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Connie Mclennan, Virginia Zontok, Caryl v. Lg Electronics Usa

February 29, 2012

CONNIE MCLENNAN, VIRGINIA ZONTOK, CARYL FARRELL, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
LG ELECTRONICS USA, INC., DEFENDANT.



The opinion of the court was delivered by: William J. Martini, U.S.D.J.:

OPINION

Plaintiffs Connie McLennan, Virginia Zontok, and Caryl Farrell filed this action on behalf of themselves and others similarly situated, alleging that Defendant LG Electronics USA, Inc. ("LG") manufactured, marketed, and sold refrigerators that were defective because their interior lights would remain lit even when the door was closed (the "Light Issue"). After approximately a year of litigation and mediation, Plaintiffs reached a proposed settlement with LG (the "Settlement"), which this Court preliminarily approved on October 7, 2011. Plaintiffs now move to finalize the Settlement, requesting that the Court certify the proposed class for settlement purposes, approve the Settlement, and grant Plaintiffs' motion for attorneys' fees. The Court reviewed the parties' submissions and held a Fairness Hearing on January 17, 2012 to consider these motions. For the reasons set forth below, the proposed class is CERTIFIED, the Settlement is APPROVED, and Plaintiffs' motion for attorneys' fees is GRANTED.

I. BACKGROUND

On July 16, 2010, Plaintiffs commenced this action, seeking relief on behalf of a proposed nationwide class (the "Class") for allegedly defective refrigerators manufactured, marketed, and sold by LG. See Compl. ¶ 1, ECF No. 1. While the Complaint asserts a number of legal theories, Plaintiffs' core allegation is that the interior lights in certain LG refrigerators do not turn off even when the refrigerator doors are closed. See id. The Light Issue allegedly prevents the machine from staying cool, allows food to spoil, and may lead to the burning and melting of parts of the refrigerator. See Compl.¶ 23, 26. LG has, at all times, denied Plaintiffs' allegations and any liability arising from the marketing or sale of its refrigerators.

On October 4, 2010, LG filed a motion to dismiss Plaintiffs' Complaint. ECF No. 7. Plaintiffs responded to that motion on October 10, 2010, and LG filed a reply on November 30, 2010. ECF Nos. 10, 16.

Following the submission of those papers, and prior to any hearing or ruling on the motion, the Court called a settlement conference, which was held on February 17, 2011. See ECF No. 28. Following that conference, the parties engaged in negotiations and reached an agreement on the material terms of a settlement, which they memorialized in a Memorandum of Understanding executed on May 20, 2011. ECF No. 31. After several months of additional negotiations, the parties finalized the proposed Settlement. ECF No. 33. On September 9, 2011, Plaintiffs submitted the parties' joint motion for preliminary settlement approval. ECF No. 34. On October 7, the Court granted the motion and set a Fairness Hearing for January 17, 2012. See ECF No. 40.

The terms of the Settlement provide, among other things, that LG will: (1) reimburse Settlement Class members for all out-of-pocket costs (parts and labor) to repair the Light Issue, to the extent such costs were incurred before Class notice was mailed; and (2) extend the warranty with respect to the Light Issue for a period of 10 years from the date of the original retail purchase of the refrigerator. Settlement ¶¶ 2, 4, ECF No. 33-1. The extended warranty will cover in-home refrigerator repair performed by LG, and, in some cases, will cover a replacement refrigerator. Id. ¶¶ 2-3.

On November 4, 2011, LG, through a claims administrator, sent individual notices summarizing the litigation and Settlement ("Summary Notice") to Class members through direct mail or e-mail. Johnson Decl. ¶ 6, ECF No. 49. The Summary Notice informed Class members that they could opt-out of or object to the Settlement by January 5, 2012, and that they could appear at the Fairness Hearing on January 17, 2012. See Johnson Decl. Ex. A, ECF No. 49. Of the 600,000 Class members, the direct notice program reached 418,411 members. Johnson Decl. ¶ 6. Notice of the settlement was published in Parade magazine on November 20, 2011. Id. ¶ 8. The claims administrator also established a dedicated toll-free telephone number for the Settlement, and activated a Settlement notification website containing links to the Settlement documents and the pleadings filed in the litigation. See Johnson Decl. Ex. C, ECF No. 49. Id. ¶¶ 7, 9. As of December 11, 2011, the website had received 17,180 hits. Id. ¶ 7.

By January 5, 2012, 107 Class members opted out of the Settlement. Supp. Johnson Decl. ¶ 11, ECF No. 65. To date, six Class members have submitted objections to the Settlement.*fn1 Letters of Objection, ECF Nos. 54, 56-60, 64, 67, and 69. The objections primarily pertain to problems with LG refrigerators other than the Light Issue.

On January 17, 2012, the Court held a Fairness Hearing to determine whether the class should be certified, whether the proposed Settlement was fair, reasonable, and adequate, and whether the requested attorneys' fees were reasonable. Prior to the hearing, Plaintiffs had fully briefed and supported their positions with extensive affidavits and exhibits. At the hearing, both Class counsel and counsel for LG made presentations. No objectors attended the hearing.

II. DISCUSSION

In order to approve a class action settlement, a court must find that: (A) class certification is appropriate; (B) the settlement is fair, reasonable, and adequate; and (C) the request for attorneys' fees is reasonable. See Krell v. Prudential Ins. Co. of Am. ("In re Prudential"), 148 F.3d 283 (3d Cir. 1998). Each issue will be addressed in turn.

A.CLASS CERTIFICATION

In order to certify a class for trial or settlement, a court must find that the proposed class satisfies the requirements of Rule 23. See Amchem Prods. Inc. v. Windsor ("Amchem"), 117 S. Ct. 2231, 2248 (1997); In re GMC Pick-Up Truck Fuel Tank Prods. Liab. Litig. ("G.M. Trucks"), 55 F.3d 768, 799 (3d Cir. 1995) (Rule 23 is designed to assure that courts will identify the common interests of class members and evaluate the named plaintiff's and counsel's ability to fairly and adequately protect class interests). Specifically, in this case, the Court must find that the Class meets the class certification requirements set forth in Rule 23(a) and Rule 23(b)(3).

On October 7, 2011, the Court preliminarily certified the proposed Class. Plaintiffs now ask the Court to finally certify the Class for settlement purposes only. Plaintiffs have defined the Class as follows:

All end user consumer residents of the United States who currently own or owned one or more of the LG-manufactured refrigerators consisting of the LG-branded or Kenmore-branded refrigerators that are identified on Exhibit A to the Settlement Agreement.

Settlement ¶ 1. Excluded from membership in the Class are: (a) LG or its affiliates; (b) Sears, Roebuck and Co. or its affiliates ("Sears"); (c) retailers, wholesalers, and other middlemen who purchased a refrigerator for commercial use or resale; (d) persons who timely and validly exclude themselves from the Class; (e) state and federal governmental entities; and (f) the judge to whom this case is assigned and any member of the judge's immediate family. Id.

For the reasons set forth below, the Court finds that the proposed Class satisfies the requirements of Rule 23(a) and Rule 23(b)(3).

a.Rule 23(a) Requirements

In order to be certified, a class must satisfy the four requirements of Rule 23(a):

(1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation. Fed. R. Civ. P. 23(a).

1.Numerosity.

Rule 23(a)(1) requires that the class be so numerous that "joinder of all class members is impracticable." Fed. R. Civ. P. 23(a)(1). In this case, there is little question that the numerosity requirement is satisfied, as the proposed class includes hundreds of thousands of individuals.

2.Commonality.

The commonality prong of Rule 23(a) asks whether "there are questions of law or fact common to the class." Fed. R. Civ. P. 23(a)(2). The Supreme Court has emphasized that "[e]ven a single [common] question" satisfies this requirement. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2556 (2011). In this case, class members share numerous questions capable of classwide resolution, including: (1) whether the refrigerators at issue contain common design or manufacturing defects; (2) whether LG knew of the defect in the refrigerators; (3) whether Class members suffered an ascertainable loss by purchasing refrigerators that experienced the Light Issue; and (4) whether Class members are entitled to recover damages. The answer to any one of these questions would meaningfully advance the litigation; accordingly, Rule 23(a)(2)'s commonality requirement is satisfied. See Wal-Mart, 131 S. Ct. at 2551, 2556.

3.Typicality.

Rule 23(a)(3) requires that "the claims . . . of the representative parties [be] typical of the claims . . . of the class." Fed. R. Civ. P. 23(a)(3). Here, the claims of the named Plaintiffs are typical: (1) the named Plaintiffs' claims, like those of all Class members, arise out of the same alleged defect; (2) the named Plaintiffs have the same legal claims as do all Class members; and (3) the named Plaintiffs bring those claims based on the same facts applicable to the claims of all Class members. Plaintiffs, therefore, satisfy the typicality requirement.

4.Adequacy.

Rule 23(a)(4) requires that "the representative parties will fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4). The Rule consists of two separate inquiries, each of which is designed to protect the interests of absentee class members. First, the adequacy of representation inquiry "tests the qualifications of the counsel to represent the class." G.M. Trucks, 55 F.3d at 800. Second, it "serves to uncover conflicts of interest between named parties and the class they seek ...


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