The District Court for the Northern District of California denied a motion for preliminary approval of a proposed settlement, citing the plaintiffs’ disregard of the court’s guidelines and various concerns as to whether the proposed settlement was “fair, reasonable, and adequate.” The matter involves claims stemming from allegedly defective touch screens and related software in Ford vehicles, and the proposed settlement provided for various forms of monetary relief and services to address the alleged defects.
Citing its preliminary approval guidelines, the court opined that it could not evaluate the fairness of the settlement because the plaintiffs failed to submit any estimate of “potential recovery if plaintiffs were to prevail on each of their claims,” including an explanation of any assumptions, evidence, or other reasoning used to reach such an estimate. Moreover, the court found insufficient the plaintiffs’ representation that the settlement would offer class members “equitable relief” in the form of a “free” software upgrade since the plaintiffs failed to submit any information about the value of this upgrade, such as the normal cost to consumers, if any.
The court also noted deficiencies concerning: (1) the requirement for class members to submit a claim despite Ford having records sufficient to identify at least some eligible claims; and (2) the fact that according to the proposed schedule, claims would not be submitted until after the court granted final approval of the settlement and heard class counsel’s motion for attorneys’ fees and costs and service awards. With regard to the second issue, the court reasoned that it would “be asked to rule on the fairness of the settlement with no or little information about the total number of claims filed and deemed valid, and thus no concrete information about the total value of the settlement actually realized by the Class.” In addition, the court noted that under the proposed settlement, claimants who sought a software repair would have the option to choose between a $100-500 cash payment or a $200-$1,000 “discount” off the value of a future purchase of a Ford vehicle equipped with the newer system. The court reasoned that this “discount” appeared to constitute a “coupon settlement” under the Class Action Fairness Act and left open the question of whether this coupon option should be subject to heightened scrutiny. For these and several other reasons, the court ordered a status conference to “discuss the issues enumerated” in the order.