“Both sides have something to gain by settling, and both sides have something to lose by continuing to litigate,” said Matthew Weinshall of Podhurst Orseck in Miami, who worked with Peter Prieto and Alissa Del Riego to negotiate the preliminary agreement.
Miami Podhurst Orseck attorneys Peter Prieto, Matthew Weinshall and Alissa Del Riego negotiated a $57 million preliminary settlement with Volkswagen Group of America Inc. and its German parent company Volkswagen AG in a move that could end a class-action lawsuit over allegedly defective suspension systems in the 2009 through 2017 CC Models.
U.S. District Judge Robert N. Scola Jr. in the Southern District of Florida has yet to rule on the motion for preliminary settlement, which is the first stage in finalizing the agreement.
Prieto, Weinshall and Del Riego estimate that about 120,000 cars have the alleged defect, which causes premature wearing of tires because wheels aren’t properly aligned.
“That was a costly burden for a vehicle owner,” Weinshall said. “Because tires are expensive, especially if you’re bringing the car in to get the tires rotated and try to preserve their life more frequently.”
And the alleged defect isn’t just a financial liability, according to Prieto.
“There’s a safety risk to prematurely worn tires, because they can cause blown tires and serious accidents,” he said.
The proposed settlement provides class members with certificates for up to two future tire rotations until their cars reach 110,000 miles. It also uses a formula to compensate for past rotations and replacements by comparing the normal life of the tire to how long it lasted for each class member. Prieto said he hopes that will incentivize people to prioritize safety by keeping their tires in good condition.
It’s taken two years for the parties to come together, and discovery was extensive.
Homer B. Ramsay, Jeffrey L. Chase and Michael B. Gallub of Herzfeld and Rubin in New York and Stanley Howard Wakshlag of Kenny Nachwalter P.A.in Miami represented Volkswagen. They declined to comment.
Volkswagen denied liability and moved to dismiss, making several arguments, including failure to state a claim, failure to plead Volkswagen’s knowledge of the defect, and the expiration of certain statutes and limitation. The court obliged in part, trimming 13 of the plaintiffs’ 29 claims.
‘Both sides had something to lose’
Neither party was sure about which way the case might go if it went to trial, and the plaintiffs team said that’s likely why they were both able to agree on a settlement.
“While plaintiffs and settlement class counsel are confident in the strength of their case, they are also pragmatic in their awareness of the various defenses available to Volkswagen, as well as the risks inherent to litigation,” the motion for preliminary settlement said.
The way Weinshall sees it, class members would be better off with a settlement that avoids years of further litigation.
“I think when there is uncertainty on both sides, even though we believe strongly in our case and Volkswagen believed strongly in its defense, sometimes that can lead to a settlement when both sides have something to gain by settling and both sides have something to lose by continuing to litigate,” Weinshall said.
The plaintiffs named in the original August 2017 complaint hail from at least nine different states, including Florida, Texas, Pennsylvania and California.
This case is the first Prieto, Weinshall and Del Reigo have litigated based on a tire alignment defect, but they’re no stranger to class actions against car companies across the country. They’re also leading the charge for two dozen law firms in multi-district litigation against car manufacturers over Takata air bag defects after the largest automotive recall in U.S. history.
Prieto is also the sole Florida attorney out of 100 on the plaintiffs executive committee in the General Motors defective ignition switch multi-district litigation.
He said the biggest obstacle to suing a car manufacturer is defeating a motion to dismiss as defendants often challenge a lawsuit on damages, arguing that the alleged defective part has already been replaced. Getting a class certification isn’t easy either, Prieto said, because car companies often claim that problems with a car are caused by individual class members misusing them, not design or manufacturing defects.
But Prieto and his team say their main concern is public safety.
“Usually, when we bring an auto-defect case, even though we’re asking for compensatory damages, economic losses, there’s always an underlying safety reason for these auto-defect class actions,” he said.
If Scola approves the motion for preliminary settlement, he will schedule a final approval hearing, during which class members will have the opportunity to object before the judge makes his final decision.
