Court Must Revisit Legal Fees in Audi-VW Sludge Case - NYTimes ...

A federal appeals court has rejected a $30 million payment to the lawyers who brought a class-action suit against Volkswagen and Audi over engines that were damaged by sludge problems.

The action does not affect the benefits provided the estimated 480,000 owners of the 1997-2004 Audi A4 (sedan, wagon and convertible variants) and the 1998-2004 VW Passat with the 1.8-liter, 4-cylinder engine.

The case was settled in 2010 without Volkswagen admitting wrongdoing, but agreeing to pay at least 50 percent, if not all, of the cost of fixing the engines.

At the time, Volkswagen?objected to legal fees. In court documents, the automaker suggested helping consumers would cost only $47 million. Given that, it argued, a $30 million legal bill would be ?grossly disproportionate to the real value of the settlement and cannot stand legally, factually or in the interests of justice.?

The plaintiffs? lawyers sought $37.5 million, saying it was a reasonable amount given their estimate of 23,000 hours of work and that the benefit to consumers would be at least $223 million, an amount the automaker disputed.

Instead, a federal district court in Massachusetts awarded the lawyers $30 million in fees and $1.2 million in expenses.

The ruling prompted Volkswagen to challenge the amount, filing a suit against the Peter J. McNulty Law Firm, Irwin & Boesen and Berger & Montague.

In a July 27 opinion, a three-judge panel from the United States Court of Appeals for the First Circuit sent the case back to the district court in Massachusetts. It said the fees should have been calculated under state and not federal guidelines.

The appeals court did not specifically say whether the amount of the award was excessive. However, it did say, ?It is clear that the present award cannot stand.?

In an interview, a Georgetown University law professor, Brian Wolfman, said there was a ?reasonable inference? in the decision that the appeals court had concerns about the size of the fee.

But in an interview, Mr. McNulty said it was clear to him that the appeals court remanded the case based on the use of federal and not state guidelines.

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Source: http://wheels.blogs.nytimes.com/2012/08/01/court-must-revisit-legal-fees-in-audi-vw-sludge-case/

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