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In re Caterpillar, Inc.

United States District Court, D. New Jersey

June 30, 2017


          James E. Cecchi, Esq. Zach S. Bower, Esq. Lindsey H. Taylor, Esq. CARELLA BYRNE CECCHI OLSTEIN BRODY & AGNELLO, P.C. -and-Natalie Finkelman Bennett, Esq. James C. Shah, Esq. SHEPHERD, FINKELMAN, MILLER & SHAH, LLP -and-Leslie Kroeger, Esq. Theodore Jon Leopold, Esq. Douglas J. McNamara, Esq. COHEN MILSTEIN SELLERS & TOLL PLLC 2925 PGA -and-Richard J. Burke, Esq. Zachary A. Jacobs, Esq. QUANTUM LEGAL LLC Attorneys for Class Plaintiffs.

          Joseph F. Falgiani, Esq. James Holsey Keale, Esq. SEDGWICK LLP One Newark Center -and-Robert G. Abrams, Esq. Darin R. Bartram, Esq. Robert J. Brookhiser, Jr., Esq. Gilbert S. Keteltas, Esq. Jonathan L. Lewis, Esq. Elliot Morrison, Esq. BAKER & HOSTETLER LLP Attorneys for Defendant, Caterpillar, Inc.

          Brad K. Howell, Esq. [Pro Hac Vice] BAKER & HOSTETLER LLP Attorney for Defendant, Caterpillar, Inc. in Texas Actions.

          Ryan S. Henry, Esq. [Pro Hac Vice] THE LAW OFFICES OF RYAN HENRY, PLLC Attorney for Plaintiff Janie A. Aguiar.

          Paige Nicole Boldt, Esq. Shalimar Wallis, Esq. [Pro Hac Vice] WATTS GUERRA LLP Attorney for Plaintiffs Armatura LLC, Petrochem Transport, LLC, Chris Wright, and PTI Logistics, Inc., d/b/a Rio Logistics.


          JEROME B. SIMANDLE U.S. District Judge.


         In this consolidated multi-district litigation (“MDL”), Plaintiffs are initial or subsequent purchasers or lessees of vehicles with an EPA 2007 Compliant Caterpillar on-highway C13 or C15 engine manufactured in 2006, 2007, 2008, or 2009 (“MY 2007 CAT Engines” or “Subject Engines”) by Defendant Caterpillar, Inc. (“Caterpillar” or “CAT”). Caterpillar and the Class reached a class-wide settlement of Plaintiffs' breach of express warranty claims and “any claims for relief . . . that are based on or in any way related” to the allegations that the Subject Engines are defective, which was approved by this Court on September 20, 2016. [Docket Item 220.] Shortly after entering judgment and closing the case, the Court received belated motions to opt-out of the class action settlement from Janie A. Aguiar [Docket Item 223] and Armatura, LLC [Docket Item 225] and a motion by Caterpillar to enforce the Final Approval Order and Judgment against Armatura. [Docket Item 224.][1] Both Ms. Aguiar and Armatura are actively litigating cases against Caterpillar related to the Subject Engines in the Texas state courts, and both assert in their respective motions that they never received notice of this action and the opportunity to opt-out of the settlement until after the deadline by which to opt-out had passed. For the reasons discussed below, the Court will not bind these class members to the Settlement Agreement and will permit both to file late opt-out notices.


         The Court need not repeat the factual allegations of this case, which are detailed at length in this Court's July 29, 2015 Opinion and Order on Caterpillar's motions to dismiss. See In re Caterpillar, Inc., C13 and C15 Prods. Liab. Litig., 2015 WL 4591236, at *2-*7 (D.N.J. July 29, 2014). [Docket Items 178 & 179.] For the purposes of these motions, it suffices to note the following.

         The United States Judicial Panel on Multidistrict Litigation transferred this MDL litigation to the undersigned on June 11, 2014. [Docket Item 1.] Ultimately, Plaintiffs in the consolidated actions asserted claims against Caterpillar for breach of express warranty based on alleged defects in C13 and C15 engines manufactured by Caterpillar which resulted in repeated fault warnings, engine failures, and costly repairs. (See Second Amended Consolidated Class Action Complaint [Docket Item 212].) After substantial motion practice, discovery, and extensive negotiations with a mediator, the parties moved for certification of a settlement class and preliminary approval of the class action settlement (“the Settlement”) [Docket Item 211, Docket Item 211-3], which was preliminarily approved by this Court on April 11, 2016 with a final approval hearing set for September 20, 2016. [Docket Item 217.] As is relevant to these motions, the Court approved the form and content of the parties' proposed Class Notice, and the designation of Epiq Systems Class Action and Claims Solutions to serve as the Court-appointed Settlement Administrator to supervise the notice procedure, the processing of claims, and other administrative functions. (Id. at 6.) Notice was to be disseminated by direct mail, publication, internet publication and radio spots. (Id. at 7; see also Settlement [Docket Item 311-3] at 20-21.) Class members were given until August 6, 2016, or 45 days before the final approval hearing, to send a signed request to the Settlement Administrator for exclusion from the Settlement. (Preliminary Approval Order at 7-8.)

         By the time this Court held the final approval hearing on September 20, 2016, no objections to the proposed Settlement, the award of attorney's fees and expenses, and incentive awards for the named Plaintiffs had been received, and only two class members had filed notice to opt out of the Settlement. (Final Approval Order and Judgment at 2 [Docket Item 220]; Order Regarding Opt-Outs [Docket Item 221].) The Court approved the Settlement and found that the proposed reimbursement plan was fair, reasonable and adequate and that the notice provided to class members was “the best notice practicable under the circumstances” and satisfied the requirements of Rule 23 and due process. (Final Approval Order and Judgment at 3-4.) In particular, at the final approval hearing, the undersigned noted that “this is a very strong settlement” offering class members “meaningful financial relief, ” and that “the notice to class members was extremely thoroughgoing. As I sit here today, I can't think of anything else that could have or should have been done to raise the figure to 100 percent of the class, that's about as near as it can ever get.” (Transcript of September 20, 2016 Hearing at 47:9-23 [Exhibit D to Certification of James Keale, Docket Item 235-5].) The Final Approval Order and Judgment, signed that same day, incorporated in its entirety the Settlement, including a provision explicitly enjoining any class member “from prosecution of any and all claims . . . that have been, could have been, or in the future can or might be asserted in any court, tribunal or proceeding . . . in connection with the acts, events, facts, matters, transactions, occurrences, statements, representations, misrepresentations, omissions, or any other matter whatsoever set forth or otherwise related to the claims asserted or those that could have been asserted in this Action regarding the Subject Engines . . . .” (Settlement at 27-29.)

         At the final approval hearing, class counsel brought to the Court's attention a letter they had received from a class member in Texas, Janie A. Aguiar, who claimed not to have received notice of this MDL until after the deadline to opt-out of the settlement and who wished to continue prosecuting her own, trial-ready, case against Caterpillar over two Subject Engines in the Texas state courts. The Court noted on the record that decision on a motion for relief from the Judgment would be reserved unless and until Ms. Aguiar herself requested relief from the Court. (See Transcript at 4-11.) Ms. Aguiar's motion to opt out of the class action settlement [Docket Item 223] followed a month later on October 21, 2016. Regarding a second party, the Court also received cross-motions for leave to opt-out of and to enforce the final approval order by Armatura, LLC, another Texas class member pursuing its own case over Subject Engines, and Caterpillar, respectively. [Docket Items 224 & 225.][2] These motions are now fully briefed. The Court heard oral argument on these and related motions on January 27, 2017, including participation by Texas counsel for Ms. Aguiar, Armatura and Caterpillar, respectively, and now finds as follows.

         III. STAN ...

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