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$66M Fee Request in $800M Chrysler Emission Class Action Settlement

May 2, 2019 | Posted in : Class Action, Contingency Fees / POF, Expenses / Costs, Fee Allocation / Splitting, Fee Award Factors, Fee Calculation Method, Fee Expert / Member, Fee Request, Hourly Rates / Hourly Billing

A recent The Recorder story by Amanda Bronstad, “Plaintiffs Lawyers in $800M Chrysler Emissions Settlement Want $66M,” reports that plaintiffs lawyers who helped craft an $800 million settlement with Fiat Chrysler this year over its “EcoDiesel” vehicles are asking for $66 million more in attorney fees and costs.  U.S. District Judge Edward Chen of the Northern District of California has scheduled oral arguments Friday about whether to grant final approval of the deal, which includes a $307 million class action settlement and $400 million to federal and state regulators to resolve claims that it installed software in 100,000 vehicles nationwide to cheat emissions tests.

In court papers, lead counsel Elizabeth Cabraser said the request for $59 million in attorney fees and $7 million in costs would be in addition to, and not deducted from, the settlement’s $800 million value.  She said the fees were reasonable in light of the complexities of the case.  “This significant result was not easily won,” wrote Cabraser, of San Francisco’s Lieff Cabraser Heimann & Bernstein, in an April 25 reply supporting the settlement.  “Plaintiffs’ claims were hotly contested and vigorously litigated for nearly two years.”

In the class action, Chen early on appointed Kenneth Feinberg, founder and managing partner of The Law Offices of Kenneth R. Feinberg in Washington, D.C., to serve as settlement master.  Last year, the judge allowed claims to go forward against Fiat Chrysler under the federal Racketeer Influenced and Corrupt Organizations Act.  Under the settlement’s terms, Fiat Chrysler Automobiles N.V. agreed to give individual cash payments of up to $3,075 and extended warranties to eligible consumers who brought their vehicles in for software fixes.  Fiat Chrysler agreed to provide $280 million, with software maker Robert Bosch GmbH contributing $27.5 million.

Class members have 18 months after the settlement’s final approval to make claims.  Unlike the $14.7 billion emission settlement in 2016 with Volkswagen, Chrysler agreed to provide a software fix for two years that would allow drivers to continue using their cars. Also unlike Volkswagen, Fiat Chrysler did not admit liability.  “We look forward to finalizing this agreement with the court, which will bring us another step closer to achieving the settlements’ goals: providing consumers the vehicles they were promised plus cash compensation, while also protecting our environment,” Cabraser said in a statement.

In the reply, Cabraser noted that only three out of 100,000 class members objected to the deal and, of the 3,461 who opted out, nearly 90 percent of them came from “vigorous marketing and solicitation campaigns by a handful of attorneys”—in particular, at Stern Law PLLC in Novi, Michigan, and Heygood, Orr & Pearson in Irving, Texas.  Ken Stern, of Stern Law, and Michael Heygood, of Heygood Orr, did not respond to questions about why they recommended their clients opt out.

“This high level of engagement and remarkably low level of opposition is a strong endorsement of the settlement terms,” Cabraser wrote in the reply.  “Under any circumstances, this extremely low objection rate would strongly favor final approval, and it does so with particular force here given the well-publicized nature of this litigation and the significant sums at stake.”  So far, she wrote, nearly 34,000 class members had registered on the settlement’s website.

In separate declarations, Robert Klonoff, a professor at Lewis & Clark Law School, and Brian Fitzpatrick, a professor at Vanderbilt University Law School, said the fee request represented between 10 to 18 percent of the settlement amount, depending on how benefits are calculated.  Both are reasonable and fall below the 25 percent benchmark established by the U.S. Court of Appeals for the Ninth Circuit.

Cabraser, in her initial motion for final approval, calculated the fee request at 13 percent, when based on a minimum required 85 percent participation rate in the cash fund and cutting the $239.5 million value of the extended warranties in half to account for the government’s role, plus $67.5 million in attorney fees and legal and administrative costs.  When assessed against the total potential value of the settlement—the entire cash fund and value of the extended warranties—the request was 9.6 percent, she wrote.

She estimated that class counsel would have spent more than 100,000 hours on the case upon completion of the claims process in two years, billing at a blended rate of $453 per hour.  “This is more than justified given the intensity of the litigation, the quality of the work, and most importantly, the results achieved,” she wrote.  In addition to Cabraser’s firm, the fees would compensate the other nine law firms on the plaintiffs’ steering committee, plus 10 additional firms who did work on the case, according to a declaration Cabraser submitted in support of final approval.