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Bankruptcy Attorneys Seek Fees From GM Ignition MDL Fee Fund

September 28, 2020 | Posted in : Expenses / Costs, Fee Fund, Fee Request, Hourly Rates, Hours Billled, Practice Area: Class Action / Mass Tort / MDL, Settlement Data / Terms

A recent Law 360 story by Vince Sullivan, “Goodwin Seeks $1.5M for Work on GM Ignition Litigation,” reports that Goodwin Procter bankruptcy attorneys representing the co-lead plaintiffs in multidistrict litigation against General Motors over faulty ignition switches said that they should be paid $1.5 million from a counsel fee fund created in a proposed $120 million settlement with the carmaker in New York federal court.  Goodwin Procter LLP said in an application for payment of its fees that it represented three co-lead plaintiffs as bankruptcy counsel in the MDL over the ignition switches and created tens of millions of dollars in value in the litigation by successfully arguing on behalf of the claimants in the bankruptcy case of Old GM.

The carmaker filed for bankruptcy in 2009 and sold its assets that year to an entity called New GM, but issues with the faulty ignition switches — which could allow keys to slip out of the ignition and shut off the car while driving — didn't arise until five years after the sale.

Goodwin Procter said it worked to resolve issues allowing for claims to be made against both the bankruptcy estate of Old GM as well as New GM, including questions of successor liability for the restructured company.  The rulings in the bankruptcy court paved the way for claims in the MDL for personal injury and wrongful death as well as a class action lodged by economic loss plaintiffs to reach the $120 million settlement earlier this year.

That settlement created a $34.5 million fund to cover the fees of counsel working on behalf of the class, and Goodwin Procter said it is entitled to receive payment of its $1.5 million in fees from that fund despite not serving as class counsel.

"Goodwin comes forward at this time to seek payment because the co-leads have not provided guidance to Goodwin on the timing or procedures for payment of Goodwin's fees and expenses," the motion said.  "The settlement agreement is clearly a watershed event in the MDL and heralds the culmination of years of work performed by many lawyers and law firms, including both law firms that served the three co-leads as designated bankruptcy counsel."

The firm said its fee request is based on about 1,800 hours of work on the cases from August 2014 through January 2017 at a blended rate of $823 per hour.  This work provided a common benefit for all claimants in the MDL and the economic loss class action, the motion said.  One of the co-lead plaintiffs in the MDL — Robert Hilliard — began paying the firm's fees and expenses in February 2017, and Goodwin is not seeking recovery for any of those amounts.

Under the terms of the settlement agreement, GM will contribute up to $70 million into a common fund for the drivers, and the trust connected to the company's 2009 bankruptcy will contribute up to $50 million.  The deal ends claims from drivers who said their vehicles sank in value over recalls related to the ignition switch defects.

GM previously paid more than $1 billion to settle other civil and criminal cases arising from the ignition-switch defects.  More than 100 deaths have been attributed to the design flaw, and GM initiated an extensive recall of the affected cars in 2014.  The litigation, which was consolidated into an MDL in June 2014, alleges that many GM cars were outfitted with faulty ignition switches, which could cause keys to slip out of position and disable brakes and air bags.

U.S. District Judge Jesse Furman of New York, who is overseeing the MDL, granted preliminary approval of the settlement in April, but final approval has not yet been granted.  The preliminary approval set Monday as the deadline for fee and expense applications from counsel, prompting Goodwin to file its motion.