A recent Law 360 story by Reenat Sinay, “Bernstein Litowitz Seeks $12M in Atty Fees for VW Deal,” reports that Bernstein Litowitz Berger & Grossmann LLP has requested $12 million in attorney fees in California federal court for securing a $48 million settlement for a class of Volkswagen AG investors, ending claims in multidistrict litigation that VW misled them in its financial reporting about its environmental compliance.
U.S. District Judge Charles R. Breyer gave the initial nod to the deal in November and conditionally certified the proposed class of investors who purchased American depositary receipts through VW between November 2010 and January 2016. According to the terms of the agreement, lead counsel for the investors said they would ask for no more than 25% of the settlement fund.
The investors’ attorneys at Bernstein Litowitz said their request of 25% of the settlement in attorney fees, which amounts to $12 million, was “fair and reasonable.” Lead counsel also asked for $296,879.86 in reimbursement for litigation expenses and a total of $7,328 to be split between the two class representatives.
“The significant monetary recovery was achieved through the skill, tenacity, and effective advocacy of lead counsel, who litigated this action on a fully contingent basis against highly skilled defense counsel,” the attorneys said. “The settlement was reached only after nearly three years of hotly contested and difficult litigation, including substantial fact discovery, which required lead counsel to dedicate a significant amount of time and resources to the action.”
In their bid for final approval of the settlement, lead plaintiff Arkansas State Highway Employees Retirement System and named plaintiff Miami Police Relief and Pension Fund told the court that the deal represented “an excellent result” for the investors and requested that Judge Breyer grant final certification of the settlement class. “Plaintiffs respectfully submit that the proposed settlement is an excellent result for the settlement class and satisfies the standards for final approval under Rule 23 of the Federal Rules of Civil Procedure,” the institutional investors said. “The proposed settlement represents approximately 33% of the likely maximum recoverable damages in the action, which is an excellent recovery for the settlement class.”
The litigation stems from the revelation in September 2015 that Volkswagen was equipping some of its diesel vehicles with devices that would allow the cars to pass government-mandated emissions tests, then emit more pollution once they hit the roads. Soon after the U.S. Environmental Protection Agency went public with the allegations, the company acknowledged it had installed the defeat device software in at least 11 million vehicles, nearly 600,000 of which had been sold in the U.S. The government filed a Clean Air Act suit against VW and its subsidiaries in January 2016. Several class actions, filed by drivers, dealerships and stockholders, followed.
The instant suit was first filed in Virginia federal court in September 2015 by the City of St. Clair Shores Police and Fire Retirement Systems, asserting on behalf of investors that the carmaker and several executives violated federal securities laws, according to court records. Along with several similar cases, it was moved to California in December 2015 by the U.S. Judicial Panel on Multidistrict Litigation.
Under the terms of the agreement, the funds allocated to each class member will be determined through a series of calculations. The value of each ADR purchased will be calculated through artificial inflation estimates and data tracking to determine when each claimant bought and sold VW's ADRs, according to the motion. Each claim will then be established by subtracting the claimant's gains from their losses, and the distribution amount will be set by dividing the claim amount by the total recognized claims of all recognized claimants, multiplied by the net amount of the settlement fund, the investors said.
Lead counsel highlighted the “significant risk” they faced in litigating the class action against “determined adversaries,” and noted that the 25% fee request is in line with awards granted in similar cases. Attorneys put in 14,000 hours of work despite the risk of no recovery, they said. “The 25% fee requested by lead counsel, which has the full support of the institutional-investor plaintiffs, is also well within the range of percentage fees that have been awarded in securities class actions and other complex class actions in the Ninth Circuit with recoveries of comparable size,” they said.
The case is In re: Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation, case number 3:15-md-02672, in the U.S. District Court for the Northern District of California.