The Toyota sudden-acceleration settlement would pay the plaintiffs attorneys $200 million. For plaintiff Henry Senatore, that brings to mind the John Grisham novel The Litigators.
"As a class member there is little else of value to me — the pool of ‘Finley, Figg & Zinc’ type legal firms appear to be suckling at the bar on this case, leaving just crumbs for the class," he complained recently. "It’s quite distasteful to need to be a member of the class in this obvious attempt to milk Toyota."
Senatore and his wife filed one of more than three dozen objections to the Toyota settlement, which would provide $1.6 billion to consumers who claim their vehicles lost value after Toyota Motor Corp. recalled more than 10 million cars and trucks because of a sudden-acceleration defect. The objectors raised a range of problems, including a proposed $30 million cy pres award for automotive-accident research and the potential for release of claims in companion litigation over anti-lock braking system defects in Priuses.
U.S. District Judge James Selna in Santa Ana, Calif., has scheduled a final approval hearing for June 14.
The settlement, announced on December 26, 2012, carries a total estimated value of $1.63 billion, according to plaintiffs attorneys. It includes $757 million in cash, of which $250 million would go to consumers whose vehicles lost value and $250 million to consumers whose vehicles are not eligible for installation of a brake override system intended to correct potential sudden-acceleration problems.
"These are excellent recoveries in any litigation and a truly exceptional recovery in a class action fraught with as much risk as this one," Steve Berman, managing partner of Seattle-based Hagens Berman Sobol Shapiro, and Marc Seltzer of Susman Godfrey’s Los Angeles office, co-lead counsel of the economic-loss cases on the plaintiffs steering committee, wrote in their final approval motion.
The rest of the settlement’s $875 million value is based on the estimated cost of installing brake override systems in a projected 3.5 million vehicles, and a customer-support program that would provide repairs and adjustments in a predicted 16 million vehicles. The claims deadline is July 29.
CY PRES AWARD
Several objectors took aim at the cy pres award the deal would channel to five universities for research associated with automotive safety. A cy pres distribution is a way to dispose of money unclaimed after class members have been paid.
"As the specific allegations of the complaint demonstrate, this lawsuit is not about defective drivers or driver error caused [unintended acceleration]," wrote Mark Chavez of Chavez & Gertler in Mill Valley, Calif., an attorney for two Maryland class members who filed an objection on May 10. "Indeed, driver error is Toyota’s defense to responsibility for the defects in its vehicles." Such components, he wrote, "would be an inappropriate use of cy pres funds, and should be rejected by the Court."
Cy pres funds have been under scrutiny by the U.S. Court of Appeals for the Ninth Circuit. Last year, the court threw out a class action settlement with Kellogg Co. because the cy pres fund had no "nexus" to the consumer claims. "Our principal concern is that the cy pres remedy is not an appropriate use of the funds under the Ninth Circuit standards," Chavez said. "The dichotomy is between driver education and behavior on the one and, on the other, automotive defect type projects."
Berman brushed off the criticisms. "The cy pres issue is the hot-button issue right now in many circuits," he said. "And so it’s ripe grounds for people to try to say they don’t think the cy pres is closely enough aligned."
In a May 13 objection, attorney Paul Kiesel of Kiesel + Larson in Beverly Hills, Calif., interim liaison counsel for the plaintiffs in the anti-lock braking system defects litigation, said the settlement could improperly release Toyota from claims in his case.
Kiesel acknowledged that plaintiffs in the Prius multidistrict litigation pending before U.S. District Judge Cormac Carney in Santa Ana assert distinctly different defects, but said the case involves the same Prius model years affected by sudden acceleration: 2004 through 2009. The underlying complaint in the sudden-acceleration case also mentioned brake defects in Prius vehicles.
"It’s not our intention to derail this settlement in any way, shape or form; it’s merely to have a clear statement from Judge Selna and/or the litigants themselves that the scope of the release is not intended to and does not resolve the claims we’ve asserted in our litigation," he wrote.
Carney is scheduled to hear class certification arguments in that case on June 17, Kiesel said.
Many class members complained that the amount they would receive pales in comparison to the costs they incurred, particularly if they experienced sudden acceleration. Some objectors questioned the discrepancy in the amount of payouts to class members based on the states in which they lived. Others objected to the attorney fees. Some called for an independent monitor to review the bills.
Berman and Seltzer argued that the fee request represents 12.3 percent of the estimated value of the deal. The leading firms, whose attorneys billed $150 to $950 per hour, spent more than $100 million litigating the case.
The class action, they underscored, was "fraught with risk." The U.S. National Highway Traffic Safety Administration, for example, had identified no electronic defect in Toyota vehicles, and plaintiffs’ software experts had been unable to replicate a sudden-acceleration incident. Furthermore, had plaintiffs lost two interlocutory appeals before the Ninth Circuit, the case would have been "gutted," they wrote.
Amanda Bronstad can be contacted at email@example.com.