group lead by KMI’s largest stockholder and Chairman, Richard Kinder, took the company private in 2006. The KMI Buyout was one of the largest management-led buyouts in corporate history. Judge David E. Bruns of the District Court of Shawnee County, Kansas, where Kinder Morgan is incorporated, appointed Ms. Nygaard and Ms. Tikellis to represent the shareholders. The derivative case was filed in 2006 and was certified as a class action in 2008.

On December 2, 2010, the Court approved a $200 million settlement to be distributed among 100,000 Kinder Morgan shareholders. The Court held that the settlement provided fair and reasonable relief for the shareholders of Kinder Morgan. Their stock was bought by insiders for $107.50 a share. Under the settlement, the shareholders will receive an additional $2.00 per share. Experts testified this represented a fair value for the stock.

In addition to the $200 million judgment awarded to former shareholders, Judge Bruns issued a separate order that the Defendants – including Goldman Sachs, several hedge funds, and the insiders at Kinder Morgan who now own all the stock – pay attorneys’ fees totaling over $22 million to the two lead counsel firms and the two other law firms participating in the case, and their expenses of $1.8 million. In determining the legal fees, Judge Bruns considered the Lodestar and Percentage methods of calculating reasonable attorneys’ fees, established precedent and expert testimony by the Honorable H. Lee Sarokin, a retired Judge of the United States Court of Appeals for the Third Circuit. He testified that “The requested fee is fair and reasonable in view of the outstanding results achieved for the Class, the substantial risks undertaken, the exhaustive efforts of counsel, the contingent nature of the representation and the attorneys’ fees awarded by courts in other class action settlements.”

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Keywords:

Kinder Morgan, Lodestar and Percentage, shareholders of Kinder Morgan, Goldman Sachs, derivative case, class action, investor fraud, securities fraud, Diane Nygaard , KMI Buyout, Chimicles & Tikellis, shareholder derivative, litigation