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$605M Takata MDL Settlement Overpays Attys, Drivers Say

Law360, January 11, 2018

By: Rachel Graf

Two Honda owners have objected in Florida federal court to the proposed $605 million settlement the automaker reached to exit multidistrict litigation over defective Takata air bags, arguing in part that the 30 percent sought by class counsel is too high.

Current Honda owner Reyna Sarmiento and former Honda owner Kervin Walsh on Monday separately argued that the amount requested by class counsel is incompatible with the amount of work the attorneys have done. The attorneys want to be paid as if they had spent 10 years working on the litigation when the most recent settlements were in fact reached within three years, Walsh said.

“Class counsels’ latest fee motion pushes an already outrageous fee into the absurd,” Walsh said in the filing.

In September, Honda agreed to the settlement in to end allegations related to the potentially explosive Takata air bags included in millions of its cars. That deal and another reached by Nissan in August to pay $98 million to exit the multidistrict litigation occurred within three years of the start of litigation, but class counsel nonetheless seeks 30 percent of each, Walsh noted.

Walsh argued that the class counsel should be required to divulge the amount of hours they worked to obtain the settlement. Sarmiento is similarly “confused as to what the attorneys did to justify their fee,” the filing said.

“Class counsels’ fee motion takes no account of the economies of scale, which recognize that with settlements reaching into the hundreds of millions, or $1.25 billion here, the costs necessarily diminish relative to the increased recovery, and concomitantly, attorneys’ fees percentages decline as settlement size increases,” Walsh said.

A December 2016 study of more than 400 class actions found that the median fees for settlements above $100 million ranged between 16.6 percent and 25.5 percent, Walsh noted.

Moreover, Walsh argues that the requirement that objectors identify each case in which they or their counsel have previously objected is an attempt to stifle objections and violates due process.

Walsh also argued that the settlement provides unequal relief to current and former Honda owners, as current owners will be entitled to an outreach program, customer support program and rental car program unavailable to former owners. If former owners no longer have their documentation, they might not get any relief, Walsh said.

“We will soon respond formally to the few objections that have been filed but given the tremendous amount of work, effort and expertise that led to these two significant settlements, we believe our fee request is fair, reasonable and consistent with the law," plaintiffs' counsel Peter Prieto Podhurst Orseck PA told Law360 by email.

Counsel for Honda didn’t immediately respond to requests for comment on Thursday.

The plaintiffs are represented by Peter Prieto of Podhurst Orseck PA..

Honda is represented by Eric S. Mattson of Sidley Austin LLP.

The case is In re: Takata Airbag Products Liability Litigation, case number 1:15-md-02599, in the U.S. District Court for the Southern District of Florida.