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In re Volkswagen "Clean Diesel" Marketing, Sales Practices, and Products Liability Litigation

United States District Court, N.D. California

February 16, 2017

IN RE VOLKSWAGEN “CLEAN DIESEL” MARKETING, SALES PRACTICES, AND PRODUCTS LIABILITY LITIGATION This Order Relates To ALL CONSUMER ACTIONS ALL RESELLER DEALERSHIP ACTIONS

          ORDER GRANTING PRELIMINARY APPROVAL OF THE BOSCH CLASS ACTION SETTLEMENT

          CHARLES R. BREYER UNITED STATES DISTRICT JUDGE

         In the fall of 2015 the public learned of Volkswagen's deliberate use of a defeat device- software designed to cheat emissions tests and deceive federal and state regulators-in nearly 600, 000 Volkswagen-, Porsche-, and Audi-branded turbocharged direct injection (“TDI”) diesel engine vehicles sold in the United States. Litigation quickly ensued, and those actions were consolidated and assigned to this Court as a multidistrict litigation (“MDL”). After months of intensive negotiations and with the assistance of a court-appointed settlement master, Plaintiffs and Defendants Robert Bosch GmbH and Robert Bosch, LLC (collectively, “Bosch”) reached a settlement that resolves consumer claims concerning certain 2.0- and 3.0-liter diesel TDI vehicles. (See Dkt. No. 2918.)

         The Settlement Class Representatives now move the Court to (1) preliminarily approve the proposed Bosch Class Action Settlement Agreement and Release (“Settlement”), (2) conditionally certify a Settlement Class, (3) approve the proposed settlement notice plan, and (4) schedule a fairness hearing. Having reviewed the proposed settlement and with the benefit of oral argument on February 14, 2017, the Court GRANTS the motion for preliminary approval. The Settlement is sufficiently fair, adequate, and reasonable to the 2.0- and 3.0-liter diesel engine vehicle consumers to move forward with class notice.

         BACKGROUND

         I. Factual Allegations

         Volkswagen sold Volkswagen-, Audi-, and Porsche-branded TDI “clean diesel” vehicles, which it marketed as being environmentally friendly, fuel efficient, and high performing. Unbeknownst to consumers and regulatory authorities, Volkswagen installed in these cars a software defeat device that allowed the vehicles to evade United States Environmental Protection Agency (“EPA”) and California Air Resources Board (“CARB”) emissions test procedures. Specifically, the defeat device senses whether the vehicle is undergoing testing and produces regulation-compliant results, but operates a less effective emissions control system when the vehicle is driven under normal circumstances. Only by installing the defeat device on its vehicles was Volkswagen able to obtain Certificates of Conformity from EPA and Executive Orders from CARB for its 2.0- and 3.0-liter diesel engine vehicles; in fact, these vehicles release nitrogen oxides at a factor of up to 40 times over the permitted limit. Over six years, Volkswagen sold American consumers nearly 600, 000 diesel vehicles equipped with a defeat device.

         As alleged, Bosch worked closely with Volkswagen to develop and supply the software defeat device for use in Volkswagen's vehicles. Despite having knowledge of Volkswagen's illicit use of the defeat device, Bosch continued to work with Volkswagen and even concealed the defeat device in communications with U.S. regulators when concerns were raised about the emission control system in certain Volkswagen vehicles. While Volkswagen has publicly admitted wrongdoing, Bosch continues to deny wrongdoing. (See Dkt. No. 2838 at 8.)

         II. Procedural History

         In January 2016, the Court appointed Elizabeth J. Cabraser of Lieff, Cabraser, Heimann & Bernstein, LLP as Lead Plaintiffs' Counsel and Chair of the Plaintiffs' Steering Committee (“PSC”), to which the Court also named 21 attorneys. (Dkt. No. 1084.) On September 2, 2016, the PSC filed its Amended Consolidated Consumer Class Action Complaint against 13 named defendants: Volkswagen Group of America; Volkswagen AG; Audi AG; Audi of America, LLC; Porsche AG; Porsche Cars North America, Inc.; Martin Winterkorn; Mattias Müller; Michael Horn; Rupert Stadler; Robert Bosch GmbH; Robert Bosch, LLC; and Volkmar Denner. (Dkt. No. 1804.) As against Bosch, the complaint asserts claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c)-(d), state fraud and unjust enrichment laws, and all fifty States' consumer protection laws. The PSC also filed a Second Amended Consolidated Reseller Dealership Class Action Complaint against the same 13 defendants; the complaint asserts against Bosch claims for RICO, fraud, and unjust enrichment. (Dkt. No. 1805.)

         Also in January 2016, the Court appointed former Director of the Federal Bureau of Investigation Robert S. Mueller III as Settlement Master to oversee settlement negotiations between the parties. (Dkt. No. 973.) Since that time, in parallel to negotiations for the 2.0-liter and 3.0-liter Volkswagen settlements, the parties have engaged in both litigation and settlement discussions over Bosch's involvement in the Volkswagen emissions scandal. The parties finally reached a proposed Settlement, and Plaintiffs now seek the Court's preliminary approval of the Settlement. (Dkt. No. 2838.)

         SETTLEMENT TERMS

         This Order addresses the proposed Bosch Class Action Settlement Agreement and Release. The key provisions of the Settlement are as follows.

         I. The Settlement Amount

         The Settlement requires Bosch to create a non-reversionary settlement fund, called the Bosch Settlement Fund, in the amount of $327, 500, 000 to compensate Class Members. (Dkt. No. 2918 ¶¶ 4.1, 10.1.)

         II. The Settlement Class

         The proposed Settlement Class consists of all persons and entities who were eligible for membership in the combination of classes defined in the 2.0-liter and 3.0-liter class action settlement agreements, including anyone who opted out or opts out of those agreements. (Id. ¶ 2.17.) The following are excluded from the Settlement Class: (a) Bosch's officers, directors, and employees; and Bosch's affiliates and affiliates' officers, directors, and employees; (b) Volkswagen; Volkswagen's officers, directors, and employees; and Volkswagen's affiliates and affiliates' officers, directors, and employees; (c) any Volkswagen franchise dealer; (d) judicial officers and their immediate family members and associated court staff assigned to this case; and (e) any person or entity that timely and properly opted out of the Bosch Settlement. (Id.)

         Eligible Vehicles under the Settlement are the same eligible vehicles identified in the 2.0-liter and 3.0-liter settlement agreements. (Id. ¶ 2.34.) Any Volkswagen, Audi, or Porsche vehicles that were never sold in the United States or its territories are excluded from the Eligible Vehicles. (Id.)

         III. Claims Process

         The Settlement Benefit Period, or the time period during which Class Members may obtain benefits under the Settlement, ends on April 30, 2020. (Id. ¶ 2.50.)

         A. Class Members Who are not Required to Make a Claim

         Any Class Member whose filed claim has been approved or is approved in the future in either or both of the 2.0-liter and 3.0-liter Volkswagen settlements will receive an automatic payment via check by mail. (Id. ¶ 5.4.) In other words, those Class Members who made or make an approved claim in the 2.0-liter or 3.0-liter settlements do not have to do anything to receive their payments from Bosch.

         B. Class Members Who Must Make a Claim

         Two categories of Class Members are entitled to compensation but will not receive automatic payments: (1) eligible Class Members who opted out of the 2.0-liter and 3.0-liter class settlements, and (2) eligible sellers in the 2.0-liter settlement who did not identify themselves during the relevant period for purposes of the 2.0 class settlement. (Id. ¶¶ 5.5.1, 5.5.2.)

         Those Class Members who opted out of the Volkswagen settlements must file a claim no later than August 15, 2017. (Id. ¶ 5.6.) Similarly, eligible sellers who did not timely identify themselves in the 2.0-liter settlement and eligible former owners who do not identify themselves by the deadline set forth in the 3.0-liter settlement and do not file a claim by the claim submission deadline in the 3.0-liter settlement must file a claim no later than May 1, 2017. (Id. ¶ 5.7.) For these categories of Class Members, claims eligibility will be decided by the Claims Administrator. (Id. ¶ 5.6.) Class Members will be notified by email or letter within five business days of the Claims Administrator's eligibility determination. (Id. ¶ 5.8.) The Claims Administrator will mail a compensation check to each Class Member whose claim is approved no later than 10 business days after the Claims Administrator's eligibility determination. (Id. ¶ 5.9).

         IV. Distribution of Settlement Payments

         The Bosch Settlement Fund will be distributed such that $163, 267, 450 will be shared among 2.0-liter Class Members and $113, 264, 400 will be shared among 3.0-liter Class Members. (Dkt. No. 2838 at 14.) The Bosch Settlement Fund will be distributed, based on the Federal Trade Commission's (“FTC”) allocation plan (see Dkt. No. 2918 ¶ 4.4), to Class Members as follows:

         An eligible owner of an Eligible Vehicle in the 2.0-liter settlement will receive $350, except that if an eligible seller or lessee has an approved claim for the same Eligible Vehicle, the eligible owner will receive $175. (Dkt. No. 2838 at 15.) An eligible seller in the 2.0-liter settlement with an approved claim will receive $175. (Id.) An eligible lessee in the 2.0-liter settlement will receive $200. (Id.)

         An eligible owner of an Eligible Vehicle in the 3.0-liter settlement will receive $1, 500, with three exceptions: (1) if an eligible former owner of the same Eligible Vehicle has an approved claim in the 3.0-liter settlement, the $1, 500 payment will be split equally ($750 each) between the owner and the former owner; (2) an eligible owner will also receive $750 if an eligible former lessee of the Eligible Vehicle has an approved claim; and (3) if two former eligible owners of the Eligible Vehicle have approved claims, the $1, 500 will be split such that the eligible owner receives $750 and each of the two former owners receives $375. (Id.) An eligible lessee in the 3.0-liter settlement will receive $1, 200. (Id.)

         At the conclusion of the Settlement Benefit Period, if any funds remain in the Bosch Settlement Fund and it is not feasible or economically reasonable to distribute such funds to Class Members, the funds will be distributed through cy pres payments according to a distribution plan and schedule filed by Class Counsel and approved by the Court. (Dkt. No. 2918 ¶ 10.2.) Any unused funds will only revert to Bosch if the Settlement is terminated or invalidated prior to the conclusion of the Settlement Benefit Period. (Id. ¶ 10.3.)

         V. Opt Out Procedure and Objections

         Class Members may request exclusion from the Settlement by mailing a signed, written request stating their desire in clear and unambiguous language, such as “I wish to exclude myself from the Bosch Settlement Class in In re Volkswagen ‘Clean Diesel' Marketing, Sales Practices and Products Liability Litigation, No. 15-md-2672, ” to the Notice Administrator on or before the opt-out deadline of April 14, 2017. (Dkt. No. 2918 ¶ 6.1.) The written request must also include (1) the Class Member's printed name, address, and telephone number; (2) a statement as to whether the class member is an eligible owner, eligible lessee, or eligible seller in the 2.0-liter settlement or an eligible owner, eligible former owner, eligible lessee, or eligible former lessee in the 3.0-liter settlement; (3) the VIN of the Eligible Vehicle(s); and (4) the dates of the Class Member's ownership or lease of the Eligible Vehicle(s). (Id.)

         The Class Notice shall advise that Class Members may object to the Settlement by filing with the Court a written objection that explains why he or she believes the Court should not approve the Class Action Settlement as fair, reasonable, and adequate. (Id. ¶ 7.1.) The written objection must include: (1) a detailed statement of and specific reasons for the objection; (2) the Class Member's name, address, and telephone number; (3) a statement as to whether the class member is an eligible owner, eligible lessee, or eligible seller in the 2.0-liter settlement or an eligible owner, eligible former owner, eligible lessee, or eligible former lessee in the 3.0-liter settlement; (4) the VIN of the Eligible Vehicle(s); (5) a statement that the Class Member has reviewed the Class definition and has not opted out of the Class; (6) the dates of the Class Member's ownership or lease of the Eligible Vehicle(s); and (7) any other supporting documents the Class Member wishes the Court to consider. (Id.) Class Members may object on their own behalf or through counsel, at the Class Members' own expense. (Id. ¶ 7.2.)

         VI. Release of Claims

         Class Members agree to release Released Claims against the Released Parties. The Settlement defines Released Parties as:

(1) Robert Bosch GmbH, Robert Bosch LLC, and all current and former parents (direct or indirect), shareholders (direct or indirect), members (direct or indirect), subsidiaries, affiliates, joint venture partners, insurers, contractors, consultants, and auditors, and the predecessors, successors, and assigns of the foregoing (the “Bosch Released Entities”); and (2) all current and former officers, directors, members of the management or supervisory boards, employees, agents, advisors and attorneys of the Bosch Released Entities (the “Bosch Released Personnel”).

(Id. ¶ 9.2.)

         The Released Claims are defined as:

any and all claims, demands, actions, or causes of action, whether known or unknown, that they may have, purport to have, or may have hereafter against any Released Party, as defined above, that: (i) are related to any Eligible Vehicle; (ii) arise from or in any way relate to the 2.0-liter TDI Matter or the 3.0 Liter TDI Matter; and (iii) that arise from or are otherwise related to conduct by a Released Party that (a) predates the date of this Class Action Settlement Agreement and (b) formed the factual basis for a claim that was made or could have been made in the Complaints. This Release applies to any and all claims, demands, actions, or causes of action of any kind or nature whatsoever, whether in law or in equity, contractual, quasi-contractual, or statutory, known or unknown, direct, indirect or consequential, liquidated or unliquidated, past, present or future, foreseen or unforeseen, developed or undeveloped, contingent or non-contingent, suspected or unsuspected, whether or not concealed or hidden, related to any Eligible Vehicle and arising from or otherwise related to conduct by a Released Party that predates the date of this Class Action Settlement Agreement as set forth above, including without limitation (1) any claims that were or could have been asserted in the Action; (2) all marketing and advertising claims related to Eligible Vehicles; (3) all claims arising out of or in any way related to emissions, emissions control equipment, electronic control units, electronic transmission units, CAN-bus-related hardware, or software programs, programing, coding, or calibration in Eligible Vehicles; (4) all claims arising out of or in any way related to a 2.0-liter TDI Matter under the 2.0-liter Class Action Settlement and a 3.0-liter TDI Matter under the 3.0-liter Class Action Settlement; and (5) any claims for fines, penalties, criminal assessments, economic damages, punitive damages, exemplary damages, statutory damages or civil penalties, liens, rescission or equitable or injunctive relief, attorneys', expert, consultant, or other litigation fees, costs, or expenses, or any other liabilities, that were or could have been asserted in any civil, criminal, administrative, or other proceeding, including arbitration[.]

(Id. ¶ 9.3.) The Court is satisfied that the scope of the Released Claims is consistent with Ninth Circuit law; that is, it covers only those claims that are based on the identical factual predicate as that underlying the claims in the Complaints. See Hesse v. Sprint Corp., 598 F.3d 581, 590 (9th Cir. 2010) (“A settlement agreement may preclude a party from bringing a related claim in the future even though the claim was not presented and might not have been presentable in the class action, but only where the released claim is based on the identical factual predicate as that underlying the claims in the settled class action.”) (citation and internal quotations omitted).

         Class Members expressly waive and relinquish any rights they may have under California Civil Code § 1542 or other similar federal or state laws. (Id. ¶ 9.5; see Cal. Civ. Code § 1542 (“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, ...


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