Hill v. Volkswagen, AG, No. 16-17157 (9th Cir. 2018)
Annotate this CaseObjectors challenged the district court's judgments in a settlement involving Volkswagen after the company admitted that it had installed defeat devices in certain models of their vehicles. These devices were at the center of a massive scheme by VW to cheat on U.S. emissions tests. The Ninth Circuit held that the district court did not abuse its discretion in certifying the class where eligible sellers benefited from being in the class alongside vehicle owners and there were no signs of an improper conflict of interest that denied absent class members adequate representation. Furthermore, the district court more than discharged its duty in ensuring that the settlement was fair and adequate to the class. The panel also held that the district court did not abuse its discretion by denying Tori Partl's motion to opt out of the settlement class after the deadline to do so had passed. In this case, she had actual and timely notice of the proper method of excluding herself from the settlement, and was therefore responsible for the failure to opt out on time.
Court Description: Class Action / Settlement. The panel affirmed the district court’s judgments certifying a class, approving a settlement, and denying Tori Patl’s motion to opt out of the settlement that was entered by Volkswagen and a class of consumers after Volkswagen admitted that it had installed “defeat devices” in certain 2009- 2015 model year 2.0-liter diesel cars. The class settlement set aside ten billion dollars to fund a suite of remedies for class members. The settlement was reached before class certification. The objectors raised a variety of challenges. The panel held that the district court did not abuse its discretion in certifying the class. The primary objection to the certification concerned whether the interests of “eligible sellers” – class members who owned vehicles with defeat devices when VW’s scheme became public, but sold them before the proposed settlement was filed – were adequately represented during settlement negotiations. The panel held that the eligible sellers benefitted from being in the class alongside vehicle owners. The panel further held that there were no signs of an improper conflict of interest that denied absent class members adequate representation. 4 IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION The panel held that the district court more than discharged its duty in ensuring that the settlement was fair and adequate to the class, and affirmed the district court’s approval of the settlement. The panel considered the objections to the settlement, and concluded that the district court considered the proper factors, asked the correct questions, and did not abuse its discretion in approving the settlement. Except with respect to a reversion provision, the appeals did not directly challenge the substantive fairness of the settlement, and therefore the panel held that it had no reason to comment upon it. Under the terms of the settlement, money not paid out from the settlement pool reverted to Volkswagen, and one objector alleged that this “reversion provision” made it impossible to know the true value of the settlement to the class and provided incentive to Volkswagen to discourage participation in the settlement. The panel held that the district court adequately explained why the reversion here raised no specter of collusion. The panel further held that the incentives for class members to participate in the settlement, the complementary inducement for Volkswagen to encourage them to participate, the value of the claims, and the actual trend in class member participation all indicated that the reversion clause did not, in design or in effect, allow VW to recoup a large fraction of the funding pool. The panel held that the district court did not abuse its discretion in denying Tori Partl’s motion to opt out of the class after the deadline to do so had passed. The panel held that the district court reasonably concluded that Partl had actual notice of the correct procedure to exclude herself from IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION 5 the class, she seemingly misunderstood clear directions, and such a mistake did not constitute excusable neglect or good cause.
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