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Tait v. BSH Home Appliances Corporation

United States District Court, C.D. California, Southern Division

July 27, 2015

DIANA TAIT, ET AL., Plaintiffs,


DAVID O. CARTER, District Judge.

Before the Court is Plaintiffs' Motion for Attorney's Fees and Reimbursement of Expenses, and Plaintiffs' Request for Service Awards ("Motion for Fees") (Dkt. 372) and Plaintiffs' Motion for Final Approval of Class Action Settlement ("Motion for Final Approval") (Dkt. 373). The Court held a hearing on this matter on June 8, 2015. Defendant did not file an opposition to the two motions. The Court received a number of objections to the proposed settlement. After reviewing the moving papers, considering the arguments at the hearing, and reviewing the entirety of the record, the Court GRANTS the Motion for Fees and the Court GRANTS the Motion for Final Approval.

I. Background

A. Procedural History

On June 3, 2010, Plaintiffs Diana Tait and Nancy Wentworth filed a Complaint against Defendant BSH Home Appliances Corporation ("BSH") alleging that certain BSH washing machines have a propensity to develop a filmy substance referred to as "Biofilm, " bacteria, mold, fungus, and bioorganic material which produce foul odors (Dkt. 1). On February 14, 2011, Plaintiffs Sharon Cobb, Beverly Gibson, Trish Isabella, Diana Tait and Nancy Wentworth filed the Consolidated Amended Complaint ("CAC") (Dkt. 41). BSH moved to dismiss the CAC (Dkt. 43). In the meantime, the consolidated action was transferred from Judge Cormac J. Carney to this Court (Dkt. 58). The Court granted BSH's motion to dismiss with leave to amend (Dkt. 60), and Plaintiffs filed a Second Consolidated Amended Complaint ("SCAC") (Dkt. 66). BSH renewed its motion to dismiss (Dkt. 67), which the Court granted in part, and denied in part (Dkt. 74). BSH answered the SCAC on September 21, 2011 (Dkt. 75).

Plaintiffs moved for certification of four individual state classes comprised of purchasers of BSH washers in California, Illinois, Maryland, and New York, respectively (Dkt. 87). BSH opposed the certification motion and moved to strike Plaintiffs' experts' opinions (Dkts. 96-102, 103-104). On December 20, 2012, the Court certified four state classes and denied BSH's motion to exclude the opinions of Plaintiffs' engineering and biology experts (Dkt. 166). Tait v. BSH Home Appliances Corp., 289 F.R.D. 466 (C.D. Cal. 2012).

BSH petitioned the Ninth Circuit for permission to appeal the class certification order on January 3, 2013. At the same time, petitions for certiorari were pending in similar moldy washer cases against Whirlpool Corporation (" Whirlpool ") and Sears, Roebuck & Co. (" Kenmore ") challenging class certification decisions by the Sixth and Seventh Circuits. On April 1, 2013, the Supreme Court granted certiorari in both Whirlpool and Kenmore, vacated the respective circuit opinions, and remanded for reconsideration in light of Comcast Corp. v. Behrend, 133 S.Ct. 1426 (2013) ("GVR Orders"). The same day, the Ninth Circuit denied BSH's petition for review. BSH filed a motion for reconsideration, which the Ninth Circuit denied. Following the GVR Orders, the Sixth and Seventh Circuits reaffirmed their earlier decisions, and Whirlpool and Sears once again petitioned for certiorari. Earlier, on July 30, 2013, BSH filed its own petition for a writ of certiorari from the Ninth Circuit's denial of permission to appeal. The petitions for all three cases were denied on February 24, 2014.

Plaintiffs' claims against BSH are on behalf of all United States residents who purchased one or more Bosch or Siemens brand 27-inch front-loading washing machines. Provisional Fourth Amended Complaint (Dkt. 370) ¶ 2.[1] Plaintiffs allege that BSH designed, manufactured, marketed, and sold washers with a propensity to develop bacteria, mold and foul odors ("BMFO"), and that BSH failed to disclose this defect or the extraordinary tasks required to abate or ameliorate BMFO. Id. ¶¶ 4-7, 44-45. Plaintiffs brought claims against BSH for violations of state consumer protection statutes, common law fraudulent concealment and nondisclosure, breach of express and implied warranties, and unjust enrichment. Id. ¶¶ 98-207.

BSH filed a motion for sanctions related to Plaintiffs' damages experts (Dkt. 232), which the Court denied on August 20, 2014 (Dkt. 252). Plaintiffs filed a motion for spoliation sanctions related to discovery issues (Dkt. 265), which was also denied (Dkt. 284).

On August 25, 2014, the Court approved Plaintiffs' proposed Notice Plan and draft forms of notice to the Class (Dkt. 258). Class notice was disseminated to California, Illinois, Maryland, and New York class members beginning in late September.

On August 29, 2014, BSH filed a motion for partial summary judgment (Dkt. 259). Ten days later, BSH filed a motion to decertify the classes (Dkt. 276). The parties also filed cross-motions to exclude the opinions of each other's experts (" Daubert motions") (Dkts. 289, 335). At the time of settlement, the partial summary judgment and decertification motions had been fully briefed and were awaiting hearing and final rulings, and reply briefs for the Daubert motions were days from being filed.

Discovery in this matter may fairly be described as extensive and contentious. Plaintiffs served multiple sets of document requests, interrogatories, and requests for admissions. Declaration of Kristen Law Sagafi ("Sagafi Decl.") (Dkt. 373-1) ¶ 8. BSH produced tens of thousands of pages of documents, including detailed consumer complaint records and internal correspondence regarding the design and marketing of the washers. Id. The parties took and defended 28 fact witness depositions, including of BSH marketing, engineering, and consumer complaint employees and former employees. These depositions took place across the United States and in the Netherlands. Id. The named Plaintiffs were also deposed. Id. ¶ 22.

The parties presented, collectively, 21 experts who together prepared and served 32 expert reports, including eight disclosed during the class certification stage. The experts prepared reports related to the washers' allegedly defective design, mold growth and testing, consumer complaints, consumer perception of BSH's marketing and alleged non-disclosures, and damages. Id. ¶ 9. The parties took and defended a total of 26 expert depositions, with some of the experts being deposed both at the class certification and the merits phases. Id.

B. Settlement Negotiations

The parties attended mediation on December 8, 2013, with the Honorable Daniel S. Pratt (Ret.) serving as mediator. At that time, this case and similar cases against other manufacturers of front-loading washing machines were facing the possibility of Supreme Court review. The case did not settle. Sagafi Decl. ¶ 12.

Pursuant to the Court's Scheduling Order dated June 30, 2014, the parties participated in mediation again, this time with the Honorable Dickran Tevrizian (Ret.), on September 8, 2014. The parties reached agreement on some significant issues, but did not reach full agreement on all terms. Id. ¶ 13.

Following the second mediation, the parties resumed active litigation, including continued expert work and briefing on BSH's motion for summary judgment, BSH's motion to decertify the class, and Daubert motions, along with trial preparation. Id. ¶¶ 13-14. On October 21, 2014, the parties resumed negotiations without the assistance of the mediator. The parties reached agreement on the outstanding issues and executed a memorandum of understanding ("MOU") on November 3, 2014. The parties negotiated the amount of attorney's fees and costs and service awards for the class representatives only after completing negotiation of the substantive settlement terms. Id. ¶ 14; Declaration of Dickran Tevrizian ("Tevrizian Decl.") (Dkt. 386) ¶ 7.

Following the MOU, there were further negotiations over the specifics of the claims process and the notice program, including consultation with the claims administrator, KCC. In parallel with these efforts, class counsel worked diligently to prepare the preliminary approval motion. Sagafi Decl. ¶ 18. On December 12, 2014, the parties fully executed the Settlement Agreement, and that same day, class counsel moved for preliminary approval (Dkt. 363).

On December 29, 2014, the Court granted Plaintiffs' Unopposed Motion for Preliminary Approval (Dkt. 368), preliminarily finding the Settlement to be "fair, reasonable, and adequate, " and "direct[ing] the Claims Administrator and the parties to carry out the Notice Plan as provided for in the Settlement."

C. Key Terms of the Settlement

The settlement class consists of all residents of the United States who were the original purchasers of one or more Bosch or Siemens brand 27-inch front-loading washers (with certain exclusions). Settlement Agreement (Dkt. 363-1) at 7, § II.G.

The settlement is a "claims-made" settlement. Each member of the class is eligible for a $55 cash payment from BSH. Id. § III.A. In order to receive the payment, class members for whom BSH had proof of ownership through its warranty records needed only to confirm their correct mailing addresses and submit a statement under penalty of perjury that they were the original purchaser. Other class members needed to provide proof of ownership through other means (such as a receipt, invoice, credit card statement, or picture of their washer's serial number) along with a statement under penalty of perjury that they were the original purchaser of the washer. Class members had until May 28, 2015, to submit a claim.

BSH agreed not to oppose a request by class counsel for attorney's fees and costs of $6.5 million, including expert fees and costs. Id. at 15, § VI.

The settlement provides for a release of liability that will preclude future claims "arising out of, or in any way relating to any act, failure to act, omission, misrepresentation, fact, event, transaction, or occurrence from the beginning of time until the Effective Date of this Settlement Agreement that were raised or could have been raised in the Action relating in any way to BMFO in the Washers (including the Nationwide Claims), except for claims for personal injury, emotional distress, or wrongful death." Id. at 17, § VIII.B.

Notice of the settlement was provided by mail or email to over 140, 000 out of an estimated 650, 000 class members. Notice was also provided through the Internet, including by the use of Internet banner ads and a settlement website, which is linked to by class counsel's websites. Declaration of Eric Robin ("Robin Decl.") (Dkt. 373-2) ¶ 14; Sagafi Decl. ¶ 19. Notice was also published in the Orange County Register and People and National Geographic magazines. Robin Decl. ¶ 11.

II. Legal Standard

A. Settlement Approval

"The claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval." Fed.R.Civ.P. 23(e). Court approval involves a two-step process: (1) preliminary approval of the settlement; and (2) following a notice period to the class, final approval of the settlement at a fairness hearing. See Nat'l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004). The Court may issue final approval of a class settlement "only after a hearing and on finding that it is fair, reasonable, and adequate." Fed.R.Civ.P. 23(e)(2); In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011). Once the court certifies a settlement class, approval of the settlement terms rests in the court's sound discretion. Class Plaintiffs v. Seattle, 955 F.2d 1268, 1291 (9th Cir. 1992).

"A difficult balancing act almost always confronts a district court tasked with approving a class action settlement." Allen v. Bedolla, 787 F.3d 1218, 1223 (9th Cir. 2015). On the one hand, "there is a strong judicial policy that favors settlements, particularly where complex class action litigation is concerned." In re Syncor ERISA Litig., 516 F.3d 1095, 1101 (9th Cir. 2008). "But on the other hand, settlement class actions present unique due process concerns for absent class members, ' and the district court has a fiduciary duty to look after the interests of those absent class members." Allen, 787 F.3d at 1223 (internal citations omitted).

Upon appellate review, approval of a settlement's substantive fairness will rarely be overturned "unless the terms of the agreement contain convincing indications that... self-interest rather than the class's interests in fact influenced the outcome of the negotiations." Staton v. Boeing Co., 327 F.3d 938, 960 (9th Cir. 2003). However, district courts in the Ninth Circuit are held "to a higher procedural standard when making that determination of substantive fairness." Allen, 787 F.3d at 1223. "To survive appellate review, the district court must show it has explored comprehensively all factors, and must give a reasoned response to all non-frivolous objections." Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012) (citations and internal quotation marks omitted).

In considering final approval of a proposed settlement, the Court's discretion is guided by the following factors:

(1) the strength of the plaintiffs' case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of class members to the proposed settlement.

Churchill Vill., LLC v. Gen. Elec., 361 F.3d 556, 575 (9th Cir. 2004). "This list is not exhaustive, and different factors may predominate in different factual contexts." Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376 (9th Cir. 1993). In addition to these factors, the Court may consider the procedure by which the parties arrived at the settlement to determine whether the settlement is truly the product of arm's length bargaining, rather than the product of collusion or fraud. See Chun-Hoon v. McKee Foods Corp., 716 F.Supp.2d 848, 851 (N.D. Cal. 2010).

The Court's role in evaluating the proposed settlement "must be limited to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable, and adequate to all concerned." Rodriguez v. West Publ'g Corp., 563 F.3d 948, 965 (9th Cir. 2009) (internal quotation marks omitted).

In general, there is a strong judicial policy favoring class settlements. Class Plaintiffs, 955 F.2d at 1276. In evaluating a settlement agreement, it is not the Court's role to second-guess the agreement's terms. Officers for Justice v. Civil Serv. Comm'n of City & Cnty. of San Francisco, 688 F.2d 615, 625 (9th Cir. 1982). If the settlement cannot be approved as is, the Court must reject the settlement because it is not authorized "to delete, modify or substitute certain provisions. The settlement must stand or fall in its entirety." Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998) (internal quotation marks omitted).

B. Attorney's Fees and Costs

"In a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement." Fed.R.Civ.P. 23(h). "[C]ourts have an independent obligation to ensure that the award, like the settlement itself, is reasonable, even if the parties have already agreed to an amount." In re Bluetooth, 654 F.3d at 941. "The reasonableness of a fee award must be considered against the backdrop of the American Rule, ' which provides that courts generally are without discretion to award attorneys' fees to a prevailing plaintiff unless" an exception applies. Id. "The award of attorneys' fees in a class action settlement is often justified by the common fund or statutory fee-shifting exceptions to the American Rule, and sometimes both." Id.

"An award of attorneys' fees incurred in a suit based on state substantive law is generally governed by state law." Champion Produce, Inc. v. Ruby Robinson Co., 342 F.3d 1016, 1024 (9th Cir. 2003). "The task of a federal court in a diversity action is to approximate state law as closely as possible in order to make sure that the vindication of the state right is without discrimination because of the federal forum." Farmers Ins. Exch. v. Law Offices of Conrado Joe Sayas, Jr., 250 F.3d 1234, 1236 (9th Cir. 2001) (internal quotation marks omitted); see also Winterrowd v. Am. Gen. Annuity Ins. Co., 556 F.3d 815, 827 (9th Cir. 2009) ("State law establishes the required showing for attorney's fees in an action in diversity.").

C. Representative Enhancement

"[N]amed plaintiffs, as opposed to designated class members who are not named plaintiffs, are eligible for reasonable incentive payments." Staton, 327 F.3d at 977. It is within the Court's discretion to grant such an award. In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 463 (9th Cir. 2000). These awards "are intended to compensate class representatives for work done on behalf of the class, to make up for financial or reputational risk undertaken in bringing the action, and, sometimes, to recognize their willingness to act as ...

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