Products Liability Law Daily Wrap Up, SETTLEMENT AGREEMENTS—MOTOR VEHICLES—D.N.J.: Consumers granted class certification and settlement approval in windshield damage litigation, (Oct 11, 2024)

By Pankhuri Bhatnagar, B.A. LL.B.

The consumers’ proposed settlement class was certified as it fulfilled the required criteria of numerosity, commonality, typicality, adequacy of representation, predominance, and superiority.

In a class action suit brought against two automakers by consumers who incurred losses due to their vehicle windshields’ susceptibility to break, the federal district court in New Jersey granted preliminary approval to the parties’ settlement agreement and plan for disseminating the class notice. The court found that the proposed settlement was reasonable and did not present any obvious deficiencies; that an analysis of various factors weighed in favor of approval; that the notice plan was “fair, accurate, and neutrally described” the required information; and that the proposed counsel and settlement administrator were qualified to serve their roles (Powell v. Subaru of America, Inc., No. 19-19114 (MJS) (D.N.J. Oct. 3, 2024)).

Background. Several consumers brought suit against Subaru of America (SOA), alleging that it manufactured, marketed, and sold vehicles with defective windshields that were susceptible to spontaneous cracking, chipping, or otherwise breaking in a dangerous manner, and then replaced those windshields with similarly defective windshields. The individual actions were consolidated into a class action complaint against SOA and Subaru Corporation (collectively, manufacturers or Subaru). The parties reached a settlement wherein the class members were divided into two groups: those who could produce proof that they incurred a qualifying repair cost and photographs confirming the damage, and those who had proof of costs but no photographs. They were entitled to recovery up to 125 and 100 percent of their costs, respectively, along with an extended warranty period of eight years during which they could replace their defective windshields. The attorney fees, costs, and service awards were separately negotiated and decided.

Instant motions. The consumers filed motions seeking (1) preliminary approval of the settlement agreement; (2) conditional certification of the proposed settlement class; (3) conditional appointment of certain claimants as Representative Plaintiffs, the Settlement Class Counsel, and the Settlement Administrator; (4) approval of the proposed Class Notice and plan for disseminating the Class Notice (Notice Plan); (5) the setting of deadlines for filing objections or exclusion requests; and (6) the setting of a Final Fairness Hearing date.

Certification. To certify a class, the requirements of Fed. R. Civ. P. 23(a) and (b) must be met, which are: (1) numerosity; (2) commonality; (3) typicality; (4) adequacy of representation; (5) predominance; and (6) superiority. The court considered each in turn. First, no minimum number of plaintiffs is required to maintain a class action, but the first prong is generally satisfied if the potential number of plaintiffs exceeds 40. The proposed class was numerous since the motion indicated almost 1.4 million class vehicles in the U.S., indicating over one million potential plaintiffs. The claimants made similar allegations about design defects in the windshields, defective materials, repair or replacement costs, and the manufacturers’ knowledge of these defects. Thus, the issues central to their claims were common to all class members. The class members were all current or previous owners or lessees of Settlement Class Vehicles who raised the same legal arguments, thus meeting the typicality requirement.

The proposed class counsel consisted of attorneys with extensive experience in multi-state class actions involving motor vehicle products liability claims, who had demonstrated thorough knowledge of the applicable law and invested significant time and resources in investigating and negotiating the settlement terms via mediation. The class representatives were also appropriate as they assisted counsel, gave deposition testimonies, and did not have any fundamental conflict of interest with the class. The common issues of design defects, the members’ injury, and the manufacturers’ conduct “predominated” over any individual variations in potential claims, such as differences in state law or the precise figure of damage. Moreover, the class action was the “superior” method of adjudicating this controversy since the members had little interest in maintaining separate actions due to their minor losses, there was no other litigation concerning this controversy, and concentrating the claims in New Jersey was desirable because New Jersey was SOA’s state of incorporation and headquarters. Therefore, the settlement class was provisionally certified.

Appointments. As noted above, the claimants’ counsel had extensive prior experience with complex and class action litigation, and had collectively and individually expended considerable resources in investigating the claims in this action. The court found them fit to serve as settlement class counsel. Next, the members sought the provisional appointment of JND Legal Administration as the Settlement Administrator. The court granted this appointment, noting that the costs of notifying the class members and administrating the settlement was to be borne by Subaru and there was no obvious conflict or other basis to deny the appointment.

Agreement approval. At the preliminary approval stage, the court’s inquiry generally considers whether “(1) the negotiations occurred at arm’s length; (2) there was sufficient discovery; (3) the proponents of the settlement are experienced in similar litigation; and (4) only a small fraction of the class objected.” The court also considers the factors laid down inGirsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975), which include: (1) the complexity, expense and likely duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; and (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation.

Here, the proposed settlement appeared to have been negotiated at arm’s length, having been crafted over the course of multiple in-person mediation sessions and telephonic meetings. Over 16,000 pages of documents were exchanged during discovery, and counsel had substantial experience in similar litigation. Preliminary approval was also appropriate because the class members would have the opportunity to object after formal notification. Turning to the Girsh factors, the court noted that this case involved complex technical and engineering questions, and the probable costs of time and money of continued litigation were high. The second factor could not be evaluated since the class was not yet notified of the litigation. The next four factors weighed in favor of approval due to the substantial volume of discovery and the presence of significant uncertainties and risks in continuing the litigation. The claimants acknowledged that there was a risk of not obtaining class certification should this action be litigated rather than settled, based on Subaru’s likely argument that individualized factual issues could render the proposed class unmanageable. The seventh factor was neutral, since the parties did not present any arguments regarding Subaru’s ability to pay a larger settlement. The reasonableness factors also favored approval since the settlement would provide members up to 100% or more of their Qualified Repair Expenses, as well as an extended warranty and attorney costs, in a timely fashion. Thus, the settlement was granted preliminary approval.

Notice plan. To “satisfy the notice requirement, the party proposing settlement must comply with the guidelines contained in Rule 23(c) and 23(e)(2).” The notice plan provided that within 75 days after the entry of a preliminary approval order, the Settlement Administrator would begin mailing the short-form notice to the current or last known addresses of all Settlement Class Members, and explain the delivery method if a notice was returned as undeliverable. The short-form notice would provide recipients with the following: a brief description of this action, the Settlement Class, and the proposed settlement; a URL directing Settlement Class Members to a Settlement Website; the deadlines for submitting claims; and a toll-free number and/or email address to reach the Settlement Administrator. The proposed long-form notice will provide information about the consequences of accepting or opting out of the settlement, how to submit a request for exclusion or raise an objection, and instructions for submitting reimbursement claims, along with online claims submission forms and a redacted version of the Agreement. The court found that the forms “fairly, accurately, and neutrally describe[d] the claims and parties in the litigation as well as the terms of the proposed settlement and the identity of the parties entitled to participate in it,” satisfying both Rule 23 and due process requirements.

The case is No. 19-19114 (MJS).

Judge: Skahill, M.

Attorneys: Abigail Gertner (Berger Montague PC) for Jeffrey Barr, Arnold Milstein and Leonardo Leon. Neal D. Walters (Ballard Spahr LLP) for Subaru of America, Inc. and Fuji Heavy Industries Ltd.

Companies: Subaru of America, Inc.; Fuji Heavy Industries Ltd.

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