Volkswagen ʺClean Dieselʺ Marketing, Sales Practices, and Products Liability Litigation

On September 16, 2016, CEI filed an objection on behalf of a class member to the proposed settlement in In re Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation. This settlement is the result of class action litigation following the Volkswagen emissions scandal that erupted in 2015. In re Volkswagen ʺClean Dieselʺ Marketing, Sales Practices, and Products Liability Litigation follows from Volkswagen’s disclosure to the EPA and California Air Resources Board that Volkswagen installed software in certain diesel vehicles that was designed to bypass emissions standards.

In the case, class member Matthew Comlish objected to class counsel’s breach of fiduciary duty in negotiating a settlement that imposes costs on class members with zero marginal benefits. Class counsel misinformed class members that they could not obtain the relief provided by the class action settlement if they “opt out,” when the same benefits are available through settlements with the Department of Justice and the Federal Trade Commission. Further, class counsel provided insufficient information regarding their fee request, which could be as high as $332.5 million, though a competitive bidding process would have likely reduced that by more than 90 percent and returned hundreds of millions more to the class.

Comlish asked the U.S. District Court for the Northern District of California to postpone the fairness hearing and order class counsel to provide corrected notice, its attorneys’ fee request, and any agreement with Volkswagen regarding those fees. CEI also asked the court to order the FTC settlement to take effect immediately, so as to not let the class-action litigation further delay relief to Volkswagen owners.

The court approved the settlement on October 25, 2016. CEI attorney Anna St. John said the following about the settlement approval:

“This $10 billion settlement is a bad deal for consumers—the actual value to consumers will be far less than that and would have been available to consumers even without this class action settlement. What’s worse is how inadequately the plaintiffs’ attorneys represented their clients in this case. Class counsel violated their fiduciary duty by misinforming and ultimately duping 475,000 class members into a settlement that will potentially pay their attorneys hundreds of millions of dollars for providing them next to nothing. These dollars should be going to the class, but instead, the lawyers’ decision to structure the settlement with self-dealing gimmicks may have cost Volkswagen owners more than a billion dollars.”

On December 21, 2016, CEI’s Center for Class Action Fairness objected to class counsel’s exorbitant request for attorneys’ fees and costs of $175 million. This multi-million dollar request is a windfall of four to eight times what they would have received in a competitive bidding process. On March 17, 2017, a California federal judge granted class counsel’s excessive fee request, and refused to require the parties to restructure the fee settlement agreement so that any residual fees would be returned to the class.

UPDATE: On April 17, 2017, CEI filed a notice of appeal of the March 17 Order to the US Court of Appeals for the Ninth Circuit on behalf of objector Comlish.

Related Amicus Briefs: The Center filed two amicus briefs asking for a competitive bidding process in the Volkswagen class action litigation.

  • January 6, 2016 – Filed before the U.S. District Court for the Northern District of California recommending the court select lead plaintiffs’ counsel through a competitive bidding process among the dozens of attorneys who applied.
  • October 20, 2015 –  Filed before the Judicial Panel on Multidistrict Litigation asking for consideration of judicial track records in scrutinizing the fairness of settlements when deciding who to transfer the case to.