Hill v. Volkswagen Grp. of Am., Inc. (In re Volkswagen "Clean Diesel" Mktg., Sales Practices, & Prods. Liab. Litig.)

914 F.3d 623
CourtCourt of Appeals for the Ninth Circuit
DecidedJanuary 22, 2019
DocketNo. 17-16020; No. 17-16065; No. 17-16067; No. 17-16068; No. 17-16082; No. 17-16083; No. 17-16089; No. 17-16092; No. 17-16099; No. 17-16123; No. 17-16124; No. 17-16130; No. 17-16132; No. 17-16156; No. 17-16158; No. 17-16172; No. 17-16180
StatusPublished
Cited by8 cases

This text of 914 F.3d 623 (Hill v. Volkswagen Grp. of Am., Inc. (In re Volkswagen "Clean Diesel" Mktg., Sales Practices, & Prods. Liab. Litig.)) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hill v. Volkswagen Grp. of Am., Inc. (In re Volkswagen "Clean Diesel" Mktg., Sales Practices, & Prods. Liab. Litig.), 914 F.3d 623 (9th Cir. 2019).

Opinion

M. SMITH, Circuit Judge:

Appellants are lawyers and law firms that represented class members in an underlying class action that secured a settlement of more than $10 billion and an additional award of $175 million in fees for class counsel. Non-class counsel filed 244 motions for attorneys' fees. In a single order, the district court denied all of the motions, determining that the lawyers neither performed common benefit work nor *636followed the proper procedures for compensation. We affirm.1

FACTUAL AND PROCEDURAL BACKGROUND

I. Factual Background

On September 18, 2015, the Environmental Protection Agency (EPA) issued a Notice of Violation (NOV) in which it alleged that Defendants-Appellees Volkswagen Group of America, Inc., Volkswagen, AG, and Audi, AG (collectively, Volkswagen) used "defeat devices" in 500,000 Volkswagen- and Audi-branded TDI "clean diesel" vehicles. As the district court later explained,

[T]he defeat device produces regulation-compliant results when it senses the vehicle is undergoing testing, but operates a less effective emissions control system when the vehicle is driven under normal circumstances. It was only by using the defeat device that Volkswagen was able to obtain Certificates of Conformity from EPA and Executive Orders from [the California Air Resources Board] for its TDI diesel engine vehicles. In reality, these vehicles emit nitrogen oxides ("NOx") at a factor of up to 40 times over the permitted limit.

Two months later, the EPA issued a second NOV to Volkswagen and Defendant-Appellee Porsche Cars of North America, Inc., which implicated the companies' 3.0-liter diesel engine vehicles.

II. Procedural Background

A. Commencement of Lawsuits

Soon after the issuance of the NOVs, consumers nationwide commenced hundreds of lawsuits. One such action was spearheaded by Appellant Nagel Rice, LLP (Nagel Rice), an illustrative law firm that represented forty-three Volkswagen owners from various states. Nagel Rice filed a complaint in New Jersey federal court on September 21, 2015-three days after the issuance of the first NOV and two months before the eventual consolidation of all related cases. During this early representation, Nagel Rice asserts that it performed various activities related to the litigation, including conducting research, fielding calls from prospective clients and the media, and communicating with German legal counsel regarding potential jurisdictional and evidentiary issues.

Eventually, on December 8, 2015, the Judicial Panel on Multidistrict Litigation consolidated the various lawsuits and transferred them to the U.S. District Court for the Northern District of California. Ultimately, the district court received more than one thousand Volkswagen cases as part of this multidistrict litigation (MDL), titled In re Volkswagen "Clean Diesel" Marketing, Sales Practices, & Products Liability Litigation , MDL 2672.

B. Pretrial Orders

On December 9, 2015-the day after the consolidation and transfer-the district court issued its first pretrial order (PTO), in which it announced its intent "to appoint *637a Plaintiffs' Steering Committee(s) to conduct and coordinate the pretrial stage of this litigation with the defendants' representatives or committee." Nagel Rice was one of the firms that submitted papers to be selected either as Lead Counsel or as a member of the Plaintiffs' Steering Committee (PSC).

The district court selected a twenty-one-member PSC following the application process, and appointed it and Lead Counsel (together, Class Counsel) in its seventh PTO (PTO No. 7). This PTO asserted that "as to all matters common to the coordinated cases, and to the fullest extent consistent with the independent fiduciary obligations owed by any and all plaintiffs' counsel to their clients and any putative class, [ ] pretrial proceedings shall [be] conducted by and through the PSC."

In its eleventh PTO (PTO No. 11), filed on February 25, 2016, the district court outlined its protocol for common benefit work and expenses. The court explained that "[t]he recovery of common benefit attorneys' fees and cost reimbursements will be limited to 'Participating Counsel,' " which it defined as

Lead Counsel and members of the Plaintiffs' Steering Committee (along with members and staff of their respective firms), any other counsel authorized by Lead Counsel to perform work that may be considered for common benefit compensation, and/or counsel who have been specifically approved by this Court as Participating Counsel prior to incurring any such cost or expense.

It further elaborated that "Participating Counsel shall be eligible to receive common benefit attorneys' fees and reimbursement of costs and expenses only if the time expended, costs incurred, and activity in question were (a) for the common benefit of Plaintiffs; (b) timely submitted; and (c) reasonable." As to the first requirement-"for the common benefit of Plaintiffs"-the district court explained that

[o]nly Court-appointed Counsel and those attorneys working on assignments therefrom that require them to review, analyze, or summarize those filings or Orders in connection with their assignments are doing so for the common benefit. All other counsel are reviewing those filings and Orders for their own benefit and that of their respective clients and such review will not be considered Common Benefit Work .

(emphasis added). Class Counsel later reported that "Lead Counsel took advantage of the authority granted in PTO 7 to enlist and authorize nearly 100 additional firms to perform the necessary common benefit work, which was then tracked pursuant to the protocol set forth in PTO 11."2

The PTOs' guidance notwithstanding, Nagel Rice claims that, although it was not selected to be Lead Counsel or a member of the PSC, it "appeared telephonically in almost every court appearance relative to the case and provided continual updates to clients via email," and "fielded scores of telephone calls from clients and other class members seeking information relative to the settlement and the process for submitting objections and claims." Similarly, another lawyer, Appellant James Ben Feinman, *638extensively litigated on behalf of 403 individual clients in Virginia state and federal courts, in addition to monitoring the MDL. There is no indication in the record that Nagel Rice, Feinman, or any other Appellants fully complied with the PTOs in performing these efforts.

C. Settlement Process

Class Counsel, along with ninety-seven additional plaintiffs' firms that Lead Counsel enlisted pursuant to PTO No. 11, embarked on an aggressive settlement process that, in the words of Settlement Master Robert S. Mueller III, "involved at least 40 meetings and in-person conferences at various locations, including San Francisco, New York City, and Washington, DC, over a five-month period.

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Bluebook (online)
914 F.3d 623, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hill-v-volkswagen-grp-of-am-inc-in-re-volkswagen-clean-diesel-ca9-2019.