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Judge Wary of Hourly Rates in Subaru Windshield Class Settlement

June 11, 2021 | Posted in : Class Incentive Awards, Expenses / Costs, Fee Allocation / Fee Apportionment, Fee Award Factors, Fee Request, Fees & Common Fund, Hourly Rates, Lodestar, Practice Area: Class Action / Mass Tort / MDL, Settlement Data / Terms

A recent Law 360 story by Jeannie O’Sullivan, “NJ Judge OKs Subaru Windshield Deal, Wary On Counsel Fee,” reports that a New Jersey federal judge gave final approval to a settlement that would give a class of Subaru drivers extended warranties and a reimbursement program to resolve claims over crack-prone windshields, but said class counsel still needs to justify its $515,000 fee request.  During a hearing held via Zoom, U.S. District Judge Renee Marie Bumb said that the settlement was fair, reasonable and adequate.  The deal will offer what the judge said was "very generous" relief to the current and former owners and lessees of about 231,000 Subaru Outback and Legacy vehicles from model years 2015 and 2016.  "It puts them in a very good position," Judge Bumb said of the settlement, agreeing to certify the class and approve the deal.

The resolution of the claims — in which Subaru denies liability — was the result of arm's length negotiations between counsel, Judge Bumb said, calling it "impressive" that the settlement notices reached 96% of the proposed class.  The deal drew only five objections, most of which she said were "the product of confusion."  Judge Bumb also directed class counsel Glancy Prongay & Murray LLP and Greenstone Law PC to provide supplemental briefing to bolster their request for attorney fees and expenses.  In their April motion, the firms specified hourly rates ranging between $800 and $850 and said they spent more than 1,200 hours on the case.

The firms' motion characterized their fee request as small relative to the deal's overall value, significantly less than the firms' actual lodestar and expenses. But Judge Bumb said that without more information, she was "somewhat handicapped in conducting an analysis" as to the reasonableness of the rate as well as the time spent on the case.  The judge pointed to a New Jersey federal court decision from August 2019, in which Chief U.S. District Judge Freda L. Wolfson, presiding over a case filed by drivers of Chrysler vehicles with allegedly defective automatic transmissions, noted that a $725-an-hour rate fell "on the outer end of reasonableness for this geographic area."

Judge Bumb also wondered about the amount of time class counsel actually spent on the Subaru case, given that the settlement deal was modeled on Subaru's prelitigation offer to extend the warranties.  Class attorney Mark S. Greenstone told the court that the total fee requested effectively reduces their hourly rate to about $600.  He pointed out that class counsel's tasks included filing an amended complaint, adding three new plaintiffs to the litigation, enlisting experts to analyze the windshields at issue, serving formal discovery and mediating the case over a year after it was filed.

In their motion for attorney fees, the firms described the negotiations as "intense, adversarial, and complex."  They noted that it wasn't a common fund settlement, so the fee wouldn't cut into the relief for the class.  The windshields at issue either cracked for no reason at all or under very slight impact, according to the complaint.  The replacement windows provided by Subaru were similarly defective, leading to multiple replacements in some cases, the complaint said.

Making a case for the deal during the hearing, Greenstone said unlimited mileage isn't a common term for car warranties, noting that the windshield replacements on average cost more than $500.  "So, in terms of the substantive relief, it is really hard to imagine a better and more appropriate remedy even if this case had gone to trial," Greenstone told the court.  The deal also includes a class representative award of $5,000 for each of the four named plaintiffs. Judge Bumb said during the hearing that she was not questioning the class representative awards.