United States District Court, S.D. New York.


No. 10 CV 7493(VB).

May 30, 2013.


BRICCETTI, District Judge.

*1 Now pending is the parties’ joint motion for an order (1) granting final approval of the parties’ proposed class action settlement; (2) certifying the proposed settlement class pursuant to Rule 23(b)(3); and (3) dismissing the lawsuit with prejudice. (Doc. # 94).

As part of the joint motion, plaintiffs’ counsel also move for (1) an award of attorneys’ fees in the amount of

$1,620,000; (2) reimbursement of litigation expenses in the amount of $36,499.43, and (3) incentive awards of $5,000 for each of the named plaintiffs.

For the following reasons, the motion is GRANTED.


This putative class action was commenced by named plaintiffs William Szymczak, Stefan Schuele, Kim Dreher, Katrina Boyd, Mario Lopez, Melanie Rivera, David Si- mons, Angela Greathouse, Cornelius Jackson, Anne Stewart, Tim McElroy, and David and Phyllis Johnson (collectively “plaintiffs”) on behalf of themselves and others similarly situated. The named plaintiffs and putative Class Members are current and former owners and lessees of Nissan Pathfinder, Xterra, or Frontier vehicles, model years 2005 through 2010, sold or leased in the United States and its territories, including Puerto Rico (the “Class

Vehicles”). There are 764,277 class vehicles, and they all use the same radiator and automatic transmission oil cooler, which was newly designed for the 2005 model year.

Plaintiffs allege the class vehicles contain design and manufacturing defects that cause coolant from the radiators to contaminate the transmission system (the “AT Oil Cooler Leak”). As the vehicles aged, defendant Nissan North America, Inc. (“Nissan”), began investigating incidents of cross-contamination of engine coolant and transmission fluid. The investigation revealed that “on a small percentage of vehicles equipped with automatic transmissions, an internal fatigue crack in the transmission oil cooler tube might occur at higher mileages, leading to internal leakage of engine coolant and cross-contamination with transmission fluid that could damage the transmissions of affected vehicles.” (D. Br. at 1).

Plaintiffs allege this AT Oil Cooler Leak causes ex- tensive damage to the class vehicles by damaging the drivetrain and requiring repair and replacement of the transmission, valve body, radiator, and associated components.

I. Procedural History

On  September  30,  2010,  plaintiff Szymczak commenced this action on behalf of himself and all other similarly situated, alleging cross-contamination of coolant and transmission fluid in the 2005 model year Nissan Path- finder.

Shortly thereafter, in October 2010, Nissan voluntarily extended the warranty on the radiator  assembly for 2005–2010 model year Nissan Pathfinder, Xterra, and Frontier vehicles with  automatic transmissions. Nissan asserts it was already in the process of extending the warranty before this action was commenced. The extended warranty applies to the radiator assembly and its component parts and extends the warranty from 3 years/36,000 miles, whichever occurs first, to 8  years/80,000 miles, whichever occurs first. The extended warranty also pro- vides customers with reimbursement for repairs made and paid for before Nissan announced the extended warranty.FN1

FN1. The parties dispute whether the extended warranty applies only to the radiator assembly, or also covers damage to the transmission. Plaintiffs also allege the warranty extension is inadequate because Nissan did not give appropriate notice to its customers.

*2 On January 14, 2011, Szymczak filed an amended complaint that expanded the putative class to a nationwide class action covering all of the vehicles covered by the warranty extension. The amended complaint added Nis- san’s parent company as a defendant named additional plaintiffs, and asserted new claims. Thereafter, defendants moved to dismiss the complaint and the parties conducted a one day mediation, which was not successful.

On December 16, 2011, the Court issued a memorandum decision dismissing some of plaintiffs’ claims. (Doc. # 26). The Court also granted plaintiffs’ request for jurisdictional discovery as to Nissan’s parent company. Thereafter, on January 17, 2012, plaintiffs filed a second amended complaint. (Doc. # 34).

While the motion to dismiss was pending, two additional  lawsuits  were  filed  raising the  same  issues  and claims as this action. One action was commenced in Texas State Court and one was commenced in California State Court. On May 16, 2012, those actions were consolidated with this action. (Doc. # 58).

In June 2012, the parties resumed settlement negotiations. The parties reached agreement on the terms of a settlement on July 23, 2012, and formal settlement papers were executed in August 2012. After the parties reached agreement on the substantive settlement, the parties also reached a limited agreement with respect to attorneys’ fees namely, that the fees would (i) be paid by Nissan without diminishing the benefits of the settlement to the class, and (ii) fall within a specific “high-low” range.

On August 24, 2012, plaintiffs filed a third amended and first consolidated class action complaint. (Doc. # 69). Simultaneously, the parties  moved for preliminary approval of a proposed class action settlement and preliminary certification of a class. On October 9, 2012, the motion was granted. (Doc. # 77).FN

FN2. The Court also so-ordered a partial stipulation of dismissal without prejudice of Nissan’s parent company, Nissan Motor Co., Ltd., on Oc- tober 9, 2012.

Thereafter,   the   Claims   Administrator sent out 1,549,712 notices to identified Class Members. All notice and claims administration expenses were paid for by Nis- san.

II. Settlement

The settlement class is defined as:

All former and current ownersand lessees of a 2005–2010 model year Nissan Pathfinder, Nissan Xterra or Nissan Frontier vehicle in the United States and its territories, including Puerto Rico, excluding fleet and governmental purchasers and lessees.

Pursuant to the settlement agreement, Nissan agreed to the following repair benefits:

Nissan agrees to make repairs through authorized [Nis- san] Dealers, if and as needed, on the radiator assembly and other damaged components (including the trans- mission) in Class Vehicles owned or leased by Settlement Class Members because of crosscontamination of engine coolant and transmission fluid (and inclusive of towing costs, if any) as a result of a defect in the radiator up to a maximum of 10 years or 100,000 miles, which- ever is less, subject to the following customer co-pay:

(a) All repairs on vehicles that exceed eight years or 80,000 miles, whichever is less, but fewer than nine years or 90,000 miles, whichever is less, are subject to a customer co-pay in the amount of $2500 which is the responsibility of the Settlement Class Member.

*3 (b) All repairs on vehicles that exceed nine years or

90,000 miles, whichever is less, but fewer than 10 years or 100,000 miles, whichever is less, are subject to a customer co-pay in the amount of $3000 which is the responsibility of the Settlement Class Member. Settlement Agreement ¶ 41.

Nissan also agreed to reimburse Class Members who have paid for repairs to their radiators and other damaged components (including the transmission) because of cross-contamination of  engine  coolant  and  transmission fluid as a result of a defect in the radiator between 8 years/80,000 miles, whichever occurs first, and 10 years/100,000 miles, whichever occurs first, subject to the mileage-related co-payments described above. See id. ¶ 42. Reimbursement is inclusive of towing costs, if any, in- curred as a result of this problem. (D. Br. at 5).

Further, to the extent Class Members did not receive notice of, did not submit a claim for reimbursement under, or had all or part of a  claim denied under Nissan’s 8 years/80,000 miles warranty extension (i.e., the October 2010 New Vehicle Limited Warranty), Nissan agreed to honor those reimbursement claims for repairs to the radiator and transmission because of cross-contamination of engine coolant and transmission fluid as a result of a defect in the radiator. See Settlement Agreement ¶ 43. Reimbursement is inclusive of towing costs, if any, incurred as a result of this problem. (D. Br. at 5).

For purposes of determining whether any of the co-payments apply to a particular claim, Nissan will refer to the date that cross-contamination was diagnosed by a Nissan Dealer or other automotive repair facility, not the date that the AT Oil Cooler Leak was repaired. See Settlement Agreement ¶ 44.

Nissan further agreed to pay all notice and claims administration expenses, id. at 60, and agreed to make an incentive payment of $5,000 to each named plaintiff. Id. 88

In return, the Class Members will release Nissan from any and all claims which were or could have been brought against Nissan based upon or related to AT Oil Cooler Leak Damage. The release does not include claims for personal injury or claims for property damage other than the class vehicle or its component parts. Also excluded from the release are claims by Class Members who provide “[a]ppropriate [c]ontemporaneous [d]ocumentation from an automotive repair or service center, odometer disclosure statement, or government agency establishing that, on [January 7, 2013, the date that notice was given for this class action settlement], the Settlement Class Member’s vehicle had more than 10 years or 100,000 miles, which- ever is less.” Id. ¶ 26.

III. Final Approval

The parties now seek final approval of the class action settlement and certification of the settlement class. The parties  assert the settlement  is  the result  of extensive arm’s length negotiations by parties who have been represented by capable counsel with experience in these types of matters. They maintain the negotiations were informed by the knowledge and experience of plaintiffs’ experts, vehicle inspections, and complaint investigation. Further, they maintain the parties reached a fair settlement taking into account the costs and risks of continued litigation.


I. Standard

*4 Unlike settlements in other types of cases, settlements in class actions must be approved by the Court. See Fed.R.Civ.P. 23(e);  In re Initial Pub. Offering Sec. Litig.,

243 F.R.D. 79, 82– 83 (S.D.N.Y.2007). Review of a pro- posed class action settlement involves a two-step process: preliminary approval and a subsequent “fairness hearing.”

Preliminary approval was granted on October 9, 2012, notice of the settlement agreement was sent on January 7,2013, and a fairness hearing was held on May 2, 2013, giving the Class Members and settling parties an opportunity to be heard prior to final Court approval of the settlement.

Approval of  class  action  settlements requires  the Court to ensure the settlement is “fair, reasonable, and adequate” to the Class Members. Fed.R.Civ.P. 23(e)(2). To make this determination, the Court examines the “negotiating process leading up to the settlement, i.e., procedural fairness, as well as the settlement’s substantive terms, i.e., substantive fairness.”   McReynolds v. Richards– Contave, 588 F.3d 790, 803– 04 (2d Cir.2009) (alterations and quotation marks omitted). “When a settlement is negotiated prior to class certification, as is the case here, it is subject to a higher degree of scrutiny in assessing its fairness.” D’Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir.2001).

“With respect to procedural fairness … a District Court reviewing a proposed settlement ‘must pay close attention to the negotiating process, to ensure that the settlement resulted from arm’s length negotiations and that plaintiffs’ counsel … possessed the [necessary] experience and ability, and have engaged in the discovery, necessary to effective representation of the class’s interests.’ “ McReyn- olds  v.  Richards– Cantave,  588  F.3d  at  804  (quoting D’Amato v. Deutsche Bank,  236 F.3d at 85) (alterations in original). “A ‘presumption of fairness, adequacy, and reasonableness may attach to a class settlement reached in arm’s-length negotiations between experienced, capable counsel after meaningful discovery.’ “ Wal– Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir.2005) (quoting MANUAL FOR COMPLEX LITIGATION, Third, § 30.42 (1995)).

With respect to substantive fairness, “the court must compare the terms of the compromise with the likely rewards of litigation.”  In re Initial Pub. Offering Sec. Litig.,243 F.R.D. at 83 (quotation marks omitted). The Court “must apprise [it]self of all facts necessary for an intelligent and objective opinion of the probabilities of ultimatesuccess  should  the  claim  be  litigated.”  Weinberger  v. Kendrick,  698 F.2d 61, 74 (2d Cir.1982). While the Court need not conduct a trial on the merits, the Court must nonetheless make “findings of fact and conclusions of law whenever the propriety of the settlement is seriously in dispute.”  Malchman  v.  Davis,  706  F.2d  426,  433  (2d Cir.1983).

  1. II. The Settlement is Procedurally Fair

*5 The parties maintain, and the Court agrees, that the settlement agreement   is  the product   of extensive, arm’s-length negotiations by parties represented by experienced and talented counsel with expertise in these types of cases. Additionally, although settlement was reached before extensive merits discovery, plaintiffs conducted an investigation prior to commencing the  action,  retained experts, and engaged in confirmatory discovery in support of the proposed settlement. Nissan produced documents and a Rule 30(b)(6) witness for deposition, Dale Weiss, the senior manager of field quality assurance.

Therefore, the Court believes the settlement is the result of serious, informed, and noncollusive negotiations.

III. The Settlement is Substantively Fair

For the reasons set forth below, the Court concludes the settlement is also substantively fair  based upon a comparison of the terms of the compromise, including the incentive awards to named plaintiffs and attorneys’ fees for plaintiffs’ counsel, with the likely rewards of litigation. See In re Initial Pub. Offering Sec. Litig., 243 F.R.D. at 83. The Court further concludes the objections raised by a few Class Members do not merit any changes to the terms of the settlement or preclude final approval of the settlement.

A. Application of Grinnel Factors Weighs In Favor of Settlement

Courts within the Second Circuit must consider nine factors outlined in  City of Detroit v. Grinnell Corp., 495

F.2d 448 (2d Cir.1974) to determine whether a proposed class action settlement is substantively fair. See D’Amato v. Deutsche Bank,  236 F.3d at 86. The Grinnell factors are:

(1) the complexity, expense and likely duration of the litigation; the reaction of the class to the settlement; (3) the stage of the proceedings and the amount of discovery completed; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining the class action through the trial; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery; (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation.

City of Detroit v. Grinnell Corp., 495 F.2d at 463 (citations omitted); see also  Wal– Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d at 117 (applying Grinnell factors). Here, the Grinnel factors weigh in favor of settlement. See In   re   Marsh   ERISA   Litig.,   265   F.R.D.   128,   138 (S.D.N.Y.2010) (noting “not every factor must weigh in favor of settlement,” to find a settlement substantively fair; “rather the court should consider the totality of these factors in  light of the  particular circumstances”) (internal quotations omitted).

1. The Complexity, Expense, and Likely Duration of theLitigation

The third amended and first consolidated class action complaint asserts claims for, among other things, breach of warranty, fraud, unjust enrichment, and violation of state consumer protection statutes.

*6 Were the claims to go forward, plaintiffs would have conducted discovery, some of which would have been directed at Nissan entities in Japan. As counsel explained, this would have been “relatively complex and lengthy and would include detailed discovery regarding the engineering, designing, and manufacturing of the vehicles.” (P. Br. at 14).

Following discovery, the parties would have proceeded with summary judgment and class certification motions and potentially interlocutory appeals. Indeed, this case would have been vigorously defended and contested by defendant. Nissan contends there are numerous impediments to recovery for plaintiffs in terms of both the merits of the claims and the ability to certify a class for non-settlement purposes. Finally, should the  case  have proceeded to trial, counsel anticipated a lengthy trial would be required.

Balancing the rewards available to Class Members now with the projected expense and delay of continued litigation, this factor weighs in favor of approval. See In re Marsh ERISA Litig., 265 F.R.D. at 138–39 (when settlement cuts short expert discovery, time and expense of additional  briefing,  and  the  anticipated  delay  of  trial, post-trial motions and appeals, which all would have reduced the value of the settlement, this factor weighs in favor of approving settlement); see also  Careccio v. BMW of N. Am. LLC, 2010 WL 1752347, *4 (D.N.J. Apr. 29,2010) (in action alleging defective car tires, this factor weighed in favor of settlement that provided for immediate recovery compared with the potential for protracted and expensive litigation).

2. The Reaction of the Class to the Settlement

The reaction of most of the class to the settlement has been positive and in favor of settlement. Approximately 1,549,712 notices were sent to potential Class Members, and  Nissan estimates  there are approximately 764,277Class Vehicles. As of the date of the fairness hearing, over twelve thousand individuals had submitted claims for reimbursement compared to only eighty-five individuals who filed objections and 198 individuals who opted-out of the class. Because “only a small number of objections [were] received, that fact can be viewed as indicative of the adequacy of the settlement.”  Wal– Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d at 118 (quoting 4 NEWBERG §11.41, at 108); see also  Charron v. Pinnacle Group N.Y. LLC, 874 F.Supp.2d 179, 197 (S.D.N.Y.2012) (concluding “silence and acquiescence of 99% of the Class Members speaks more loudly in favor of approval than the strident objections of the 1% against it”).

3. The Stage of the Proceedings and Amount of Discovery


Under this factor, the Court considers whether the parties and their counsel had “sufficient understanding of the case to gauge the strengths and weaknesses of their claims and the adequacy of the settlement.” In re AOL Time Warner, Inc. Sec. & ERISA Litig., 2006 WL 903236, at *10 (S.D.N.Y. Apr. 6, 2006); see also McBean v. City of N.Y., 233 F.R.D. 377, 386 (S.D.N.Y.2006)  (amount of discovery exchanged  is  not  important; rather  “what  is important is whether the parties have ‘a thorough understanding of their case’ and the extent to which there are remaining  factual  ‘unknowns’  prior  to  trial”)  (quoting Wal– Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d at118)).

*7 Although the parties have not engaged in extensive discovery, as previously noted, the plaintiffs cond

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