Battle Over Attorney Fees In Kia And Hyundai MDL
Class members and the presiding judge in an MDL concerning false car milage rates are unhappy with the plaintiffs' representation after learning of the high proportion of attorney's fees detailed in a proposed settlement.
Sunday, March 22, 2015 - The allotment of funds awarded to in a proposed multidistrict litigation settlement with car companies Kia and Hyundai has become a point of contention between plaintiff lawyers and the federal judge overseeing the case. The lawsuits, which concern overstatements of fuel-efficiency made by Kia and Hyundai, were nearing an end when large attorney fees included in the proposed settlement caught the eye and the eire of U.S. District Judge George H. Wu after objections filed by class members unhappy with the deal.
The case focuses on Kia and Hyundai having to restate their mileage figures for more than a dozen vehicles in 2012. The original numbers reported were not in line with fuel testing protocols provided by the Environmental Protection Agency. The companies claimed that procedural errors were at fault for their inaccurate calculations, but plaintiffs claim that the misleading figures were intentionally employed to deceive customers and artificially add value to the vehicles.
Judge Wu made several points directly to attorneys representing plaintiffs in the case that criticized the amount proposed they receive from the proposed $255 million settlement. He stated to lawyers from Consumer Watchdog that the work done by their staff was not effective and many of their argued points were not successful, both factors that he deemed did not entitle the legal counsel to the high-end $925 per hour rates requested. For comparison, the settlement proposed was expected to pay each claimant affected by the mileage overstatement between $50 and $1,420 for Kia vehicles and between $140 and $590 for Hyundai.
Lawyers representing plaintiffs from McCuneWright LLP claim that Hyundai should have to disclose the hourly rates of their lawyers for comparison if they wish to challenge the proposed attorney fees. A lawyer from the firm argued that if the two sides are assigned to the same case and doing comparable work, plaintiffs‘ lawyers are at a financial disadvantage because they aren‘t paid from the settlement throughout the trial. Judge Wu however did not entertain this line of argument however, noting that the timeline for when the money is paid out has no bearing on the amount that should be awarded.
Class members were not happy with the proportion of the settlement their lawyers were planning on walking away with, far above the 25 percent some objectors proposed. There were also complaints related to how the settlement was stipulated, with objectors claiming that were was far more detailed information related to the attorney‘s fees and how quickly they would be paid out compared with areas concerning resolutions with the car companies. They claimed the parts of the settlement that discussed necessary steps needed to effectively reimburse class members, such as calculating the payments based on the vehicle in question, were far less meticulous than they should have been. These errors further support Judge Wu‘s argument that the work done by the plaintiffs‘ lawyers is not worthy of the award they are seeking.
At least one firm has already backed out of the settlement because it could not have its desired fees met. The lawsuit, which had preliminary approval for the settlement in August of 2014, is now in a state of limbo as all parties involve continue to argue over the structure and disbursement of a likely to be revised settlement.
