Madrid et al v. Nissan North America, Inc. et al
Filing
145
MEMORANDUM OPINION. Signed by District Judge Eli J. Richardson on 1/24/2022. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(ln)
IN THE UNITED STATES DISTRICT COURT FOR THE
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
CHEYNNE NORMAN, et al., individually
and on behalf of a class of similarly situated
individuals,
Plaintiffs,
v.
NISSAN NORTH AMERICA,
Defendant.
PATRICIA WECKWERTH, et al.,
individually and on behalf of a class of
similarly situated individuals,
Plaintiffs,
v.
NISSAN NORTH AMERICA,
Defendant.
CHRISTOPHER GANN, et al., individually
and on behalf of a class of similarly situated
individuals,
Plaintiffs,
v.
NISSAN NORTH AMERICA,
Defendant.
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NO. 3:18-cv-00534
JUDGE RICHARDSON
NO. 3:18-cv-00588
JUDGE RICHARDSON
NO. 3:18-cv-00966
JUDGE RICHARDSON
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MEMORANDUM OPINION
Pending before the Court is Defendant Nissan North America, Inc. (“NNA”)’s Motion to
Enforce Settlement Agreement and Approval Order, which was filed in all of the three abovecaptioned matters (Norman, et al. v. Nissan North America, Inc. (Case No. 3:18-cv-00534), Gann,
et al. v. Nissan North America, Inc. (Case No. 3:18-cv-00966), and Weckwerth, et al. v. Nissan
North America, Inc. (Case No. 3:18-cv-00588)). (Doc. No. 125).1 NNA filed a Memorandum in
Support of its Motion to Enforce Judgment (Doc. No. 126) with several attachments (Doc. Nos.
127-1–127-6). Non-party AUL Corporation (“AUL”) responded. (Doc. No. 135). NNA thereafter
replied. (Doc. No. 143).
BACKGROUND
This case involves claims brought by a nationwide class of owners and lessees of Nissan
vehicles equipped with a Continuously Variable Transmission (“CVT”). (Doc. No. 70 at 7).
Plaintiffs allege that the CVT systems in these vehicles (“Class Vehicles”)2 are defective and pose
an unreasonable safety risk which requires the transmission to be replaced prematurely. (Id.). On
July 16, 2019, the Court granted Plaintiffs’ Motion for Preliminary Approval in all three matters
and preliminarily certified a Settlement Class (“the Class”) consisting of “[a]ll current and former
1
For the sake of efficiency, all references herein to document numbers for filings refer to those in
Norman, et al. v. Nissan North America, Inc. (Case No. 3:18-cv-00534). For each such filing
referred to herein, a substantively identical filing was made in each of the other two cases.
2
The particular model of Nissan vehicle constituting a Class Vehicle varies among the three cases.
Plaintiffs in these three cases were ultimately grouped in the following manner for settlement
purposes: Norman (Case No. 3:18-cv-0534) concerns Nissan Juke vehicles, Gann (Case. No. 3:18cv-0966) concerns Nissan Altima vehicles, and Weckwerth (Case. No. 3:18-cv-0588) concerns
Nissan Sentra and Versa vehicles. (Doc. No. 71 at 5 (also explaining that these cases were recaptioned accordingly)).
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owners and lessees of [Class vehicles] who purchased or leased Class Vehicles in the United States
or its territories including Puerto Rico.” (Doc. No. 80).
Between the preliminary and final approval stages, NNA received a demand letter from
AUL, a third-party company that sells vehicle-service contracts for which customers pay AUL a
fee in order for AUL to cover certain repair costs customers may incur after expiration of their
manufacturer’s warranty. (Riehle Decl., Ex. B to Doc. No. 126). AUL’s demand letter asserted
that the settlements “contain a glaring omission” by not reimbursing repair costs paid by a service
contract provider such as AUL because “[a]s a service provider to Nissan vehicle owners, AUL
stands in the shoes of its customers and is entitled to recover in subrogation the fees it paid to fix
Nissan’s defective product.” (Id.). AUL did not intervene in the present case.
On March 10, 2020, the Court entered, in each of the three actions, a Final Approval Order
and Judgment, whereby the Court approved a class settlement and dismissed with prejudice claims
brought by the putative class. (Doc. No. 123). The Court’s order did the following: (1) provided
that each Class Member who had not opted out was bound by the terms of the Settlement
Agreement and released and discharged NNA from all “Released Claims” (Doc. No. 123 at ¶¶ 1314), defined in the Settlement Agreement (Doc. No. 71-2 at ¶¶ 34, 103) to include all claims “based
upon or in any way related to transmission design, manufacturing, performance, or repair of Class
Vehicles, including but not limited to all claims asserted in” this case; (2) permanently enjoined
Class Members “and their successors and assigns” from pursuing “in any forum” “either directly
or indirectly” any Released Claim (Doc. No. 123 ¶ 15); and (3) retained continuing exclusive
jurisdiction over “any suit, action, proceeding or dispute arising out of or relating to [the Final
Approval Order] and the Settlement Agreement, or the applicability of the Settlement Agreement”
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including any action “in which the provisions of the Settlement Agreement are asserted as a
defense in whole or in part to any claim or cause of action.” (Id. at ¶ 18).
Following final approval, AUL sued NNA in California state court (A.U.L. Corp. v. Nissan
North America, Inc., Case No. 20CV000362 (the “California Suit”)) (see Complaint, Doc. No.
127-1). In the California Suit, AUL seeks payment from NNA related to costs AUL paid under its
service contracts to repair NNA vehicles equipped with an allegedly defective CVT. A total of 712
of the vehicles for which AUL seeks to recover repair costs in the California Suit are Class
Vehicles that were repaired for members of the federal Class (with three of these 712 vehicle
owners having opted out of the Class Settlement). (Doc. No. 126 at 17–18 (citing Riehle Decl.
(Doc. No. 127) at ¶¶ 7–8)). AUL’s claims include a subrogation claim based on the theory that
“customers of AUL who own or lease Nissan vehicles have suffered losses” including “associated
repair costs” by virtue of the alleged CVT defect and that “AUL sustained losses in covering the
cost of CVT repairs” “in full satisfaction of the claims of its customers” (including members of
the Settlement Class) against NNA. (Doc. No. 126 at 8). AUL also brings claims for restitution,
equitable contribution, and quantum meruit, which do not specifically invoke a subrogation theory.
(Doc. No. 127-1 at 7-8).
On June 23, 2021, Judge Victoria Wood stayed the California Suit on the grounds that this
Court retains jurisdiction to enforce the settlement agreement, stating that this jurisdiction
“includes the applicability and scope of the settlement agreements” and that “the federal court [in
Tennessee] must first decide whether this litigation falls under its jurisdiction pursuant to the
settlement agreements.” (Doc. No. 127-6 at 3). In staying the matter, Judge Wood directed NNA
to “file, in the federal court within 30 days of [June 23, 2021] a motion to enforce the settlement
agreement,” noting that a failure to do so would be “treated as a waiver of [Defendant NNA’s]
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right to seek relief in that forum and a submission to [the California state court’s] jurisdiction.”
(Id. at 2).
NNA accordingly filed the present Motion in this Court, which states in pertinent part the
following: “NNA brings this motion with the permission and, indeed, pursuant to an Order of
Judge Victoria Wood, who is presiding over the California Suit. By Order dated June 23, 2021,
Judge Wood granted NNA’s Motion to Stay and agreed with NNA that this Court should decide
whether the California Suit is barred in whole or part by the Class Settlements this Court
approved.” (Doc. No. 126 at 6).3
The parties do not indicate in the Motion or response thereto any opposition to this Court
having proper jurisdiction to rule on the Motion.4 Likewise, the Court finds that this Motion does
properly fall under this Court’s jurisdiction. Judge Wood’s June 23, 2021 Order explains the
relevant jurisdictional grounds: “The federal court in Tennessee made it clear that it retained
jurisdiction to enforce the settlement agreements. This jurisdiction includes the applicability or
scope of the settlement agreements. Although 712 of the 1,751 vehicles appear to invoke the
federal court’s jurisdiction, that is not for this Court to decide as the district court has retained
jurisdiction on this threshold issue. Likewise, plaintiff’s assertion it is not bound by the settlement
agreement as it was not a party is a decision for the federal court.” (Doc. No. 127-6 at 3).
The apparent basis for Judge Wood issuing a directive to the parties to file the Motion in
this Court arises from the Settlement Agreement and the Final Approval Order. The Settlement
3
As discussed below, Judge Wood did not say (and this Court is not purporting to say) whether,
if this Court were to find that the California Suit is barred, AUL could sue NNA federal court in
Tennessee; that issue is separate and one the Court need not reach herein.
AUL argues only that the Court has no jurisdiction over AUL’s state court action. (Doc. No. 135
at 4). AUL does not appear to dispute that the Court has the authority to rule on the Motion and
determine whether the Settlement Agreement and Final Approval Order bar the California Suit.
4
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Agreement in each of the three matters states that this Court “shall retain jurisdiction over the
Parties . . . with respect to the future performance of the terms of the Settlement Agreement
including, but not limited to, whether any claim being asserted in any Court or forum is released
by the terms of the Settlement Agreement.” (Gann Settlement Agreement at ¶ 108; Weckwerth
Settlement Agreement at ¶ 107; Norman Settlement Agreement at ¶ 106). The Final Approval
Order issued in each of the three matters states:
The Parties and Class Members have irrevocably submitted to the exclusive
jurisdiction of this Court for any suit, action, proceeding or dispute arising out of
the Settlement.
[. . .]
It is necessary to protect this Court’s jurisdiction and ability to enforce this
judgment, and also in the best interest of the Parties and the Class Members and
consistent with principles of comity, judicial economy and the strong federal policy
favoring settlement, that any dispute between any Class Member (including any
dispute as to whether any person is a Class Member) and any Released Party which
in any way relates to the applicability or scope of the Settlement, or this Final
Judgment and Order of Dismissal, should be presented exclusively to this Court for
resolution by this Court.
[. . .]
Without affecting the finality of this judgment, the Court’s retained jurisdiction of
this Settlement also includes the administration and consummation of the
Settlement. In addition, without affecting the finality of this judgment, the Court
retains exclusive jurisdiction of, and the Parties and all Class Members are hereby
deemed to have submitted irrevocably to the exclusive jurisdiction of this Court for,
any suit, action, proceeding or dispute arising out of or relating to this Order and
the Settlement Agreement, or the applicability of the Settlement Agreement.
Without limiting the generality of the foregoing, any dispute concerning the
Settlement Agreement, including, but not limited to, any suit, action, arbitration or
other proceeding by a Class Member in which the provisions of the Settlement
Agreement are asserted as a defense in whole or in part to any claim or cause of
action or otherwise raised as an objection, shall constitute a suit, action or
proceeding arising out of or relating to this Order. Solely for purposes of such suit,
action or proceeding, to the fullest extent possible under applicable law, the Parties
hereto and all persons within the definition of the Settlement Class are hereby
deemed to have irrevocably waived and agreed not to assert, by way of motion, as
a defense or otherwise, any claim or objection that they are not subject to the
jurisdiction of this Court, or that this Court is, in any way, an improper venue or an
inconvenient forum.
(Doc. No. 123 at 4, 6).
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NNA argues in its Motion that, pursuant to the All Writs Act, 28 U.S.C. § 1651, the Court
should “enter an Order confirming that the injunctions it issued in the Final Approval Orders for
the three class actions and the Release in the class Settlement Agreements that this Court approved
preclude AUL from seeking recovery for repair costs related to the 709 Class Members, in the
California litigation or in any other forum.” (Doc. No. 126 at 18). NNA goes on to ask this Court
to permanently enjoin AUL from asserting its claims in any other litigation “if the Court believes
that a specific additional injunction against AUL is warranted.” (Id. at 19, 23).
AUL argues that, as a non-party to the class action and class settlement, this Court does
not have the authority under the All Writs Act to enjoin AUL from bringing its claims in California
state court. (Doc. No. 135 at 4). AUL contends that because the California Suit does not “frustrate[]
or in any way affect[] the class action settlements,” and because AUL “is not a ‘successor’ or
‘assign’ of the class action claimants,” this Court does not have jurisdiction over its claims. (Id. at
4-5).
LEGAL STANDARD
The All Writs Act provides that courts “may issue all writs necessary or appropriate
in aid of their respective jurisdictions and agreeable to the usages and principles of
law.” 28 U.S.C. § 1651. However, courts' power to enjoin state court proceedings
under the All Writs Act is substantially limited by the Anti-Injunction Act, which
provides that “[a] court of the United States may not grant an injunction to stay
proceedings in a State court except” (1) “as expressly authorized by Act of
Congress, or” (2) “where necessary in aid of its jurisdiction, or” (3) “to protect or
effectuate its judgments.” 28 U.S.C. § 2283; see Lorillard Tobacco Co. v. Chester,
Willcox & Saxbe, 589 F.3d 835, 844 (6th Cir. 2009). The three exceptions are
“narrow” and “[a]ny doubts as to the propriety of a federal injunction against state
court proceedings should be resolved in favor of permitting the state courts to
proceed.” Smith v. Bayer Corp., 131 S. Ct. 2368, 2375 (2011) (quoting Atl. Coast
Line R.R. Co. v. Bhd. of Locomotive Eng'rs, 398 U.S. 281, 297 (1970)).
Jones v. Elite Emergency Services, LLC, 2016 WL 836630 at *4 (M.D. Tenn. 2016).
“[P]rinciples of equity, comity and federalism oblige federal courts to act with great restraint, even
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where the power to grant an injunction has been found to lie within one of the exceptions to the
Anti-Injunction Act[;]” “[i]f there is any doubt as to the propriety of the injunction, it should not
be issued.” Silcox v. United Trucking Serv., Inc., 687 F.2d 848, 850-851 (6th Cir. 1982).
DISCUSSION
NNA’s Motion invokes the All Writs Act generally and without specifically mentioning
any of the three exceptions to the Anti-Injunction Act. It appears most likely, however, based on
the case law cited by NNA, that NNA has in mind the third exception to the Anti-Injunction Act
(the “relitigation” exception). (See Doc. No. 126 at 19 (“AUL is attempting to frustrate the
injunctions in the Court’s Final Approval Orders, as well as the terms of the Settlement
Agreements[.]”)). But because the second exception to the Anti-Injunction Act (the “necessary in
aid of” exception) arguably could also apply, the Court will address the applicability of both the
second and third exceptions to the Anti-Injunction Act.5
As indicated above, the issue here is whether this Court should enjoin AUL from
proceeding in the California Suit. It appears that Sixth Circuit case law has not addressed this kind
of issue involving similar circumstances. But in Sandpiper Vill. Condo. Ass'n., Inc. v. LouisianaPac. Corp., 428 F.3d 831 (9th Cir. 2005), the Ninth Circuit considered a district court ruling made
pursuant to the All Writs Act in a situation very similar to the present matter. The Ninth Circuit
summarized the procedural background and the Court’s resulting decision as follows:
Lester Building Systems and its affiliate, Lester's of Minnesota, Inc. (collectively
“Lester”), appeal an order permanently enjoining entry of judgment on a portion of
a jury verdict rendered in favor of Lester and against Louisiana–Pacific Corporation
(“L–P”) in Minnesota state court. In re Louisiana–Pacific Inner–Seal Siding
Litigation, 234 F. Supp. 2d 1170 (D. Or. 2002). The district court exercised its
authority under the All Writs Act, 28 U.S.C. § 1651, to partially enjoin entry of the
5
NNA does not invoke, nor does the Court find applicable, the first exception to the AntiInjunction Act, which would apply only where Congress has expressly authorized jurisdiction (and
no party has here suggested that any act of Congress is relevant to the present dispute).
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judgment on the ground that the state court award was inconsistent with the
settlement reached in a prior nationwide class action involving L–P and over which
the court retained jurisdiction. We conclude that the injunction violates the Anti–
Injunction Act, 28 U.S.C. § 2283, and reverse.
Id. at 834. Lester, the entity bringing the state lawsuit, was not a class member in the federal action
and was not a party to the federal settlement agreement. The district court held that the injunction
was proper under the second and third exceptions to the Anti-Injunction Act, and the Ninth Circuit
reversed. Id. at 842.
Exception two: “necessary in aid of”
The Ninth Circuit first rejected the district court’s decision that the injunction was proper
under the “necessary in aid of” exception to the Anti-Injunction Act, which authorizes injunctive
relief “to prevent a state court from so interfering with a federal court's consideration or disposition of
a case as to seriously impair the federal court's flexibility and authority to decide that case.” Atl. Coast
Line R. Co. v. Bhd. of Locomotive Engineers, 398 U.S. 281 at 295 (1970). The Ninth Circuit found this
exception to be inapplicable because:
the state court action did not threaten the district court's jurisdiction over the Inner–
Seal Siding litigation. By the time that the court issued the injunction, the Inner–Seal
Siding class action had long since been resolved. Indeed, the district court had several
years earlier approved the settlement and entered final judgment. Because the litigation
was over, the state court action could not have interfered with the district court's
consideration or disposition of the class claims. Cf. Alton Box, 682 F.2d at 1271. Nor
could it have interfered with the court's continuing jurisdiction over the settlement. The
membership of the class was fixed, the parties' respective rights and liabilities were
resolved, the settlement fund had been established and claims were being paid. Lester
did not seek to join or undo the class, contest the payment of funds to class members
or make a claim on the settlement fund. Although the state court litigation arose from
the same facts as the class action, an “injunction cannot issue to restrain a state court
action” simply because it involves “the same subject matter at issue before the federal
court.” Id. at 1272; accord Bennett, 285 F.3d at 807. Instead, an injunction is
“necessary in aid of” the court's jurisdiction only when it is required to preserve the
court's jurisdiction. See Atlantic Coast Line, 398 U.S. at 295, 90 S. Ct. 1739; Bennett,
285 F.3d at 806–07. Because the state court action did not seriously impair the district
court's flexibility and authority to decide the Inner–Seal Siding litigation or enforce the
settlement agreement, an injunction was not necessary to preserve the court's
jurisdiction. See, e.g., Alton Box, 682 F.2d at 1271–73.
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Sandpiper, 428 F.3d. at 844.
The Court embraces this reasoning, and it applies here. The federal litigation is done and
over. The Settlement Agreement has been finally approved, and the parties’ rights and liabilities
have been resolved. The settlement fund has been approved and claims have been paid. AUL does
not “seek to join or undo the class, contest the payment of funds to class members or make a claim
on the settlement fund.” An injunction enjoining the California Suit is thus unnecessary to preserve
this Court’s jurisdiction, decide the federal litigation, or enforce the settlement agreement.
However, NNA claims that AUL’s subrogation theory presents a unique circumstance
(which NNA would likely argue distinguishes the present case from Sandpiper). NNA claims that
because AUL brings claims that are derivative of the claims of certain Class Members who had a
contract with AUL, the present scenario is more akin to an actual Class Member attempting to
bring a claim in state court that was already litigated in the federal class-action. NNA refers to this
concept as AUL “standing in the shoes” of these Class Members. But as far as the “necessary in
aid of” exception to the Anti-Injunction Act is concerned, AUL is a non-Class Member who was
not subject to the class action (and did not intervene), so AUL’s state court case in no way
interferes with this court’s jurisdiction over and disposition of the original class action suit. And,
as emphasized by the Sandpiper court, this class action is not at a “sensitive” stage; it has already
reached final judgment, so it is not somehow imperiled by the state litigation. Id. at 845 (explaining
that temporarily enjoining state proceedings would be more appropriate during the “delicate and
transitory process of approving a settlement agreement” in concurrent federal proceedings, as “a
competing state class action covering a portion of the federal class” would “threaten[] the district
court’s ability to resolve the litigation.”). Thus, the “necessary in aid of” exception does not apply,
and the Court cannot and will not enjoin the state proceedings pursuant to this exception.
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Exception three: the “relitigation” exception
The Ninth Circuit in Sandpiper also rejected the district court’s decision that the injunction
was proper under the “relitigation” exception to the Anti-Injunction Act, which permits a federal
court to enjoin state proceedings when necessary “to protect or effectuate its judgments.” 28 U.S.C.
§ 2283. The Ninth Circuit held that the relitigation exception was inapplicable because the
Minnesota lawsuit did not challenge the res judicata effect of the federal class settlement, and
found that it was “significant” that “Lester was not named as a party to the class action and was
not a member of the nationwide class [. . .] nor were Lester’s interests sufficiently parallel to the
class members’ interests such that privity could be implied.” Sandpiper, 428 F.3d. at 848. In
reaching this conclusion, the Court invoked the general rule that a third-party is not “bound by a
judgment in personam in a litigation in which he is not designated as a party or to which he has not
been made a party by service of process”; therefore, “[a] judgment or decree among parties to a lawsuit
resolves issues as among them, but it does not conclude the rights of strangers to those proceedings.”
Id. at 848–849 (internal citations omitted). But if a third-party stands in “privity”6 to a class member,
6
The Ninth Circuit in Sandpiper did not expressly articulate what specifically it meant by the
terms “privity” or “in privity.” Relevant to that point, however, the Court did state (in a footnote)
the following:
Relying on our decision in Trevino v. Gates, 99 F.3d 911 (9th Cir. 1996), the
dissent contends that Lester and its class member customers were in “virtual”
privity because Lester, “[i]n essence, ... sought to serve as a conduit for its
customers by obtaining additional damages on their behalf.” Post at 864. We
disagree. In Trevino, we found sufficient privity of interest between a child and her
grandmother with respect to the narrow issue of the amount of punitive damages to
be awarded for the wrongful death of the child's father because the issues and the
interests of the parties in the separate actions were “identical” and the child and her
grandmother enjoyed “a familial relationship,” which was “an important factor” in
finding privity. 99 F.3d at 933–34. Trevino is readily distinguishable. For starters,
there was no familial or legal relationship, express or implied, between Lester and
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that third-party may properly be bound by a judgment in which the class member is a party. Thus,
where privity exists between a third-party and a class member to a federal action, the relitigation
exception would apply and allow a federal court to prevent a third-party from relitigating in state court
claims brought by the class member in a federal action.
its class member customers, and Lester did not control the class members in the
prior action or succeed to the class members' interests. Moreover, Lester's interests
and the interests of its class-member customers were similar only in the limited
sense that both Lester and its customers wanted the buildings constructed with
Inner–Seal Siding to be repaired. Cf. Kerr–McGee Chem., 816 F.2d at 1180–
81. According to Lester, however, moral obligations and business realities
compelled it to repair the damaged buildings with or without compensation from
L–P. Lester was also motivated to repair the defective siding by a desire to
rehabilitate its tarnished image and rebuild its goodwill. From Lester's perspective,
then, the repair costs claim was far more about making itself whole than
reimbursing customers. Cf. Frank, 216 F.3d at 852–53; Kerr–McGee Chem., 816
F.2d at 1180–81. Lester's financial and imagerelated [sic] concerns were obviously
not represented by the class members in the prior action. Cf. Frank, 216 F.3d at
852–53; Kerr–McGee Chem., 816 F.2d at 1180–81. Finally, the issues litigated in
the two actions are not “identical.” In the federal action, the class members sued
and recovered for their injuries, while Lester, in the state court action, sued and
recovered for its injuries. The mere fact that both injuries have the same root—
defective Inner–Seal Siding—does not mean that both issues are identical.
Sandpiper, 428 F.3d at 849 n.25.
The Court can thus conclude from this footnote from Sandpiper that the Ninth Circuit
meant “privity” to require something more than the third party seeking to obtain additional
damages on behalf of its customers. Instead, the third party must have some stronger relationship
to the class member. Here, like Lester in Sandpiper, AUL did not have a familial or legal
relationship with the federal Class Members who possessed a contract with AUL, and AUL did
not control these Class Members or succeed their interests. And as discussed further below, as with
the interests at issue in Sandpiper, AUL’s interests and these Class Members’ interests are not
identical (as opposed to merely similar in the limited sense that they both want(ed) compensation
related to defective Nissan vehicles). True, the alleged injuries of AUL may have the same “root”
as the injuries as the injuries of the relevant Class Members, but what matters is that AUL is
seeking recovery for its own injuries, while the Class Members sought recovery for their own
injuries. The Court thus can conclude that AUL and the relevant federal Class Members are not in
privity in the sense that Sandpiper used the term. Sandpiper’s view of the relevance of “privity”
as thus defined, and Sandpiper’s reasoning as a whole, is sound and so the Court chooses to follow
Sandpiper.
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Applying this rule to the current matter, here, like Lester, AUL is a “stranger” to the federal
class proceedings and settlement. Id. at 849. AUL was not a party to the federal class action, is not
a federal Class Member, and did not seek to intervene in the federal action. However, Sandpiper
suggests that to the extent that privity exists between AUL and certain Class Members, the
relitigation exception would apply. NNA’s argument that AUL “stands in the shoes” of the
particular federal Class Members who had contracted with AUL is thus particularly relevant to the
“relitigation” exception.
As a preliminary matter, NNA at times misses the mark by focusing on whether the claims
brought in the California Suit were already litigated in the federal case rather than focusing whether
privity exists between AUL and the federal Class Members who had contracts with AUL.7 But
even if AUL brought the very same claims that were litigated in the federal class action, the
“relitigation” exception would still not bar the state court proceedings if the interests of AUL and
the relevant federal Class Members are not sufficiently similar (i.e., if privity does not exist
between them). Instead, the proper focus is whether the derivative nature of AUL’s claims renders
AUL’s interests so sufficiently similar to the federal Class Members with AUL contracts such that
privity can be implied, thus triggering the “relitigation” exception.
NNA points to several reasons why (according to it) privity exists.8 First, NNA refers to
AUL’s January 23, 2020 demand letter. (Doc. No. 127-2). NNA claims that in this letter, AUL
See, e.g., Doc. No. 126 at 20 (“However, as AUL’s California Complaint concedes, all claims
related to the alleged CVT defects in the Class Vehicles were recently adjudicated to a final
judgment in three related consumer class actions in the Middle District of Tennessee.” (internal
quotations omitted)).
7
8
NNA does not explicitly refer to the concept of privity using that precise term, nor does NNA
expressly refer to the relitigation exception. Instead, NNA generally refers to the “derivative”
nature of AUL’s claims and the concept of AUL “standing in the shoes” of the federal Class
Members as providing a grounds for enjoining the state proceedings pursuant to the All Writs Act.
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“concedes that AUL’s claims are derivative of claims held by Class Members” (Doc. No. 126 at
20) because AUL states in the letter that “AUL stands in the shoes of its customers and is entitled
to recover in subrogation the fees it paid to fix [NNA]’s defective product.” (Doc. No. 127-2 at 3).
While at first glance it does seem like this statement from AUL itself would preclude AUL from
denying that privity exists between AUL and the Class Members who had contracts with AUL,
AUL’s demand letter takes care to distinguish between AUL and these Class Members. In the
demand letter, AUL describes its relationship to the vehicle owners subject to the federal action as
follows:
AUL is a leading provider of vehicle service contract programs. It provides car
owners with protection for certain covered parts, including transmissions, after the
expiration of their vehicle’s manufacturer’s warranty. When a car covered by an
AUL vehicle service contract has a broken or defective qualifying part, AUL covers
the cost of repair.
[. . .]
The proposed settlements [. . .] reimburse consumers’ actual repair costs, extend
the transmission warranty for qualifying cars by two years or 24,000 miles, and
offer former owners credits toward new vehicles.
[. . .]
The proposed settlements, however, contain a glaring omission for one specific
kind of injury: they purport to exclude the cost of repairs covered by any vehicle
service contract. In each proposed settlement, the “criteria for reimbursement”
excludes repair costs paid for by “an extended warranty or service contract
provider.”
(Doc. No. 127-2 at 2–3). Thus, based on AUL’s description of its relationship to the customers
involved in the federal action, AUL’s interests are not sufficiently parallel to the relevant Class
Members. In fact, one might argue that there is no overlap at all in AUL’s interests and the interests
of a Nissan vehicle owner considering joining the federal class action. That is because if a Nissan
owner’s CVT-related repair costs were already covered by AUL, the owner would have no reason
The Court views these arguments by NNA to fall under the general notion of privity between AUL
and the federal class.
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to be—would have nothing to gain from being—a part of the Class, as the owner would be paid
nothing under the class settlement (due to the settlement excluding the reimbursement of repair
costs paid for by “an extended warranty or service contract provider” such as AUL). Thus, despite
AUL stating that it “stands in the shoes” of its customers, this statement made in AUL’s demand
letter does not provide much help to establish privity between AUL and these Class Members. In
short, AUL does not really “stand in the shoes” of the Class Members who are its customers;
NNA’s contention that it does so is not supported by the actual interests of AUL and the relevant
Class Members.
NNA’s own response to the demand letter also undercuts its position. In its letter dated
February 7, 2020, NNA states that “AUL is not a class member and lacks standing to object” to
the settlement. (Doc. No. 127-3 at 3). NNA goes on to state that “AUL is not seeking greater
benefits or protections for actual class members” and that “there is no support for the theory that
AUL can supplant the rights of class members.” (Id.). This position runs directly contrary to
NNA’s position in its Motion that AUL’s interests and claims are directly aligned with those of
Class Members with AUL contracts. NNA’s own prior position that AUL lacks the ability to
object to the federal settlement thus suggests that its current position (that AUL cannot now
bring its claims in a separate forum) is wrong.
NNA also argues that the nature of AUL’s state law claims are purely derivative, in that
the claims “seek recovery for amounts AUL allegedly paid on behalf of Class Members for postwarranty CVT transmission repairs to Nissan vehicles pursuant to AUL’s service contracts.” (Doc.
No. 126 at 20). NNA notes that AUL’s claims in the California Suit specifically “seek[] recovery
for sums that it has paid for CVT repairs for [C]lass [V]ehicles identified in the Class Actions.”
(Id.) (internal quotations omitted). If indeed AUL’s claims were purely derivative and based solely
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on a theory of subrogation, NNA’s argument would have more merit than it would have if AUL
asserted non-derivative claims. That is, if AUL’s claims assert nothing more than rights derivative
of the Class Members with AUL contracts, AUL’s interests would be more similar to those of
these Class Members, thus making it more likely that privity could be implied.9
Unfortunately for NNA, this is not the case. In the California Suit, AUL brings four claims:
Claim I: damages in subrogation; Claim II: restitution; Claim III: equitable contribution; and Claim
IV: quantum meruit. (Doc. No. 127-1 at 7–8). Claim I, by its nature as a subrogation claim, is
necessarily derivative in that it seeks compensation based on the losses suffered by Nissan vehicle
owners. Claims II, III, and IV, however, are not based on a theory of subrogation. In these claims,
AUL seeks compensation for losses it independently suffered as a vehicle service contract provider
based on the amount it paid for repairs related to the CVT defect. AUL notes specifically that NNA
excluded vehicle service contract providers such as AUL from settlements with consumers
regarding the CVT defect. The interests claimed by AUL through these three causes of action,
9
AUL argues that even if it were purely a subrogee, asserting only rights derivative of the Class
Members with which it had contracts, a “well-settled exception” has been established that “a
tortfeasor cannot knowingly exclude the insurer from a voluntary settlement and then claim the
release bars a subsequent action by the insurer.” (Doc. No. 135 at 11 (quoting Allstate Ins. Co. v.
Mel Rapton, Inc., 77 Cal. App. 4th 901, 912 (2000)). AUL argues that contrary to this principle,
“[NNA] seeks to bind AUL to a settlement that it was not a party to, did not assent to, was
expressly excluded from, and that would, if applied to AUL, extinguish its claims. The law is not
that unfair, nor does it reward a tortfeasor’s effort to shift the price of its damage to others.” (Doc.
No. 135). This line of reasoning misconstrues NNA’s Motion and confuses what would result if
the Court were to grant the relief NNA seeks. NNA’s Motion concerns only whether AUL has the
right to bring its claims in the California Suit. Put differently, NNA seeks only a ruling from this
Court declaring that if AUL wants to bring claims against NNA “seeking recovery for repair costs
related to the 709 Class Members,” it must do so in federal court in Tennessee. (Doc. No. 126 at
23). Certainly, NNA would likely make the argument in response to any suit filed by AUL in this
Court that AUL’s claims are precluded by the Class Settlement. At that juncture, it would be
appropriate for AUL to raise the exception articulated in Allstate. But because the present Motion
concerns only jurisdictional issues related to AUL’s ability to bring claims related to the federal
Class Settlement in the California Suit, the Court will not determine whether the Allstate exception
applies to AUL’s claims.
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while related to the interests of the Class Members who are AUL customers, are not identical to
the interests of these Class Members, and thus privity cannot be established by virtue of the causes
of action asserted by AUL in the California Suit.
Finally, NNA points to Paragraph 15 of the Final Approval Order, which states: “Members
of the Settlement Class and their successors and assigns are hereby permanently barred and
enjoined from asserting, commencing, prosecuting or continuing to prosecute, either directly or
indirectly, any Released Claim against any of the Released Parties in any forum, with the exception
of any former Class Members who have duly opted out of the Settlement Class.” (Doc. No. 123 at
¶ 15) (emphasis added). NNA argues that by asserting subrogation claims that are derivative of the
Settlement Class, AUL falls under this category of “successors and assigns.” (Doc. No. 126 at 22).
In particular, NNA asserts that AUL is an “assignee of the Class Members’ claims.” (Id.). NNA
supports its contention that AUL is an assignee by reiterating AUL’s statement in the demand letter
that “AUL stands in the shoes of its customers.” (Id.). Plaintiff responds that AUL is not a
“successor” or “assign” of its customers. (Doc. No. 135 at 12). Plaintiff supports this position by
again emphasizing NNA’s position in response to AUL’s demand letter that “AUL [was] not a
class member, had no standing to participate in the settlement, and was not seeking benefits or
protections for actual class members.” (Id. (internal quotation marks omitted)). AUL also argues
that the relief it seeks in the California Suit is not as a “successor” or “assign” of the class members,
but instead is “direct relief in the form of reimbursement for payments it made to fix
malfunctioning Nissan transmissions, for which Nissan was responsible.” (Id. at 13).
Even if AUL reasonably could be construed to be an “assignee” of certain Class Members
in relation to its subrogation claim (Claim I), the Court cannot accept NNA’s assertion that AUL
is an assignee of the Class Members with AUL contracts for all purposes relevant here. As
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explained above, three of AUL’s four claims seek relief based not on a theory of subrogation, but
instead on grounds in which AUL does not “stand in the shoes” of these Class Members. Further,
NNA has not pointed to any particular provision of a contract between AUL and its customers in
which vehicle owners assign their rights to AUL. Without more, NNA cannot show that AUL falls
under the category of “successors and assigns” of the Class Members such that the Final Approval
Order bars AUL from bringing its claims in California state court. Therefore, no injunction of AUL
is appropriate; and alternatively, even assuming arguendo that the Court could find grounds to
enjoin AUL as to Claim I, no injunction as to the other three claims would be appropriate.
Because AUL is not a successor or assign of any Class Members in this action, and because
AUL lacks privity to any Class Members, no exception to the Anti-Injunction Act gives this Court
authority pursuant to the All Writs’ Act to enjoin the California Suit. AUL has the right to bring
its claims in the California Suit regardless of this settled federal class action, and this Court cannot
and should not interfere with AUL’s right to do so.
CONCLUSION
For the reasons set forth above, NNA’s Motion to Enforce Judgment will be denied in each
of the three above-captioned cases. An appropriate order will be entered.
___________________________________
ELI RICHARDSON
UNITED STATES DISTRICT JUDGE
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