HESS v. VOLKSWAGEN OF AMERICA, INC., 2014 OK 111

Background

Plaintiffs (Hess & Parsons) brought a nationwide class action against Volkswagen alleging design defects to the Jetta front spoiler; class certified in Oklahoma and settlement reached in 2011–2012.
Settlement provided repairs and a one-year warranty extension; only 310 claimants (none from Oklahoma) received payouts totaling $45,780 (≈$140 per claimant).
Settlement required Volkswagen to pay plaintiffs’ reasonable attorneys’ fees and costs; plaintiffs initially sought $15,000,000.
Trial court calculated a lodestar and awarded $3,610,719.15 in fees (after a 5% reduction to account for a failed Florida certification case), plus expenses.
After plaintiffs relied on the Missouri Supreme Court’s Berry decision, the trial court reopened fees and applied a 1.9 multiplier to its lodestar, increasing the award to about $7.2 million.
Oklahoma Supreme Court reversed and remanded, holding the trial court abused its discretion by (1) including hours from the failed Florida litigation in the lodestar, and (2) applying an unexplained 1.9 multiplier that relied heavily on non-binding out-of-state precedent despite a tiny class recovery.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether hours from the failed Florida (Sugarman) litigation could be included in the lodestar	Hours were compensable because that work aided prosecution and settlement of the nationwide case	Inclusion was improper because the Florida certification failed and the work was unrelated/unsuccessful	Excluding those Florida-only hours was required; including them was an abuse of discretion
Whether application of a 1.9 multiplier to the lodestar was appropriate on reconsideration	Berry supports a multiplier (contingent risk, preclusion of other work, time commitment justify enhancement)	Multiplier unjustified: record lacks evidence of lost opportunities and multiplier produces a fee grossly disproportionate to class recovery	Applying 1.9 was an abuse of discretion given the record and minimal recovery
Whether reliance on Berry (Missouri precedent) justified the enhanced award	Berry is persuasive and analogous; trial court may consider similar out-of-state awards	Berry is non‑binding and factually distinguishable; Oklahoma law requires consideration of statutory Burk factors and actual recovery	Trial court erred in placing undue weight on non-binding out-of-state authority when Oklahoma statutory factors and recovery disproved enhancement
Whether the attorney-fee award bears a reasonable relationship to the recovery	Plaintiffs argued the lodestar-plus-multiplier approach (and comparators) produced a reasonable market fee	Volkswagen argued fees were wildly disproportionate to the $45,780 payout, violating Burk/§2023 considerations	Fees must reasonably relate to the recovery; the court reversed because the enhanced award lacked a rational basis given the tiny class recovery

Key Cases Cited

State ex rel. Burk v. City of Oklahoma City, 598 P.2d 659 (Okla. 1979) (adopted lodestar method and Burk factors for determining reasonable attorney fees)
Berry v. Volkswagen Group of America, Inc., 397 S.W.3d 425 (Mo. 2013) (Missouri Supreme Court affirmed 2.0 multiplier in Volkswagen class-action fee award)
In re Volkswagen & Audi Warranty Extension Litig., 692 F.3d 4 (1st Cir. 2012) (criticized district court’s multiplier and emphasized use of actual claims data in enhancement analysis)
Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542 (2010) (lodestar presumptively reasonable; enhancements require record justification)
Volkswagen of America, Inc. v. Sugarman, 909 So.2d 923 (Fla. Dist. Ct. App. 2005) (Florida appellate decision decertifying class on predominance/causation grounds)
Arkoma Gas Co. v. Otis Eng'g Corp., 849 P.2d 392 (Okla. 1993) (lodestar adjustments may be substantial up or down)
Tibbets v. Sight 'N Sound Appliance Ctrs., Inc., 77 P.3d 1042 (Okla. 2003) (amount recovered and results obtained are critical in fee reasonableness analysis)