From the National Law Journal yesterday: “Judge stalls Prius headlight settlement, citing ‘big problem’ with fees”
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A federal judge, citing concerns about a request for attorney fees, has put the brakes on a proposed class action settlement between Toyota Motor Corp. and nearly 300,000 owners and lessees of Prius hybrids who claimed that their headlights were defective because they intermittently shut off.
U.S. District Judge Manuel Real, during a final settlement hearing on Aug. 29 in Los Angeles, said he was having a “big problem” going through the fees request, estimated at $4.7 million for five plaintiffs’ firms. Toyota’s lawyers have maintained in court documents that the amount is too high — particularly since the value of the settlement is less than $4.7 million.
Both sides support approving the deal despite the fees dispute. But Real expressed concern about the deal’s fairness and rescheduled a fairness hearing for Oct. 17.
The claims were unrelated to separate litigation over sudden unintended acceleration. Toyota faces more than 200 lawsuits in multidistrict litigation before U.S. District Judge James Selna in Santa Ana, Calif., regarding those claims.
The Prius headlight actions involve two class actions filed in May 2009 and February 2010. The deal, reached on Oct. 4, would resolve claims on behalf of U.S. owners and lessees of 2006 through 2009 model Prius vehicles with factory-made high-intensity discharge headlights. Toyota has denied allegations that the vehicles were defective, citing a National Highway Traffic Safety Administration investigation that found no problems.
The settlement would reimburse in cash class members who replaced their headlight bulbs within five years or 50,000 miles of driving the vehicles, according to court documents. Class members who paid for parts and labor for replacements after five years or 50,000 miles would receive reimbursement on a case-by-case basis. The settlement would extend the warranty for class members who have yet to repair their headlights.
Notices of settlement were sent to 293,670 class members, according to court documents.
On Jan. 10, Real certified the proposed class.
On June 6, San Francisco’s Girard Gibbs submitted a motion to approve nearly $4.7 million in attorney fees for approximately 6,881 hours of work. The request included $1.9 million to Girard Gibbs; $720,000 to Wasserman, Comden, Casselman & Esensten of Tarzana, Calif.; $250,000 to Los Angeles-based Arias Ozzello & Gignac; $1.2 million to Los Angeles-based Initiative Legal Group; and nearly $600,000 to Cohen Milstein Sellers & Toll in Washington.
In opposing the fee request, Toyota estimated the total value of the settlement at between $3.3 million and nearly $4.7 million, including the value of extended warranty repairs, according to documents filed on July 8.
Toyota’s attorney, Michael Mallow, a partner in the Los Angeles office of Loeb & Loeb, called the request “an astounding case of ‘piling on.’ ”
“This work could have, should have, and from Toyota’s perspective, was, performed by only one of the plaintiff law firms for a quarter of the amount claimed by the collective five firms,” he said. “Simply put, this Court should not award the settlement class’ lawyers fees and costs that eclipse the value of the settlement itself.”
Given the $4.7 million request, plaintiff attorneys want fees equal to at least 101% of the settlement value, Mallow said in court documents.
He maintained that a more reasonable fee award, based on 25% of the value of the settlement, would be $1 million to $1.2 million. Additionally, he said, the fees are unreasonable when compared to what Loeb & Loeb billed Toyota: About $1.5 million for 4,218 hours of work.
Mallow criticized the contributions of the four firms other than Girard Gibbs, calling much of their work duplicative.
During the hearing, Mallow said that the U.S. Court of Appeals for the 9th Circuit’s Aug. 19 decision in a case involving Motorola’s Bluetooth headsets “may assist” the judge in deciding the fees issue.
In that case, which involved claims of hearing loss, the 9th Circuit found that the trial judge had failed to adequately test whether the attorney fees were excessive. The 9th Circuit found that U.S. District Judge Dale Fischer had failed to cross check the amount the plaintiffs could have demanded by billing at their usual hourly rates — called the “lodestar” amount — to what they would have received were their fees based on a percentage of the settlement.
In reply papers filed on July 18, plaintiffs’ lawyers called Toyota’s attempt to “cross-check” the lodestar amount against an estimated percentage of the settlement “inappropriate” for this type of litigation, in which no common fund is available. Additionally, Toyota’s own estimate of its legal costs, as a comparison, excluded work done by its in-house attorneys, they argued.
In addition to the two class actions in federal court in Los Angeles, the proposed settlement would resolve a related action in Los Angeles County, Calif., Superior Court. A fourth class action, which would not be affected by the settlement, is pending in federal court in New Jersey. During the hearing, Real raised questions about the status of both of those cases.
