State Law, Not Federal Law, Should Have Governed Fee Inquiry.
The U.S. Court of Appeals for the First Circuit reversed a Boston federal judge’s award of around $30 million in attorney’s fees to plaintiffs’ lawyers in multidistrict litigation over an alleged oil sludge defect in certain Volkswagen cars.
The basis for the overturn was that the district court should have applied Massachusetts law, not federal law, when fixing fees. The litigation settlement agreement was a contract governed by Massachusetts law because the case was venued in the statute, many of the negotiations happened in Boston, and the agreement was subject to final approval by the Massachusetts district court.
On remand, the district judge can use either a lodestar approach (which would be a base figure of $7.7 million) or a multifactor analysis looking at attorney ability/reputation, matter importance, time spent, fees usually charged for similar services by other lawyers in the area, the value of the property affected, and the results (similar to a multiplier approach used by many venues).
VW Bus. Wikipedia Creative Commons License. R. Engelhardt, photographer.