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A federal judge in Los Angeles struck down the proposed attorney fees in a class action settlement against Toyota Motor Corp. over Prius headlights, calling the $4.7 million request “highly unreasonable” for a case with “narrow, not complex” legal work. “This could not be a simpler case,” said U.S. District Judge Manuel Real, who granted final approval of the settlement, which he estimated at more than $3.8 million, but reduced the fee request to 20 percent of that value, or $766,000. He questioned why so many firms were involved in the first place, saying, “There was no need for five firms to be involved.” Eric Gibbs, a partner at San Francisco’s Girard Gibbs, lead counsel for the plaintiffs, said he was pleased to see the settlement approved despite the reduced fee award. “My firm worked hard to get the settlement benefit for the class,” he said. “As for the fee award, we’ll need to sit down and weigh the court’s comments against the record that that court has before it, and use that preface to evaluate what our next steps ought to be.” “Toyota worked in good faith to resolve this matter in the interest of customer satisfaction, so we are pleased that Judge Real approved the settlement, and we accept his decision on the fees and expenses,” said Toyota spokeswoman Celeste Migliore. The settlement resolved claims in a proposed class action on behalf of nearly 300,000 owners and lessees of Prius hybrids who claimed that their headlights were defective because they intermittently shut off. The claims were unrelated to separate litigation over sudden unintended acceleration involving Toyota cars and light trucks. Toyota faces nearly 300 lawsuits in multidistrict litigation before U.S. District Judge James Selna in Santa Ana, Calif., regarding those claims. The settlement resolved claims on behalf of U.S. consumers of model-year 2006 through 2009 Priuses with factory-made high-intensity discharge headlights. The deal would provide cash reimbursements to class members who replaced their headlight bulbs within five years or 50,000 miles on the road, according to court documents. Class members who paid for parts and labor for replacements after five years or 50,000 miles would be repaid on a case-by-case basis. The settlement would extend the warranty for class members who have yet to repair their vehicles. During a settlement conference on Aug. 29, Real said he had a “big problem” going through the fees request submitted by five firms: Girard Gibbs, which asked for $1.9 million; Wasserman, Comden, Casselman & Esensten of Tarzana, Calif., which sought $720,000; Initiative Legal Group of Los Angeles, $1.2 million; Cohen Milstein Sellers & Toll in Washington, $600,000; and Los Angeles-based Arias Ozzello & Gignac, $250,000. Toyota attorney Michael Mallow, a partner in the Los Angeles office of Loeb & Loeb, questioned why so many firms were needed and called their billing records “inherently unreliable by bloated timekeeping, unnecessary work, and contradictory statements,” according to a Sept. 2 court document. He wrote that the fee request was “grossly excessive”–particularly since he valued the settlement at about $3.8 million. A more accurate request would be between $950,000 and a little more than $1 million in fees, plus costs, he wrote. “In such cases, the Ninth Circuit encourages courts to guard against an unreasonable result by cross-checking their calculations against a second method, such as the percentage of recovery method,” Mallow wrote. He cited the U.S. Court of Appeals for the 9th Circuit’s Aug. 19 ruling in the Motorola Bluetooth headsets litigation. The 9th Circuit rejected a settlement in that case, ruling that U.S. District Judge Dale Fischer had failed to cross-check the amount the plaintiffs could have demanded by billing at their usual rates–called the “lodestar” amount–to what they would have received were their fees based on a percentage of the settlement. That settlement would have provided $100,000 in cy pres awards–gifts to charitable organizations–and $800,000 to the plaintiffs’ attorneys. The class members would have received no monetary recovery. Gibbs, who estimated the value of the Prius settlement at more than $4 million, wrote that the Bluetooth case was nothing like his own, which involved “a high degree of success” for class members. “In other words, the relative success achieved by the settlement indicates that this is indeed a legitimate, arm’s-length deal and not a collusive settlement,” he wrote. He added in a Sept. 2 court document that the attorney fees and $400,000 in administrative costs should be included in the value of the settlement. He disputed Toyota’s calculation of how much future warranty repairs were worth. Under such a calculation, Gibbs wrote, the settlement amount would be closer to $6.35 million, and the plaintiffs’ attorney fees would represent only 31 percent of its value. In reducing the fee award, Real cited the number of pages of each major document filed in both cases–one of which he called a “form” complaint that was a “piggyback” to the first complaint. He noted that mediation lasted just one day and that much of the information used by plaintiffs’ attorneys was in the public record, including the National Highway Traffic Safety Administration’s investigation into the alleged defect. Based on the 6,881 hours that plaintiffs’ attorneys estimated they had billed in the case, each firm would have worked about 11 hours a day, Real said. “The number of hours allegedly worked in this case is striking,” he said. As for the billing records submitted, Real found them “most difficult, if not impossible, to decipher.” He noted that the case involved only two months of discovery, making plaintiffs’ attorneys more akin to “negotiation agents” for the class than actual litigators confronting “new legal issues.” Having five firms on the case was unnecessary, he said, especially since the three firms other than Girard Gibbs and Wasserman “had very little to do with the litigation.” Of the $766,000 in total fees, Real awarded 65 percent to Girard Gibbs. He ordered Girard Gibbs to apportion the remaining funds to the other four firms. Contact Amanda Bronstad at [email protected].

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