Citizens Against Lawsuit Abuse of Central Texas

www.lawsuitreformwatch.com
August 12, 2010

Judge cuts down inflated settlement in Volkswagen case

New Jersey’s weak Consumer Fraud Act almost helped make attorneys $9.4 million richer.  Thanks to U.S. Magistrate Judge Patty Shwartz’s diligence and attention to detail, however, consumers were spared having to absorb this expense.

Here are the facts.   As reported in the New Jersey Law Journal, some Volkswagen owners complained that their 1997 – 2005 Passat, Jetta, New Beetle, Golf, and Touareg models leaked in heavy rain.  In some cases it damaged the car’s interior, or its contents, varying in severity.  A nationwide class action lawsuit was filed in Newark, under New Jersey’s Consumer Fraud Act.  They were also accused of breaching express and implied warranty and the “duty of good faith and fair dealing.” 

In Del Guercio v. Volkswagen of America Inc., two firms represented the 5.5 million class members, representing 3 million vehicles.  The lawyers estimated a settlement of $142 million earlier this summer, and sought $22.5 million (15.8 percent) for themselves in fees.  Eventually, both sides agreed to $90 million instead. 

And then the judge scratched beneath the surface.  The plaintiffs’ expert estimate called for $28 million in “preventative maintenance,” including the cost of future labor, parts, towing, and loaner cars.  But the judge reduced this amount by more than half – to $13.1 million, because towing and loaner cars are already covered by the dealer, making the inclusion of these fees in the settlement redundant and without benefit to the consumer.  Further, the Court would be double counting if it agreed to damages for both avoiding future repairs and the declining car value if it has water damage. 

“While the two components address different consequences of the avoided water damage,” said Judge Shwartz, “one of the two will never come about because the maintenance avoids it.” 

To Read More:http://www.lawsuitreformwatch.org/2010/08/judge-cuts-down-inflated-settlement-in-volkswagen-case.html