Dunk v. Ford Motor Co.

• Decision Date: 30 August 1996
• Docket Number: No. G017975,G017975
• Citation: 48 Cal.App.4th 1794,56 Cal.Rptr.2d 483
• Court: California Court of Appeals Court of Appeals
• Parties: , 96 Cal. Daily Op. Serv. 6628, 96 Daily Journal D.A.R. 10,799 Matthew DUNK, et al., Plaintiffs and Respondents; William Geer, et al., Plaintiffs and Appellants, v. FORD MOTOR COMPANY, et al., Defendants and Respondents.

Page 483

56 Cal.Rptr.2d 483

48 Cal.App.4th 1794, 96 Cal. Daily Op. Serv. 6628,

96 Daily Journal D.A.R. 10,799

Matthew DUNK, et al., Plaintiffs and Respondents William Geer, et al., Plaintiffs and Appellants, v. FORD MOTOR COMPANY, et al., Defendants and Respondents.

No. G017975.

Court of Appeal, Fourth District, Division 3, California.

Aug. 30, 1996.

As Modified Sept. 30, 1996.

Review Denied Dec. 11, 1996.

[48 Cal.App.4th 1799] Lucinda A. Sikes, Public Citizen Litigation Group, and Brian Wolfman, Washington, DC, pro hac vice, for Plaintiffs and Appellants.

Herbert Hafif, Claremont, Wayne Austero, Newport Beach, Robert S. Kilborne, IV, San Diego, and John M. Van Dyke, Fullerton, for Plaintiffs and Respondents.

Baker & Hostetler, G. Richard Doty, Emil W. Herich, and Peter W. James, Los Angeles, for Defendants and Respondents.

OPINION

WALLIN, Associate Justice.

William Geer, John Loving, Bonnie Peterson, Robert Peterson, and David Whitworth appeal the judgment approving the settlement of a class action against Ford Motor Company relating to alleged defects in certain Ford Mustang convertibles, contending: (1) the trial court erred by finding the settlement was fair and reasonable; (2) notice to class members was not adequate; (3) the trial court erroneously certified a nationwide class for settlement; ¹ and (4) the trial court erroneously calculated attorney fees and failed to make factual findings. ² We affirm in part and reverse in part. ³

* * *

Deidre Dale and Matthew Dunk filed a class action suit against Ford Motor Company in mid-1991, alleging causes of action for negligence, breach of express and implied warranty, strict liability, concealment, false representation, conversion, and breach of the implied covenant of good faith and fair dealing. ⁴ All of the causes of action related to an alleged defect in the door construction on 1983 through 1986 Mustang convertibles.

Early in the proceedings, Ford removed the case to federal court, but Dunk successfully had the matter remanded to state court with an order for Ford to pay attorney fees. Ford's demurrer was sustained as to causes of action for conversion and breach of the implied covenant of good faith and fair dealing. After Dunk successfully opposed a motion for a protective order, discovery, including form and special interrogatories, document production, inspection of vehicles, and depositions were conducted from early 1992 until the spring of 1993. ⁵

In May 1993, Ford's motion for summary adjudication was granted as to the causes of action for breach of express and implied warranty, and false representation, leaving intact causes of action based on negligence, strict liability, and concealment. Writ and review petitions were denied by this court and the Supreme Court, respectively.

In August 1993, the trial court granted class certification limited to California residents who owned 1983 through 1986 Mustang convertibles. ⁶ The parties agreed to mediation by retired Presiding Justice John K. Trotter in October 1993. After approximately six months, they agreed to a settlement. A stipulation was filed in October 1994, providing each class member would receive a coupon redeemable for $400 off the price of any new Ford car or light truck purchased within one year. Ford also agreed to pay attorney fees and costs not to exceed $1.5 million. The proposed settlement included a national class. The court tentatively approved the settlement and notice was sent to class members, including publication in USA Today.

Dunk and Ford submitted memoranda supporting the settlement, Ford submitted a memorandum opposing the attorney fees sought by Dunk, and Geer submitted objections to which Dunk and Ford submitted replies. After a hearing on the objections, the court entered judgment approving the settlement and awarding attorney fees of $985,000 and costs of $10,691.

I

Geer contends the trial court erred in finding the settlement fair and reasonable, because Dunk did not meet his burden to show it was. Geer misapprehends Dunk's burden. Dunk made a sufficient showing which Geer failed to adequately rebut.

" ' "[T]o prevent fraud, collusion or unfairness to the class, the settlement or dismissal of a class action requires court approval." ' " (Malibu Outrigger Bd. of Governors v. Superior Court (1980) 103 Cal.App.3d 573, 578-579, 165 Cal.Rptr. 1; see also Marcarelli v. Cabell (1976) 58 Cal.App.3d 51, 55, 129 Cal.Rptr. 509.) The court must determine the settlement is fair, adequate, and reasonable. (See Officers for Justice v. Civil Service Com. (9th Cir.1982) 688 F.2d 615, 625; Fed. Rules Civ. Proc., rule 23(e), 28 U.S.C.) ⁷ The purpose of the requirement is "the protection of those class members, including the named plaintiffs, whose rights may not have been given due regard by the negotiating parties." (Officers for Justice v. Civil Service Com., supra, 688 F.2d at p. 624.)

The trial court has broad discretion to determine whether the settlement is fair. (Rebney v. Wells Fargo Bank (1990) 220 Cal.App.3d 1117, 1138, 269 Cal.Rptr. 844.) It should consider relevant factors, such as the strength of plaintiffs' case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and the stage of the proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement. (Officers for Justice v. Civil Service Com., supra, 688 F.2d at p. 624.) The list of factors is not exhaustive and should be tailored to each case. Due regard should be given to what is otherwise a private consensual agreement between the parties. The inquiry "must be limited to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned." (Id. at p. 625.) "Ultimately, the [trial] court's determination is nothing more than 'an amalgam of delicate balancing, gross approximations and rough justice.' [Citation.]" (Ibid.)

Geer urges the burden was on Dunk to show the settlement was fair, adequate, and reasonable, but cites no case or statute for that proposition. (But see Newberg & Conte, Newberg on Class Actions (3d ed. 1992) § 11.42, p. 11-94; 3B Moore's Federal Practice (2d ed. 1987) § 23.80, pp. 23-488; id. (1992-1993 Supp.)) However, since some federal cases seem to assume the burden is on the proponents, we will presume, for the sake of argument, the premise is correct. (See, e.g., In re General Motors Corp. Pick-Up Fuel Tank (3d Cir.1995) 55 F.3d 768, 785 [" '[T]he court cannot accept a settlement the proponents have not shown to be fair, reasonable, and adequate.' [Citation.]" (Italics added.) ]; but see United States v. State of Ore. (9th Cir.1990) 913 F.2d 576, 581 [court did not err by placing burden on objectors].)

Assuming the burden is on the proponents, a presumption of fairness exists where: (1) the settlement is reached through arm's-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small. (Newberg & Conte, supra, § 11.41, pp. 11-91.)

Our task is limited to a review of the trial court's approval for a clear abuse of discretion. (Officers for Justice v. Civil Service Com., supra, 688 F.2d at p. 626; see also Rebney v. Wells Fargo Bank, supra, 220 Cal.App.3d at p. 1138, 269 Cal.Rptr. 844.) We will not "substitute our notions of fairness for those of the [trial court] and the parties to the agreement. [Citations.]" (Officers for Justice v. Civil Service Com., supra, 688 F.2d at p. 626.) " 'So long as the record ... is adequate to reach "an intelligent and objective opinion of the probabilities of success should the claim be litigated" and "form an educated estimate of the complexity, expense and likely duration of such litigation, ... and all other factors relevant to a full and fair assessment of the wisdom of the proposed compromise," it is sufficient.' [Citations.] Of course, such an assessment is nearly assured when all discovery has been completed and the case is ready for trial. [Citation.]" (Ibid.)

Applying these factors, we conclude the trial court did not abuse its discretion. The case was over three years old when it settled. Extensive discovery and pretrial litigation, including a demurrer and motion for summary judgment, had been conducted. Plaintiffs' experienced attorneys had learned the alleged defect did not affect the vehicles' crashworthiness. No instance of personal injury was found. At most, the defect caused a poor door fit, resulting in some water leakage, wind noise, and minor cosmetic damage, such as paint chipping. The maximum damages to each member of the plaintiff class was $600 (the highest repair estimate), and the settlement coupons represented two-thirds of that amount, or $400. Although several people objected, their numbers were small in comparison to the entire class of over 65,000.

Plaintiffs' and Ford's counsel believed there were statute of limitation and other potential problems that would negatively impact the chances of recovery. ⁸ Given the risks, they believed the settlement was reasonable. The independent mediator, a retired superior court judge and appellate justice with substantial experience and respect in the legal community, recommended the settlement.

Voluminous pleadings were filed in support of and in opposition to the settlement, and the trial court reviewed the extensive court file and heard oral argument. Under the review standard we have explicated, the record was ideal for the trial court to make a rational and educated determination the...