Source: The National Law Journal by Amanda Bronstad
Volkswagen A.G.'s legal problems tied to its emissions scandal could be over before they've hardly begun.
In one of his first orders, U.S. District Judge Charles Breyer has asked plaintiffs lawyers suing Volkswagen to suggest the best person to oversee settlement of more than 500 class actions.
The selection of a special settlement master is not uncommon, but it usually takes place much later in the course of litigation. Many plaintiffs lawyers have predicted that Volkswagen could Âquickly settle the litigation, having already admitted that 11 million cars and trucks have a "defeat device" in them designed to cheat emissions tests, including 482,000 in the United States. Then, on Dec. 17, Volkswagen announced that it had hired famed claims administrator Kenneth Feinberg to set up a compensation fund for an estimated 500,000 diesel-car owners. Feinberg, managing partner of The Law Offices of Kenneth R. Feinberg in Washington, gave few details about the program, including when it would begin accepting claims. Volkswagen reached out to him to set up the program "in an effort to divert those claims out of the court system and into a claims program that will provide remedies to those automobile owners," he said.
Volkswagen's move could put a dent in the plans of plaintiffs lawyers, who have clamored this month over their favorite picks for settlement master.
"I don't know how they'll play it," Frank Pitre of Cotchett, Pitre & McCarthy in Burlingame, California, said of Volkswagen. His firm supports three mediators in San Francisco as potential settlement masters. "Now we have Feinberg who will be involved in some kind of consumer goodwill package they'll offer to people and, therefore, if he's doing that, wouldn't it be nice if he also was involved as a special master with all the settlement of the class action claims?"Feinberg is among the 18 names plaintiffs lawyers have suggested for settlement master.
Bob Hilliard of Hilliard Muñoz Gonzales of Corpus Christi, Texas, who supports Feinberg, said Volkswagen's announcement raised Feinberg's chances of getting the job.
"It might enhance his curriculum vitae to get the appointment," he said. "It makes no sense to have two settlement masters."
But not everyone agrees.
Elizabeth Cabraser, a partner at San Francisco's Lieff Cabraser Heimann & Bernstein, said in a Dec. 17 court filing that "while Mr. Feinberg's retention is a meaningful development, and a commendable action by Volkswagen, this alone does not guarantee a fair, adequate, reasonable and comprehensive settlement."
Breyer, of California's Northern District, didn't give any reasons behind his Dec. 9 pretrial order asking for settlement master selections. He asked lawyers to submit names by Dec. 22 — the date of the first hearing in the litigation. Consumers allege they were duped into paying premium prices for "clean diesel" cars that the U.S. Environmental Protection Agency has said emit as much as 40 times the standard for nitrogen oxides.
Some lawyers suggested that Breyer should appoint more than one settlement master, particularly after VolksÂwagen's announcement about Feinberg, while others have said that one was enough. The most popular name was retired U.S. District Judge Layn Phillips, who was appointed in October by both Gerald Rosen, chief judge of the Eastern District of Michigan, and U.S. District Judge Jose Linares of New Jersey to oversee preliminary settlement discussions. Those talks went nowhere, but plaintiffs lawyers involved in those efforts submitted Phillips as a candidate on Dec. 14.
Phillips, of Phillips ADR in Newport Beach, California, is a former federal prosecutor who was U.S. attorney for the Northern District of Oklahoma and a federal judge for the Western District of Oklahoma. John Perry, who was appointed on Dec. 11 as a special master to oversee General Motors Co.'s settlement of 1,380 personal injury and wrongful-death lawsuits tied to its ignition-switch recalls in 2014, also is a lead candidate. He is a partner at the law firm Perry, Atkinson, Balhoff, Mengis, Burns & Ellis and founding principal of mediation firm Perry Dampf Dispute Solutions, both in Baton Rouge, Louisiana.Many are looking closer to home, suggesting JAMS mediators in San Francisco. Among the most popular was Edward Infante, who was chief magistrate judge of California's Northern District from 1990 to 2001, and Rebecca Westerfield, a former Jefferson County Circuit Court judge in Kentucky with experience in dealing with international matters.
"This is a somewhat unique litigation where there probably are going to be these constant parallel settlement discussion while litigation is proceeding," said Shon Morgan, chairman of the national class action practice group at Los Angeles-based Quinn Emanuel Urquhart & Sullivan.