Judge Whacks 90% of Attorney Fees in VW Dealer Case

SAN FRANCISCO (CN) — A federal judge Wednesday cut more than $25 million from attorneys’ fees in a $1.2 billion settlement between Volkswagen and its U.S. dealerships.

U.S. District Judge Charles Breyer reduced the award to $2.9 million, finding a request for $28.5 million too high, given that “much of the groundwork for the settlement was laid in negotiations” for a previous deal.

Breyer lopped off $1.5 million in billable hours deemed as “hybrid time,” or hours spent negotiating both the dealership settlement and a larger, $10 billion deal for owners of 2.0-liter diesel engine vehicles.

He found that attorneys already had been compensated for those hybrid hours in a $175 million fee award approved in March.

The $2.9 million fees award is the latest Volkswagen must pay to make amends for its installation of emissions-cheating software in 11 million vehicles worldwide, including nearly 600,000 diesel-powered vehicles sold in the United States. The defeat device software kicked in to hide emissions during tests, while allowing cars to spew up to 40 times more nitrogen oxide on the road than allowed under federal law.

Under the $1.2 billion deal approved in January, 644 U.S. dealerships will each receive an average $1.85 million to cover losses precipitated by the German automaker’s diesel-gate scandal.

Although the requested $28.5 million makes up a mere 2.8 percent of the $1.2 billion deal, granting it would allow the lawyers to pocket more than 14 times the value of hours they actually worked, Breyer wrote.

“Dealer class counsel did not expend significant additional time procuring the settlement, nor did it undertake significant additional risk, given Volkswagen’s incentive to settle quickly,” Breyer wrote in the 10-page ruling.

He cut an additional $560,000 in anticipated billable hours, finding Volkswagen has already started paying dealerships and no further hours are needed to execute the deal.

Breyer recalculated the total value of billable hours at $1.47 million and applied a 2.0-multiplier, for a total of $2.95 million to be split between two law firms.

Hagens Berman Sobol Shapiro will receive $2.3 million; Bass Sox & Mercer will get $622,000.

The judge also granted the firms $87,538 in litigation costs.

Representatives for the law firms did not immediately return phone calls seeking comment Wednesday afternoon.

Volkswagen has paid more than $20 billion in U.S. civil settlements and criminal fines for its diesel-gate scandal thus far, and U.S. prosecutors have criminally charged six of its executives for their roles in the scheme.

Volkswagen is also fighting a shareholder class action claiming it defrauded U.S. investors. In January, Breyer refused to relinquish jurisdiction over that suit to a German court.

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