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August 1, 2012

Press Release
David A. Barry

First Circuit win for Volkswagen and Audi

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In a major victory for Sugarman Rogers’s clients Volkswagen and Audi, the United States Court of Appeals for the First Circuit has overturned a lower court’s award of $30 million in attorneys’ fees to lawyers who represented a class of plaintiffs in litigation involving alleged engine defects in certain VW and Audi vehicles. The First Circuit adopted the argument of VW and Audi’s team of appellate lawyers, including Sugarman Rogers partner David Barry, that after approving a settlement of the class action, the lower court erred in applying federal law, rather than state law, to justify the fee award. Instead, the First Circuit held, the recoverability of fees should be governed by Massachusetts law.

Massachusetts courts have used a so-called “lodestar” method or a multi-factor approach in determining appropriate fee awards. Further, without deciding exactly which method the lower court should apply in this case, the First Circuit found it “clear” that the $30 million award “cannot stand.” And the court held that to the extent the overall value of the settlement achieved in the class action is an appropriate factor in the fee award, the relevant value is to be determined based on actual submitted claims, not claims as originally projected by class counsel and their experts.

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