Lawyers’ nightmare: When 9th Circuit Chief Judge Kozinski is class objector (2011-12 Nissan Leaf)
By Alison Frankel NOVEMBER 20, 2013
Alex Kozinski, Chief Judge of the 9th Circuit Court of Appeals is known for (among other things) his intellect, his libertarian leanings and his sharp writing style. I appeared last year on a panel with Kozinski and can attest to his charm and humor. But when Kozinski uses his wit against you, it stings. Just ask lawyers at Capstone Law and Sedgwick, who had the bad luck to negotiate the settlement of a class action in which Kozinski is a class member. That would have been fine if Kozinski were a satisfied client. He’s not, and as you can see from the brief he and his wife, Marcy Tiffany, filed last week in opposition to final approval of the settlement, Kozinski spares neither side.
The case, filed in September 2012, involves claims that Nissan didn’t tell buyers and leasers of its electric car, the LEAF, that the car’s lithium battery would deteriorate if they clocked a lot of miles or regularly charged the battery to its full capacity. In December, class counsel at Capstone and Nissan lawyers at Sedgwick agreed to the terms of a settlement that requires Nissan to repair or replace batteries that cannot hold at least most of their charge. Capstone moved for preliminary approval of the settlement in July. Its valuation expert estimated the warranty relief the class had obtained was worth between $38 million and $200 million.
Capstone touted the quick resolution of the case as a boon to the class, since the new warranty would restore lost battery capacity while LEAF drivers are still driving the cars. Drawn-out litigation, Capstone argued in its motion for $1.9 million in fees, would serve only to delay the objective of making the cars operational, and money damages to former LEAF owners would be eaten up by administrative costs. “Even if plaintiffs were to prevail at trial after years of litigation, it is difficult to see how that would result in relief more comprehensive than that provided by the settlement agreement,” the plaintiffs’ brief said.
Judge Kozinski had no trouble envisioning such an outcome. Who knows what plaintiffs lawyers might have obtained in a settlement, he said, if they’d even bothered to conduct discovery on Nissan’s documents before entering the deal? “That’s right, plaintiffs’ counsel sat down to the negotiating table and cut a deal, without knowing a single thing about what cards their opponents held,” Kozinski said in a Nov. 11 brief. “For all counsel knew – for all they know even today – there are memoranda and reports in Nissan’s internal files disclosing that the LEAF’s Lithium-Ion battery suffers from a variety of defects, and that Nissan nevertheless decided to go to market with it.” Without discovery, the judge argued, there’s no way to judge the merits of the settlement.