How many lawyers does it take to reach a settlement with a car company that admits it cheated on vehicle emissions tests?

It’s the riddle facing U.S. District Judge Charles Breyer.

Nearly 150 law firms have applied for leadership positions in the multidistrict litigation (MDL) targeting Volkswagen A.G. over its diesel emissions scandal, making the lead counsel fight one of the largest in class action history. Among the contenders are barons of the class action bar, big name litigators and even a former presidential candidate.

With all that legal talent descending on a case that, according to some observers, is basically a slam dunk, one prominent class action critic says Breyer should ditch the typical beauty contest and leadership committee approach in favor of something more cost-conscious.

Theodore Frank of the Center for Class Action Fairness, a regular objector to high attorney fee awards in class actions, has submitted a brief asking Breyer to solicit competitive bids for lead plaintiffs counsel. He proposes that lawyers seeking to lead the case file bids under seal including a proposed fee structure that would be made public 48 hours after the bidding deadline.

“Nobody is treating this like a really risky case. They’re treating it like a potential windfall,” Frank said. “You can’t tell me that if they actually had a paying client that told them ‘I have this billion-dollar case I want to give you’ that they wouldn’t tell them what they would charge to handle it.”

Breyer, a veteran Northern District judge who has overseen nine previous MDLs, will hear from lawyers vying for leadership positions on Thursday. So far the judge hasn’t indicated what he thinks of Frank’s approach. Two of the leading figures in the plaintiffs bar, Hagens Berman Sobol Shapiro’s Steven Berman and Cohen Milstein Sellers & Toll’s Stephen Toll, concede in their petitions for a leadership role that asking for the standard 25 percent of settlement funds would be excessive given the facts of the VW case. Neither Berman nor Toll, however, fully endorse Frank’s proposal. “The fees may well end up being anywhere from 5 to 20 percent depending on multiple factors, but that is something this court can decide after the litigation resolves,” Toll wrote.


After officials with the U.S. Environmental Protection Agency found last year that many of VW’s “clean diesel” vehicles came equipped with software designed to cheat emissions tests, the company admitted the defect and set aside more than $7 billion dollars to cover related costs. With some lawyers calling for a full recall of the roughly 580,000 affected cars in the U.S., the company faces potential liability of more than $1 billion for U.S. car owners.

“It’s hard to think of another case where before [things get going], the defendant says, ‘Yes we did it,’ ” said Deborah Hensler, a professor at Stanford Law School whose research focuses on class actions. If the company sticks by its concession, Hensler said, it could eliminate “ if not all, most of what we would normally see litigated” in similarly sized MDLs.

Evidently, that’s an appealing proposition for lawyers working on contingency.

Many leading figures in the plaintiffs bar are campaigning to lead the VW cases, which were consolidated last month by the Judicial Panel on Multidistrict Litigation and assigned to Breyer. In addition to Berman and Toll, pitches have come in from Cotchett, Pitre & McCarthy’s Frank Pitre, Hausfeld LLP’s Michael Hausfeld and Lieff Cabraser Heimann & Bernstein’s Elizabeth Cabraser.

Aside from the big names in consumer protection, leaders of two of the largest and most profitable litigation firms in the country, Quinn Emanuel Urquhart & Sullivan’s John Quinn and Boies, Schiller & Flexner’s David Boies, have joined the competition.

The VW emissions suit marks the first time in his 40-year legal career that Quinn Emanuel’s John Quinn has applied for an MDL leadership position. However, he submitted that “some of the most demanding clients in the world,” including Google, IBM, General Motors, Coca-Cola, Colgate-Palmolive and Morgan Stanley have chosen his firm in their most challenging cases. He previously litigated against VW nearly 20 years ago, winning a settlement valued at $1.1 billion on behalf of General Motors in a trade secrets dispute.

Pointing to the public-policy questions at play in the MDL, David Boies wrote that anyone leading the VW suits needs the ability to work alongside U.S. Department of Justice lawyers pursuing parallel claims. Boies, who filed joint complaints in multiple district court cases alongside Robbins Geller Rudman & Dowd, called out his own experience working for the government as special trial counsel in the antitrust case against Microsoft Corp.

Boies wrote that he “fully anticipate[s] a productive relationship with the DOJ and its lawyers” should he be chosen to lead the VW suit. Boies’ firm also notably won a competitive bidding process in 2000 to lead a price-fixing class action against leading luxury auction houses, agreeing to take just 5 percent of settlement proceeds.

After filing multiple suits across the country in a relationship similar to that between Boies Schiller and Robbins Geller, John Quinn endorsed Hagens Berman’s Steven Berman as his potential co-lead counsel. The Quinn firm and Hagens Berman previously worked on opposite sides in consumer litigation over fuel-efficiency claims made by Hyundai Motor America and Kia Motors America Inc.

Berman has held leadership posts on a pair of other automotive suits, one targeting Toyota over sudden unexplained acceleration and another claiming General Motors vehicles have faulty ignition switches. Berman will likely have to miss the hearing over the VW lead counsel appointment before Breyer Thursday because he’s trying the first bellwether trial in the General Motors MDL, which started this past week.

Like Berman, Elizabeth Cabraser boasted leadership positions on multiple ongoing auto-related MDLs. In her application, Cabraser called the VW case “unusual” because it presents a “large, ascertainable, and engaged nationwide class” and a defendant that has already admitted to being at least partially liable. “This case should settle, fully and swiftly,” she wrote. She has the support of 67 other firms with cases in the VW MDL. (By comparison, 17 support Berman.)

Edwards Kirby’s John Edwards is among the lawyers asking for a spot on the plaintiff steering committee. The former U.S. senator and 2008 Democratic vice presidential nominee wrote that he’s met personally with foreign heads of state, including German Chancellor Angela Merkel.

“Having personally met with Chancellor Merkel, I believe I can assist in working directly with” government entities that provide funding for VW, he wrote. “As VW may be interested in settling all global claims concurrently, working with foreign counsel and/or governments may become necessary to productive settlement discussions.”


Stanford’s Hensler heads the school’s Globalization of Class Actions Exchange, a group spearheading international research on mass litigation procedures around the globe. She called the VW litigation, where a German company faces claims from investors, customer, and dealers around the globe, “the quintessential transnational case.”

“That both complicates the litigation process here in the U.S. but also produces opportunity for settlement,” Hensler said. If VW decides to play hardball, it could try to use European litigation rules to shield the company and its executives from U.S.-style discovery. German and European discovery is much more restrictive on what plaintiffs can access and some European courts have been hostile to U.S. requests.

Hensler said that some U.S. plaintiffs firms that have established links to firms in Europe might be positioned to help drive a global VW settlement. Although Europe lacks a U.S.-style class action vehicle, Hensler said that deals have been reached using a Dutch collective settlement process in cases with mass damages, including a securities settlement by Royal Dutch Shell at the end of the past decade.

“What [the Shell settlement] created is an awareness among leading plaintiffs firms that there is this option for arriving at very large-scale settlements, conceivably global settlements,” she said.

Quinn touted his firm’s large German presence in his leadership bid, making a point to inform Breyer about his firm’s 27 lawyers in Germany who have experience dealing with cross-border discovery issues. Hausfeld, one of the pioneers in the global expansion of the plaintiffs bar, likewise pointed to his firm’s presence in Germany as an asset. His firm has a small Berlin office staffed by two partners and two associates.


Frank of the Center for Class Action Fairness said that this is the earliest he and his group have ever stepped into a case. He said that he decided to put forward the competitive bidding idea after seeing hundreds of class actions filed against VW across the country. A number of federal jurists have experimented with the idea, including former Northern District Chief Judge Vaughn Walker, who pioneered the approach in a securities class action against Oracle Corp.

“Because this is a low-risk case in which class counsel is virtually certain to recover attorneys’ fees, there is little need for a ‘risk premium’ traditionally built into contingency fees,” Frank wrote in a brief filed Dec. 31. He added that plaintiffs likely “will be able to piggyback off of government investigations of Volkswagen’s conduct.”

Most plaintiffs vying for a lead role in the case have steered clear of addressing Frank’s brief. But it has drawn criticism from a few plaintiffs lawyers, including Robert Arns of the Arns Law Firm and Scott Nealey of Nealey Law, who raised questions about the funding sources of Frank’s nonprofit organization, the Center for Class Action Fairness, which merged in October with the pro-business Competitive Enterprise Institute.

Frank filed a declaration maintaining the groups’ merger agreement doesn’t permit donors to interfere with his center’s litigation activity and that the Competitive Enterprise Institute had received only one $5,000 donation from Volkswagen in 2013.

Frank said that he’d be disappointed if the judge appoints a 12-firm steering committee that runs up the lodestar and asks for a high percentage of the settlement. “Given the magnitude of the likely settlement you’re talking tens and maybe hundreds of millions of dollars flowing from class members that didn’t have to,” he said.

A hearing on the motions to serve as lead counsel is set for Jan. 21. It’s been moved to the San Francisco courthouse’s ceremonial courtroom to accommodate the expected crowd.