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In re Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation

United States District Court, N.D. California

March 17, 2017

IN RE VOLKSWAGEN "CLEAN DIESEL" MARKETING, SALES PRACTICES, AND PRODUCTS LIABILITY LITIGATION This Order Relates To: Dkt. No. 2175

          ORDER GRANTING PLAINTIFFS' MOTION FOR ATTORNEYS' FEES AND COSTS RELATING TO 2.0-LITER SETTLEMENT

          CHARLES R. BREYER United States District Judge

         This MDL consists of various actions brought by consumers, dealers, securities plaintiffs, and government agencies against Volkswagen based on its use of a defeat device-software designed to cheat emissions tests and deceive federal and state regulators-in nearly 600, 000 Volkswagen-, Porsche-, and Audi-branded turbocharged direct injection (“TDI”) diesel engine vehicles sold in the United States. With regards to the 2.0-liter TDI diesel vehicles, the parties submitted an Amended Consumer Class Action Settlement Agreement (“Settlement”) on July 26, 2016 (Dkt. No. 1685), and the Court granted final approval of the Settlement on October 25, 2016 (Dkt. No. 2102). The Settlement established a Funding Pool of slightly more than $10 billion. (See Dkt. No. 1685 ¶ 2.42.) At the time of final approval, Class Counsel had not yet moved for their fees and costs, though they submitted a statement that they would seek no more than $324 million in fees and no more than $8.5 million in actual and reasonable out-of-pocket costs for expenses incurred through October 18, 2016. (See Dkt. No. 1730 at 2-3.)

         Class Counsel has now submitted its application for $167 million in attorneys' fees and $8 million in costs. (Dkt. No. 2175.) Having considered the relevant briefing, including Class Members' objections, the Court GRANTS Class Counsel's motion. Class Counsel's requested fees, amounting to approximately 1.7% of the $10.033 billion Funding Pool established by the Settlement, is an appropriate fee award in this case. Further, Class Counsel's requested costs are reasonable.[1]

         DISCUSSION

         Federal Rule of Civil Procedure 23(h) provides that, “[i]n a certified class action, the court may award reasonable attorneys' fees and nontaxable costs that are authorized by law or by the parties' agreement.” Fed.R.Civ.P. 23(h). “Attorneys' fees provisions included in proposed class action agreements are, like every other aspect of such agreements, subject to the determination whether the settlement is ‘fundamentally fair, adequate and reasonable.'” Staton v. Boeing Co., 327 F.3d 938, 964 (9th Cir. 2003) (citation omitted). Thus, even where attorneys' fees and costs are authorized by law or the parties' agreement in a certified class action, “courts have an independent obligation to ensure that the award, like the settlement itself, is reasonable, even if the parties have already agreed to an amount.” In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011).

         In “common fund cases, ” a court has discretion to award attorneys' fees as either a percentage of such common fund or by using the lodestar method.[2] See Staton, 327 F.3d at 967-968. The Ninth Circuit's “benchmark” for attorneys' fees in common fund class actions is 25% of the common fund. Id. at 968. “Selection of the benchmark or any other rate must be supported by findings that take into account all of the circumstances of the case.” Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1048 (9th Cir. 2002). Vizcaino outlines a number of factors that courts may consider in setting an appropriate fee: (1) the results achieved; (2) the risks of litigation; (3) whether there are benefits to the class beyond the immediate generation of a cash fund; (4) whether the percentage rate is above or below the market rate; (5) the contingent nature of the representation and the opportunity cost of bringing the suit; (6) reactions from the class; and (7) a lodestar cross-check. Id. at 1048-52.

         Applying the relevant factors, the Court finds that the Settlement supports Class Counsel's requested fees in the amount of $167 million and that Counsel's request for $8 million in costs is reasonable.

         I. Attorneys' Fees

         A. Results Achieved

         Class Counsel achieved extraordinary results for Class Members and for the public as a whole. The results from the Settlement are particularly notable in light of the short time frame it took the parties to settle the 2.0-liter class action claims.

         As to Class Members, the Settlement essentially makes Class Members whole, putting them in the position they were in prior to the public disclosure of Volkswagen's use of the illegal software defeat device and providing additional compensation on top. In particular, the Settlement provides restitution payments to each Class Member as well as the option for Class Members to (1) return their vehicles to Volkswagen for a buyback, in the case of owners, or terminate their leases, in the case of lessees, or (2) receive an emissions modification for their vehicles if such modification is approved by the Environmental Protection Agency (“EPA”) and the California Air Resources Board (“CARB”). (See Dkt. No. 2102 at 6-7.) Compensation for buybacks, lease terminations, and restitution are to be drawn from a $10.033 billion Funding Pool. (See Dkt. No. 1685 ¶ 2.42.)

         As for the general public, the DOJ Consent Decree requires Volkswagen to pay $2.7 billion to fully remediate any environmental effects of excess nitrous oxide (NOx) emissions and an additional $2.0 billion to create infrastructure for and promote public awareness of zero emission vehicles. (See Dkt. No. 1685 at 3.) While the Consent Decree is not itself part of the Settlement Agreement, the Court has recognized that the 2.0-liter Settlement and the settlements with the government entities are highly interrelated-that is, “part and parcel of an overall settlement.” (Dkt. No. 2079 at 53.)

         In short, Class Members and the public have benefited and will benefit as a result of Class Counsel's work in this litigation. This factor supports Class Counsel's fee request.

         B. ...


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