MERCEDES EMISSIONS CLAIMS – SUMMARY OF FUNDING AND ENGAGEMENT DOCUMENTS
This note sets out a summary for claimants who wish to participate in the group claim against Mercedes represented by Hausfeld and using litigation funding provided by CF BH Ltd, an entity serviced by Black Hammer Capital.
Your claim against Mercedes will be run as part of a group, alongside other claimants’ claims. The claimants have formed a committee to make key decisions in relation to the claims on behalf of the claimant group, including giving instructions to us, Hausfeld, as your lawyers, regarding the running of the claims and any decision on settlement.
The costs of bringing the claims will be paid on your behalf by the litigation funder, who will also take out adverse costs insurance to cover the risks of having to pay the defendant’s costs if the claim does not succeed. In return, the litigation funder is entitled to 40% of your compensation at the end of the case (which will include your liability for our fees and other costs), plus any unrecovered VAT payable on Hausfeld’s conditional fees, which we refer to below as the “Funding Fee”. If you win your claim, you will keep 60% of your compensation less any unrecovered VAT payable on Hausfeld’s conditional fees.
To become a claimant, you must read and sign four legally binding agreements: (i) two engagements with your lawyers, Hausfeld; (ii) a litigation management agreement, which sets out how your claim and other claimants’ claims will be run together; and (iii) a funding participation agreement which says that you understand and agree to adhere to the terms of the funding agreement and the Priorities Agreement. This summary is not a substitute for reading the agreements in detail but it is intended to help you understand what these agreements say.
I.YOUR LAWYERS - THE HAUSFELD ENGAGEMENTS
In conjunction with your agreement to the funding agreement, Hausfeld will work for you on the basis that if you don’t win your claim, no fee is required from you. The terms on which Hausfeld are engaged are contained in Hausfeld’s two engagement letters: the first engagement applies when Hausfeld’s fees are being paid in part by the funder; the second engagement will apply when the budget for Hausfeld’s fees under the Funding Agreement has been used up and Hausfeld’s fees are no longer being
Under the first engagement, 55% of Hausfeld’s fees and other litigation costs will be paid by the funder on your behalf, as the litigation progresses. The remaining 45% of Hausfeld’s fees are deferred and will only be due if you win your case, together with a success fee which is the equivalent of 45% of Hausfeld’s fees. Under the second engagement, Hausfeld will work for you with no payment at all unless the claim is successful. On success, the full fees will be payable together with a success fee which is equivalent of 100% of Hausfeld’s fees. You will be notified by the committee at the point at which the budget has been used up and Hausfeld’s second engagement starts to apply.
If you win your case, Hausfeld will recover all or part of your legal fees, including the deferred fees to the extent possible, from Mercedes and these will be paid to Hausfeld, alongside their success fee, from the Funding Fee, which you agree to pay to the funder. Your liability in respect of Hausfeld’s fees and disbursements in the event that your claim is successful is as set out in the Hausfeld engagements. It is capped within the Funding Fee, so that you will receive 60% of the Damages Award (less any unrecovered VAT on Hausfeld’s conditional fees). If you lose your case, you will not have to pay any legal fees provided you have complied with your obligations under the agreements.
The committee will instruct Hausfeld, on your behalf. Invoices for Hausfeld’s
information about your claim, in a timely manner. Hausfeld will advise you as part of the group of claimants and will only be able to progress your claim once you have completed the registration process and information questionnaire in full. Hausfeld does not have to proceed with your claim if it isn’t appropriate to do so, for example because it does not have sufficient prospects of success, or if it is not suitable to be pursued as part of the group claim (for example due to needing to be issued before the rest of the group or where it might involve different parties which are not common to other claimants) – if this is the case, Hausfeld will inform you as soon as possible. As part of the agreement with the litigation funder, your claim will not be filed until the minimum group size of 27,500 claimants has been met and the funder has put in place the insurance policy to cover adverse costs.
You can cancel your retainer with Hausfeld any time within 14 days of agreeing to the engagement terms. Outside of that 14 day period, you can cancel your retainer at any time but if you do so without Hausfeld’s written permission then you may be charged Hausfeld’s costs, as set out in the engagement letter and any costs incurred on your behalf by the funder as set out below. Hausfeld has the right to cancel their engagement with you if they have a good reason to do so, such as because you have failed to provide all the information required about your claim, and in this scenario you may be charged Hausfeld’s costs insofar as they relate to your claim.
II.RUNNING THE CLAIMS AS A GROUP – THE LITIGATON MANAGEMENT AGREEMENT
It would only be viable to bring your claim against Mercedes as part of a group of other claims, given the costs involved in litigation and the efficiencies created by grouping the claims together. It is in your best interests to cooperate with the other claimants represented by Hausfeld. It is also, in Hausfeld’s view, in your best interests to cooperate with a further group of claimants, whose claims are materially similar to the Hausfeld group’s claims and are being run by another law firm, Harcus Parker. Cooperation with the Harcus Parker claimants maximises the efficiencies and other benefits of bringing the claims as a group.
In order for multiple claimants’ claims to be brought as a group, an agreement is needed between claimants as to how to run the claim – this document in the litigation management agreement. This agreement also, sets out how the committee will run your claim on your behalf, how the costs of running the litigation will be shared, governs the
The costs of running the litigation will be met by the litigation funder and recovered from Mercedes if the claims are successful. A high proportion of those costs are expected to be common to all of the claims, including the Harcus Parker claimants. However, some costs may be specific to an issue which affects certain claimants or individual to certain claimants. Your allocation of the costs of bringing the claim will be calculated based on the number of vehicles which you have in the claim, as set out in more detail in the litigation management agreement. These costs will be paid on your behalf and recovered from the defendant and you will only have to pay the Funding Fee provided you do not breach any terms of the agreements.
If damages are obtained via a successful judgment or settlement, the Committee will decide, following the advice of counsel how best to divide up those damages between the claimants. The claimants agree not to accept any settlement offer from Mercedes that does not account for the costs of running the litigation and if any such offer is made and accepted then you will be liable to Hausfeld and to the litigation funder for your costs.
As with Hausfeld’s engagement, you can terminate your participation in the litigation management agreement within 14 days agreeing to its terms. Outside of this 14 day period, you may only terminate your involvement with the permission of the litigation funder and the insurer and if you do so then you may be liable for your share of the litigation costs. If you do not cooperate with reasonable requests from Hausfeld or the litigation funder during the claim, the committee may discontinue your claim and terminate your
participation in the litigation management agreement. Hausfeld will no longer be able to represent you in relation to your claim and the Hausfeld engagement will also be terminated. If your participation in the litigation management agreement ends, your engagement with Hausfeld will be terminated and vice versa.
III.THE COSTS OF THE CLAIMS – THE FUNDING PARTICIPATION AGREEMENT
The Funding Agreement has been agreed with the Funder by the Chair of the Claimant Committee and in entering into the Funding Participation Agreement, you confirm your agreement to the terms of the Funding Agreement and to the Priorities Agreement.
•The Funding Agreement sets out the terms on which the Funder will advance the costs of the litigation on your behalf in accordance with the agreed budget and your agreement to pay the Funding Fee (being 40% of your damages and any unrecovered VAT on our Conditional Fees) if the claims are successful.
•The Priorities Agreement explains how the claim proceeds will be allocated which sets out the payment to you of the agreed 60% of your damages aware less any unrecovered VAT on our conditional fees.
The Funding Agreement provides that the projected costs of running the claims of £10,302,553 will be paid on your behalf by the litigation funder. This includes any non- deferred fees paid under the Hausfeld Engagements together with any anticipated disbursement costs and the costs of the insurance, which will cover the Hausfeld and the Harcus Parker claimants against the risk of having to pay Mercedes’ costs. The level of funding available under the funding agreement can be increased during the course of the proceedings by agreement between the committee and the funder if we believe it is reasonably necessary to conclude the claims.
The funding agreement also provides protection to the claimants in the event that their claims are lost. Usually in litigation, the losing party is ordered to pay the winning side’s legal costs – however, in this case, the litigation funder has indemnified you against paying Mercedes’ costs up to £7.5 million on the terms of an insurance policy which it will take out. If you do not agree with the terms of the insurance which the funder obtains, including as to the level of indemnity provided under the insurance, then you will have 14 days from the terms of the insurance being made available to you to cancel your participation in the claims.
There may be some circumstances in which adverse costs will not be covered by the insurance policy, for example where the funder believes it is not viable to continue running the claim and the insurer does not to agree to the claims being discontinued. It is also possible that the insurance may be inadequate in some respect, including due to the level of cover, insurer insolvency or the risk of avoidance, which may result in exposure to adverse costs. However, we believe the risk of these eventualities is low and in this case any liability for adverse costs would be split between all claimants by reference to the number of vehicles for which they claim such that each claimant is only liable for a share.
If the claim is successful, in return for the Funder’s commitment to the claims, you agree to pay the funder the Funding Fee. The Funding Fee comprises 40% of your damages, plus any unrecovered VAT on the portion of legal fees which are contingent upon success, and 100% of all costs which are recovered from the defendants. You will retain 60% of the damages received less any unrecovered VAT on the portion of legal fees which are contingent upon success. The Funding Fee will be used to pay the funder, Hausfeld and counsel their conditional fees, the insurer and the US Consortium.
As part of the agreement with the litigation funder, your claim will not be filed until the minimum group size of 27,500 claimants has been met and the funder has put in place the insurance.
Obligations and warranties: As part of signing up to the action, you agree, via the Funding Participation Agreement, that you will adhere to the terms of the funding agreement. The claimants have obligations under the funding agreement, in particular:
•that the information provided to Hausfeld about your claim must be true and accurate and that there is nothing of relevance of which you are aware about your claim which you have failed to disclose to Hausfeld. If any further information about your claim comes to light then you will disclose this to Hausfeld. You also agree that all information which you provide can be shared with the Funder;
•that you have had the opportunity to take independent legal advice in relation to your participation in the claims;
•that you will comply with the terms of the funder’s insurance once this is put in place, a copy of the terms of which will be made available to you. You will also comply with any steps required by the funder to procure, maintain or claim under the insurance and you will not take any steps which may jeopardise the insurance;
•that you will follow the legal advice of Hausfeld and counsel and cooperate with them throughout the proceedings so as to maximise the chances of a successful outcome and minimise any exposure to having to pay the defendants’ costs;
•that you agree that if you do not comply with your obligations under the Funding Agreement or if any of the warranties that you have provided are untrue, you may be in breach of the Funding Agreement and liable to pay the Funder your share of the costs the Funder has invested in the claims. You may also share liability for any breach by the claimant committee; and
•to follow legal advice and to abide by the terms of the funder’s insurance, and it is important that you follow these obligations and comply with any requests from Hausfeld or the Committee or else you may be in breach of the funding agreement.
Termination: The funder can terminate your participation in the funding agreement if you breach its terms or fail to
Under the Litigation Management Agreement, you agree that the Committee has the authority to amend the Funding Agreement and the Priorities Agreement including any increase to the budget, but it may only agree to change the amount of the Funding Fee in circumstances in which it is not otherwise be possible to put in place the insurance and is considered by the Claimant Committee in the claimants’ best interests in order to progress the claims. You understand that if the Committee proposes to change the amount of the Funding Fee, you will have the right within 14 days of notice to elect to cancel your participation in the Funding Agreement, the Priorities Agreement and the claims.
THIS IS ONLY A SUMMARY: it is not a substitute for reading the agreements in full. You must now read each agreement and sign to say that you agree with its terms. You may wish to take independent legal advice on the agreements before entering into them. As set out in the agreements, if you are signing up as a consumer rather than a business then you have a right to cancel your participation in the agreements within 14 days by sending written notice to MercedesEmissionsClaim@hausfeld.com.