2 7 8 9 10 IN RE: Toyota Motor Corp. 11 Sales Practices ...

Case 8:10-ml-02151-JVS-FMO Document 3804 Filed 06/17/13 Page 1 of 56 Page ID #:123117

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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Case No. 8:10ML 02151 JVS (FMOx)

10 IN RE: Toyota Motor Corp.

Unintended Acceleration Marketing,

11 Sales Practices, and Products Liability Order Regarding Proposed Class

Litigation

Action Settlement

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13 This document relates to:

14 All Economic Loss Cases.

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Case 8:10-ml-02151-JVS-FMO Document 3804 Filed 06/17/13 Page 2 of 56 Page ID #:123118

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Table of Contents

2 I.

3 II.

4 III.

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Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Class Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Terms of Settlement, Allocation Plan and Scope of Release of Claims . . . . 3 A. Terms of Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

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1. Alleged Diminished Value Fund . . . . . . . . . . . . . 4

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2. BOS Installation and Cash-in-Lieu of BOS

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Installation Fund . . . . . . . . . . . . . . . . . . . . . . . . . 5

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3. Customer Support Program . . . . . . . . . . . . . . . . . 6

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4. Safety and Education Fund . . . . . . . . . . . . . . . . . 7

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B. Allocation Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

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C. Scope of Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

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IV. Legal Standards Applicable to Class Action Settlement Approval . . . . . . 11

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A. Rule 23(e) Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

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B. Appropriateness of Continued Certification of the Class . . . . . . . . . 12

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V. Evaluation of Rule 23(e) Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

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A. Rule 23(e)(3) ? Parties Must Identify the Terms of the Settlement

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B. Rule 23(e)(1) ? Notice to the Class . . . . . . . . . . . . . . . . . . . . . . . . . . 13

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C. Rule 23(e)(4) ? Opportunity to Opt Out and Rule 23(e)(5) ?

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Opportunity to Object . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

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D. Rule 23(e)(2) ? Settlement Must be "[F]air, [R]easonable, and

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[A]dequate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

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1. Hanlon Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

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a. Strength of the Plaintiffs' Case . . . . . . . . . . . . . . . . . . 18

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b. Risk, Expense, Complexity, and Likely Duration of

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Further Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

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c. Risk of Maintaining Class Action Status Throughout the

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Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

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d. Amount Offered in Settlement . . . . . . . . . . . . . . . . . . . 25

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e. Extent of Discovery Completed and the Stage of the

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Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

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f. Experience and Views of Counsel . . . . . . . . . . . . . . . . 27

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g. Presence of a Governmental Participant . . . . . . . . . . . 28

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h. Reaction of the Class Members to the Proposed

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Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

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2. Ruling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

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VI. Contribution to the Safety and Education Fund . . . . . . . . . . . . . . . . . . . . . 31

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VII. Objections to Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

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A. Overall Fairness and Sufficiency of Settlement . . . . . . . . . . . . . . . . 34

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B. Sale Window and Early Lease Termination Window . . . . . . . . . . . 36

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C. BOS Installation and Cash-in-Lieu-of-BOS Fund . . . . . . . . . . . . . . 37

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D. Customer Support Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

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E. Other Objections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

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1. Objections to Attorney Fees and Compensation of Named

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Plaintiffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

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2. Scope of Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

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3. Applicability of Release to Claims Asserted by Putative Class

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in Hybrid Brake MDL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

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4. Claims Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

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5. Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

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6. Objections Based on Disability . . . . . . . . . . . . . . . . . . . . . . . 45

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7. Manifestation States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

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8. Ohio and Pennsylvania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

5 VIII. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

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Case 8:10-ml-02151-JVS-FMO Document 3804 Filed 06/17/13 Page 5 of 56 Page ID #:123121

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Presently before the Court is a Motion filed by the Economic Loss Plaintiffs

2 ("Plaintiffs") seeking final approval of the proposed class action settlement.

3 (Docket No. 3555-56.) A number of objections to the proposed settlement and 4 award of fees, costs, and class representative compensation have been filed.1 The

5 Toyota Defendants and Plaintiffs have filed Reply briefs in support of the

6 settlement. (Docket Nos. 3728 & 3731.)

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As set forth more fully below, generally, the Court believes that the

9 proposed settlement is fair, adequate, and reasonable. Nevertheless, as articulated

10 in detail herein, certain difficulties in the plan of allocation of the settlement funds

11 preclude the Court's final approval of the proposed settlement at this time.

12 Accordingly, and with the following discussion, the Court holds in abeyance the

13 Motion for Final Approval of Class Action Settlement.

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15 I. Background

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On December 28, 2012, on application from the Economic Loss Plaintiffs,

18 this Court granted preliminary approval to a proposed settlement agreement.2 (See

19 Docket Nos. 3344-45 ("Preliminary Approval Orders").) After preliminary

20 approval, the parties amended two terms of the proposed settlement agreement

21 relating to the circumstances under which any excess in each of the two cash funds

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1 The objections are discussed herein at length. See infra section VII.

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2 The proposed settlement agreement was reached with the assistance of

Court-appointed Settlement Special Master Patrick A. Juneau. (See Docket No. 25 2462.)

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