John True v. American Honda Motor Co Inc

Filing 100

ORDER DENYING PRELIMINARY APPROVAL WITH LEAVE TO SUBMIT ADDITIONAL MATERIALSNO LATER THAN APRIL 24, 2009 by Judge Virginia A. Phillips: Accordingly, the Court DENIES the Motion. The Court will permit Plaintiffs to submit additional information in support of the Motion. Plaintiffs shall file any such materials no later than April 24, 2009. (am)

1 2 3 4 5 6 7 8 9 10 11 JOHN TRUE, individually and on behalf of all 12 others similarly situated, 13 Plaintiff, 14 v. 15 AMERICAN HONDA MOTOR 16 CO., INC., ) ) ) ) ) ) ) ) ) ) ) ) 17 Defendants. ) ________________________ ) 18 19 20 21 22 23 24 25 26 27 28 Case No. EDCV 07-287-VAP (OPx) [Motion filed on March 2, 2009] ORDER DENYING PRELIMINARY APPROVAL WITH LEAVE TO SUBMIT ADDITIONAL MATERIALS NO LATER THAN APRIL 24, 2009 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

Plaintiffs John True ("True") and Gonzalo Delgado's ("Delgado") (collectively "Plaintiffs") Motion for Preliminary Approval of Settlement ("Motion") came before the Court for hearing on March 23, 2009. After reviewing

and considering all papers filed in support of, and in opposition to, the Motion the Court DENIES the Motion WITHOUT PREJUDICE and grants the parties leave to submit additional materials no later than April 24, 2009.

1

Plaintiffs allege they were exposed to advertising

2 regarding the fuel efficiency of Honda Civic Hybrid 3 ("HCH") automobiles and bought HCHs based on these 4 representations during the class period, between 2003 and 5 2008. (First Amended Complaint ("FAC") ¶¶ 1-10; Class 6 Action Settlement Agreement and Release ("Settlement 7 Agreement") at 1, 9.) 8 9 10 I. BACKGROUND True named American Honda Motor Company ("Defendant")

11 as Defendant in a Complaint filed on March 9, 2007, in 12 which Delgado joined. Plaintiffs seek relief on the 13 following claims: (1) California Business and Professions 14 Code section 17200; (2) California Business and 15 Professions Code section 17500; (3) California Civil Code 16 section 1750; (4) common law unjust enrichment. 18 19 Defendant brought a Motion to Dismiss, which the The parties engaged in 20 Court denied on June 25, 2007. 22 before proceeding to mediation. 24 (Mot. 2.) 25 26 28
2

(Motion

17 for Preliminary Approval of Settlement ("Mot.") 1.)

21 approximately 11 months of discovery and motion practice (Mot. 2.) By December 23 2008, the parties reached a settlement in principle.

They now seek preliminary approval of the Settlement

27 Agreement and move the Court to enter an order directing:

1

(1) Certification of a single class, solely for the

2 purpose of settlement, under Rule 23 of the Federal Rules 3 of Civil Procedure, consisting of "[a]ll persons who 4 purchased or leased a new Honda Civic Hybrid automobile 5 model years 2003 through 2008 in the United States of 6 America including the District of Columbia" excluding 7 Defendant and its subsidiaries and affiliates and their 8 employees, officers, their family members, class counsel, 9 and all persons who timely opt out of the proposed 10 settlement (Settlement Agreement Ex. E ¶ 1); 11 12 (2) Preliminary approval of the Settlement Agreement; (3) Approval of the proposed Class Notice, notice

13 via the website, and Consumer Claim Form (Settlement 14 Agreement Exs. B-D); 15 17 19 21 (4) Appointment of True and Delgado as class 16 representatives (Settlement Agreement Ex. C ¶ 9); (5) Appointment of Nicholas Chimicles ("Chimicles") 18 and Jonathan Cuneo ("Cuneo") as class counsel; (6) Appointment of Defendant as claims 20 administrator; and (7) Establishment of a date for a final fairness (See Settlement 22 hearing on the settlement agreement. 23 Agreement Ex. C.) 24 25 27 28
3

Plaintiffs also move for a finding that Defendant

26 provided notice of proposed settlement to the Attorney

1 General of the United States and the attorneys general of 2 the States as required by 28 U.S.C. § 1715(b). 3 4 B. 5 Facts Pursuant to the Settlement Agreement, Defendant will

6 review its fuel economy advertising for the HCH and will 7 modify its disclaimer language for at least 24 months, 8 including at least changing the language from "actual 9 mileage may vary" to "actual mileage will vary." 10 4; Settlement Agreement 14.) (Mot. In addition, all class

11 members will receive a DVD demonstrating methods for 12 operating and maintaining HCHs to maximize fuel economy. 13 (Mot. 3.) Class members will also receive one of four The 14 kinds of payments or discounts, described below. 15 parties do not explain the size of the total fund 16 available for these monies, nor whether it is 17 reversionary. 18 19 20 1. Option A Option A is available to members of the proposed (See Mot. 2-4.)

21 class who: (1) own (rather than lease) an HCH; (2) sell 22 or trade in their HCH; and (3) buy an Eligible Vehicle 23 from Defendant, defined as "a new model year 2009 or 2010 24 Honda or Acura, excluding the Honda Fit, Honda Insight, 25 HCH or any Honda Certified Used Car or Acura Certified 26 Pre-Owned Vehicle." 28
4

Those claiming relief under Option A

27 must buy an Eligible Vehicle (4) before June 30, 2011.

1 They will receive $1,000. 2 transferrable. 3 4 5 2. Option B

This benefit is non-

(Mot. 3; Settlement Agreement 11-12.)

Option B is available to those class members who

6 retain ownership or a leasehold on their HCH and (1) 7 purchase an Eligible Vehicle from Defendant (2) before 8 June 30, 2011. They will receive a $500 payment, 9 transferrable to certain listed family members: spouses, 10 parents, siblings, children, grandparents, or 11 grandchildren. (See Settlement Agreement 12-13.) 12 Registered domestic partners, in states that recognize 13 those unions, are not included, however. 14 15 16 3. Option C Option C is available to those class members who made

17 a documented Complaint regarding the fuel economy of 18 their HCH to Defendant, an authorized Honda or Acura 19 dealership who reported the Complaint to Defendant, or to 20 Plaintiffs' counsel. 21 $100. They will receive a cash payment of The moving papers do not contain an estimate of

22 the number of persons who made qualifying complaints. 23 (Settlement Agreement 13-14.) 24 25 26 28
5

4.

No additional relief

Class members who do not want to, or are not able to,

27 buy an Eligible Vehicle, and who did not make a

1 qualifying complaint, will be ineligible to receive any 2 payments or discounts. 3 4 In exchange for receiving these benefits, class 5 members will release Defendant of all claims that were or 6 could have been made arising from Defendants' marketing 7 regarding the fuel economy of the HCH. 8 Settlement Agreement 6-7.) 9 10 The entire Settlement Agreement is subject to 11 cancellation by Defendant "[i]f one hundred (100) or more 12 Settlement Class Members properly and timely submit 13 requests for exclusion from the Settlement Class." 14 (Settlement Agreement 31.) 16 (Mot. 5-6.) 18 19 Plaintiffs request attorneys' fees, expenses, and (Mot. 4; Settlement Agreement 20-21.) (Mot. 4.) 20 named plaintiffs' incentive awards of no more than 21 $2,950,000. 22 Plaintiffs seek $12,500 for True and $10,000 for Delgado 23 as incentive payments. 24 25 26 28
6

(Mot. 4;

Plaintiffs' counsel estimates

15 the class consists of approximately 120,000 people. The moving papers do not address the 17 likelihood that more than 100 persons will opt out.

II. LEGAL STANDARD Parties seeking class certification for settlement

27 purposes must satisfy the requirements of Rule 23.

1 Amchem Prods, Inc. v. Windsor, 521 U.S. 591, 620 (1997). 2 A court considering such a request should give the Rule 3 23 certification factors "undiluted, even heightened, 4 attention in the settlement context." 5 6 Under Rule 23(a), in order to bring a class action, a 7 plaintiff must demonstrate: the class is so numerous that 8 joinder of all members is impracticable ["numerosity"], 9 (2) there are questions of law or fact common to the 10 class ["commonality"], (3) the claims or defenses of the 11 representative parties are typical of the claims or 12 defenses of the class ["typicality"], and (4) the 13 representative parties will fairly and adequately protect 14 the interests of the class ["adequacy of 15 representation"]. 16 17 In addition to these prerequisites, a plaintiff must Where, as here, a plaintiff 18 satisfy one of the prongs of Rule 23(b) in order to 19 maintain a class action. 21 plaintiff must prove that: 22 23 24 25 26 27 28 the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the
7

Id.

20 moves for class certification under Rule 23(b)(3), the

class

in

individually

1 controlling the prosecution or defense of separate actions; 2 (B) the extent and nature of any litigation concerning the 3 controversy already commenced by or against members of the 4 class; (C) the the desirability litigation or of undesirability the claims in of the 5 concentrating 7 8 Rule 23(e) requires the Court or to approve of any the 9 settlement, voluntary dismissal, compromise

6 particular forum.1

10 claims, issues, or defenses of a certified class. 11 Civ. P. 23(e).

Fed. R.

The court must hold a hearing and find that Review of a proposed settlement

12 "the settlement . . . is fair, reasonable, and adequate." 13 Fed. R. Civ. P. 23(e)(2). 14 generally proceeds in two stages, a hearing on preliminary 15 approval followed by a final fairness hearing. See Federal 16 Judicial Center, Manual for Complex Litigation, § 21.632 17 (4th ed. 2004). 18 19 At the preliminary approval stage, a court determines 20 whether a proposed settlement is "within the range of 21 possible approval" and that notice should be sent to class 22 members. In re Corrugated Container Antitrust Litig., 643 23 F.2d 195, 205 (5th Cir. 1981); see also Gautreaux v. 24 Pierce, 690 F.2d 616, 621 n.3 (stating that the purpose of 25 a preliminary approval hearing is "to ascertain whether A fourth factor, "the difficulties likely to be encountered in the management of a class action," need 27 not be considered when class certification is only for settlement purposes. Fed. R. Civ. P. 23(b)(3)(D); Amchem 28 Prods., 521 U.S. at 620. 26
8
1

1 there is any reason to notify the class members of the 2 proposed 4 5 6 III. DISCUSSION For the reasons explained below, the Court lacks settlement and to proceed with a fairness 3 hearing"); Manual for Complex Litigation § 21.632.

7 sufficient information to determine whether the proposed 8 class satisfies the requirements of Rule 23 and whether 9 the proposed settlement is fair, adequate, and 10 reasonable. 11 12 A. 13 Certification of the Class Plaintiffs seek certification under Rule 23 of a

14 single class of buyers of HCHS, based on Defendant's 15 advertising which allegedly violates: (1) California 16 Business and Professions Code section 17200; (2) 17 California Business and Professions Code section 17500; 18 (3) California Civil Code section 1750; and resulted in 19 (4) common law unjust enrichment. 20 21 22 1. Numerosity To establish, under Rule 23(a)(1), that joinder of (Mot. 1; FAC ¶ 6.)

23 all members is "impracticable," the plaintiff need not 24 show that it would be "impossible" to join every class 25 member. Haley v. Medtronic, Inc., 169 F.R.D. 643, 647 There is no specific number 26 (C.D. Cal. 1996). 28
9

27 requirement, as the court may examine the specific facts

1 of each case. 3 4

Ballard v. Equifax Check Servs., Inc., 186

2 F.R.D. 589, 594 (E.D. Cal. 1999). Here, Plaintiffs' counsel estimates the proposed (Mot. 5-6.)

5 class consists of over 120,000 persons. 7 8 9 2. Commonality

6 This satisfies the numerosity requirement of Rule 23(a).

Courts have construed Rule 23(a)(2)'s commonality Hanlon v. Chrysler Corp., 150 As the Ninth Circuit

10 requirement permissively. 12 explained: 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Id.

11 F.3d 1011, 1019 (9th Cir. 1998).

All questions of fact and law need not be common to satisfy the rule. The existence of shared legal issues with divergent factual predicates is sufficient, as is a common core of salient facts coupled with disparate legal remedies within the class.

Additionally, this Court, Pfaelzer, J., has stated that "the commonality requirement is interpreted to require very little," In re Paxil Litigation, 212 F.R.D. 539, 549 (C.D. Cal. 2003), and that "for the commonality requirement to be met, there must only be one single issue common to the proposed class." at 648. Here, Plaintiffs' FAC alleges several common
10

Haley, 169 F.R.D.

1 questions of fact and law: (1) whether Defendant's 2 advertising was false and misleading; (2) whether 3 Defendant knew or should have known it was misleading; 4 (3) whether Defendant's claims about fuel economy were 5 material to the class; (4) whether the class suffered 6 damages; (5) whether Defendant knew or should have known 7 the class members would experience significantly less 8 fuel economy than advertised; (6) whether Defendant 9 concealed or failed to tell the class about material 10 facts regarding fuel economy. 12 requirement. 13 14 15 3. Typicality To gauge typicality, a "court does not need to find (Mot. 6; FAC ¶¶ 26-32.) 11 Accordingly, Plaintiffs satisfy the commonality

16 that the claims of the purported class representative[s] 17 are identical to the claims of the other class members." 18 Haley, 169 F.R.D. at 649. The Ninth Circuit in Hanlon 19 further wrote that "[u]nder the rule's permissive 20 standards, representative claims are 'typical' if they 21 are reasonably co-extensive with those of absent class 22 members; they need not be substantially identical." 23 F.3d at 1020. 24 "must be able to pursue [their] claims under the same 25 legal or remedial theories as the unrepresented class 26 members." 27 28
11

150

Additionally, the class representatives

Paxil, 21 F.R.D. at 549.

1

Here, Plaintiffs assert their claims are typical

2 because they bought HCHs seeking fuel efficiency but were 3 never able to achieve the advertised mileage per gallon. 4 (Mot. 7-8.) They rely on excerpts from deposition Even 5 transcripts but fail to attach these to the Motion. 6 assuming for the sake of this Motion the excerpts are 7 accurately cited, however, the Court cannot assess 8 whether Plaintiffs' claims are typical because, although 9 the FAC asserts Plaintiffs were exposed to advertising 10 and relied on it, Plaintiffs do not so state in their 11 Motion. (See FAC ¶¶ 4-5 (all class members exposed to Plaintiffs are directed to amend their 12 advertising and all relied on it), 29 (named Plaintiffs' 13 claims typical).) 14 pleading with pertinent excerpts from the deposition 15 transcripts, bracketed according to Local Rules 32-1 and 16 16-2.7. 17 18 19 4. Adequacy of Representation Traditionally, courts have engaged in a two-part

20 analysis to determine if the plaintiff has met the 21 requirements of Rule 23(a)(4): (1) the class 22 representative must not have interests antagonistic to 23 the unnamed class members, and (2) the representative 24 must be able to prosecute the action "vigorously through 25 qualified counsel." 27 28
12

Lerwill v. Inflight Motion Pictures,

26 Inc., 582 F.2d 507, 512 (9th Cir. 1978).

1

Adequate representation "'depends on the

2 qualifications of counsel for the representatives, an 3 absence of antagonism, a sharing of interests between 4 representatives and absentees, and the unlikelihood that 5 the suit is collusive.'" 7 23(g). Paxil, 212 F.R.D. at 550. 6 Courts now determine the adequacy of counsel under Rule See, e.g., Hill v. Merrill Gardens, L.L.C., 2005 8 WL 2465250, *3 (N.D. Ind. 2005); F.R.C.P. 23 Advisory 9 Committee Notes. 10 11 12 a. Named Plaintiffs The Court cannot assess whether named Plaintiffs are

13 adequate representatives because Plaintiffs' counsel 14 failed to submit declarations from named Plaintiffs 15 regarding any possible conflicts of interest between them 16 and the proposed class. The Court will permit Plaintiffs 17 leave to supplement their Motion to support the absence 18 of antagonism between named Plaintiffs and the class. 19 Such materials should address whether named Plaintiffs 20 owned or leased their HCHs and the type of relief they 21 intend to claim under the Settlement Agreement. 22 23 24 b. Counsel Plaintiffs' counsel submitted substantial evidence of

25 their experience with class action, complex, and other 26 large-scale litigation, including substantial trial 27 experience. 28
13

(Joint Declaration of Co-Lead Counsel

1 Jonathan W. Cuneo and Nicholas E. Chimicles ("Cuneo & 2 Chimicles Decl.") ¶¶ 2, 3, Exs. 1-2.) 4 qualifications. 5 6 7 8 5. Predominance of Common Questions of Law or Fact and Superiority of a Class Action Plaintiffs satisfy the requirements of Rule 23(b). Plaintiffs' 3 counsel have made an adequate showing of their See Fed. R. Civ. P. 23(g).

9 Common questions of fact predominate, common questions of 10 law may predominate, and a class action is clearly the 11 superior way to resolve this controversy. 12 13 First, this action concerns claims based on 14 nationwide advertising created and distributed on behalf 15 of a single company regarding a single product; all class 16 members allegedly wrongly paid a hybrid premium, or 17 additional cost to obtain a hybrid rather than 18 conventional vehicle.2 The Court has already determined (Mot. 11; June 19 it can infer reliance on the advertising because the 20 alleged misrepresentations were material. 22 21 22, 2007 Order Denying Defendant's Motion to Dismiss 12The record is ambiguous about the amount of the 23 hybrid premium. Plaintiffs plead a hybrid premium of "nearly $7000" in their FAC and original Complaint, based 24 on comparing the prices of hybrid and non-hybrid Honda Civic models. (FAC ¶ 15; Compl. ¶ 15.) Although 25 Plaintiffs' counsel states they consulted with experts about how to "calculate the difference in value between a 26 similarly equipped Honda Civic and Honda Civic Hybrids" they do not explain why they now estimate the hybrid 27 premium at $2500, less than half the original estimate. (See Cuneo & Chimicles Decl. ¶ 44.) 28
14
2

1 13.)

Although individual damages, including restitution

2 for unanticipated fuel expenses, would vary, common 3 issues of fact predominate over individualized inquiries. 4 (See Mot. 11.) 5 6 Second, Plaintiffs assert common legal issues 7 predominate because California law applies to all members 8 of the nationwide class because all of the following are 9 located in California: (1) Defendant's headquarters, 10 where it "coordinated" Defendant's "national and regional 11 advertising" and "regulated or reviewed dealer 12 advertising"; (2) Defendant's primary advertising agency, 13 where it "created and placed all or substantially all of 14 the advertising and promotional materials at issue;" and 15 (3) the offices of Defendant's legal and regulatory 16 departments, which reviewed Defendant's advertising. 17 (Mot. 9-10 citing Clothesrigger, Inc. v. GTE Corp., 191 18 Cal. App. 3d 605, 613 (1987).) 19 20 Third, Plaintiffs also show a class action is the 21 superior method of resolving this controversy as each 22 class member has a relatively small and uniform injury. 23 (Mot. 12.) 24 25 27 28
15

For the reasons above, Plaintiffs have carried their

26 burden and satisfied the requirements of Rule 23(b)(3).

1 B. 2

Fairness and Adequacy of Settlement Agreement We now turn to the factors of Rule 23(e) to determine

3 whether the settlement is adequate and reasonable, 4 balancing several factors, including: 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the strength of plaintiffs' case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offered in settlement; the extent of discovery completed, and the stage of the proceedings; the experience and views of counsel; the presence of a governmental participant; and the reaction of the class members to the proposed settlement. Class Plaintiffs v. City of Seattle, 955 F.2d 1268 (9th Cir. 1992). Here, the Settlement Agreement calls for a total settlement amount which is undisclosed, $2.95 million in attorneys' fees, expenses and costs, including a total of $22,500 in class representative incentive payments for the two named Plaintiffs. (Mot. 4.) The declarations of Plaintiffs' counsel and the third-party mediator, as well as other materials on the record, demonstrate the parties engaged in substantial and arms-length negotiations over several sessions, in person and through various electronic media. ¶¶ 48-66.) (Mot. 12-13; Cuneo & Chimicles Decl. Although the Court is satisfied the

settlement was reached through arms-length negotiation, it lacks sufficient information to grant or deny preliminary approval to the settlement.
16

The Court

1 directs the parties to submit the information requested 2 below. 3 4 5 1. The strength of Plaintiffs' case The Court lacks sufficient information to assess the Plaintiffs assert the application of (See Mot. 19-20.) The parties

6 strength of Plaintiffs' case and the risk and duration of 7 further litigation. 8 California law to all members of the proposed class is a 9 contested legal issue. 10 believe two cases pending before the California Supreme 11 Court, In re Tobacco II Cases, No. S147345 and Pfizer v. 12 Superior Court, No. 2145775 "may affect core legal issues 13 in this Lawsuit." The parties fail to explain how or why (See Mot. 18 n.24.) 14 these cases will affect this suit. 16 issue at the hearing. 17 18 Plaintiffs also assert preparation for trial will (Mot. 1819 require additional discovery, work with experts, and 20 preparation of a motion for summary judgment. 21 19.) While discovery, pretrial motion practice, and

15 The parties are invited to address the Court on this

22 trial preparation in a complex case normally entail 23 significant expense, their anticipated occurrence does 24 not alone inform the Court about which disputed legal or 25 factual issues Plaintiffs' counsel unearthed when 26 "review[ing] thousands of pages of relevant documents 27 produced by [Defendant] and third parties and tak[ing] 28
17

1 four depositions of [Defendant's] executives . . . ." 2 (Mot. 14.) Nor does the Motion explain what Plaintiffs 3 learned from their experts which led them to reduce the 4 estimate of the hybrid premium from $7000 to $2500. 5 (Compare FAC ¶ 15 with Mot. 11.) 7 8 9 2. The amount offered in settlement Plaintiffs assert the settlement is within the range The Court directs the 6 parties to submit further information on these issues.

10 of possible approval because it "provides a meaningful 11 benefit to all Settlement Class Members," is "tailored to 12 remedy . . . the specific issues raised by Plaintiffs' 13 allegations," and is "user-friendly and accessible." 14 (Mot. 15.) In particular, Defendants assert the in-kind 15 benefits, the Option A and B discounts on certain of 16 Defendant's vehicles, are reasonable because they are of 17 real economic value to members of the proposed class. 18 (Mot. 15.) 19 20 Based on the record here, the Court cannot determine 21 the extent to which the proposed relief, including DVDs, 22 changes to advertising, the different types of payments 23 to those qualifying for Options A, B, and C, and the lack 24 of monetary payment for some class members is adequate 25 and reasonable for the proposed class of over 120,000 26 persons. 27 28
18

(See Mot. 2-4, 12.)

1

First, Plaintiffs assert the DVD is of real value to

2 the class, drawing parallels to cases such as Shaw v. 3 Toshiba America Information Systems, Inc., 91 F. Supp. 2d 4 942, 946 (E.D. Texas 2000), in which settlement 5 consideration included a specially-designed software 6 patch. (Mot. 17.) There is insufficient information in 7 the record here about the proposed content of the DVD, 8 which remains to be developed, to assess the extent to 9 which it may be valuable consideration. 10 Agreement 14-15.) (See Settlement For example, the record does not

11 reveal the extent of the fuel efficiency gains estimated 12 to be garnered if members of the proposed class follow 13 its instructions. 14 15 Second, as to the value of in-kind payments, 16 Plaintiffs rely on Shaw, 91 F. Supp. 2d at 960, although 17 it undermines Plaintiffs' position in several important 18 respects. On the one hand, Shaw approves of settlements Shaw, 91 F. Supp. 2d 19 including in-kind payments so long as they are of "real, 20 economic value to class members." 21 at 960. 22 some economic value. Payment of $1,000, $500, or $100 is no doubt of On the other hand, Shaw supported

23 its conclusion that the benefits at issue in the case 24 before it, "Toshiba Bucks," were of real value because 25 they were "designed to be as much like cash as possible ­ 26 specifically, they're assignable, aggregational, and 27 transferrable." 28
19

Shaw, 91 F. Supp. at 961.

1

By contrast, the payments proposed here do not bear They are either not assignable at all, For

2 these attributes.

3 or only to a limited degree, and for a limited time. 4 these reasons, the proposed payments here are 5 distinguishable from "Toshiba Bucks": 7 Shaw, 91 F. Supp. at 961.3 8 9 Third, the Court lacks two vital pieces of 10 information about the adequacy of the settlement: the they are not See 6 "designed to be as much like cash as possible."

11 size of the total fund and the likely claims on the fund. 12 Useful information on this subject might include: 13 · 14 15 16 17 18 · 19 20 21 22 an estimated total number of relatives or other persons eligible for transfer of the $500 Option B payments intend to purchase an Eligible Vehicle within the proposed time period;
3

an estimated total number of persons in the proposed class who intend to purchase an Eligible Vehicle within the proposed time period, qualifying for Options A or B;4

Plaintiffs also rely on Manners v. American General 23 Life Insurance Company, 1999 WL 33581944 (M.D. Tenn. 1999) but the Court's review of this case does not reveal 24 discussion of in-kind benefits. Plaintiffs assert that "the historically high brand loyalty exhibited by Honda owners" increase "the 26 likelihood that many Settlement Class Members would be purchasing Honda vehicles in the near future." (Mot. 27 16.) Plaintiffs' only support is the deposition transcript of Delgado, which was not provided with this 28 Motion. 25
20
4

1 2· 3 4 5 6 7 8 9 10 11 12 · 13 14 15 16 The Court also directs the parties to brief the 17 following issue: the reasons the parties, in seeking 18 certification of Rule 23(b)(3) opt-out class, require 19 those seeking relief under Option C to have "opted-in" 20 some time ago by filing a written Complaint with 21 Defendant or a Honda or Acura dealer. 22 23 24 25 3. The extent of discovery completed, and the stage of the proceedings Plaintiffs filed this action on March 9, 2007. Over an estimated total number of persons who are likely to recover no compensation save the DVDs from the proposed settlement. an estimated total number of persons within the proposed class who made complaints to Defendant or to authorized dealers regarding HCH fuel efficiency, allowing them to recover under Option C; whether Defendant or Plaintiffs' counsel solicited such complaints; and whether there is reason to believe members of the proposed class made complaints that were never relayed to Defendant, barring them from relief under Option C; and

26 a two-year time span, Defendant produced approximately 27 17,000 pages of documents of an undisclosed nature, 28
21

1 tailored to discovery of Defendant's "development, 2 manufacturing, research, testing, advertising and 3 handling of complaints" regarding the HCH as well as 4 Defendant's corporate structure. 5 Chimicles Decl. ¶¶ 28, 30.) (Mot. 14; see Cuneo & Plaintiffs deposed

6 representatives of Defendant regarding: advertising by 7 independent Honda dealerships and Defendant's agreements 8 with them regarding advertising; advertising of HCH 9 through various media; "[t]he origins, background, 10 questions asked, preparation and factual support for the 11 Early Buyer Study5 produced by" Defendant and any other 12 relevant buyer studies. 13 35.) (Cuneo & Chimicles Decl. ¶¶ 33The Court concludes discovery has been sufficient

14 to permit the parties to enter into a well-informed 15 settlement. 16 17 18 4. The experience and views of counsel As explained above, Plaintiffs' counsel demonstrates

19 experience with class action and complex litigation and 20 provides a helpful description of the steps counsel 21 undertook in the litigation of this action. 22 14; Cuneo & Chimicles Decl. ¶¶ 48-68.) (See Mot. The Court does

23 not doubt the experience of Plaintiffs' counsel but 24 requires their views on the fairness, reasonableness, and 25 adequacy of the settlement. 27 settlement. 28
5

Plaintiffs' counsel should

26 submit a statement regarding their views of the Plaintiffs do not explain what this study is.
22

1 2 3

5.

The reaction of the class members to the proposed settlement

Plaintiffs provide no evidence regarding class Plaintiffs

4 members' reaction to the proposed settlement.

5 counsel fail to provide any declarations, including those 6 of the named Plaintiffs, regarding their reactions to the 7 proposed settlement. 8 this factor at all. Indeed, the Motion does not mention The Plaintiffs shall submit the

9 declarations of True and Delgado regarding their view of 10 the proposed settlement. 11 12 For the above reasons, Plaintiffs have not borne Accordingly, the Court 13 their burden under Rule 23(e). 15 adequate. 16 17 C. 18 Notice Plaintiffs must provide notice to potential opt-in See Hoffmann-La Rouche Inc. v. Sperling, The claims

14 cannot conclude the settlement is fair, reasonable, or

19 class members that is "timely, accurate, and 20 informative." 21 493 U.S. 165, 172 (1989) (emphasis added). 23 in several respects. 24 25 26 28
23

22 administration process and the claims forms are deficient

1.

Claims administration process It will send

Defendant will act as the Claims Administrator.

27 (Settlement Agreement 15-19; Notice Plan).

1 the notice and claims forms to class members, attempt to 2 locate class members no longer at their original 3 addresses, provide notice via a website, and assist class 4 members with the claims process through a telephone 5 Helpline. 6 7 8 10 11 13 14 · 15 16 17 18 · 19 20 21 22 23 24 25 26 27 28
24

(Notice Plan 1-6.)

This process is adequate.

2.

Consumer Claim Form

Claim forms must be informative and accurate.

9 Hoffman-LaRouche, 493 U.S. at 172. The Consumer Claim Form is generally acceptable,

12 although the Court notes some areas of concern: Registered domestic partners, and members of civil unions, are not among the list of transferees for Option B. The Consumer Claim Form lacks a clear statement that if the potential class member does not qualify for payment under Options A, B, or C he will receive no money. The Consumer Claim Form should include a clear statement to this effect: "IF YOU DO NOT SIGN AND RETURN THIS FORM, OR IF YOU DO NOT QUALIFY FOR OPTION A, B, OR C, YOU WILL RECEIVE NO MONEY FROM THE SETTLEMENT."

1· 2 3 4 5 6 7 8 9 10 11 12 13 14

The Consumer Claim Form lacks a convenient way for class members to opt out. The Court notes that the Settlement Agreement creates serious consequences if more than 100 persons opt out of the class: Defendant has the option of voiding the Settlement Agreement, exposing both sides to continuing litigation and depriving Plaintiffs' counsel of their attorneys' fees. (See Settlement Agreement 31.) Nevertheless, the Court must safeguard the interests of all class members. Opting out should be as convenient as remaining a part of the class. 3. Class Notice Like the Consumer Claim Form, the Class

The Class Notice, like the Consumer Claim form, must

15 be accurate.

16 Notice should include registered domestic partners and 17 civil unions among the transferees for Option B relief on 18 page 5. 19 20 Like the Consumer Claim Form, the Class Notice should 21 include a clear statement regarding the consequences of 22 failure to file a Consumer Claim Form or to qualify for 23 relief under Options A, B, or C. 25 and answers located on page 2. 26 D at 2.) 27 28
25

(Settlement Agreement Ex. D at 5.)

This is very important (Settlement Agreement Ex.

24 information and should appear on the chart of questions

1

In addition, the Class Notice, at page 6, should

2 provide reference to a form through which class members 3 may exclude themselves, rather than detailed instructions 4 about how to compose their request for exclusion. 5 (Settlement Agreement Ex. D at 6.) 6 7 The parties should also clarify the statement at page "If you do not 8 6 of the Class Notice which states:

9 object to the proposed settlement and/or wish to 10 participate in the settlement, you need not do anything. 11 If the Court approves the settlement, you will 12 automatically become eligible to receive all the benefits 13 to which you are entitled." 15 later claim benefits. 16 17 D. 18 19 Attorneys' Fees and Incentive Payment for Named Plaintiff The Motion indicates Plaintiffs will seek allocation This may lead class members 14 to believe they need not file Consumer Claim Form to (Settlement Agreement Ex. D at 6.)

20 of settlement funds for attorneys' fees and for incentive 21 payments for the named Plaintiffs. 22 23 24 25 26 28
26

1.

Attorneys' fees

Plaintiffs assert claims under California law, and

27 California law governs the award of attorneys' fees.

1 Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th 2 Cir. 2002). California recognizes the common fund 3 doctrine for the award of attorneys' fees to prevailing 4 plaintiffs whose efforts result in creation of a fund 5 benefitting others. 6 (1977). Serrano v. Priest, 20 Cal. 3d 25, 35 Under both California and Ninth Circuit

7 precedent, a court may exercise its discretion to award 8 attorneys' fees from a common fund by applying either the 9 lodestar method or the percentage-of-the-fund method. 10 Wershba v. Apple Computer, Inc., 91 Cal. App. 4th 224, 11 253 (2001); Fischel v. Equitable Life Assur. Soc'y of 12 U.S., 307 F.3d 997, 1006 (9th Cir. 2002) (citing 13 Vizcaino, 290 F.3d at 1047). 14 15 Plaintiff's counsel, Cuneo and Chimicles, will seek (Stipulation 16 up to 2.95 million in attorneys' fees, costs, expenses, 17 and incentive payments for Plaintiffs. 18 20:24-28; 21:1-2.) 19 20 Plaintiffs' counsel reviewed documents, deposed They do not state 21 several experts, and engaged in extensive negotiations. 22 (Cuneo & Chimicles Decl. ¶¶ 48-66.) 23 the hours they have spent on this case although they 24 state their fees incurred thus far, calculated pursuant 25 to the lodestar method, would be approximately the same 26 amount as the fees they seek; by the time the settlement 27 reaches final approval, their fees calculated through the 28
27

1 lodestar method will exceed the fee they seek. 2 Chimicles Decl. ¶ 68; Mot. 24.) As noted above,

(Cuneo &

3 Plaintiffs' counsel provide insufficient information 4 about the value of the benefits that will be provided to 5 the proposed class and the estimated liability of 6 Defendant. On the basis of the information submitted in 7 support of the Motion, the Court cannot assess the 8 results Plaintiffs' counsel have provided for the class. 9 Plaintiffs' counsel have not met their burden regarding 10 an award of attorneys' fees. 11 12 13 2. Incentive payments for Plaintiffs The Motion indicates named Plaintiffs will seek a (Settlement Agreement 21.) The

14 total of $22,500 in incentive awards: $12,500 for True 15 and $10,000 for Delgado. 16 criteria courts may consider in determining whether to 17 make an incentive award include: 18 19 20 21 22 23 1) the risk to the class representative in commencing suit, both financial and otherwise; 2) the notoriety and personal difficulties encountered by the class representative; 3) the amount of time and effort spent by the class representative; 4) the duration of the litigation and; 5) the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation.

24 Van Vranken v. Atlantic Richfield Co., 901 F. Supp. 294, 25 299 (N.D. Cal. 1995). 26 27 28
28

1

The declaration of Chimicles and Cuneo gives some

2 general information about the tasks Plaintiffs performed 3 ­ including communicating with their counsel regarding 4 interrogatories, requests to admit, and document 5 requests, and preparing for and testifying at 6 depositions. (See Mot. 25 citing Cuneo & Chimicles Decl. In addition, True attended a hearing (Cuneo & Chimicles Decl. ¶¶ 21, 7 ¶¶ 42, 43, 55, 66.) 9 66.)

8 and a status conference.

Nevertheless, Plaintiffs' counsel provides little

10 detail relevant to the factors listed in the preceding 11 paragraph, including the risks shouldered, notoriety 12 experienced, time required, and personal benefits derived 13 by Plaintiffs from the litigation. (See Mot. 25 citing Accordingly, 14 Cuneo & Chimicles Decl. ¶¶ 42, 43, 55, 66.) 16 reasonable.

15 the Court cannot assess whether these awards are fair or Plaintiffs have not carried their burden as The Court directs Plaintiffs' 17 to incentive awards.

18 counsel to submit additional information, including 19 declarations from the Plaintiffs themselves. 20 21 E. 22 Notice Pursuant to 28 U.S.C. section 1715 Plaintiffs move the Court to find that Defendant

23 provided proper notice of proposed settlement pursuant to 24 the Class Action Fairness Act ("CAFA"), in particular 28 25 U.S.C. § 1715(b). 27 Agreement. 28
29

Plaintiffs attach a form letter

26 providing notice as Exhibit A to the Settlement Section 1715(b) requires Defendant to serve

1 the notice on certain officials ten days after filing the 2 proposed settlement. 4 sent. This made it difficult to file, 3 concurrently with the Motion, proof the letters had been Nevertheless, the Court requires proof the letters 5 were timely sent before it can make the finding requested 6 by Plaintiffs. 7 8 9 IV. CONCLUSION As explained above, Plaintiffs have failed to

10 establish that their proposed class is entitled to 11 certification under Federal Rule of Civil Procedure 12 23(a). Moreover, they have failed to establish that the Accordingly, the Court DENIES 13 proposed settlement is fair, reasonable, and adequate as 14 required by Rule 23(e). 15 the Motion. The Court will permit Plaintiffs to submit

16 additional information in support of the Motion. 17 Plaintiffs shall file any such materials no later than 18 April 24, 2009. 19 20 21 Dated: March 25, 2009 22 23 24 25 26 27 28
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VIRGINIA A. PHILLIPS United States District Judge