In re Volkswagen & Audi Warranty Extension Litigation (First Circuit)

This appeal arose out of an award of attorneys’ fees in a settled class action. The total benefits paid to the class under the settlement totaled approximately $40 million. As part of the settlement agreement, the parties agreed that class counsel would seek an award of fees, but Volkswagen retained its right to contest the amount sought. Class counsel ultimately requested $37.5 million in fees, arguing that the settlement had a “potential” value of more than $250 million. The district court agreed, awarding $30 million under the “percentage of fund” method based on the “potential” value of the settlement. On appeal, the First Circuit agreed with our position that state law, not federal law, should have governed the fee analysis and that the district court therefore should not have applied the percentage method. The court remanded with instructions to award a fee under Massachusetts law based on the district court’s separate $7.7 million lodestar calculation.