Early Friday, U.S. District Judge Charles Breyer of San Francisco approved a request for $175 million in fees and costs for the plaintiffs lawyers who led car owners’ $10 billion class action against Volkswagen in the emissions cheating scandal. Judge Breyer was widely expected to award that $175 million to class counsel Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein and other lawyers who worked on behalf of the class. He has been consistently complimentary of the “extraordinary results” they obtained. Moreover, the fee request garnered only four objections, which Breyer brushed aside, and was not opposed by Volkswagen.
But Judge Breyer’s fee opinion also gives VW ammunition against a fee request it does intend to oppose in the emissions cheating litigation.
Volkswagen is not happy about a $28 million fee request by Hagens Berman Sobol Shapiro, class counsel for VW franchise dealers who reached a $1.36 billion settlement with VW. As I told you last week, Volkswagen accused Steve Berman of Hagens Berman of inflating his firm’s hourly billings in the dealer case by double-counting time already included in the car owners’ class action.
Berman described the disputed $1.5 million in billings as hybrid time that benefited both car owners and dealers. After he realized the time had, in fact, been included in plaintiffs’ lawyers’ account of their hourly billings in the car owners’ case, he and car owners’ class counsel Cabraser asked Judge Breyer to remove $1.5 million in Hagens Berman fees from the car owners’ account and include them instead in Hagens Berman’s so-called lodestar in the dealer class action. (Judges overseeing class actions, as you’re probably aware, often look at lodestar billings to confirm the reasonableness of fee requests for a percentage of class recovery.)
Volkswagen opposed the request and asked the judge to count Hagens Berman’s $1.5 million in hybrid time in the car owners’ case.
In Friday’s fee decision, Judge Breyer sided with Volkswagen. He noted the dispute over how to account for Hagens Berman’s hybrid time and VW’s argument that “Hagens Berman should not be permitted to shift its hybrid time in an effort to lower the resulting lodestar multiplier in the franchise dealer fee application.” The judge said the proper accounting of those hours is, as VW asserted, in the car owners’ case. He instructed Cabraser to pay Hagens Berman for that time out of the fee award in the car owners’ class action.
The judge’s footnote leaves Hagens Berman with lodestar billings of only $2 million in the dealers’ class action. Its request for fees of $28 million represents a multiplier of 14 times billings. By contrast, lodestar billings in the car owners’ class action were about $63.5 million, so the multiplier in that case was 2.63.
The fracas over Hagens Berman’s fees escalated this week. Hagens Berman filed a response to VW’s accusation of double-counting, emphasizing that the firm has asked for fees of just 2.1 percent of the cash available to dealers in their settlement with VW - a drastically lower percentage than class counsel typically receive. In a joint stipulation, the two sides said they’d subpoenaed one another’s billing records and time sheets and asked for an extension on the briefing schedule on Hagens Berman’s request.
The judge gave VW’s lawyers at Sullivan & Cromwell until Monday to file their formal opposition to Hagens Berman’s fees in the dealer case. VW lawyer Robert Giuffra declined to provide a statement on Judge Breyer’s decision to count Hagens Berman’s hybrid time in the car owner case, but you can be sure the automaker will jump all over Hagens Berman’s mere $2 million in billings and outsized lodestar multiplier.
Steve Berman didn’t respond to my email request for comment on Judge Breyer’s ruling Friday. In previous filings he has said the judge need not consider a lodestar cross check because Hagens Berman has asked for such a small percentage of dealers’ recovery. The firm’s brief responding to VW is due on March 23.