United States District Court, D. Minnesota
TROY FATH, HIGINIO BAUTISTA, AND CHRISTOPHER HAMILTON, Plaintiffs,
AMERICAN HONDA MOTOR CO., INC., Defendant.
ORDER GRANTING PRELIMINARY APPROVAL OF CLASS ACTION
E. BRASEL UNITED STATES DISTRICT JUDGE
matter came before the Court on the Plaintiffs' Unopposed
Motion for Preliminary Approval of Class Action Settlement.
[ECF No. 72 (the “Motion”).] Troy Fath, Higinio
Bautista, and Christopher Hamilton (collectively, the
“Named Plaintiffs”) have sued American Honda
Motor Co., Inc. (“Honda”) on behalf of a putative
class in the above-captioned litigation (the
“Litigation”). The Named Plaintiffs and Honda
have agreed on a putative settlement class, and now the Named
Plaintiffs seek preliminary approval of the Class Action
Settlement Agreement and Release dated July 22, 2019 and its
attached exhibits. [ECF No. 75-1 (collectively, the
“Settlement Agreement”)]. For the reasons stated
below, the Court GRANTS the Motion.
November 2018, the Court ordered the consolidation of two
putative class actions alleging a latent fuel dilution defect
in the engines of certain Honda vehicles. [See ECF
No. 42.] The Court also appointed interim class counsel.
parties have since negotiated a proposed class action
settlement. On August 15, 2019, the Named Plaintiffs filed
their first amended consolidated class action complaint [ECF
No. 71 (the “FAC”)] and moved for preliminary
approval of the Settlement Agreement that, among other
things, provides for the release of claims relating to or
arising out of the alleged latent oil dilution defect.
Summary of the Allegations in the FAC
to the FAC, Honda failed to disclose to the Named Plaintiffs
and members of the putative class that the Class
Vehicles are predisposed to an engine defect that
causes dilution of engine oil. (See FAC ¶¶
1-2.) Once the defect manifests, the internal
engine components that rely on lubrication experience rapid
wear. (See Id. ¶ 3.) Honda has long been aware
of this latent defect but has been unable to adequately
repair the Class Vehicles when the defect manifests. (See
Id. ¶ 5.) It has not issued a recall, offered
suitable repairs, or offered to reimburse customers for
out-of-pocket repair expenses. (See id.
¶ 8.) The Named Plaintiffs and members of their putative
class would not have purchased any of the Class Vehicles had
they known about the defect and have incurred costs paying
for related repairs. (See Id. ¶¶ 9-11.)
The FAC asserts causes of action under certain state consumer
protection statutes and various common law theories. (See
Id. ¶¶ 99-184.)
Summary of the Settlement Agreement
Settlement Agreement provides that Honda agrees to put
certain measures in place in exchange for Named
Plaintiffs' promise to seek dismissal of this case.
(See Settlement Agreement ¶ 3.1.) Among other
things, Honda agrees to: (1) extend the existing Powertrain
Limited Warranty an additional year (see Id.
¶¶ 3.2-3.4); (2) reimburse certain towing expenses
incurred before the date by which Honda completes serving
notice on the putative settlement class members (the
“Notice Date”) (see Id. ¶¶
1.14, 3.5-3.4); (3) reimburse certain oil change costs
incurred before the Notice Date (see Id.
¶¶ 3.7-3.8); (4) reimburse up to $250 of certain
diagnostic costs incurred before the Notice Date (see
Id. ¶¶ 3.9-3.10); (5) provide a Product Update
to Class Vehicles registered in certain cold-weather states
so that they receive software updates that will reduce the
likelihood that the defect manifests (see Id. ¶
3.11, ECF No. 74 at 6.).
addition, under the Settlement Agreement, Honda is the
Settlement Administrator, meaning it will administer certain
components of the settlement and bear any associated costs.
(See Id. ¶ 3.12.) In that role, among other
things, Honda agrees to process claims for reimbursement and
provide notice to putative settlement class members of the
terms of the settlement. (See id.) In particular,
Honda agrees to send members of the proposed settlement class
an agreed-upon notice that describes this litigation, their
legal rights, the settlement terms, and the claims processing
procedure. (See Id. ¶¶1.14, 3.12; Ex. B.)
Under the Settlement Agreement, the method of providing
notice is by first-class mail and establishment of a website.
Pursuant to the Settlement Agreement, Honda will mail each
putative settlement class member the agreed-upon Notice and
Claim Form by first-class mail and also create and maintain a
website that will make these documents, as well as others
related to the settlement, available for download. (See
Id. ¶¶ 3.12, 4.2.)
determine whether approval on a preliminary basis is
appropriate, a district court considers whether it will
“likely be able to: (1) approve the proposal under Rule
23(e)(2); and (2) certify the class for purposes of judgment
on the proposal.” Fed.R.Civ.P. 23(e)(1); see also
Swinton v. SquareTrade, Inc., No. 18-CV-144 (SMR/SBJ),
2019 WL 617791, at *5 (S.D. Iowa Feb. 14, 2019);
Famuliner v. Walmart Inc., No. 19-CV-60, 2019 WL
2566443, at *2 (W.D. Mo. June 21, 2019). “If these two
elements are satisfied, the Court will consider whether the
parties' proposed method of giving notice satisfies the
requirements set out in Rule 23(c)(2)(B).”
Swinton, 2019 WL 617791, at *5.
standard comes from the December 2018 Amendments to the
Federal Rules of Civil Procedure, including Rule 23(e).
Advisory Committee Notes to the 2018 Amendments indicate that
the process set forth in Rule 23(e) is meant to codify the
preliminary approval process that was a matter of practice,
but not rule. See In re GSE Bonds Antitrust
Litigation, No. 19-CV-1704 (JSR), 2019 WL 5838960, at *1
(S.D.N.Y. Nov. 7, 2019) (noting that prior to the amendments,
Rule 23 did not specify a standard for preliminary approval);
Swinton, 2019 WL 617791, at *4 (noting that the
process was meant to “codify the ‘preliminary
approval' process that is customary in class action
The proposed settlement satisfies the Rule 23(e)(2)
23(e)(2) provides that “[i]f the proposal would bind
class members, the court may approve it only after a hearing
and only on finding that it is fair, reasonable, and adequate
after considering” certain factors. Fed.R.Civ.P.
23(e)(2). And so, courts must consider: (1) whether
“class representatives and class counsel have
adequately represented the class, ” Fed.R.Civ.P.
23(e)(2)(A); (2) whether “the proposal was negotiated
at arm's length, ” Fed.R.Civ.P. 23(e)(2)(B); (3)
whether “the relief provided for the class is adequate,
” taking certain specified considerations into account,
Fed.R.Civ.P. 23(e)(2)(C); and (4) whether “the proposal
treats class members equitably relative to each other,
” Fed.R.Civ.P. 23(e)(2)(D). The Eighth Circuit has set
forth its own largely overlapping test to ascertain the
fairness and adequacy of a proposed settlement. See
Swinton, 2019 WL 617791 at *5. For the reasons
stated below, the Court finds that the proposed settlement is
likely to satisfy these requirements.
the Court is persuaded that the class representatives and
class counsel have adequately represented the proposed
settlement class. The Court is not aware of a conflict of
interest or anything else that would render the Named
Plaintiffs' representation of the proposed settlement
class deficient. Upon review of the declarations submitted in
this matter and their interactions with the Court, the Court
also finds that Sauder Schelkopf LLC; Mazie Slater Katz &
Freeman, LLC; Gustafson Gluek PLLC; and Migliaccio and Rathod
LLP (“Class Counsel”) are qualified, experienced,
and able to conduct the litigation. Accordingly, the first
factor weighs in favor of approving the proposed settlement
on a preliminary basis.
the Court finds that the proposed settlement was the result
of arms-length negotiation. As noted above, it was negotiated
between experienced, capable counsel knowledgeable in complex
class action litigation. And an experienced, capable mediator
was also involved. [See ECF No. 74 at 15
(representing “mediation was conducted by Bradley A.
Winters, an experienced and respected JAMS mediator”).]
In these circumstances, the second factor weighs in favor of
approving the proposed settlement on a preliminary basis.
See, e.g., In re GSE Bonds Antitrust
Litig., 2019 WL 5848960 at *2; Stephens v. Farmers
Rest. Grp., No. 17-CV-1087 (TJK), 2019 WL 2550674, at *6
(D.D.C. June 20, 2019).
the Court finds that the proposed settlement provides
adequate relief to the proposed settlement class members.
Rule 23(e)(2)(C) instructs the Court to consider the
following to determine whether the proposal provides adequate
(i) the costs, risks, and delay of trial and appeal;
(ii) the effectiveness of any proposed method of distributing
relief to the class, including the method of processing
class-member claims; [and]
(iii) the terms of any proposed award of attorneyʹs
fees, including timing of payment
Fed. R. Civ. P. 23(e)(2)(C).
noted above, the Settlement Agreement provides members of the
proposed settlement class the opportunity to submit claims
and be reimbursed by Honda for certain towing, oil change,
and diagnostic costs incurred due to the manifestation of the
oil dilution defect in the Class Vehicles. The Court
acknowledges that historically few class members file claims
in cases that use claims-making processes such as the one
contemplated by the Settlement Agreement and that such
distribution methods generally bring little benefit to class
members. See In re MyFord Touch Consumer Litig.,
3:13-cv-03072- EMC, ECF No. 449 at 3 (N.D. Cal. June 14,
2018) (collecting cases); see also 4 Newberg §
12:17 (“The theoretical and empirical evidence
suggest[s] that few class members file claims in most cases .
. . .”). There is no indication that claims rates here
would outpace low claims rates in similar cases. But the
additional year of Powertrain Limited Warranty that Honda
agrees to make available to all members of the proposed
settlement class would provide additional value to the class,
as would the Product Update that Honda would provide to
Vehicles registered in cold-weather states.
while Class Counsel maintains that the Named Plaintiffs'
legal positions are strong, they recognize the inherent risks
and costs of continuing to litigate further, particularly as
Honda continues to disclaim liability. [See ECF No.
74 at 12.] Class Counsel acknowledges that consumer class
actions generate complex legal issues that are heavily
contested both throughout the country and within the Eighth
Circuit. (Id.) In addition, proving liability and
damages would require experts and extensive Daubert
briefing. (Id.) The Court agrees that the risks of
proceeding to trial are substantial. And the parties are
likely to appeal any rulings issued on the complex legal
issues implicated by this case, further increasing litigation
costs and delaying the distribution of relief to members of
the proposed settlement class.
analyzed the value of the settlement offer to members of the
proposed class-paying particular attention to the
effectiveness of the method of distributing relief and the
costs, risks, and delay of trial and appeal-the Court is
satisfied with the proposal for attorneys' fees
vis-à-vis the settlement offer. Honda has agreed not
to oppose Class Counsel's request for up to $850, 000 in
attorneys' fees and expenses. [ECF No. 74 at 6-7.] This
sum would not be deducted from a finite settlement fund and
therefore would not deduct from any award to the proposed
settlement class. (See Settlement Agreement ¶
5.4.) Further, the Settlement Agreement provides that this
sum will be paid out when an order and judgment approving the
Settlement Agreement becomes final, see Settlement
Agreement ¶¶ 1.7, 1.8 5.3, 5.4, and so the Court
finds nothing problematic with “timing of payment,
” Fed.R.Civ.P. 23(e)(2)(C)(iii). Accordingly, the Court
finds that the proposed settlement provides adequate relief
to the members of the proposed settlement class. This factor
therefore also weighs in favor of approving the proposed
settlement on a preliminary basis.
the Court finds that the “proposal treats class members
equitably relative to each other.” Fed.R.Civ.P.
23(e)(2)(D). “There is no requirement that all class
members in a settlement be treated equally.”
Swinton, 2019 WL 617791, at *8. Here, members of the
proposed settlement class with Class Vehicles registered in
21 cold-weather states will receive Product Updates while
members with Class Vehicles registered in other states will
not. But Class Counsel represents that Class Vehicles in
cold-weather states are more likely to manifest the oil
dilution defect. [See ECF No. 74 at 6.] The Court
therefore finds that this differing approach is fair because