Chambers v. Whirlpool Corp.
| Decision Date | 10 November 2020 |
| Docket Number | No. 16-56694, No. 16-56684,No. 16-56666, No. 16-56688,16-56666 |
| Citation | 980 F.3d 645 |
| Parties | Steve CHAMBERS; Lynn Van Der Veer; Joseph Cicchelli; Kurt Himler; Susan Milicia; Gary Leblanc ; James Cashman ; Kevin O'Donnell; George Bliss ; Susan Bathon; Maureen Meneghetti; W. David Beal; Linda Sample; Shirl Mederlet; Lyndee Walker; Jackie Steffes; Raymond Paolini, Jr.; Zila Koswener; Pamela Walchli, as individuals and for all others similarly situated, Plaintiffs-Appellees, Christine Knott, Objector-Appellant, v. WHIRLPOOL CORPORATION, a Delaware Corporation; Sears Holdings Corporation, a Delaware Corporation; Sears, Roebuck and Co., a New York corporation, Defendants-Appellees. Steve Chambers; Lynn Van Der Veer; Joseph Cicchelli; Kurt Himler; Susan Milicia; Gary Leblanc ; James Cashman ; Kevin O'Donnell; George Bliss ; Susan Bathon; Maureen Meneghetti; W. David Beal; Linda Sample; Shirl Mederlet; Lyndee Walker; Jackie Steffes; Raymond Paolini, Jr.; Zila Koswener; Pamela Walchli, as individuals and for all others similarly situated, Plaintiffs-Appellees, v. Whirlpool Corporation, a Delaware Corporation; Sears Holdings Corporation, a Delaware Corporation; Sears, Roebuck and Co., a New York corporation, Defendants-Appellants. Steve Chambers; Lynn Van Der Veer; Joseph Cicchelli; Kurt Himler; Susan Milicia; Gary Leblanc ; James Cashman ; Kevin O'Donnell; George Bliss ; Susan Bathon; Maureen Meneghetti; W. David Beal; Linda Sample; Shirl Mederlet; Lyndee Walker; Jackie Steffes; Raymond Paolini, Jr.; Zila Koswener; Pamela Walchli, as individuals and for all others similarly situated, Plaintiffs-Appellees, Jan L. Miorelli, Personal Representative of the Estate of George P. Liacopoulos, Objector-Appellant, v. Whirlpool Corporation, a Delaware Corporation; Sears Holdings Corporation, a Delaware Corporation; Sears, Roebuck and Co., a New York corporation, Defendants-Appellees. Steve Chambers; Lynn Van Der Veer; Joseph Cicchelli; Kurt Himler; Susan Milicia; Gary Leblanc ; James Cashman ; Kevin O'Donnell; George Bliss ; Susan Bathon; Maureen Meneghetti; W. David Beal; Linda Sample; Shirl Mederlet; Lyndee Walker; Jackie Steffes; Raymond Paolini, Jr.; Zila Koswener; Pamela Walchli, as individuals and for all others similarly situated, Plaintiffs-Appellees, W. Allen McDonald, Objector-Appellant, v. Whirlpool Corporation, a Delaware Corporation; Sears Holdings Corporation, a Delaware Corporation; Sears, Roebuck and Co., a New York corporation, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Robert W. Clore (argued) and Christopher A. Bandas, Bandas Law Firm P.C., Corpus Christi, Texas; Timothy R. Hanigan and Vaughn M. Greenwalt, Lang Hanigan & Carvalho LLP, Woodland Hills, California; for Objector-Appellant Christine Knott.
Sam A. Miorelli (argued), Law Office of Sam Miorelli P.A., Orlando, Florida, for Objector-Appellant/Cross-Appellee Jan L. Miorelli, Personal Representative of the Estate of George P. Liacopoulos.
Christopher T. Cain, Scott & Cain, Knoxville, Tennessee, for Objector-Appellant W. Allen McDonald.
Steven A. Schwartz (argued) and Timothy N. Mathews, Chimicles Schwartz Kriner & Donaldson-Smith LLP, Haverford, Pennsylvania; Charles S. Fax and Liesel J. Schopler, Rifkin Weiner Livingston LLC, Bethesda, Maryland; Jeffrey M. Cohon, Law Offices of Jeffrey M. Cohon APC, Los Angeles, California; Jonathan D. Selbin and Andrew Kaufman, Lieff Cabraser Heimann & Bernstein LLP, New York, New York; David H. Weinstein and Robert Kitchenoff, Weinstein Kitchenoff & Sher LLC, Philadelphia, Pennsylvania; for Plaintiffs-Appellees.
Andrew J. Pincus (argued), Mayer Brown LLP, Washington, D.C.; Michael T. Williams, Allison R. McLaughlin, and Galen D. Bellamy, Wheeler Trigg O'Donnell LLP, Denver, Colorado; Stephen M. Shapiro, Timothy S. Bishop, Joshua D. Yount, and Chad M. Clamage, Mayer Brown LLP, Chicago, Illinois; for Defendants-Appellees/Cross-Appellants.
Oramel H. Skinner III (argued) and Dana R. Vogel, Assistant Attorneys General; Paul N. Watkins, Civil Litigation Division Chief; Mark Brnovich, Attorney General; Office of the Attorney General, Phoenix, Arizona; for Amicus Curiae Nine State Attorneys General.
Before: Richard R. Clifton and Kenneth K. Lee, Circuit Judges, and Frederic Block,** District Judge.
Is it reasonable to award $14.8 million in attorney's fees in a class action settlement that provides $116.7 million in benefits to class members? But what if the class settlement is in fact worth only $4.2 million? We face these two dramatically divergent scenarios in large part because the settlement here offers "coupons" that may provide phantom benefits to most class members.
The parties settled a long-running class action lawsuit about malfunctioning "electronic control boards" in Whirlpool dishwashers. That settlement provided, among other things, coupons that consumers could use to buy a new Whirlpool dishwasher. The parties, however, could not agree on the value of this settlement, or the amount of attorney's fees for the plaintiffs’ counsel.
The district court approved the class settlement and awarded $14.8 million in attorney's fees based on a lodestar calculation of billable hours expended. We affirm the district court's approval of the settlement. But we vacate and remand the fee award because the district court erred in applying a lodestar-only methodology for the coupon portion of the settlement. That methodology potentially inflates the amount of attorney's fees in proportion to the results achieved for the class because the coupons may end up providing minimal benefit to the class. On remand, the district court should thus apply a percentage-of-redemption-value methodology for the coupon portion of a settlement, and use a lodestar method for the non-coupon part of the relief. Alternatively, the district court may use a lodestar-only methodology, but only if it does not consider the coupon relief or takes into account its redemption value.
This case began a long time ago in a district far, far away from the Central District of California: in the Maryland home of Steve Chambers and his wife, their 2002 KitchenAid dishwasher unit suffered from a bad electronic control board ("ECB") that caused it to overheat and even emit internal flames. Chambers complained to Whirlpool Corp., which makes dishwashers under its own brand name as well as under the Kenmore and KitchenAid imprints. After his requests went unheeded, he set up a website that attracted similar grievances from other Whirlpool dishwasher owners.
Ultimately, Chambers and his wife, along with eight other plaintiffs, filed a putative class action lawsuit in California against Whirlpool,1 asserting breach of warranty and other state law claims. The complaint alleged that several of Whirlpool's dishwashers suffered from a design defect that caused a small number of ECBs to overheat and malfunction. While the complaint highlighted the potential risk of a dishwasher malfunction and even a fire, actual instances of failure appear to be relatively rare. Apparently, fewer than 0.2% of the dishwashers have suffered overheating problems.
The initial complaint sought certification of a nationwide class of dishwasher purchasers. The plaintiffs amended their complaint four times. In the process, they added two federal claims for alleged violations of the Magnuson-Moss Warranty Act, while narrowing the scope of the class allegations to 11 state classes.
The district court had not yet ruled on any substantive motion when the parties reached a nationwide settlement in September 2015. The settlement agreement provided benefits to both class and non-class members based on the type of ECB in the consumer's dishwasher.
The proposed class included people who bought dishwashers that used a "Rushmore" or "Rush" ECB manufactured between October 2000 and January 2006. The non-class dishwashers contained a "NewGen" or "Raptor" ECB manufactured between February 1998 and March 2012. The settlement covers about 5.8 million Rushmore/Rush class members and 12.6 million NewGen/Raptor non-class members.
The settlement provides overlapping benefits on a claims-made basis to both class and non-class members — with the difference being that class members are entitled to more coupons. This difference stems from the somewhat higher risk of overheating in Rushmore/Rush ECB dishwashers. Under the settlement, class members receive benefits and release potential claims unless they timely request exclusion. Non-class members, on the other hand, must separately execute a release to receive a benefit. Neither class nor non-class members release claims for personal injury or damage to property other than the dishwasher.
The settlement provides to both class and non-class members: (i) full reimbursement or $200 for individuals who paid for an overheating-related repair; (ii) $200 or $300 for consumers who replaced an overheated dishwasher; and (iii) $100 or a 30% discount "rebate" (i.e. , coupon) for a new Whirlpool dishwasher if there is a future overheating incident within two years of the settlement notice date, or within 10 years of purchase for NewGen/Raptor owners.
Class members also receive a 10–20% "rebate" coupon to purchase a new Whirlpool dishwasher, which expires 120 days after the claim deadline. And finally, Whirlpool must revise its service kit pointers and training bulletins to "emphasize the important safety function" of the thermal cut-off device that helps prevent overheating, "instruct technicians and customers not to bypass or disable" the device, and urge "inspect[ion]" of the device when servicing an ECB.
The district court granted preliminary settlement approval and class certification. Direct mail notice was sent to 3,567,542...
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