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Kennedy v. Samsung Elecs. Am., Inc.

United States District Court, D. New Jersey

May 21, 2018

SAMSUNG ELECS. AM., INC., Defendant.


          WILLIAM J. MARTINI, U.S.D.J.

         Plaintiffs Colleen Kennedy and David Foster (“Kennedy”) and Mitchell Orenstein (“Orenstein”), represented by the same attorney (Mr. Bruce Nagel) in these putative class actions, filed suit against Samsung Electronics America, Inc. (“SEA”), alleging certain top-load washing machine models contained a drain pump design defect that could cause personal injury and property damage. Plaintiffs assert causes of action under state consumer fraud law as well as federal and state warranty and breach of contract claims. These matters come before the Court on Plaintiffs' motion to enforce settlement. There was no oral argument. Fed.R.Civ.P. 78(b). For the reasons below, Plaintiffs' motion should be GRANTED.

         I. BACKGROUND

         On August 7, 2014, Mr. Nagel filed the Kennedy class action complaint, alleging certain SEA top-load washers contained a defective flimsy plastic housing covering the drain pump which would break and cause flooding in homes. Kennedy Compl. ¶ 25, ECF No. 1.[1]On June 15, 2015, Mr. Nagel filed the Orenstein class action complaint, which, like in Kennedy, alleged the same drain dump design defects. Orenstein Compl. ¶ 25, ECF No. 1. In both cases, Mr. Philip Oliss, admitted pro hac vice, represents SEA.

         Separate and apart from the Kennedy/Orenstein actions, and in what became part of a Multidistrict Litigation matter in the Western District of Oklahoma, multiple plaintiffs filed class-action Complaints in separate federal districts as to SEA's top-load washing machine models. Involving overlapping putative nationwide classes and/or multiple state classes, those Complaints alleged certain SEA top-load washers contained defects that arose during the spin cycle and posed a risk of harm to consumers and their property. Among the claimed defects was that during the washers' spin cycle, components such as the drain pump detach, break apart, or explode. See In re: Samsung Top-Load Washing Machine Marketing, Sales Practices and Products Liability Litigation, Case 5:17-ml-2792-D, ECF No. 1 (“MDL Transfer Order”) [hereinafter “the MDL Docket”].

         On June 20, 2017, before the Judicial Panel on Multidistrict Litigation (the “Panel”), SEA and other retail defendants filed a motion to centralize 24 putative class actions over its top-load washing machines in the Western District of Oklahoma (“the MDL”). Although not listed on the motion papers, Mr. Oliss was and remains SEA's counsel of record in the MDL. On June 13, the Mediator, Judge Stephen Orlofsky (ret.) (“Mediator” or “Judge Orlofsky”), advised this Court that the Kennedy and Orenstein matters had finally settled.

         On August 15, 2017, while the MDL consolidation motion remained pending, this Court held a hearing to inquire as to the absence of settlement documents. ECF No. 44. Plaintiffs' counsel (Mr. Nagel) and SEA's counsel (Mr. Mark Dosker, also from the same firm as Mr. Oliss) reiterated to this Court that two months earlier (June 13, 2017) the parties had reached a settlement on the last material term, namely Plaintiffs' attorneys' fees. See Cert. of Bruce H. Nagel, Ex. 1, Aug. 15, 2017, Hr'g Tr. 3:9-4:5, ECF No. 65-3 (“Nagel Cert.”). Mr. Dosker attributed the delay to SEA's business requirement to obtain the go-ahead from multiple people within the company but expected final approval by week's end. Id. at 4:6-5:15. Having yet to receive draft settlement papers more than two months after agreeing on material terms, the Court ordered SEA to provide Plaintiffs' counsel the settlement documents by September 1, 2017. See Id. at 10:13.

         On August 28, 2017, Mr. Oliss emailed Mr. Nagel draft settlement documents. See Cert. of Philip M. Oliss, Esq., Exs. 1(a)-(g), ECF No. 66-1 (“Oliss Cert.”). While Messrs. Oliss and Nagel hashed out the written settlement agreement, the Panel acted on SEA's motion by directing the consolidation and transfer of 24 cases, including a drain pump case, to the Western District of Oklahoma (“MDL Court”). See MDL Transfer Order. In its October 4, 2017, Transfer Order, the Panel noted the substantial overlap in putative nationwide and statewide classes and common complex factual questions presented. Id.

         Six days later, on October 10, 2017, Ms. Randee Matloff (Nagel's co-counsel), emailed SEA attorneys, Messrs. Oliss and Dosker, to inquire of them about the recently issued MDL Transfer Order in the “exploding washer case” and that an action included therein appeared to be a drain pump case. She recommended they “reach out to the plaintiffs [sic] counsel in that case and advise them that we already have a settlement.” Oliss Cert., Ex. 4. Upon receiving no response, on October 20, 2017, Ms. Matloff emailed Mr. Oliss and the Court-appointed Mediator, seeking an update on proposed settlement document changes and again asked for a status on “the MDL in the exploding washer case which appears to have swept up a drain pump case.” Id., Ex. 5. The same day, Mr. Oliss responded via email and indicated he could speak with Ms. Matloff the following Monday. Id., Exs. 6-7. The parties generally discussed issues of fact common to the MDL cases, Oliss Cert. ¶ 14, which SEA now argues are all distinguishable from the allegations in Kennedy and Orenstein.[2]

         Over two weeks later, on November 6, 2017, the Court held another hearing to again inquire as to the parties' failure to produce settlement documents. ECF No. 49. Mr. Oliss told the Court that Kennedy/Orenstein were close to finalization, pending Mr. Nagel's submission of a revised claim form, which he agreed to send within 48 hours. See Nagel Cert., Ex. 3, Nov. 6, 2017, Hr'g Tr. 17:2-18:3. Noting the delay in drafting the settlement documents, the Court emphasized how the parties and Mediator had both informed the Court that the matters were settled in mediation. Id. at 16:11-16. At no time did the parties indicate a breakdown of the essential terms agreed upon in June.

         To this Court's understanding, at the same time Messrs. Nagel and Oliss were hashing out the settlement papers and months after informing this Court they reached a settlement, the MDL parties-which included SEA's counsel, Mr. Oliss-entered mediation. On March 30, 2018, the MDL parties informed the MDL Court “they have agreed to the material terms of a global settlement and release of all relevant claims on a nationwide class basis as to all Defendants, subject to final review and approval of a written settlement by all the parties and their counsel.” MDL Docket, ECF No. 75. A month later the MDL parties provided the MDL Court a joint notice as to finalizing the formal proposed settlement agreement. Id., ECF No. 79.

         While the MDL parties negotiated and reached a global settlement, Messrs. Nagel and Oliss advised this Court for the first time of their inability to settle Kennedy and Orenstein. ECF Nos. 52, 53. Counsels stated this despite the Court having previously received such assurances from the Mediator and counsel in its August and November 2017 hearings that the matters had been settled. See Nagel Cert., Ex.1, Aug. 15, 2017, Hr'g Tr. 3:20-5:1, 5:20- 25, 7:6-10; Ex. 3, Nov. 6, 2017, Hr'g Tr. 26:15-16, 28:24-29:3, 30:10-16. Of concern to this Court and while the MDL progressed towards settlement, in an April 10, 2018, letter, Mr. Oliss told Mr. Nagel that “Samsung's incentives to continue attempting to engage with you regarding class settlement have changed.” Oliss Cert., Ex. 22. Conspicuously, during the same time the MDL parties appeared closer to reaching a negotiated settlement, the talks between Plaintiffs' and SEA's counsels broke down. Counting on the MDL to sweep up Kennedy and Orenstein, SEA would have had little motivation to agree on written terms. Understandably so and considering the information given, Mr. Nagel informed the Court of the parties' failed mediation efforts and requested a status conference to move ahead in litigating Kennedy and Orenstein. See ECF No. 52.

         In response, on April 23, 2018, Mr. Oliss filed a letter, informing the Court for the first time that SEA had “entered an agreement to settle other class-action litigation encompassing the same washers and providing relief to all putative class members in the instant cases.” ECF No. 53 (emphasis added). In a status hearing the next day, the Court informed Messrs. Nagel and Oliss that it intended to issue an Order to Show Cause as to why the Court should not sanction the parties for misrepresentations made to this Court and for why SEA's counsel did not include Kennedy and Orenstein as potential MDL tag-along cases. Two days later, the Court issued an Order to Show Cause as to why Kennedy and Orenstein were not referred to the Panel months ago as potential tag-along cases. ECF No. 57.

         During the May 2, 2018, Order to Show Cause (“Show Cause”) hearing, Mr. Oliss told the Court he was aware of his obligation under the MDL Rules and offered two justifications for declining to refer Kennedy and Orenstein as potential tag-along cases. First, he asserted “the reason why these cases weren't included is [that] they did not involve the same allegations.” See Nagel Cert., Ex. 7, May 2, 2018, Hr'g Tr. 33:8-10. Second, he noted the Mediator and the parties advised the Court back on June 13th that both cases had settled and explained that “you don't consolidate settled cases with unsettled cases for purposes of discovery and pretrial rulings.” Id. at 33:13-23. Yet, as referenced in his April 23rd letter and during the Show Cause hearing, Mr. Oliss indicated the global MDL settlement releases may cover and bar the Kennedy and Orenstein alleged drain pump defect claims. In his April 30, 2018, letter and before the Court in the Show Cause hearing, Mr. Oliss admitted that in late March 2018, as part of the MDL Action, SEA agreed to include relief for washer drain pump failure allegations to include the same washing machine models at issue in Kennedy and Orenstein. See ECF No. 60; Oliss Cert. ¶ 38.

         As the MDL settlement nears its conclusion and to avoid its potentially conflicting terms, Plaintiffs now ask this Court to enforce the settlement terms the parties agreed to as of June 13, 2017. See Pls.' Mot. for Settlement Enforcement 1-19, ECF No. 65-1. SEA opposes, arguing first the absence of a written agreement precludes enforcement because: (1) Third Circuit and New Jersey law bars Plaintiffs from enforcing an unmemorialized, alleged oral settlement reached during the parties' mediation; (2) the parties' post-mediation conduct shows no meeting of the minds on material terms; and (3) Plaintiffs' counsel cannot now accept terms from an email. Second, even if the parties had a valid, written settlement agreement, such agreement would be unenforceable because (1) Plaintiffs' counsel committed anticipatory breach and, in any case, both parties mutually abandoned the written agreement and (2) Plaintiffs' counsel cannot obtain Rule 23 class certification without injuring the rights of absent Kennedy and Orenstein putative class members. See SEA's Opp'n Br. 15-30, ECF No. 66.

         II. ...

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