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True v. American Honda Motor Co.

March 25, 2009

JOHN TRUE, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
AMERICAN HONDA MOTOR CO., INC., DEFENDANTS.



The opinion of the court was delivered by: VIRGINIA A. Phillips United States District Judge

[Motion filed on March 2, 2009]

ORDER DENYING PRELIMINARY APPROVAL WITH LEAVE TO SUBMIT ADDITIONAL MATERIALS NO LATER THAN APRIL 24, 2009

Plaintiffs John True ("True") and Gonzalo Delgado's ("Delgado") (collectively "Plaintiffs") Motion for Preliminary Approval of Settlement ("Motion") came before the Court for hearing on March 23, 2009. After reviewing and considering all papers filed in support of, and in opposition to, the Motion the Court DENIES the Motion WITHOUT PREJUDICE and grants the parties leave to submit additional materials no later than April 24, 2009.

Plaintiffs allege they were exposed to advertising regarding the fuel efficiency of Honda Civic Hybrid ("HCH") automobiles and bought HCHs based on these representations during the class period, between 2003 and 2008. (First Amended Complaint ("FAC") ¶¶ 1-10; Class Action Settlement Agreement and Release ("Settlement Agreement") at 1, 9.)

I. BACKGROUND

True named American Honda Motor Company ("Defendant") as Defendant in a Complaint filed on March 9, 2007, in which Delgado joined. Plaintiffs seek relief on the following claims: (1) California Business and Professions Code section 17200; (2) California Business and Professions Code section 17500; (3) California Civil Code section 1750; (4) common law unjust enrichment. (Motion for Preliminary Approval of Settlement ("Mot.") 1.)

Defendant brought a Motion to Dismiss, which the Court denied on June 25, 2007. The parties engaged in approximately 11 months of discovery and motion practice before proceeding to mediation. (Mot. 2.) By December 2008, the parties reached a settlement in principle. (Mot. 2.)

They now seek preliminary approval of the Settlement Agreement and move the Court to enter an order directing:

(1) Certification of a single class, solely for the purpose of settlement, under Rule 23 of the Federal Rules of Civil Procedure, consisting of "[a]ll 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" excluding Defendant and its subsidiaries and affiliates and their employees, officers, their family members, class counsel, and all persons who timely opt out of the proposed settlement (Settlement Agreement Ex. E ¶ 1);

(2) Preliminary approval of the Settlement Agreement;

(3) Approval of the proposed Class Notice, notice via the website, and Consumer Claim Form (Settlement Agreement Exs. B-D);

(4) Appointment of True and Delgado as class representatives (Settlement Agreement Ex. C ¶ 9);

(5) Appointment of Nicholas Chimicles ("Chimicles") and Jonathan Cuneo ("Cuneo") as class counsel;

(6) Appointment of Defendant as claims administrator; and

(7) Establishment of a date for a final fairness hearing on the settlement agreement. (See Settlement Agreement Ex. C.)

Plaintiffs also move for a finding that Defendant provided notice of proposed settlement to the Attorney General of the United States and the attorneys general of the States as required by 28 U.S.C. § 1715(b).

B. Facts

Pursuant to the Settlement Agreement, Defendant will review its fuel economy advertising for the HCH and will modify its disclaimer language for at least 24 months, including at least changing the language from "actual mileage may vary" to "actual mileage will vary." (Mot. 4; Settlement Agreement 14.) In addition, all class members will receive a DVD demonstrating methods for operating and maintaining HCHs to maximize fuel economy. (Mot. 3.) Class members will also receive one of four kinds of payments or discounts, described below. The parties do not explain the size of the total fund available for these monies, nor whether it is reversionary. (See Mot. 2-4.)

1. Option A

Option A is available to members of the proposed class who: (1) own (rather than lease) an HCH; (2) sell or trade in their HCH; and (3) buy an Eligible Vehicle from Defendant, defined as "a new model year 2009 or 2010 Honda or Acura, excluding the Honda Fit, Honda Insight, HCH or any Honda Certified Used Car or Acura Certified Pre-Owned Vehicle." Those claiming relief under Option A must buy an Eligible Vehicle (4) before June 30, 2011.

They will receive $1,000. This benefit is nontransferrable. (Mot. 3; Settlement Agreement 11-12.)

2. Option B

Option B is available to those class members who retain ownership or a leasehold on their HCH and (1) purchase an Eligible Vehicle from Defendant (2) before June 30, 2011. They will receive a $500 payment, transferable to certain listed family members: spouses, parents, siblings, children, grandparents, or grandchildren. (See Settlement Agreement 12-13.) Registered domestic partners, in states that recognize those unions, are not included, however.

3. Option C

Option C is available to those class members who made a documented Complaint regarding the fuel economy of their HCH to Defendant, an authorized Honda or Acura dealership who reported the Complaint to Defendant, or to Plaintiffs' counsel. They will receive a cash payment of $100. The moving papers do not contain an estimate of the number of persons who made qualifying complaints. (Settlement Agreement 13-14.)

4. No additional Relief

Class members who do not want to, or are not able to, buy an Eligible Vehicle, and who did not make a qualifying complaint, will be ineligible to receive any payments or discounts.

In exchange for receiving these benefits, class members will release Defendant of all claims that were or could have been made arising from Defendants' marketing regarding the fuel economy of the HCH. (Mot. 4; Settlement Agreement 6-7.)

The entire Settlement Agreement is subject to cancellation by Defendant "[i]f one hundred (100) or more Settlement Class Members properly and timely submit requests for exclusion from the Settlement Class." (Settlement Agreement 31.) Plaintiffs' counsel estimates the class consists of approximately 120,000 people. (Mot. 5-6.) The moving papers do not address the likelihood that more than 100 persons will opt out.

Plaintiffs request attorneys' fees, expenses, and named plaintiffs' incentive awards of no more than $2,950,000. (Mot. 4; Settlement Agreement 20-21.) Plaintiffs seek $12,500 for True and $10,000 for Delgado as incentive payments. (Mot. 4.)

II. LEGAL STANDARD

Parties seeking class certification for settlement purposes must satisfy the requirements of Rule 23.

Amchem Prods, Inc. v. Windsor, 521 U.S. 591, 620 (1997). A court considering such a request should give the Rule 23 certification factors "undiluted, even heightened, attention in the settlement context." Id.

Under Rule 23(a), in order to bring a class action, a plaintiff must demonstrate: the class is so numerous that joinder of all members is impracticable ["numerosity"], (2) there are questions of law or fact common to the class ["commonality"], (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class ["typicality"], and (4) the representative parties will fairly and adequately protect the interests of the class ["adequacy of representation"].

In addition to these prerequisites, a plaintiff must satisfy one of the prongs of Rule 23(b) in order to maintain a class action. Where, as here, a plaintiff moves for class certification under Rule 23(b)(3), the plaintiff must prove that: the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions;

(B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum.*fn1

Rule 23(e) requires the Court to approve any settlement, voluntary dismissal, or compromise of the claims, issues, or defenses of a certified class. Fed. R. Civ. P. 23(e). The court must hold a hearing and find that "the settlement . . . is fair, reasonable, and adequate." Fed. R. Civ. P. 23(e)(2). Review of a proposed settlement generally proceeds in two stages, a hearing on preliminary approval followed by a final ...


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