Express Modification Provisions In Volkswagen Class Settlement Agreement Allowed For A Modifying Amendment.
Look Sharp Barber Shop sign (painted 1969 Volkswagen), Yuma, Arizona. John Margolies, photographer. Library of Congress. [No, that's not the model involved in the "Clean Diesel" Litigation, but we liked the photo].
The settlement agreement between class action plaintiffs and Volkswagen Group of America, Inc. provided for compensation to owners and lessees of diesel cars with so-called "defeat devices" that altered automobile emission profiles, concealing that diesel engines emitted excessive pollution. A nation-wide class action settlement of the civil claims was approved by the district court in October 2016, with the court retaining the jurisdiction to "enforce, administer, and ensure compliance" with it terms, and the settlement was affirmed by the 9th Circuit in 2018.
The settlement, however, excluded certain "branded title" vehicles with titles such as "Junk," "Rebuilt, or "Salvaged." Then in February 2018, the Claims Supervisor, whose role was created to administer the settlement, announced that under a "Framework", "branded title" vehicles would also include vehicles purchased from "insurance auctions."
Claimants who had purchased at insurance auctions and were not excluded by the modification tried to enforce the settlement that did not exclude them. However, the district court accepted this modification, finding that the Claimants who had acquired vehicles at insurance auctions did so after Volkswagen's fraud became public, and thus did not "unknowingly suffer harm from the auto manufacturer's actions." Furthermore, most such vehicles were already taken off road, and thus were not polluting anymore, so the additional exclusion of vehicles from the settlement did not undermine the purpose of the settlement.
The Claimants appealed the denial of their motion to enforce the settlement. In re Volkswagen "Clean Diesel" Litigation, No. 19-16361 (9th Cir. 9/10/20) (Bumatay, Schroeder, Morris). The Court of Appeals affirmed, reasoning that the district court did not abuse its discretion denying the Claimants' motion, because the district court had retained jurisdiction, and the settlement agreement included express modification provisions allowing the modification to be made.
Judge Bumatay, who authored the opinion, wrote: "It doesn't take a mechanic to understand this case."
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