True v. Am. Honda Motor Co.

• Decision Date: 26 February 2010
• Docket Number: Case No. EDCV 07–0287–VAP (OPx).
• Citation: 749 F.Supp.2d 1052
• Court: U.S. District Court — Central District of California
• Parties: John TRUE and Gonzalo Delgado, individually, and on behalf of all others similarly situated, Plaintiffs,v.AMERICAN HONDA MOTOR COMPANY, Defendant.

749 F.Supp.2d 1052

John TRUE and Gonzalo Delgado, individually, and on behalf of all others similarly situated, Plaintiffs,

v.AMERICAN HONDA MOTOR COMPANY, Defendant.

Case No. EDCV 07–0287–VAP (OPx).

United States District Court, C.D. California.

Feb. 26, 2010.

Denise Davis Schwartzman, Nicholas E. Chimicles, Chimicles & Tikellis, Haverford, PA, Jon A. Tostrud, Jonathan W. Cuneo, Matthew E. Miller, Matthew Wiener, Maxwell M. Blecher, William H. Anderson, Cuneo Gilbert and Laduca Los Angeles, CA, for Plaintiffs.Alan Benjamin Clark, Livia M. Kiser, Mark S. Mester, Wendy Peterson Harper, Latham & Watkins LLP, Los Angeles, CA, for Defendant.

ORDER DENYING (WITHOUT PREJUDICE) (1)PLAINTIFFS' MOTION FOR FINAL APPROVAL OF SETTLEMENT and (2) PLAINTIFFS' MOTION FOR ATTORNEYS' FEES AND INCENTIVE AWARDS

VIRGINIA A. PHILLIPS, District Judge.

Plaintiffs' Motion for Final Approval of Settlement and Motion for Attorneys' Fees and Incentive Awards came before the Court for a hearing on February 22, 2010. After reviewing and considering all papers filed in support of, and in opposition to, the Motions, as well as the arguments advanced at the hearing, the Court DENIES both motions, as set forth below.

Plaintiff John True (“True”) filed this lawsuit against American Honda Motor Company (“Defendant” or “AHM”) on behalf of a putative class of Honda Civic Hybrid (“HCH”) purchasers and lessees on March 9, 2007.¹ In the operative First Amended Complaint (“FAC”), Plaintiffs seek relief: (1) for violations of California Business and Professions Code §§ 17200, et seq. ; (2) for violations of California Business and Professions Code §§ 17500, et seq. ; (3) for violations of California Business and Professions Code §§ 1750, et seq. ; and (4) under a common law theory of unjust enrichment.

Plaintiffs allege the class members were exposed to false and misleading advertising regarding the fuel economy of HCHs and relied on these representations in paying a “Hybrid premium” ² and purchasing HCHs during the class period, between 2003 and 2008. (FAC ¶¶ 1–10; Class Action Settlement Agreement and Release (“Settlement Agreement”) ³ at 1, 9.)

On August 27, 2009, the Court preliminarily certified a settlement class, preliminarily approved the initial proposed settlement, and directed notice be given to the class. On February 8, 2010, Plaintiffs filed a motion seeking final approval of a revised settlement (“the proposed settlement”), as well as a motion for the disbursement of attorneys' fees and incentive awards. AHM also submitted a brief and evidence in support of approval on February 9, 2010. ⁴

Several objectors filed oppositions to the motions on February 17 and 18, 2010, as have twelve state Attorneys General as amici curiae on February 19, 2010. The Court held a fairness hearing on February 22, 2010, and heard argument from the parties, as well as objectors to the terms of the settlement.

I. BACKGROUND

A. Procedural History

The parties engaged in approximately 11 months of discovery and motion practice before engaging in mediation. In December 2008, after several rounds of mediation, the parties informed the Court they had reached a settlement of the claims, and on March 2, 2009, Plaintiffs moved for preliminary approval of that settlement on behalf of the class. On March 25, 2009, 2009 WL 838284, the Court denied that motion with leave to submit additional materials. Upon the submission of supplemental materials and a second hearing, the Court granted the motion for preliminary approval and preliminarily certified a settlement class on August 27, 2009. The class was defined as “All persons who purchased or leased a new Honda Civic Hybrid automobile model years 2003 through 2008 in the United States of America including the District of Columbia,” except certain persons affiliated with AHM, class counsel, and those who opt out of the class. (Doc. 114 at 4.)

In accordance with the Court's Order granting preliminary approval, notice was both mailed to class members and posted on a website (“the HCH Fuel Economy Website”). (Pls.' Mem. at 7–8; Lifosjoe Decl. ¶¶ 3, 6, 10; Wright Decl. ¶¶ 3–5; Cooper Decl. ¶¶ 2–4.) The website also contained other documents, including the initial proposed settlement agreement itself. (Lifosjoe Decl., Ex. D.) The Settlement Administrator, AHM, also sent the notice by electronic mail message (“e-mail”) to the 55,469 class members for whom it had e-mail addresses. (Lifosjoe Decl. ¶¶ 12–14, Ex. E.) It also operated a toll-free telephone “helpline,” which received 1,591 calls as of January 31, 2010. (Lifosjoe Decl. ¶ 16.)

Notice of the initial proposed settlement was also mailed to the United States Attorney General and the Attorneys General of each of the fifty states and the District of Columbia, as required by the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. § 1715(b).⁵ (Kiser Decl. ¶ 3, Exs. A–B.)

Both before and after the preliminary approval of the initial proposed settlement, the Court received several filings in opposition to approval of the settlement. These include formal objections from objecting class members Gaetano Paduano; Robyn Major; Francine P. Peterman; Stephen and Richard Vise (“the Vise objectors”); Joseph K. Goldberg, Valerie M. Nannery, and Katherine A. Burghardt (“the Goldberg objectors”); and the State of Texas (collectively, “the Objectors”). A coalition of twenty-five state Attorneys General and one state Office of Consumer Affairs also filed an amicus curiae brief in opposition to the initial proposed settlement.⁶

Several additional objections were sent directly to class counsel by unrepresented class members. These include letters from Norman Whitton, Daniel Bergmann, Keith Cyrnek, Michael Beishe, Robert Tighe, and Gerald Nicholson. (Plaintiffs' Consolidated Response to Objections to Settlement Agreement (“Pls.' Resp. to Objs.”), Ex. A.) In addition to these objections, several class members sent other letters expressing their views on the settlement to either class counsel or the Settlement Administrator. ( See Pls.' Resp. to Objs., Ex. B; Opt–Out Forms & Written Communications Submitted to Settlement Admin.)

The Court has reviewed these submissions, as well as the opt-out forms submitted to the Settlement Administrator, which have been lodged with the Court.

The parties also reviewed the various communications from class members. As a result, they agreed to several adjustments and “clarifications” to the terms of the settlement, as described below. (Pls.' Mem., Ex. A.)

On February 8, 2010, Plaintiffs filed a Motion for Final Approval of Settlement and a Motion for the Approval of Attorneys' Fees and Incentive Awards. Plaintiffs seek a Final Order (1) certifying a class for settlement purposes; (2) granting approval of the proposed settlement; and (3) “granting such other and additional relief as the court may deem just and appropriate.” (Mot. at 1.)

B. Settlement Terms

The proposed settlement does not create a settlement fund. Rather, it provides for up to four kinds of relief for class members, as well as incentive payments for the two named plaintiffs and attorneys' fees for class counsel. The declarations of Plaintiffs' counsel and the third-party mediator, as well as other materials in the record, demonstrate the parties engaged in substantial and arms-length negotiations over several sessions, in person and through various electronic media.

1. Relief for Class Members

(a) Fuel Economy DVD—AHM will mail all class members a DVD, produced by AHM specifically for purposes of this settlement, “demonstrating how to operate and maintain [HCH] vehicles to maximize and optimize fuel economy.” (Pls.' Mem. at 4.) The content of the DVD will also be accessible in streaming video format on the HCH Fuel Economy Website for a limited time. ( Id.) Class members will not, however, be required to view this material before submitting a claim. ⁷ (Pls.' Mem. at 6, Ex. A at 3.) The DVD has yet to be finalized, and AHM is not required to produce a script or story boards for the DVD to class counsel until forty-five days after the settlement is given final approval. (Prop. Settlement at 14.)

(b) Rebates—Class members will be able to select from one of two rebate options, referred to as “Option A” and “Option B.”

— “Option A” is a $1,000 cash rebate for those class members “who sell or otherwise trade in ⁸ their HCH and purchase an Eligible Honda Vehicle.” (Pls.' Mem. at 4, emphasis added.) Such rebates are non-transferable, and expire twelve (12) months after the later of (1) the effective date of settlement or (2) October 31, 2011. ( Id.)

— “Option B” is a $500 cash rebate, available to those class members “who retain their HCH and purchase an Eligible Honda Vehicle.” ( Id., emphasis added.) This rebate is transferable to certain family members, and also expires twelve (12) months after the later of the effective date of settlement or October 31, 2011.⁹ ( Id.)

— “Eligible Honda Vehicles” are defined as any new model year 2010 or 2011 Honda or Acura vehicle.¹⁰ (Pls.' Mem. at 7, Ex. A at 2.)

(c) Cash—A subset of class members will be eligible to receive, in addition to any rebates they receive under Option A or B,¹¹ a cash payment of $100 (referred to as “Option C”). (Pls.' Mem. at 7, Ex. A at 3.) This subset is defined as those class members “who made a documented [c]omplaint regarding the fuel economy of their HCH to (1) AHM or an authorized Honda or Acura dealership who reported the [c]omplaint to AHM; or (2) to Class Counsel,” before March 2, 2009. ( Id.; Prop. Settlement at 3–4.) Class members will only be eligible for the Option C cash payment if there is a “written record [of their complaint] which was created in the ordinary course of business.” (Prop. Settlement at 3–4.)

(d) Injunctive Relief

AHM will “promptly undertake to review all of its fuel economy advertising for the HCH” and “modify its disclaimer language, including, at a minimum, changing language from ...