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CEI Objects to Multi-Million Dollar Windfall for Attorneys in Volkswagen Class Action Litigation

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This week, the Competitive Enterprise Institute’s (CEI) Center for Class Action Fairness filed an objection to the massive attorneys’ fees and costs—$175 million—being sought by class counsel as a result of the Volkswagen emissions scandal class action settlement: In re Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation.

“Class counsel is demanding four to eight times what they would have received in a competitive bidding process. And, what’s worse, is millions of dollars in fees will come entirely at the expense of class members,” said CEI attorney Anna St. John. “Thanks to class counsel’s self-dealing gimmicks, this settlement ensures any overage goes to Volkswagen rather than the class. The settlement was already a bad deal for consumers and it keeps getting uglier.”

CEI’s Center for Class Action Fairness asked the U.S. District Court for the Northern District of California to refuse to award any attorneys’ fees until the settlement provision that reverts fees back to Volkswagen instead of class members is removed and the excess amount is guaranteed to be returned to class members.

According to CEI, it is inappropriate to award class counsel any percentage of the $10 billion settlement fund, especially since there is no evidence that class counsel contributed to the creation of the fund. The government’s involvement was indispensable to the settlement and based on the publicly-available evidence, class counsel arguably harmed class members by surrendering valuable claims for no more relief than what was negotiated by public servants at the Justice Department, Environmental Protection Agency, California Air Resources Board, and the Federal Trade Commission. It’s also inappropriate to calculate fees using the maximum $10 billion settlement fund because consumers are trading valuable property (their cars) for settlement relief, and the value of those cars should be deducted.

Background: This class action litigation is a result of the 2015 Volkswagen emissions scandal. CEI’s Center for Class Action objected to the Volkswagen class action settlement on the grounds that class counsel violated their fiduciary duty by ultimately duping 475,000 class members into a settlement that could pay their attorneys hundreds of millions of dollars for providing them next to nothing.

Learn more about this litigation:

CEI’s Center for Class Action Fairness represents class members against unfair class action procedures and settlements. Founded by Ted Frank in 2009, the center has won millions of dollars for consumers and shareholders and won landmark precedents that safeguard consumers, investors, courts, and the general public.