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Think Tank Claims Attorneys Bilked VW Claimants Out Of Hundreds Of Millions

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Chris White Tech Reporter

Attorneys in the Volkswagen emissions cheating case colluded to bilk claimants out of hundreds of millions of dollars in legal fees, according to a court filing by a D.C.-based libertarian think tank.

Competitive Enterprise Institute (CEI) filed an objection Friday with the U.S. District Court for the Northern District of California, claiming attorneys managed to sucker litigants in the VW case out of hundreds of millions of dollars.

Attorneys in the case “provided insufficient information” regarding the cost of legal fees, which, according to the court document, could total nearly $332.5 million. Legal costs could have been reduced by as much as 90 percent, potentially adding millions more to the case had it operated under a competitive bidding process.

CEI also stated that attorneys told litigants they couldn’t win the case if they “opt out.” The same benefits are available for those in the case through settlements with the Department of Justice and the Federal Trade Commission.

“Dozens of law firms colluded instead of competed and will now seek thousands of dollars an hour for providing class members what Volkswagen and the government would have provided anyway, perhaps even sooner than the class-action process would have,” Ted Frank, director of CEI’s Center for Class Action Fairness, said in a press release on the group’s website.

“And, it’s ironic,” he added, “that lawyers in a consumer-fraud suit are misleading the public and the media by calling this a $10 billion settlement when the actual value to consumers will be a small fraction of that.”

VW admitted in September to installing so-called defeat devices in hundreds of thousands of diesel-powered vehicles in the U.S. The company installed the devices after discovering their technology could not comply with U.S. regulatory standards in “the required time frame and budget.

This settlement was a result of the company’s disclosure to the Environmental Protection Agency (EPA) and California Air Resources Board (CARB) that Volkswagen installed the software used to dupe fuel emission test.

The scandal will cost the company a total of $14.7 billion, $10 billion of which will go to the owners of the tainted vehicles, while another $2.7 billion will head to the EPA for environmental mitigation. The German automaker will also have to shovel a $2 billion investment into electric vehicle technology, which will be distributed within the next decade.

The payments will be dolled out to various plaintiffs, such as the state of New York, which will use $115 million for environmental projects to improve air quality, and another $30 million to the state’s general fund.

The group maintained that it does not object to those with tainted vehicles receiving relief – rather, it believes the legal fee snafu allowed attorneys to “shortchange” the company’s customers.

CEI asked the court to postpone the fairness hearing and order class counsel to provide corrected notice, its attorneys’ fee request, and any agreement with Volkswagen regarding those fees. CEI also asked the court to order the FTC settlement to take effect immediately, so as to not let the class-action litigation further delay relief to Volkswagen owners.

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