244 Non-Class Counsel Fee Motions Resolved On Appeal In The Volkswagen Class Action.
In In re Volkswagen “Clean Diesel“ Litig., Case Nos. 17-16020 et al. (9th Cir. Jan. 22, 2019) (published), the Ninth Circuit was facing 244 fee motions by non-class counsel seeking fees in the settlement of the VW “clean diesel” action where the lower court had earlier approved a $10 billion settlement (not a common fund) and awarded class counsel $175 million in fees. Needless to say, the non-class counsel filed attorney’s liens on their individual class member recovery and initiated enforcement proceedings against individual clients, with the district court enjoining this at earlier stages of the matter. Eventually, a class action settlement was entered into, with specific provisions by which VW paid fees only to class counsel and under which individual clients would have to bear their own expenses if they utilized counsel other than class counsel. Because non-class counsel wanted to get paid, they moved to enforce attorney’s liens under retention agreements against individual class members, with the supervising district court enjoining those efforts, only to later remove the injunction later on during the case. Non-class counsel moved to recover fees, but the lower court denied them based on the ground their efforts did not result in a substantial benefit to the class.
The Ninth Circuit affirmed.
VW challenged the non-class counsel’s standing to appeal, but—in a first impression case—decided that non-class parties/counsel deprived of fees did show an injury worthy of standing to appeal the adverse fee denial order.
However, that is as good as it got. After carefully analyzing the efforts of non-class counsel (especially calibrated to the settlement provisions on what VW would pay—only class counsel efforts), the federal court of appeals decided that the district did not err in concluding that the non-class counsel efforts did not result in a substantial benefit to the class. With respect to the attorney’s lien issues, this was moot because the lower court vacated the injunction such that individual class members will have to duke it out with their attorneys as what should (or should not) be paid.
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