Last month the Ninth Circuit affirmed a district court decision approving a class settlement regarding Volkwagen’s marketing of clean diesel vehicles that used so-called “defeat devices” to circumvent emissions tests. Hundreds of “defeat device” lawsuits against Volkswagen were consolidated in the Northern District of California for pretrial proceedings. The proposed settlement provided over $10 billion in potential damages and class members’ recovery depended on whether they presently own, lease, or had previously sold an affected Volkswagen. The district court granted preliminary and then final approval of the settlement over numerous objections.
On appeal, the court affirmed the decision to certify the class over an objection that the class of “eligible sellers” were not adequately represented during settlement negotiations. The court found there was no irreparable conflict of interest between the classes where the eligible sellers class benefited from being joined with the eligible owners class because the sellers’ claims were materially weaker and less individually valuable than the owner claims which were also more numerous. Indeed, the court opined that the sellers’ “quite possibly obtained [relief] because they were in the same class as vehicle owners who had leverage…, not in spite of that inclusion.”
The Ninth Circuit also upheld the settlement over a number of procedural and substantive objections. Among other things, it gave short shift to the objection that a “reversion clause” incentivized Volkswagen to discourage class member participation. A consent decree with the Department of Justice required the company to participate, and the large potential recovery was substantial enough to encourage participation. It also permitted the district court to approve a settlement prior to class counsel’s fee request so long as class members had a meaningful chance to object to the fee request when it was filed. Finally, the court brushed off an objector’s challenge to an order denying her motion to opt out, noting that she filed her motion after the court-imposed deadline.
In re Volkswagen “Clean Diesel” Mktg., Sales Practices, & Prods. Liab. Litig., No. 16-17157 (9th Cir. July 9, 2018).