Lawyers ask for $300 million in fees in VW scandal settlement
Plaintiff lawyers who helped negotiate a potential $10 billion settlement with Volkswagen over the diesel emissions scandal fired back at critics who question their request for more than $300 million in fees for negotiating terms that are largely overlapped by VW’s agreements with the Justice Department and federal regulators.
In a filing this weekend by lead attorney Elizabeth Cabraser of Lieff Cabraser Heiman & Bernstein, the Plaintiffs’ Steering Committee called its work “complementary” and “integral to the success of the combined efforts to right Volkswagen’s wrong.” VW might have offered consumers less without the promise of also ending civil litigation under the same global settlement, those lawyers say.
Cabraser took special aim at attorney Ted Frank of the Competitive Enterprise Institute’s Center for Class Action Fairness, who in an objection filed Sept. 16 said the plaintiff attorneys obtained almost nothing for class members that isn’t provided under VW’s consent agreements with the DOJ and Federal Trade Commission. Frank, representing objector Matthew Comlish, also objected to the fee arrangement under which plaintiff lawyers will submit their final fee request only after the settlement is approved, depriving class members of notice as to how much of the potential settlement pot is going to lawyers instead of their clients. Those fees will be higher than necessary, Frank adds, because more than 60 plaintiff law firms collaborated in the case, instead of competing to drive costs down.
The plaintiff lawyers’ response to the objections says Frank’s analysis is “fatally flawed” because class members who opt out of the settlement — in essence, fire Lieff Cabraser et al as their lawyers — aren’t entitled to a buyback program that accounts for 99% of the $10 billion in consumer benefits. Under the proposed settlement VW will pay up to $40,000 to buy back cars consumers no longer want because of the doctored emissions systems, which allowed higher levels of nitrogen oxide into the air. The plaintiff lawyers say those buyback benefits are available only to class members who sign away their right to sue under the settlement, citing an executive summary that it says DOJ and FTC reviewed, which says opt-outs “cannot receive a Buyback or Lease Termination” or “any cash payment.”
“Those who opt out of the Class Action Settlement are not eligible for the Buyback and cannot recover any cash,” the plaintiff lawyers state.
Not so, says Frank. The executive summary isn’t a binding legal document, he says, and the actual DOJ consent agreement says VW’s obligations are independent of anything the company negotiates with private lawyers or the FTC. Under all circumstances, that document says, VW “must still offer and provide the Buyback.”
The plaintiff lawyers say they also negotiated and set up a system to administer the claims, “a massive project,” and eliminating it to simply enforce the DOJ consent agreement would “undermine the efforts of the Class, VW, the regulators and the court to comprehensively resolve all of the related harms promptly and efficiently. The Class Action Settlement is not surplusage; it is essential.”
Frank also accused the plaintiff lawyers of breaching their fiduciary duties to their clients by negotiating a fee arrangement that hides what they will be paid until class members sign off on the settlement, and failing to compete among themselves to provide the lowest cost. All they lawyers have disclosed is they will seek no more than $324 million plus expenses, which on $10 billion would certainly be lower than the 25-30% fee courts approve in many class actions. Frank says that’s still too much, given the settlement provides almost nothing more than the DOJ and FTC obtained for VW owners on their own. By splitting the fee from the negotiations over how much VW was willing to pay for a release of claims against it, Frank says, the plaintiff lawyers abandoned a key point of leverage for obtaining more money for their clients. VW likely assumed the lawyers would seek far more in fees, he argued, and therefore proposed a lower payout than they otherwise might have done.
Source: Forbes
