Dickerson et al v. York International Corporation et al
MEMORANDUM (Order to follow as separate docket entry) re 92 Unopposed MOTION for Attorney Fees Approval of Attorneys' Fees and Expenses filed by Katie Evans Moss, Steven Dickerson, Nancy Roberts, Richard Sanchez, Robert Hester, & 94 P laintiffs' Motion For Final Approval Of Class Action Settlement filed by Katie Evans Moss, Steven Dickerson, Nancy Roberts, Richard Sanchez, Robert Hester. (See memo for complete details.) Signed by Chief Judge Christopher C. Conner on 8/22/17. (ki)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
STEVEN DICKERSON, et al.,
CORPORATION, et al.,
CIVIL ACTION NO. 1:15-CV-1105
(Chief Judge Conner)
The above-captioned action involves claims arising from the alleged failure
of copper evaporator and condenser coils used by defendants York International
Corporation and Johnson Controls, Inc., in residential and light-commercial airconditioning and heat pump systems. Before the court are a motion (Doc. 94) for
final approval of class action settlement and motion (Doc. 92) for attorneys’ fees
and expenses. For the reasons articulated on the record during a fairness hearing
convened on August 16, 2017 and reaffirmed in further detail herein, the court will
grant both motions.
Factual Background and Procedural History
Plaintiffs commenced this litigation by filing a class action complaint (Doc. 1)
on June 5, 2015 against York International Corporation and Johnson Controls, Inc.
(collectively “JCI”). The matter is currently proceeding on plaintiffs’ first amended
complaint (Doc. 31) filed September 21, 2015. Therein, plaintiffs assert claims for
declaratory relief, injunctive relief, and unjust enrichment, in addition to claims for
breach of express and written warranties under federal and state laws. (Id. ¶¶ 121-
278). Plaintiffs’ claims concern alleged defects in copper evaporator and condenser
coils manufactured and sold by JCI and installed in plaintiffs’ air-conditioning and
heat pump systems. (See id.) Plaintiffs allege that the uncoated copper coils used
by JCI are known to be vulnerable to formicary corrosion, pitting corrosion, and
other defects which result in costly refrigerant leaks under normal usage. (See id.)
According to plaintiffs, JCI’s coils are substandard compared to similar products,
viz., tin-coated copper or aluminum coils. (See id. ¶ 6). Plaintiffs further contend
that, although JCI’s limited manufacturer’s warranty covers a replacement coil
itself, the warranty does not cover labor or refrigerant costs, causing homeowners
to incur substantial out-of-pocket expenses. (See id. ¶¶ 106, 108, 112).
JCI denies these allegations. (See Doc. 95 at 2, 5). JCI maintains that
only 1.5 percent of all coils manufactured from 2010 to present have failed for any
reason, and that less than 10 percent of that number are believed to have failed due
to corrosion. (Id. at 5). JCI also contends that environmental factors rather than
manufacturing defects are likely responsible for the limited occasions of corrosioninduced damage. (Id.) JCI moved to dismiss the amended complaint on October 5,
2015. (Doc. 36). The motion is fully briefed and raises timeliness, justiciability, and
merits challenges to the various counts of plaintiffs’ amended complaint. (See Docs.
39, 48, 51).
The parties moved to stay these proceedings pending mediation on
December 22, 2015. (Doc. 52). The court granted the motion, and the parties
participated in several mediation sessions with retired federal magistrate judge
Diane M. Welsh. Those sessions were successful and ultimately produced the
settlement agreement currently before the court for approval. (Doc. 95 at 6-7).
On November 14, 2016, the parties filed a motion (Doc. 78) for preliminary
approval of class settlement agreement. The court granted preliminary approval
and provisionally certified a settlement class under Federal Rule of Civil Procedure
23 on November 22, 2016. (Doc. 80). The settlement documents compartmentalized
the relief to be offered into four distinct categories based on the nature of the harm
to class members, as follows:
Class members who experienced one copper coil failure between January
1, 2008 and the preliminary approval date would receive a $75 service
rebate certificate for service performed by an authorized JCI dealer;
Class members who experienced two or more copper coil failures between
January 1, 2008 and the preliminary approval date would receive a check
as reimbursement of their out-of-pocket expenses up to $550.00 for each
replacement (but no more than $1,100 for all replacements);
Class members who experience a first copper coil failure after the
preliminary approval date would receive an aluminum replacement coil
plus a $75 service rebate certificate for service performed by an
authorized JCI dealer; and
Class members who experience two or more copper coil failures, with at
least one occurring after the preliminary approval date, would receive
an aluminum replacement coil plus a check as reimbursement of their
out-of-pocket expenses up to $550.00 for each replacement (but no more
than $1,100 for all replacements).
(Doc. 79-1 ¶¶ 15-18).
Counsel contacted the court on December 28, 2016 to request a telephonic
status conference concerning the preliminarily-approved settlement. The parties
reported recently learning that certain air-conditioning and heat pump systems
could not accept replacement aluminum condenser coils. (See Doc. 83 ¶ 2). The
parties initially believed the issue impacted only condenser coil class members, but
eventually learned that a limited number of systems could not accept aluminum
evaporator coils either. (See id. ¶ 4). We tasked the parties to develop appropriate
alternative remedies and to file a renewed motion for preliminary approval. With
the mediator’s assistance, the parties negotiated an amended settlement.
The parties filed a motion (Doc. 89) for preliminary approval of the amended
settlement agreement on March 8, 2017. The categories of relief are unchanged for
class members who experience copper coil failures prior to preliminary approval.
(Doc. 90-1 ¶¶ 15-16). For copper coil failures post-dating the preliminary approval
date, the parties propose the following relief:
Class members who experience a first copper coil failure after the
preliminary approval date will receive:
o If the failed coil is an evaporator coil, either an aluminum
replacement coil or a tin-coated copper coil (if aluminum is not
feasible) in addition to a $75 service rebate certificate for service
performed by an authorized JCI dealer; or
o If the failed coil is a condenser coil, a new copper replacement coil
with an extended copper coil warranty and a $75 service rebate
certificate for service performed by an authorized JCI dealer.
Class members who experience two or more copper coil failures after the
preliminary approval date will receive:
o If the failed coil is an evaporator coil, either an aluminum
replacement coil or a tin-coated copper coil (if aluminum is not
feasible) in addition to a check as reimbursement for out-of-pocket
expenses up to $550 for each replacement (but no more than $1,100
for all replacements); or
o If the failed coil is a condenser coil, a new copper replacement coil
with an extended copper coil warranty in addition to a check as
reimbursement for out-of-pocket expenses up to $550 for each
replacement (but no more than $1,100 for all replacements).
(Id. ¶¶ 17-18). The settlement allows reimbursement and replacement regardless of
the cause of the failure. (See Doc. 95 at 8). The terms of the settlement apply only
to copper coil failures that occur while the coil in question is covered by the original
manufacturer’s warranty. (See Doc. 90-1 ¶¶ 15-18). For those class members whose
systems cannot accept a replacement aluminum or tin-coated copper coil, JCI will
provide a replacement uncoated copper coil with an extended eight-year parts and
labor warranty, in addition to the rebate or reimbursement described above. (See
id. ¶¶ 14(O), 17-18). The deadline for filing claims is 120 days after the date of final
approval or 120 days after the class member experiences a coil failure, whichever is
later. (See id. ¶ 14(F)).
By order dated March 15, 2017, we provisionally certified the settlement
class, preliminarily approved the amended settlement agreement, and scheduled a
final approval hearing for August 16, 2017. (Doc. 91). The settlement administrator
thereafter provided notice to class members in accordance with the court-approved
notice plan. (See Doc. 97 ¶¶ 7-12). In addition to internet banner ads, publication
notice, and press releases, the settlement administrator disseminated direct notice
to 893,620 settlement class members. (See id.) Of those class members, 11,403
returned claim forms.1 Only twelve objections were received. (See id. ¶ 20).
This updated figure was provided to the court by class counsel during the
final approval hearing.
The court convened a final approval hearing on August 16, 2017. (Doc. 91).
None of the twelve objectors appeared personally or through counsel. During the
hearing, the court pressed all counsel about particular aspects of the settlement and
fully explored the parties’ proposed resolution. We noted on the record that the
settlement appears to be fair, reasonable, and adequate. This memorandum
supplements and memorializes the court’s findings.
Rule 23 Class Certification
Class certification under Rule 23 requires a two-step process. First, a
putative class must meet each of four requirements of Rule 23(a): numerosity,
commonality, typicality, and adequacy. See In re Hydrogen Peroxide Antitrust
Litig., 552 F.3d 305, 309 n.6 (3d Cir. 2008). These determinations require a court to
conduct a “rigorous analysis” of the relevant evidence to determine whether the
elements of Rule 23 have been met. Id. at 310. In considering the evidence, courts
should address all relevant legal and factual issues and make preliminary inquiries
into the merits of the case. See id. at 317. The party seeking class certification
bears the burden to prove, by a preponderance of the evidence, each requirement
of Rule 23(a). In re NFL Players Concussion Injury Litig., 821 F.3d 410, 426 (3d Cir.
2016) (quoting In re Cmty. Bank of N. Va. Mortg. Lending Practices Litig., 795 F.3d
380, 391 (3d Cir. 2015)).
Once the elements of Rule 23(a) are satisfied, the suit must fit within
one of three categories described in subsection (b). Rule 23(b)(3) certification is
proper if a court finds “that the questions of law or fact common to class members
predominate over any questions affecting only individual members, and that a class
action is superior to other available methods for fairly and efficiently adjudicating
the controversy.” FED. R. CIV. P. 23(b)(3). The dual requirements of Rule 23(b)(3)
are referred to as predominance and superiority. In re Hydrogen Peroxide, 552
F.3d at 310.
The parties posit that the elements of Rule 23(a) and 23(b)(3) are easily
satisfied. We will address each of the prerequisites seriatim. Ultimately, the court
agrees that certification of this settlement class is appropriate under Federal Rule
of Civil Procedure 23.
No minimum threshold of plaintiffs is required to obtain class certification.
See Stewart v. Abraham, 275 F.3d 220, 226 (3d Cir. 2001) (citing 5 JAMES WM. MOORE
ET AL., MOORE’S FEDERAL PRACTICE
§ 23.22[a] (3d ed. 1999)). However, the Third
Circuit Court of Appeals has noted that the numerosity requirement is “generally”
satisfied if the potential class exceeds 40 members. Id. at 226-27. The settlement
administrator herein reports that more than 10,000 class members have submitted
claims to date. (See Doc. 97 ¶ 18). Given the nature of the settlement, claims will
continue to be filed for the foreseeable future. The numerosity factor resolves in
favor of certification.
The commonality requirement is satisfied when the named plaintiffs share
“at least one” question of law or fact with the prospective class. See Stewart, 275
F.3d at 227 (quoting Baby Neal v. Casey, 43 F.3d 48, 56 (3d Cir. 1994)). Thus, the
requirement “is easily met.” Baby Neal, 43 F.3d at 56. The parties here identify
several common issues of law and fact, including: whether uncoated copper coils
are susceptible to premature failure; whether that failure is due to formicary and
pitting corrosion; whether the alleged corrosion amounts to a “defect”; whether
JCI knew its products were “defective”; whether JCI disclosed the alleged defect
in its products; and whether JCI took measures to mitigate the harm once known.
(See Doc. 95 at 16-17). These manifold common issues support certification.
The typicality inquiry examines whether the named plaintiffs’ interests align
with the interests of absent class members. See Stewart, 275 F.3d at 227 (quoting
Moore, supra, at § 23.24). Typicality is generally satisfied when each plaintiff
would need to prove the existence of the same adverse behavior by the defendant.
Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 183-85 (3d Cir.
2001) (citations omitted). The named plaintiffs’ claims and the prospective class
members’ claims sub judice all arise from allegations that JCI’s uncoated copper
coils are defective. (See Doc. 31 ¶¶ 122-278). And all claims are grounded in the
same or similar legal theories—principally, breach of implied and express
warranties. (See id.) This factor favors certification.
Under Rule 23(a)(4), class representatives must “fairly and adequately
protect the interests of the class.” FED. R. CIV. P. 23(a)(4). The Third Circuit has
explained that the “linchpin of the adequacy requirement is the alignment of
interests and incentives between the representative plaintiffs and the rest of the
class.” Dewey v. Volkswagen Aktiengesellschaft, 681 F.3d 170, 183-84 (3d Cir. 2012).
The adequacy inquiry comprises two prongs: whether class counsel is competent
and qualified to conduct a class action, and whether the class representatives have
any interests adverse to or conflicting with the prospective class. See id. at 182-83
(citing In re Cmty. Bank, 418 F.3d at 303); In re Chocolate Confectionary Antitrust
Litig., 289 F.R.D. 200, 218 (M.D. Pa. 2012) (Conner, J.) (citing New Directions
Treatment Servs. v. City of Reading, 490 F.3d 293, 313 (3d Cir. 2007)).
As for the first inquiry, plaintiffs maintain that class counsel invested time
and resources in preliminary discovery and substantial research, as well as intense
and protracted settlement negotiations, and that class counsel have considerable
experience in litigating similar class actions. (See Doc. 95 at 19). The court has no
reason to doubt this assertion, which is evidenced by counsel’s exemplary, zealous,
and thorough representation at all stages of the settlement process. As for the
second inquiry, all class members, including the named plaintiffs, receive equal
treatment and benefits under the settlement. (See Doc. 90-1 ¶¶ 15-18). These
considerations weigh in favor of certification.
The predominance inquiry is “far more demanding” than the commonality
requirement. In re Hydrogen Peroxide, 552 F.3d at 310-11 (quoting Amchem Prods.,
Inc. v. Windsor, 521 U.S. 591, 623 (1997)). To satisfy this element, common issues
must constitute a “significant part” of the individual cases. See In re Chiang, 385
F.3d 256, 273 (3d Cir. 2004) (citations omitted), abrogated on other grounds by In re
Hydrogen Peroxide, 552 F.3d at 318-19 & n.18. Nonetheless, the presence of some
individualized issues and inquiries will not defeat a predominance finding. See id.
Plaintiffs contend that a trio of common issues—whether the coils are defective,
whether JCI knew they were defective, and whether JCI failed to disclose the
defect—is the fulcrum of each class member’s claim. (See Doc. 95 at 21). We agree
and conclude that this case readily surmounts the predominance hurdle.
Rule 23(b)(3) outlines several factors pertinent to the superiority inquiry, to
wit: (a) the class members’ interest in individually controlling the action; (b) the
nature and extent of litigation already commenced by or against individual class
members; (c) the desirability vel non of concentrating the litigation in the chosen
forum; and (d) whether the case, if tried, will present intractable case management
problems. FED. R. CIV. P. 23(b)(3). The factors balance, “in terms of fairness and
efficiency, the merits of the class action against those alternative available methods
of adjudication.” In re Chocolate, 289 F.R.D. at 225 (quoting In re Warfarin Sodium
Antitrust Litig., 391 F.3d 516, 534 (3d Cir. 2004)).
As a threshold matter, plaintiffs assert (correctly) that considerations
regarding the difficulties of managing a class action through trial do not arise for
settlement-only classes because, if a settlement is approved, there will be no trial.
Amchem Prods., 521 U.S. at 620. The remaining factors support certification. The
individual class members would have little interest in pursuing individual actions
when the cost of litigating would quickly outpace the value of their claim. And
concentrated class settlement procedures avoid a potentially significant strain
on judicial resources. As this court has previously observed, certification is the
superior method of adjudication in terms of both economic and judicial efficiency
when a case involves thousands of class members disbursed throughout the United
States who otherwise likely could not afford to pursue claims individually. See In re
Chocolate, 289 F.R.D. at 225-26. We have little difficulty concluding that class
certification is the fairest and most efficient means of adjudicating this case.
Plaintiffs have established that the requirements of Rule 23(a)—numerosity,
commonality, typicality, and adequacy—are readily satisfied in this case. See FED.
R. CIV. P. 23(a). The court further finds that a settlement class may be maintained
under Rule 23(b)(3) because plaintiffs have established both predominance and
superiority. See FED. R. CIV. P. 23(b)(3). Accordingly, we will grant plaintiffs’
request for certification of a settlement class.
Approval of Class Settlement
A class action cannot be settled absent court approval upon a finding that
the settlement is “fair, reasonable and adequate.” FED. R. CIV. P. 23(e)(2). Within
the Third Circuit, it is well-established that the “law favors settlement,” especially
in class actions, when considerable resources might be saved by early and amicable
resolution of a case. In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab.
Litig. (“In re GMC Trucks”), 55 F.3d 768, 784 (3d Cir. 1995) (citations omitted).
We consider nine factors (the “Girsh factors”) in measuring the fairness of a
proposed settlement, to wit:
(1) the complexity, expense[,] and likely duration of the
litigation; (2) the reaction of the class to the settlement; (3)
the stage of the proceedings and the amount of discovery
completed; (4) the risks of establishing liability; (5) the risks
of establishing damages; (6) the risks of maintaining the
class action through the trial; (7) the ability of the
defendants to withstand a greater judgment; (8) the range
of reasonableness of the settlement fund in light of the best
possible recovery; [and] (9) the range of reasonableness of
the settlement fund to a possible recovery in light of all the
attendant risks of litigation.
Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975) (internal alterations and citations
omitted). After Girsh, the circuit suggested that, in appropriate circumstances,
courts may also wish to consider additional factors (the “Prudential factors”):
(1) the maturity of the underlying substantive issues,
as measured by experience in adjudicating individual
actions, the development of scientific knowledge, the
extent of discovery on the merits, and other factors that
bear on the ability to assess the probable outcome of a
trial on the merits of liability and individual damages; (2)
the existence and probable outcome of claims by other
classes and subclasses; (3) the comparison between the
results achieved by the settlement for individual class or
subclass members and the results achieved—or likely to
be achieved—for other claimants; (4) whether class or
subclass members are accorded the right to opt out of
the settlement; (5) whether any provisions for attorneys’
fees are reasonable; and (6) whether the procedure for
processing individual claims under the settlement is fair
In re NFL Players Concussion Litig., 821 F.3d at 436 (citing In re Prudential Ins.
Co. America Sales Practice Litig. Agent Actions, 148 F.3d 283, 323 (3d Cir. 1998)).
Presumption of Fairness
Plaintiffs maintain, as a threshold issue, that a presumption of fairness
applies to their proposed settlement. (Doc. 95 at 24-25); see also In re NFL Players
Concussion Litig., 821 F.3d at 436 (quoting In re Cendant Corp. Litig., 264 F.3d 201,
232 n.18 (3d Cir. 2001)). The presumption applies when (1) negotiations occurred at
arm’s length; (2) the parties exchanged sufficient discovery; (3) class counsel are
experienced in similar litigation; and (4) any objectors represent “a small fraction”
of the class. In re NFL Players Concussion Litig., 821 F.3d at 436 (quoting In re
Cendant , 264 F.3d at 232 n.18).
The presumption of fairness applies here. The parties exchanged thousands
of pages of documents and reached their settlement under the auspices of a retired
federal magistrate judge during multiple mediation sessions. (See Doc. 95 at 24-25).
It is beyond peradventure that counsel are well-qualified in class action litigation
and have vigorously pursued the interests of the plaintiff class. The objectors—12
total—represent a miniscule fraction of the class, which currently comprises more
than 10,000 members. This settlement warrants the presumption of fairness.
The fairness presumption is rebuttable, however, and the court must
fastidiously examine a settlement’s terms and ensure that class counsel has
advocated for and protected the interests of all class members. See First State
Orthopaedics v. Concentra, Inc., 534 F. Supp. 2d 500, 516 (E.D. Pa. 2007) (quoting
In re Warfarin, 391 F.3d at 534-35). Hence, courts must still explore the Girsh and
Prudential factors even after finding that the presumption applies. See, e.g., In re
NFL Players Concussion Litig., 821 F.3d at 436-37 (finding presumption applies but
nonetheless proceeding to extensive analysis of the Girsh and Prudential factors).
Complexity, Expense, and Likely Duration of Litigation
The first Girsh factor considers “probable costs, in both time and money, of
continued litigation.” Id. at 437-38 (quoting In re Warfarin, 391 F.3d at 535-36). We
agree with counsel that, had this case proceeded to trial, extensive and expensive
litigation would have ensued. Defendants’ pending motion to dismiss fully tests the
timeliness, justiciability, and merits of plaintiffs’ claims. Had any aspect of that
motion failed, the parties would have proceeded to full merits and class discovery,
dispositive motion practice, and eventually trial. The parties also highlight the
possibility of a Rule 23(f) interlocutory appeal if the court did certify a litigation
class. (See Doc. 95 at 26-27). The expense and likely duration of this litigation
Reaction of the Class to the Settlement
The second Girsh factor gauges whether class members generally support
the settlement. In re NFL Players Concussion Litig., 821 F.3d at 438 (quoting In re
Warfarin, 391 F.3d at 536). Notice in this matter was disseminated to more than
893,000 class members. (Doc. 97 ¶ 7). Of more than 10,000 responses, only 12 class
members objected to the settlement. (Id. ¶ 20). There can be little doubt that the
settlement has been well-received.
The Stage of the Proceedings and the Amount of Discovery
The third factor examines the degree to which the case developed before
counsel elected to settle—that is we ask whether counsel had a true appreciation of
the merits before negotiating. In re NFL Players Concussion Litig., 821 F.3d at 43839 (quoting In re Warfarin, 391 F.3d at 537). Here, the parties assert that counsel
conducted extensive review of the facts underlying the class claims and considered
the ramifications of settlement. (See Doc. 95 at 29). Class counsel have participated
in three other cases concerning formicary corrosion of copper coils and began this
litigation with a firm understanding of the legal and factual foundation, including all
attendant risks. (See id.) Defendants’ motion to dismiss, which the parties fully
briefed, allowed each side to consider the strengths and weaknesses of their
respective claims and defenses. This factor too favors settlement.
Risks of Establishing Liability and Damages
The fourth and fifth factors examine the dual risks of litigation—establishing
liability and damages—and balances the likelihood of success on both components
with the benefits of the negotiated settlement. In re NFL Players Concussion Litig.,
821 F.3d at 439 (quoting Prudential, 148 F.3d at 319). In other words, we measure
the potential but uncertain value of litigating with the immediate and determinable
value of settlement. See id.; see also In re GMC Trucks, 55 F.3d at 814.
If JCI were to prevail on any aspect of its motion to dismiss, plaintiffs’ claims
would be substantially weakened—if not entirely defeated right out of the gate. JCI
has identified several decisions dismissing virtually identical claims on grounds
similar to those raised in JCI’s Rule 12 motion. (Doc. 39 at 1 n.2 (collecting cases)).
Plaintiffs face a not-insignificant hurdle in establishing at trial not only that JCI’s
product was defective, but also that JCI knew and failed to disclose that its product
was defective. And plaintiffs would additionally need to establish causation—that
defective coils, rather than environmental factors, caused the corrosion. These
uncertainties militate in favor of settlement.
Risks of Maintaining the Class Through Trial
The Third Circuit recently held that the sixth Girsh factor receives
only “minimal consideration” in the settlement class context. In re NFL Players
Concussion Litig., 821 F.3d at 440 (citation omitted). Plaintiffs correctly aver that
this factor still requires some consideration because the strength of the class bears
directly on the range of recovery components of the Girsh analysis. (See Doc. 95
at 33-35 (citing In re GMC Trucks, 55 F.3d at 817)). The risk that the class may be
decertified by the district court at any time were this matter to proceed to trial
weighs in favor of settlement. See In re Warfarin, 391 F.3d at 537.
Ability of Defendants to Withstand Greater Judgment
The seventh factor is “most relevant” when the settlement is justified, at least
in part, by a defendant’s professed inability to pay. In re NFL Players Concussion
Litig., 821 F.3d at 440. The mere fact that a defendant could withstand a greater
judgment, however, does not mean that the settlement is unreasonable. See, e.g.,
id. (quoting Sullivan, 667 F.3d at 323); In re Warfarin, 391 F.3d at 538; see also In re
GMC Trucks, 55 F.3d at 818. This factor is a wash.
Range of Reasonableness of the Settlement Fund in Light
of the Best Possible Recovery and All Attendant Risks of
The final two factors together form a capstone which tests the settlement’s
overall reasonableness: they task the court to determine whether a settlement
represents “a good value for a weak case or a poor value for a strong case.” In re
NFL Players Concussion Litig., 821 F.3d at 440 (quoting In re Warfarin, 391 F.3d at
538). There is no mathematical formula for measuring reasonableness. The Third
Circuit describes the test as follows: “[T]he present value of the damages plaintiffs
would likely recover if successful, appropriately discounted for the risk of not
prevailing, should be compared with the amount of the proposed settlement.”
Prudential, 148 F.3d at 322 (quoting In re GMC Trucks, 55 F.3d at 806).
Even if plaintiffs were ultimately successful in their claims at trial, there is no
guarantee that any plaintiff would recover substantial damages. Plaintiffs request
punitive damages in their amended complaint, but the standard for recovery of
punitive damages is a stringent one. Moreover, the parties have identified several
legal and factual hurdles that stand between plaintiffs and proven liability. The
proposed settlement is reasonable in view of the risk-reduced value of plaintiffs’
Only 12 class members object to the settlement. (See Docs. 95-1 to -12). The
objections can be catalogued into five groups: those requesting reimbursement of
100 percent of out-of-pocket costs; those requesting reimbursement for incidental
damages; those seeking to expand the dealers with whom rebates can be redeemed
beyond JCI authorized dealers; those who believe the claims process requires too
much documentation; and those who contend that the warranty period should be
extended for uncoated copper coils which have not yet experienced a failure. (See
id.) Plaintiffs respond to each of these objections at length in their memorandum
supporting final approval. (Doc. 95 at 38-51). We address the objections in turn.
All 12 objectors first take issue with the amount of reimbursement provided
by the settlement. They contend that the settlement is unreasonable for failure to
The parties do not address the Prudential factors in their motion. The
court finds that only two are relevant sub judice. The procedure for processing
individual claims is the subject of an objection and is addressed in the next section.
The provision for and reasonableness of attorneys’ fees is also discussed infra in
Section C examining class counsel’s motion for attorneys’ fees and expenses.
reimburse homeowners 100 percent of their out-of-pocket costs. This argument
fundamentally misapprehends the bargained-for nature of the benefit provided: a
settlement necessarily requires all parties to make calculated concessions. Here,
JCI compromises by waiving the protective shield of its parts-only warranty; the
class compromises by accepting a guaranteed but risk-reduced benefit previously
unavailable to them. The $75 rebate certificate for one-time failures reflects the
reality that a single failure is not necessarily indicative of a defective product; the
$550 cash reimbursement for two or more failures, capped at $1,100 for all failures,
reflects that a second failure within the warranty period is suggestive (but not ipso
facto proof) of a defect. (See Doc. 95 at 40-44). These amounts were the result of
intense and informed negotiations with the assistance of the mediator. In view of
the risks of proving liability and causation, these awards are quite reasonable.3
The objections seeking incidental damages are related to the above request
for full reimbursement of service costs. These objectors request reimbursement for
all conceivable costs associated with an alleged defect, ranging from damage caused
to air duct systems, lost wages for taking time off work for service visits, and the
potential health and safety effects caused by leaking refrigerant or a temporary lack
of proper air conditioning. Plaintiffs observe that each of these enumerated items
This same rationale answers the objection which asks why all failures
are not reimbursed equally. (See Doc. 95-1 at 3). Specifically, the objector queries:
“Shouldn’t each failure of the Copper Coil be treated equally and the compensation
for each failure be equitable, regardless of the date when and/or number of failures
that occurred?” (Id.) As detailed above, the parties deliberately chose to treat
single failure claims differently than multiple failure claims given the liability
inferences to be drawn from a second failure during the warranty period.
presents manifold and individualized issues of causation and valuation that cannot
be addressed in a class settlement context. (Doc. 95 at 46). Plaintiffs also note that
this litigation never sought to recover costs for damaged air ducts, and there is no
allegation in the pleadings that such damage results from defective coils. (See id.)
Settlements necessarily require “yielding of the highest hopes in exchange for
certainty and resolution.” In re GMC Trucks, 55 F.3d at 806. If any class member
felt they had a stronger damages claim than the rest of the class, they were free to
opt out of the settlement class. The court will overrule the objections to the rebate
and reimbursement remedies provided by
the settlement agreement.
One objector is dissatisfied that the $75 service rebate is redeemable only
with authorized JCI dealers. The objector suggests that this arrangement is selfdealing which “increases costs” for the class. (Doc. 95-7 at 1). Plaintiffs respond
with ample and adequate justification for limiting redemption to JCI dealers: the
limitation increases the likelihood that service will be performed correctly and will
allow accurate monitoring of the rebate system. (See Doc. 95 at 46-47). Because JCI
authorized dealers are independent, JCI receives no revenue from redemption of
the rebates. (Id.) This objection is without merit.
The same objector contends that the documentation required to submit a
claim is “too extensive” given that the claim period dates to 2008. (Doc. 95-7 at 1).
This objection is belied by the claim form itself, which permits claimants to prove
purchase by “[a]ny competent evidence,” including but not limited to “an invoice,
receipt, photograph, owners’ manual, or registration card.” (Doc. 90-1 at 62). To
receive a $75 rebate certificate, claimants must submit “evidence of the copper coil
failure,” including “invoice(s), receipt(s), photograph(s), correspondence to or from
JCI or an HVAC dealer or contractor, warranty claim(s), or any other competent
evidence of the failure.” (Id. (emphasis added)). Similarly, to submit a claim for a
reimbursement check, a class member need only provide proof that the coil was in
fact replaced and evidence of the amounts paid, in the form of, inter alia, invoices,
receipts, checks, credit card statements, or “any other competent evidence.” (Id.
(emphasis added)). The documentation requirement reflects the bare minimum
proof necessary to protect the settlement from abuse. The court overrules this
Finally, one objector contends that the settlement should extend the
warranty on all copper coils which have not yet failed for either the lifetime of the
product or fifteen years, the average lifetime of a unit. (Doc. 95-1 at 4). Plaintiffs’
response is twofold: first, by virtue of the settlement, JCI has already extended its
limited manufacturer’s warranty to cover labor and refrigerant costs not previously
available to homeowners; and second, extending the warranty to cover the lifetime
of the product would “illogically extend the benefit conferred . . . to the point that
the systems would be expected to need replacement” due to normal wear-and-tear.
(Doc. 95 at 49-50). The parties further allege that formicary corrosion typically
presents within 5 to 10 years of installation; thus, the current warranty period offers
an appropriate limitation for capturing claims likely related to a defective coil. (Id.)
We agree that to extend the manufacturer’s warranty as requested would result in a
windfall to class members whose systems fail for reasons other than alleged defects.
The court has rigorously reviewed the amended settlement agreement
for fairness, adequacy, and reasonableness. We have carefully considered each
of the twelve objections and have weighed the points raised therein against the
terms of the settlement. The court concludes that none of the objections upset
the presumption of fairness or the weighted balance of the Girsh factors. The
settlement provides immediate and certain relief to class members who, given the
likely value of the average claim, otherwise would lack the means or motivation to
pursue appropriate relief. The court concludes that the proposed settlement is fair,
adequate, and reasonable under Federal Rule of Civil Procedure 23. We will grant
plaintiffs’ motion for final approval of the amended settlement agreement.
Rule 23(e) mandates that all members of a class be notified of the terms
of any proposed settlement. FED. R. CIV. P. 23(e)(1). Such notice is “designed to
summarize the litigation and the settlement and to apprise class members of the
right and opportunity to inspect the complete settlement documents, papers, and
pleadings filed in the litigation.” Prudential, 148 F.3d at 327 (internal quotation
marks omitted). District courts must closely monitor notice provided at all phases
of a class action “to safeguard class members from unauthorized and misleading
communications from the parties or their counsel.” In re Cmty. Bank, 418 F.3d at
310 (internal quotation marks omitted).
We approved the parties’ notice plan in the course of provisionally certifying
the class and preliminarily approving the settlement agreement. (See Doc. 91). The
settlement administrator submitted a declaration detailing its compliance with and
implementation of the court-approved notice plan. (See Doc. 97). The rate at which
claims have been received confirms that notice has been effective. The court finds
that the notice provision of Rule 23(e) is satisfied.
Attorneys’ Fees and Expenses
An award of attorneys’ fees is within the sound discretion of this court. FED.
R. CIV. P. 23(h). Courts generally apply one of two methods to calculate attorneys’
fees: the percentage of recovery method, or the lodestar method. Prudential, 148
F.3d at 333. The lodestar method is traditionally applied in matters (like this one) in
which “the nature of the recovery” precludes estimation of the settlement’s total
value. Id. (citing In re GMC Trucks, 55 F.3d at 820). The lodestar method employs a
simple formula: multiply the number of hours reasonably attributable to the case by
a reasonable hourly billing rate. Id. Courts determine a reasonable hourly rate in
view of geographical area, the nature of the services provided, and the attorneys’
experience and qualifications. See In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 305
(3d Cir. 2005). The court has discretion to adjust the lodestar after it is calculated
based on the results obtained, the litigation’s complexity and scope, the quality
of counsel’s representation, and any public policy considerations. See Rode
v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990).
We then measure the requested fee against the lodestar to determine the
lodestar multiplier. Multipliers between one and four are routinely approved in
the Third Circuit. See In re Cendant, 243 F.3d at 742 (citing Prudential, 148 F.3d at
341). A negative multiplier reflects that counsel is requesting only a fraction of the
billed fee; negative multipliers thus “favor approval.” Altnor v. Preferred Freezer
Servs., 197 F. Supp. 3d 746, 767 (E.D. Pa. 2016) (citation omitted). Although the
percentage-of-recovery approach is inapplicable here given that the settlement
value in toto is incalculable, the Gunter/Prudential factors that typically govern
percentage-of-recovery analyses are nonetheless informative in measuring the
reasonableness of the lodestar award. Those factors are:
(1) the size of the fund created and the number of
beneficiaries, (2) the presence or absence of substantial
objections by members of the class to the settlement
terms and/or fees requested by counsel, (3) the skill and
efficiency of the attorneys involved, (4) the complexity
and duration of the litigation, (5) the risk of nonpayment,
(6) the amount of time devoted to the case by plaintiffs'
counsel, (7) the awards in similar cases, (8) the value of
benefits attributable to the efforts of class counsel relative
to the efforts of other groups, such as government
agencies conducting investigations, (9) the percentage fee
that would have been negotiated had the case been
subject to a private contingent fee arrangement at the
time counsel was retained, and (10) any innovative terms
In re Diet Drugs, 582 F.3d 524, 541 (3d Cir. 2009) (citing Gunter v. Ridgewood
Energy Corp., 223 F.3d 190 (3d Cir. 2000); Prudential, 148 F.3d 283).
Class counsel seeks attorneys’ fees in the amount of $1,000,000 and
reimbursement of out-of-pocket expenses in the amount of $22,176.81. (See Docs.
92-93, 99). They calculate a current lodestar fee of $1,156,601.75 (exclusive of costs
associated with the final approval motion and hearing), resulting in a multiplier of
0.865. Counsel suggests that the negative multiplier, combined with an examination
of the Gunter/Prudential factors, favors approving the requested fee.
The court agrees. The settlement benefits a class of substantial size;
the attorneys are well-qualified; the case involved substantial time and resources
and could be fairly characterized as complex; and class counsel proceeded despite
the risk that JCI could prevail (and in fact had prevailed in other, similar cases). In
an analogous case involving Lennox, the court approved a fee award at a lodestar
multiplier of .88. See Thomas v. Lennox Indus. Inc., No. 1:13-CV-7747 (N.D. Ill.).
Moreover, despite the additional efforts by class counsel necessary to resolve coil
incompatibility issues after the first settlement agreement had been preliminarily
approved, class counsel did not increase its initial fee request. Only one objection
speaks to attorneys’ fees; that objection is without merit—it does not genuinely
dispute counsel’s calculation or performance, but instead suggests that the fee
award should be distributed amongst the class.
Class counsel also request reimbursement in the amount of $22,176.81 for
out-of-pocket expenses such as copying fees, expert fees, computerized research,
travel, and costs of mediation. (Doc. 99). The settlement agreement contemplates
reimbursement for costs and expenses up to a maximum of $25,000. (See Doc.
90-1 ¶ 59). Given the relative complexity of this matter, the court concludes that
reimbursement of costs and expenses of $22,176.81 is reasonable.
Plaintiffs lastly ask the court to approve service awards in the amount of
$2,500 each for named plaintiffs Steven Dickerson, Robert Hester, Nancy Roberts,
Katie Evans Moss, and Richard Sanchez. (See Doc. 96; see also Doc. 90-1 ¶ 64). A
service award compensates class representatives for services provided and risks
incurred during the course of litigation and settlement proceedings and rewards
their public service in contributing to enforcement of the laws. See Sullivan, 667
F.3d at 333 n.65. The court finds that the named plaintiffs’ assistance to this case
was valuable and substantial. The service awards of $2,500 to each named plaintiff
are entirely reasonable.
For all of the reasons stated herein, the court will grant in full the pending
motion (Doc. 94) for final approval of class action settlement and motion (Doc. 92)
for approval of attorneys’ fees and expenses. An appropriate order shall issue.
/S/ CHRISTOPHER C. CONNER
Christopher C. Conner, Chief Judge
United States District Court
Middle District of Pennsylvania
August 22, 2017
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