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Judge Denies Fee Requests in VW Diesel Emission Litigation

April 25, 2017 | Posted in : Ethics & Professional Responsibility, Expenses / Costs, Fee Agreements, Fee Allocation / Splitting, Fee Award, Fee Dispute, Fee Reduction / Fee Denial, Fee Request

A recent the Recorder story by Amanda Bronstad, “Breyer Denies Fee Motion in VW Diesel Fraud Case, But Opens Door for Lawyer to Seek Payment From Client,” reports that the federal judge in the Volkswagen diesel emissions litigation has denied 244 motions for attorney fees but lifted an earlier injunction which had prevented law firms from suing their own clients for payment.

The order was an unusual twist in the class actions that Volkswagen settled last year for $14.7 billion to resolve claims by consumers of 475,000 "clean diesel" vehicles that cheated emissions tests.  In a separate arrangement, Volkswagen agreed to pay an additional $175 million in attorney fees and costs to 22 law firms that were appointed to the plaintiffs steering committee heading up more than 1,200 class actions.

Seeking a portion of that award, nearly 60 law firms not on the committee sought fees and costs, many citing work they did on behalf of 3,642 class members.  In rejecting the fees, U.S. District Judge Charles Breyer of the Northern District of California concluded the firms did work for their clients, but not for the class.

"Because Volkswagen did not agree to pay these fees and costs as part of the settlement, and because non-class counsel have not offered evidence that their services benefited the class, as opposed to their individual clients, the court denies the motions," Breyer wrote.  He also said their work had not been authorized by the plaintiffs steering committee, unlike nearly 100 other firms that were granted fees as part of the $175 million award.

Among the firms requesting fees were Nagel Rice in Roseland, New Jersey; Davis Law Firm in San Antonio; Locks Law Firm in New York; Robbins Ross Alloy Belinfante Littlefield in Atlanta; and Conrad & Scherer in Fort Lauderdale.  Many of the firms claimed their liens had been left out of the emissions settlement intentionally in a rush to reach a deal in which lawyers could assure class members would not see their awards reduced to pay attorney fees.

The order, Breyer lifted an earlier order which had alarmed many attorneys because it barred them from submitting liens against their clients' awards.  That order had required Volkswagen to pay class members their full awards regardless of liens and invoked the federal All Writs Act to enjoin all state court proceedings involving attorney liens.

Acknowledging this time that the fee disputes were "a matter of contract law, subject to the codes of professional conduct," Breyer vacated the order, allowing law firms to enforce their client agreements by suing in state courts.  Volkswagen had opposed the fee requests, which ranged from a few thousand dollars to hundreds of thousands of dollars, noting that $175 million "more than generously compensates" plaintiffs lawyers in the litigation.

Earlier this month, in another fee request opposed by Volkswagen, Breyer slashed by nearly 90 percent a fee request made by Seattle's Hagens Berman Sobol Shapiro in a separate $1.2 billion settlement involving Volkswagen's franchise dealerships.