Third Circuit Overturns Settlement in Volkswagen Case - U.S. Third Circuit
U.S. Third Circuit - The FindLaw 3rd Circuit Court of Appeals Opinion Summaries Blog

Third Circuit Overturns Settlement in Volkswagen Case

The Third Circuit Court of Appeals has rejected a disparate 2010 settlement in a class action lawsuit involving Volkswagen sunroofs.

The settlement would have provided some hefty fees for the class action lawyers involved in the case, Forbes reports. On the flip side of the settlement, the majority of car owners would not get a penny.

Attorneys were getting a huge cut of the settlement-- $9.2 million in fees, to be exact.

The products liability lawsuit involved leaky sunroofs. The manufacturers were sued over sunroof-drainage lines which could potentially flood the cars.

On the lawyers' side, experts testified that the settlement was worth $142 million.

The class action settlement was opposed by many car owners and by the Center for Class Action Fairness on the grounds that the settlement was unfair.

That's not what led the Third Circuit Court of Appeals to overturn the settlement, however. Well, not directly, at least.

The court's reasoning was largely procedural, based on Rule 23(a)(4) of the Federal Rules of Civil Procedure.

While fairness was at the essence of the issue, the reason behind the reversal of the settlement was due to the way the class was divided. Some plaintiffs were entitled to receive reimbursement from the $8 million reimbursement fund while other plaintiffs had to wait until the first set made their claims.

The division of the class caused a conflict of interest where certain plaintiffs (and their lawyers) stood to gain more than others.

The motivation for representative plaintiffs, the court insisted, should be to benefit the entire class.

The class certification order has been remanded for further proceedings.

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