2014 WL 4090564
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United States District Court,
C.D. California.

Brad AARONS, et al.



No. CV 11–7667 PSG (CWx). |
Signed April 29, 2014.

Attorneys and Law Firms

Jordan S. Esensten, Wasserman Comden Casselman & Esensten LLP, Tarzana, CA, Jonathan Shub, Scott Alan George,  Seeger  Weiss  LLP,  Philadelphia,  PA,  Mark  P. Pifko, Roland K. Tellis, Mark P. Pifko, Baron and Budd P.C., Encino, CA, Cody R. Padgett, Jordan L. Lurie, Tarek H. Zohdy, Capstone Law APC, Gene Arthur Meneses, Initiative Legal Group APC, Payam Shahian, Strategic Legal Practices APC, Los Angeles, CA, Matthew R. Mendelsohn, Mazie Slater Katz and Freeman LLC, Roseland, NJ, Edward Maurice Mullins, Jenelle E. La Chuisa, Astigarraga Davis Mullins and Grossman PA, Miami, FL, Howard M. Bushman, Lance August Harke, Sarah Clasby Engel, Harke Clasby and Bushman LLP, Miami Shores, FL, Lawrence Allen Caplan, Lawrence A. Caplan PA, Boynton Beach, FL, Leslie Hurst, Blood Hurst and O’Reardon LLP, San Diego, CA, for Brad Aarons, et al.

Christopher J. Dalton, Buchanan Ingersoll and Rooney P.C., Newark, NJ, Deborah H. Oliver, Robert Walter Boos, Adams and Reese LLP, Tampa, FL, Eric Y. Kizirian, Roy M. Brisbois, Lewis Brisbois Bisgaard and Smith, Los Angeles, CA, for BMW of North America, LLC.

Proceedings: (In Chambers) Order GRANTING Final Approval of Class Settlement and GRANTING Motion for Attorneys’ Fees and Costs

Honorable PHILIP S. GUTIERREZ, District Judge.

*1  Wendy K. Hernandez, Deputy Clerk.

Before the Court are Plaintiffs’ motions for: (1) final approval of a class settlement; and (2) attorneys’ fees, costs, and incentive awards. Dkts. # 138, 139. Pursuant to the Court’s

August 5, 2013 Order, the parties have filed: in camera memoranda  discussing  their  views  of  the  merits  and  the value of the case; a memorandum addressing the requested attorneys’ fees, costs, and incentive awards; and attestations that  there  are  no  separate  deals  between  the  opposing parties or counsel. Dkts. # 145–149. Plaintiffs have also submitted statements from nine objectors and a response to the objections. Dkt. # 150. The Court held a fairness hearing on April 28, 2014. Having considered the arguments in all of the submissions, as well as those raised at the April 28, 2014 fairness hearing, the Court GRANTS Plaintiffs’ motions

I. Introduction

Plaintiffs Brad Aarons, Dolores Kollmer, Mary Limon, Lynette Bourne–Miller, Victor Ferrer, Robert Hare, Paul Pugliese, Darren Bailey, and James Frederic Bonomo (the “Class Representatives”) filed five separate class-action lawsuits against Defendant BMW of North America, LLC (“BMW”) concerning the Continuously Variable Automatic Transmission (“CVT”) used in First Generation MINI Cooper vehicles (“MINIs”) sold by BMW (the “Class Vehicles”). Plaintiffs asserted claims under various state statutes, alleging that the Class Vehicles’ CVTs contained design and manufacturing defects. See Aarons v. BMW of North America, LLC, No. CV 11–7667 PSG (CWx) (C.D.Cal. Sept. 15, 2011); Bourne–Miller, et al. v. BMW of North America, LLC, et al., No. CV 12–9824 PSG (JCx) (C.D.Cal. Sept. 23, 2011); Limon v. BMW of North America, LLC, et al., No. SACV 11–1952 PSG (CWx) (C.D.Cal. Dec. 16, 2011); Kollmer v. BMW of North America, LLC, No. CV 11–10444 PSG (CWx) (C.D.Cal. Dec. 19, 2011); Bonomo v. BMW of North America, LLC, No. CV 12–9820 PSG (CWx) (C.D.Cal. July 9, 2012). 1

Plaintiffs allege that the CVTs used in the Class Vehicles are prone to sudden premature failure before the end of the useful life of the vehicles. ACAC ¶ 7. The CVTs allegedly fail without warning, resulting in a complete loss of power to the Class Vehicles’ drive wheels. See id. ¶ 9. Those failures potentially expose drivers and passengers to collisions and other accidents. See id.Plaintiffs contend that affected Class members were required to either spend approximately $6,000 to $9,000 to replace or repair faulty CVTs, or sell their un- repaired vehicles at a substantial loss. See id. ¶ 8. Further, according to Plaintiffs, BMW knew about the defect in the CVTs, but failed to disclose and actively concealed the problem from consumers. Id. ¶ 11.

Plaintiffs’ operative Amended Consolidated Class Action Complaint (“ACAC”) pleads claims for: (1) violation of the Consumers Legal Remedies Act (“CLRA”), Cal. Civ.Code § 1750, et seq.; (2) violation of the Unfair Business Practices Act, Cal. Bus. & Prof.Code § § 17200, et seq.; (3) breach of implied warranty pursuant to the Song–Beverly Consumer Warranty Act, Cal. Civ.Code §§ 1791.1, 1792, et seq.; (4) unjust enrichment; (5) breach of written warranty under the Magnuson–Moss Warranty Act, 15 U.S.C. § 2301, et seq.; (6) violations of the express warranty statutes of various states; (7) violations of the implied warranty statutes of various states; and (8) violations of the consumer protection statutes of various states. ACAC ¶¶ 130–207.

*2  On August 5, 2013, the Court granted preliminary approval of a class settlement, and preliminarily certified a settlement class (the “Class”) of:

All current and former owners and lessees within the United States of the following vehicles (“Class Vehicles”) equipped with a Continuously Variable Automatic Transmission (“CVT”):

-MINI R50 (June 11, 2001–Nov. 28, 2006 production period);

-MINI R52 (March 6, 2004–July 31, 2008 production period) [.]

August 5, 2013 Order ¶ 3. The Class excludes BMW’s officers, directors, and employees. See ACAC ¶ 116. The Class also excludes all individuals who opted out of the Class. See Tellis Reply Decl. ¶ 3.

Following the Court’s August 5, 2013 Order, the parties’ Claims Administrator distributed a Court-approved notice to approximately 124,000 Class members. See Cooper Decl. ¶ 7. The Claims Administrator also established an Interactive Voice Response system and website to distribute information about the proposed settlement. See id. ¶ 5, 6. Nine Class members filed objections, and fourteen individuals opted out of the Class. See Tellis Reply Decl . ¶ 3. At the fairness hearing, Class Counsel represented that 1,453 timely claims were filed.

Plaintiffs now seek final approval of the class settlement, as well as attorneys’ fees, costs, and incentive awards. Dkts. #138, 139. BMW has joined in the motion for approval of the settlement, and has not opposed Plaintiffs’ request for fees, costs, and incentive awards. See Dkt. # 142

II. Background

A. Procedural History

Class Counsel began researching problems with the MINI CVT in March 2011, and retained an expert to inspect and analyze  the  CVT.  See  Tellis  Decl.  ¶  10.  Class  Counsel also consulted with automotive experts, reviewed BMW manuals and technical service bulletins, researched consumer complaints filed with the National Highway Traffic Safety Administration (“NHTSA”), and examined federal auto safety regulations. See id. ¶ 11.

The first lawsuit in this matter, Aarons v. BMW of North America., LLC, No. CV 11–7667 PSG (CWx), was filed in  this  Court  in  September  2011.  Class  Counsel  filed  a First Amended Complaint (“FAC”) in November 2011. Dkt. # 22. BMW moved to dismiss the FAC. Dkt. # 23. The Court granted BMW’s motion, but held that Plaintiff Aarons had adequately pleaded a safety-related defect, and granted Aarons leave to amend. See March 16, 2012 Order at 5.

The Aarons case was consolidated with Kollmer and Limon on March 9, 2012. Dkt. # 36. On April 9, 2012, Plaintiffs Aarons, Kollmer, and Limon filed a Consolidated Class Action Complaint. See CAC ¶ 73. BMW answered on September 18, 2012. Dkt. # 71.

Class Counsel engaged in substantial discovery. Among other things, Class Counsel obtained and reviewed: “service and repair manuals; maintenance and warranty manuals; technical service bulletins; warranty repair invoices; warranty reimbursements; service records; vehicle population numbers for Class Vehicles equipped with CVT transmissions; warranty data; and consumer complaint reports.”See Tellis Decl. ¶ 13. Class Counsel also engaged in motion practice to obtain documents from BMW. See id. ¶¶ 14–15.

*3  In June 2012, Class Counsel and BMW began arm’s length negotiations regarding a possible settlement. See id. ¶ 20.Between June 2012 and February 2013, the parties engaged in three separate mediations. On February 13, 2013, in a mediation before the Honorable Howard B. Weiner, a retired Associate Justice of the California Court of Appeal, the parties reached a global settlement. See id. ¶ 25.

The Court notes that this is the second settlement that has been proposed. The plaintiffs in the Bonomo case, which was filed in the Southern District of Florida, reached a proposed settlement with BMW in September 2012. See Joint Motion for Preliminary Approval of Settlement, Bonomo v. BMW of North America, No. CV 12–9820 PSG (CWx), Dkt.  18. After the Aarons and Bourne–Miller plaintiffs moved to intervene in Bonomo, Judge Donald M. Middlebrooks of the Southern District of Florida transferred Bonomo and Bourne–Miller to this Court sua sponte. See Nov. 6, 2012 Order,Bonomo v. BMW of North America, No. CV 12–9820 Bonomo and Bourne–Miller cases were consolidated with Aarons in August 2013. Dkts. # 121, 123.

B. The Proposed Settlement

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See Settlement Agreement III.A. Class Vehicles that were older than eight years or had more than 150,000 miles at the time of the CVT replacement/repair are not eligible for reimbursement. See id .The same reimbursement terms apply for Class members whose CVTs fail after the effective date of the settlement. See id.Any CVTs replaced or repaired at a BMW or MINI dealership will be covered by a 3 year/50,000 mile parts warranty, inclusive of labor costs. See id.III.D. Class members who replaced or repaired their CVTs at repair facilities other than authorized BMW or MINI dealerships can also receive reimbursement for some of their out-of pocket expenses. See id.III.B. Under the settlement agreement, each Class Vehicle is allotted a budget of $4,100. See id.Subject to that budget, Class members who replaced or repaired their CVTs at third party facilities can receive reimbursement for their out-of-pocket expenses based on the reimbursement

The proposed settlement offers three key categories of compensation: (1) reimbursements for Class members who incurred out-of-pocket costs to replace or repair their CVTs; (2) reimbursements for Class members who incur out-of- pocket costs to replace or repair their CVTs after the effective date of the settlement; and (3) reimbursements for Class members who sold their vehicles as a result of CVT failures.

Class  members  who  replaced  or  repaired  their  CVTs through authorized BMW or MINI dealerships can receive reimbursement for a portion of their out-of-pocket expenses. The reimbursement rate will be determined by the following schedule, based on the age and mileage of the Class Vehicle at the time of the replacement or repair:

rates listed above and the age/mileage of their vehicles at the time of the CVT replacement or repair. See id.Class members may seek reimbursement for multiple replacements or repairs, until the $4,100 budget allotted to each vehicle is exhausted. See id.Reimbursements within each vehicle’s budget will be made on a “first come, first served” basis. See id.These provisions do not apply to any replacements or repairs after the effective settlement date. See id.Moreover, Class members who claim reimbursement for third-party repairs cannot make any other claims for reimbursement. See id.

*4  Class members who sold their Class Vehicles for $4,000 or less due to CVT failures can receive reimbursement as follows, based on the model year of their vehicle:
Screen Shot 2017-07-18 at 10.55.40 AM

See id.III.F. Class members submitting such claims must attest under penalty of perjury that they sold their Class Vehicles because of a CVT failure. See id.Class Vehicles that were older than eight years or had more than 150,000 miles at the time of sale are not eligible for this reimbursement. See id.Reimbursements for sales, like reimbursements for third- party replacements and repairs, will be allocated on a “first come, first served” basis. See id.

The settlement provides that Class members release BMW; BMW (US) Holding Corp.; Bayerische Motoren Werke Aktiengesellschaft   (BMW   AG);   all   BMW   subsidiaries and related entities; all entities involved in the design, development, supply, manufacture, sale, lease or distribution of the Class Vehicles; and all officers, directors, shareholders, predecessors in interest, successors in interest, and employees of those entities from all claims or causes of action that could be asserted regarding the Class Vehicles’ CVTs. See id.I .30, VIII.A. However, the settlement does not release claims for personal injury, claims for property damage (other than damage to the CVT), or claims for subrogation. See id.VIII.B.

The settlement agreement states that BMW will not oppose Class Counsel’s application for fees and costs up to the amount of $1,997,500. See id.IX.A. BMW also states that it  will  not  oppose  the  Class  Representatives’  application for certain incentive awards-namely, $3,500 for Aarons and $2,000 each for the other Class Representatives. See id.IX.B.

Class Counsel and counsel for BMW have attested that the proposed settlement agreement represents the only settlement agreement between the parties. See Tellis Supp. Decl. ¶ 5; Kizirian Supp. Decl. ¶ 2.

C. Objections to the Settlement

Nine individuals have filed objections to the settlement: Victor DeGrande, Elaine Golladay, Brittany Harris, Catherine Jackson, Devin Jaremus, William Jarosz, Xiaopeng Jiang, Mary Dana Maggiolino, and Yvonne Yeh. See Tellis Reply Decl., Ex. 1. Their objections can be grouped into five overlapping categories.

DeGrande, Golladay, Jackson, and Harris object to the eight- year age cap for replacement/repair reimbursement. See id. at 2, 13, 17–23, 57.DeGrande, Golladay, and Jackson purchased Class Vehicles whose CVTs failed more than eight years after their initial sale, and argue that the settlement is unfair because they would not receive compensation. Harris’s CVT  failed within five years, but she did not replace or repair her CVT.

Jaremus objects to the $4,000 limit for vehicles sold as a result of CVT failure. See id. at 62–63.He sold his vehicle for $4,500 following a CVT failure, and argues that it would be unfair to exclude him from recovery under the settlement.

*5  Jarosz objects to the reimbursement amount for vehicles sold as a result of CVT failure. See id. at 73.After experiencing a CVT failure, he traded in his vehicle for a value of $300. He estimates that he would be eligible for a reimbursement of $1,500, but contends that he should be reimbursed  in  the  amount  of  $4,500.  Jarosz  also  objects to the “first-come, first-serve” method of allocating the reimbursement budget for Class Vehicles.

Maggiolino and Yeh object to the settlement on the basis that it does not compensate owners who did not take any affirmative steps to replace or repair their CVTs, and who did not sell their vehicles. See id. at 79–81, 97–98.

Jiang argues that defective vehicles, under any circumstances, should be recalled and repaired by the manufacturer, and that owners should be reimbursed for any expenses they incurred regardless of mileage or vehicle age. See id. at 8. Similarly, Harris argues that the Class Vehicles should be maintained by BMW “for the life of the car, at least[.]”See id. at 21.

III. Discussion

A. Class Certification i. Legal Standard

When “the parties reach a settlement agreement prior to class certification, courts must … ratify both the propriety of the certification and the fairness of the settlement.”Staton v. Boeing Co., 327 F.3d 983, 952 (9th Cir.2003).

Plaintiffs seeking class certification must affirmatively demonstrate that it meets the four requirements of Rule 23(a) and at least one of the requirements of Rule 23(b).Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613–14, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). To satisfy Rule 23(a), the plaintiffs  must  show  that:  “(1)  the  class  is  so  numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.”Fed.R.Civ.P. 23(a). To certify a class under Rule 23(b) (3), as Plaintiffs seek to do here, the plaintiffs must also show that: (5) “questions of law or fact common to class members predominate over any questions affecting only individual members,” and (6) “that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”Fed.R.Civ.P. 23(b)(3). These requirements are often referred to, respectively, as numerosity, commonality, typicality, adequacy, predominance, and superiority.

The Court must conduct a “rigorous analysis” to confirm that  the  Rule  23  standard  is  met.  See  Gen.  Tel.  Co.  of the Sw. v. Falc

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