Center for Class Action Fairness argues selection of Volkswagen MDL court is ‘critical’

By Jessica Karmasek | Oct 23, 2015

WASHINGTON (Legal Newsline) - A non-profit representing class members against unfair class action procedures and settlements this week filed an amicus brief with the Judicial Panel on Multidistrict Litigation over pending federal litigation against Volkswagen.

The Competitive Enterprise Institute’s subunit, the Center for Class Action Fairness, filed its brief with the panel Tuesday.

The center, which merged with CEI earlier this month, claims in its 12-page brief that it is concerned the panel will not consider judicial track records in scrutinizing the fairness of settlements when transferring the case.

The nonprofit argues it is “critical” that the panel emphasize the importance of judicial scrutiny to protect absent class members’ rights “to promote a just and efficient outcome.”

“Plaintiffs and defendants will each argue for jurisdictions they perceive as favorable to their interests (perhaps because of previous rulings on class-certification or state-law issues) to maximize their leverage in settlement negotiations,” wrote Ted Frank, attorney for and director of the center. “But there is one critical area where both plaintiffs’ counsel and defendants have a common but perverse interest in proposing transferee courts: neither wishes the transferee court to closely scrutinize the class action settlements that will inevitably be reached to resolve the litigation.

“The naming of the transferee MDL court almost always means the naming of the judge who will evaluate the settlement terminating the case.”

As Frank notes, there is no incentive for a plaintiff’s attorney or a defendant to ask the panel to ensure that the transferee judge will closely scrutinize a class action settlement -- as doing so will benefit absent class members at the expense of class counsel’s fees and the defendants’ attempt to minimize litigation expense.

“With hundreds of millions of dollars at stake, this Panel must do so,” Frank wrote.

The location of where the litigation will take place is being fiercely debated.

The center, in its brief, requests that Judge William Alsup, of the U.S. District Court for the Northern District of California, be selected to oversee the MDL case, saying the move would be “good public policy beyond this individual case.”

“Judge Alsup has a long and distinguished track record of scrutinizing class action settlements and fee requests closely, at both the preliminary-approval and fairness hearing stages, even in cases without objectors,” Frank wrote.

The panel is scheduled to hear about the Volkswagen class actions at its meeting in New Orleans on Dec. 3.

“There will eventually be a class action settlement in the Volkswagen case,” Frank said in a statement. “For that reason, it’s important that this happen before a judge who can assure the class members get the settlements they are entitled to, rather than a sweetheart deal for the plaintiff lawyers and Volkswagen, who will want to simply end the case quickly.

“We are the only ones raising this issue.”

More than 175 class action lawsuits have been filed in the aftermath of the automaker’s emissions scandal.

Last month, Volkswagen admitted to intentionally programming turbocharged direct injection, or TDI, diesel engines to activate certain emissions controls only during laboratory emissions testing.

Volkswagen and Audi owners began filing class actions soon after, claiming fraud and breach of contract due to expected reductions in horsepower and fuel efficiency. At least one investor lawsuit, seeking class action status, has been filed to seek compensation for the drop in stock value due to the scandal.

Originally founded by Frank in 2009, the Center for Class Action Fairness has won millions for consumers and shareholders, and won landmark precedents that safeguard consumers, investors, courts and the general public.

Click here to read the center’s full amicus brief.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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