Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-md-02672/USCOURTS-cand-3_15-md-02672-142/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 15:2301 Magnuson-Moss Warranty Act

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United States District Court 

Northern District of Californi

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UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

IN RE: VOLKSWAGEN “CLEAN DIESEL” 

MARKETING, SALES PRACTICES, AND 

PRODUCTS LIABILITY LITIGATION 

_____________________________________/ 

This Order Relates To: 

ALL ACTIONS (except the securities action) 

______________________________________/ 

MDL No. 2672 CRB (JSC) 

ORDER RE: ATTORNEYS’ LIENS 

 Volkswagen has notified the Court that certain attorneys have placed liens on several Class 

Members’ settlement proceeds. (See Dkt. No. 2159.) Specifically, The Driscoll Firm, P.C.; 

Wayne Wright LLP; Lashley & Baer, P.C.; the Davis Law Firm; and Aylstock, Witkin, Kreis & 

Overholtz, PLLC have sent letters to Volkswagen Group of America, Inc.; Volkswagen AG; Audi 

of America, LLC; and/or Audi AG (collectively, “Volkswagen”) notifying them that they have 

placed attorneys’ liens on their clients’ recovery under the Amended Consumer and Reseller 

Dealership Class Action Settlement (“Settlement”). (Dkt. Nos. 2159-1, 2159-2, 2159-3, 2159-4, 

2159-5, 2159-6; see Dkt. No. 1685.) These five firms claim to represent approximately 1,185 

Class Members.1 (See Dkt. No. 2159 at 2.) 

It is obvious that satisfaction of these liens would have a substantial impact on Class 

Members. Not only does a reduced payment fail to adequately compensate Class Members, but it 

also negatively effects the environmental benefits contemplated by the Settlement. With a smaller 

cash payment, Class Members may have little incentive to sell their vehicles back and, as a result, 

these vehicles will remain in their current polluting state. For the reasons set forth below, the 

 

1

 This figure takes into account any duplicate names listed in The Driscoll Firm’s June 28, 2016 

and August 17, 2016 letters. (See Dkt. Nos. 2159-1, 2159-3.) 

Case 3:15-md-02672-CRB Document 2247 Filed 11/22/16 Page 1 of 6
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United States District Court 

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Court ORDERS Volkswagen to pay Class Members their Settlement compensation directly and in 

full, notwithstanding any purported liens on that compensation. Not only does recognizing these 

liens require Volkswagen to violate the terms of the Settlement, but ensuring that Class Members 

are made whole, whether or not they retained counsel, must be the highest priority. 

DISCUSSION 

When the Court granted final approval of the Settlement, it “retain[ed] the exclusive 

jurisdiction to enforce, administer, and ensure compliance with all terms of the Settlement in 

accordance with the Settlement and this Order.” (Dkt. No. 2102 at 48.) As such, the Court 

possesses ancillary jurisdiction to adjudicate any lien disputes that arise from the Settlement. See

Fed. Sav. & Loan Ins. Corp. v. Ferrante, 364 F.3d 1037, 1041-42 (9th Cir. 2004) (explaining 

“ancillary jurisdiction exists over attorney fee disputes collateral to the underlying litigation” and 

noting “[h]ad [the firm] attempted to assert its attorney liens for services performed in connection 

with a particular action, it might have successfully invoked ancillary jurisdiction”); Curry v. Del 

Priore, 941 F.2d 730, 731 (9th Cir. 1991) (“Courts have long recognized that fee disputes arising 

from litigation pending before a district court fall within that court’s ancillary jurisdiction.”); see 

also Elusta v. City of Chicago, 696 F.3d 690, 694 (7th Cir. 2012) (“Attorney’s fee disputes are 

closely enough related to the underlying litigation to be the basis for supplemental jurisdiction, 

even if other attorney-client disputes, such as malpractice actions, are not.”); Guy v. LexingtonFayette Urban Cty. Gov’t, 624 F. App’x 922 (6th Cir. 2015) (district court had jurisdiction over 

motion to quash attorney’s lien where lien was “‘so related to claims in the action within . . . 

original jurisdiction that they form[ed] part of the same case’” (edits in Guy; quoting 28 U.S.C. § 

1367(a)). 

Among other things, the Settlement seeks to make Class Members whole. (See Dkt. No. 

1976 at 13, 15.) As the Federal Trade Commission (“FTC”) explains, “[t]o be made whole, 

consumers must receive full compensation for their vehicles’ full retail value and all other losses 

caused by Volkswagen’s deception. Full compensation has to be sufficient for consumers to 

replace their vehicle.” (Dkt. No. 1781 at 1.) To effectuate this goal, the Settlement requires 

Volkswagen to pay cash compensation directly to Class Members. See, e.g., Dkt. No. 1685 ¶ 2.16 

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United States District Court 

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(“‘Lessee Restitution’ means monetary compensation that Volkswagen will pay to Eligible Lessees

. . . .” (emphasis added)), ¶ 2.52 (“‘Owner Restitution’ means monetary compensation that 

Volkswagen will pay to Eligible Owners . . . .” (emphasis added)), ¶ 2.60 (“‘Seller Restitution’ 

means monetary compensation that Volkswagen will pay to Eligible Sellers . . . .”) (emphasis 

added)).2 The compensation provided under the Settlement “restore[s] Class members to the 

positions they would have occupied if Defendants had never committed the frauds.” (Dkt. No. 

1976 at 13.) In other words, the Settlement ensures Class Members who participate in a Buyback 

have sufficient cash to purchase a comparable replacement vehicle and thus facilitates removal of 

the polluting vehicles from the road. 

An attorneys’ lien on a Class Member’s recovery frustrates this goal. By diverting a 

portion of Class Members’ compensation to private counsel, a lien reduces Class Members’ 

compensation and places them in a position where they must purchase another vehicle but lack the 

funds to do so. Put another way, attorneys—notably, attorneys who did not have a hand in 

negotiating the Settlement—stand to profit while their clients are left with inadequate 

compensation.3 This interferes with the Settlement’s purpose and the Class Member’s decision to 

 

2

 The FTC’s Consent Order likewise states that payments shall be made directly to consumers. 

See Dkt. No. 1607 ¶ H (“‘Consumer Payment’ means any payment under the Settlement Program 

made directly to an Eligible Consumer or to a lender on behalf of an Eligible Owner for the 

purpose of satisfying an outstanding Loan Obligation related to an Eligible Vehicle.” (emphasis 

added)). 

That said, Eligible Owners who are eligible for Loan Forgiveness may have some or all of their 

compensation paid directly to their lenders. (Dkt. No. 1685 ¶ 4.2.2; Dkt. No. 1685-1 ¶ 14.) This 

still makes Eligible Owners whole; even if they do not receive cash, it relieves them of their 

obligation to make payments on a vehicle they no longer own. 

3

 For instance, The Driscoll Firm’s “retainer agreements with Claimants provides [sic] for a 

contingent attorney’s fee to the Firm of forty percent (40%) of any amount paid in settlement or to 

satisfy any judgment after suit is filed.” (Dkt. Nos. 2159-1 at ECF p.1, 2159-3 at ECF p.1.) 

Assume, for argument’s sake, that each of The Driscoll Firm’s clients is an Eligible Owner 

entitled to the minimum restitution payment of $5,100. (See Dkt. No. 1685-3 at 8-9.) Of that, The 

Driscoll Firm would take $2,040, leaving each client with only $3,060. Under these facts and with 

approximately 362 clients, The Driscoll Firm would be entitled to a total of $736,480. This figure 

could also reasonably be expected to be greater, as the $5,100 represents only the minimum, 

guaranteed amount of Restitution and does not include compensation for selling the vehicle back 

to Volkswagen in a Buyback. Indeed, if The Driscoll Firm takes 40% of an Eligible Owner’s 

Buyback package—the cash received in a Buyback plus Restitution—its fees could easily run into 

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participate. By electing to remain part of the Class, consumers can and should expect to be 

compensated in an amount determined by the Settlement terms, not by attorneys who may have 

played no role in obtaining the Settlement. 

Accordingly, the Court orders Volkswagen to pay Class Members the full amount of 

compensation as required by the terms of the Settlement, regardless of whether an attorney 

purports to have placed a lien on those funds. First, the Settlement does not allow Volkswagen to 

make payments to Class Members’ private attorneys. Should Volkswagen recognize these liens 

and direct payment to counsel, Volkswagen risks violating the Settlement. Second, complete 

payment to Class Members is necessary to fulfill the Settlement’s purpose of making Class 

Members whole; a Class Member’s ability to purchase a comparable vehicle should not be 

hampered by an attorneys’ lien. Finally, providing Class Members with the funds effectuates 

another goal of the Settlement—to ensure that polluting vehicles are removed from the roads. (See

Dkt. No. 1976 at 16.) If Class Members do not receive sufficient monies to replace their vehicles, 

or if their compensation is otherwise reduced, they have little incentive to participate in the 

Settlement’s Buyback or Fix programs. As a result, Class Members will likely continue to use 

their vehicles in their current polluting state. For these reasons, it is necessary that Volkswagen 

compensate Class Members in strict compliance with the Settlement. 

Even if Volkswagen provides Class Members their full compensation, however, attorneys 

could seek to litigate their liens in state court. This too frustrates the administration and purpose 

of the Settlement. Given that the Court retains jurisdiction to enforce and ensure compliance with 

the Settlement, it now invokes its authority under the All Writs Act to enjoin any state court 

proceedings regarding attorneys’ lien on Class Members’ settlement compensation. 

The All Writs Act provides that “all courts established by Act of Congress may issue all 

writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages 

and principles of law.” 28 U.S.C. § 1651. This broad grant of authority is limited by the AntiInjunction Act, which prohibits federal courts from enjoining state court proceedings “except 

 

the millions of dollars. 

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where expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to 

protect or effectuate its judgments.” 28 U.S.C. § 2283. Nonetheless, “[u]nder an appropriate set 

of facts, a federal court entertaining complex litigation, especially when it involves a substantial 

class of persons from multiple states, or represents a consolidation of cases from multiple districts, 

may appropriately enjoin state court proceedings in order to protect its jurisdiction.” In re Diet 

Drugs, 282 F.3d 220, 235 (3d Cir. 2002). An injunction is appropriate here to preserve the 

Court’s jurisdiction. If attorneys seek to enforce their liens in state court, such proceedings will 

interfere with the Court’s ability to enforce and ensure compliance with the Settlement terms, such 

as Volkswagen’s obligation to directly pay consumers the full amount to which they are entitled 

under the Settlement. For that reason, the Court enjoins any state court proceeding relating to an 

attorneys’ lien on any Class Member’s recovery under the Settlement. 

CONCLUSION 

Under the power conferred by the All Writs Act, together with the Court’s retention of 

jurisdiction over the enforcement and administration of the Settlement, the Court ORDERS the 

following: 

1. Volkswagen shall pay Class Members directly the full amount to which they 

are entitled under the terms of the Settlement, notwithstanding any lien an 

attorney purports to impose on those funds. 

2. The Court ENJOINS any state court action relating to attorneys’ liens on Class 

Members’ Settlement compensation. 

3. The Court understands that some attorneys may have provided Class Members 

with compensable services. As with Class Counsel, those attorneys will not be 

paid out of the Settlement, and the Court will determine the appropriate amount 

of fees, if any. If an attorney seeks to recover fees in accordance with his or her 

lien, he or she shall file with the Court a separate application for each Class 

Member supported by declaration. The application shall set forth the amount 

sought; the specific legal service(s) provided, including time records; and the 

terms of the fee agreement that require such an award, and shall include a 

Case 3:15-md-02672-CRB Document 2247 Filed 11/22/16 Page 5 of 6
United States District Court 

Northern District of Californi

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SO ORDER

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