Toyota Seeks Settlements

This month, Toyota said it would begin negotiations to settle hundreds of pending federal and state lawsuits over the sudden acceleration of its vehicles. Lawyers suing Toyota claim unintended acceleration reports increased after Toyota began equipping vehicles with electronic throttle control via its ETCS-i system. Signals from a sensor detecting how far the gas pedal is pressed control the throttle. An Oklahoma jury recently found a Camry’s electronic throttle system was defective and that Toyota had acted with reckless disregard. Previously, Toyota won sudden-acceleration trials; this being the automaker’s first loss. Reportedly, this verdict likely caused Toyota to pursue settlements in its remaining cases. Negotiations could put an end to a lengthy process that hurt Toyota financially and affected its reputation for quality. Last summer, Toyota agreed to pay $1.6 billion to settle a class-action lawsuit brought by vehicle owners who suffered financial losses. Toyota still faces hundreds of personal injury and wrongful death suits, most of which are consolidated in California. The decision to pursue a comprehensive settlement process will suspend that litigation. Lawyers representing plaintiffs in those cases felt talks would save both sides time and legal costs. Over the past few years, Toyota recalled over ten million Toyota and Lexus vehicles for problems including floor mats that caused the accelerator to become stuck. U.S. District Judge James Selna of Santa Ana issued an order halting the lawsuits. A hearing has been set next month in case 8:10-ml-02151, United States District Court for the Central District of California. See stories here-- http://nyti.ms/1h46mJ4 and http://bloom.bg/KbMiqp

BP Settlement Causation Arguments Rejected

This week, New Orleans U.S. District Judge Carl Barbier rejected BP's argument that a multibillion-dollar settlement over the company's massive 2010 Gulf oil spill shouldn't compensate businesses if they can't directly trace their losses to the spill. Recently, the U.S. Circuit Court of Appeals for the Fifth Circuit ruled that the trial judge must reconsider BP's arguments for injunctive relief that 2012 settlement proceeds only compensate businesses whose economic losses are directly traced to the 2010 Gulf of Mexico oil spill, holding that the lower court erred last month in refusing to consider causation arguments in interpreting the consent decree. Perhaps because BP has previously received favorable rulings on appeal, it attacked the multibillion-dollar settlement by disputing payouts to businesses. BP argued court settlement administrators wrongly considered bogus or inflated claims. Plaintiffs' lawyers countered that BP undervalued claims and underestimated the number of claimants qualifying for payments. BP and the plaintiffs' lawyers had previously agreed on objective and specific methods of proving losses were caused by the spill such that losses for businesses located from Louisiana to Florida were presumed to be caused by the spill under the settlement's terms. The lower court felt it unreasonable to expect claimants to prove losses were directly traced to the spill. The appellate court directed the trial judge to allow businesses who can trace their losses to the spill to continue receiving payments. Judge Barbier said in his ruling on remand that the settlement was designed to avoid the delays that would result from a claim-by claim analysis of whether each claim can be traced to the spill. BP attorneys complained dozens of claimants whose losses were caused by something other than the spill have received millions. Judge Barbier sided with plaintiffs' lawyers that BP can't make those arguments because the company took a contradictory position on the same issue when it urged the court last year to approve the settlement. Stay tuned; another trip to the 5th Circuit may be coming. See story here-- http://abcn.ws/1a8NuRf and case no. 2:10-md-02179-CJB; MDL 2179, U.S. District Court, Eastern District of Louisiana.

Mediated Settlement Agreement Enforced Despite Second Thoughts

When a settlement is reached, parties typically sign a binding settlement agreement before they leave-- often to prevent buyer's remorse. At the conclusion of a long mediation, litigants are sometimes physically and emotionally exhausted. Recently in Florida, a trial court let one party out of a mediated settlement agreement after she claimed coercion. In that case, the mediator allegedly denied her request to take the agreement home over the weekend. The lower court judge believed a request for additional time to review the document was warranted, due to fatigue from the extensive negotiation. After reflecting upon the settlement terms, the litigant apparently requested the agreement be rescinded, instructing her attorney to file a Motion to Vacate. When her attorney suggested he could not file such a motion, she then filed pro se. The trial court erroneously concluded she did not freely, knowingly and intelligently enter into the agreement. The district court of appeal, upon reversing, found the record devoid of evidence that the agreement was signed as a result of fraud, misrepresentation, coercion, or overreaching, and ordered the settlement agreement to be enforced. To void the agreement, the presence of fraud, misrepresentation, coercion, or overreaching is needed. Fatigue, distress, and second thoughts are not enough. The court reasoned though appellee may have been fatigued and distressed-- and later suffered second thoughts-- without more, these facts do not provide grounds for setting aside an otherwise valid agreement. See First DCA Opinion Case No. 1D13-1546 http://opinions.1dca.org/written/opinions2013/12-10-2013/13-1546.pdf

Hyundai Drops Arbitration Clause

A policy that required some warranty disputes to be settled through binding arbitration, unless owners notified Hyundai within 90 days of purchasing the vehicle of their decision to opt-out of the arrangement, was recently dropped. Following an article about the arbitration requirement that appeared in The New York Times’s Automobiles section, Hyundai issued a statement saying it would change the policy. Hyundai said it didn't want the public to be misled that it would not stand behind "America’s best warranty.” Hyundai claims it has only used arbitration ten times since 2006. Under the earlier policy, failing to opt-out may have disqualified owners from joining class actions or collecting refunds if their vehicle was determined to be a lemon. Formerly binding arbitration was administered by the American Arbitration Association with owners paying a part of the cost and decisions not subject to appeal. Owners choosing to opt-out could seek resolution elsewhere, including court. Reportedly, notice directly from the automaker printed in the owner’s manual is unusual, according to consumer advocates. Hyundai previously maintained giving owners 90 days to opt-out of arbitration was fair notice included in the vehicle warranty brochure. Owners could still file lemon law, product liability or personal injury lawsuits. See article here-- http://nyti.ms/18wm7U3

BP Settlement Challenged

The U.S. Circuit Court of Appeals for the Fifth Circuit ruled this week that a trial judge must reconsider BP's arguments for injunctive relief that 2012 settlement proceeds only compensate businesses whose economic losses are directly traced to the 2010 Gulf of Mexico oil spill, holding that the lower court erred last month in refusing to consider causation arguments in interpreting the consent decree. BP attacked its multibillion-dollar settlement and has previously received favorable rulings on appeal regarding disputes over payouts to businesses. BP argued court settlement administrators wrongly considered bogus or inflated claims by businesses. Plaintiffs' lawyers countered that BP undervalued claims and underestimated the number of claimants qualifying for payments. BP and the plaintiffs' lawyers had agreed on objective and specific methods of proving that losses were caused by the spill such that losses for businesses located in certain areas from Louisiana to Florida were presumed to be caused by the spill under the settlement's terms. The U.S. District judge presiding over the case felt it unreasonable to expect claimants to prove losses were directly traced to the spill, and that doing so would defeat the purpose of a class settlement. Citing lack of some colorable claims, the appellate court directed the trial judge to craft an order allowing businesses who can trace their losses to the spill to continue receiving payments, but ensuring those who cannot trace their losses to the spill don't receive compensation. BP attorneys complained dozens of claimants whose losses were caused by something other than the spill have received millions. The trial judge already expressed disappointment that BP accused the claims administrator of disregarding the settlement terms and felt that BP was attempting to rewrite unambiguous terms of the Settlement Agreement. However, the appeals court stated that by allowing recovery from the settlement fund by those who have no case and cannot state a claim, the court acts "ultra vires." Meanwhile, LawFinance Group, a provider of capital for litigation, announced the availability of the $50 million in funding due to financing demand that allows smaller plaintiffs’ firms to stay afloat while they litigate with BP over disputed claims. See stories here-- http://abcn.ws/18BY60h and http://buswk.co/1bfEs8J and opinion here-- http://www.ca5.uscourts.gov/opinions/pub/13/13-30315-CV0.pdf

State's Confirdential Arbitration Program Violates First Amendment

The United States Court of Appeals for the Third Circuit ended Delaware’s confidential arbitration arbitration program, upholding a trial court decision that it violated the First Amendment. The program, established in 2009, was limited to business disputes of $1 million or more involving Delaware companies. Delaware is well known as a friendly state of incorporation for public companies and its Chancery Court specializes in business disputes. The state Legislature wanted cost effective means of resolving these disputes in light of growing private confidential arbitration with streamlined proceedings, like AAA and JAMS. Interestingly, the disputes were arbitrated by Delaware’s own judges, knowledgeable in adjudicating corporate law matters. Deliberations and resolution were confidential. Delaware charged $6,000 a day with a $12,000 filing fee, generating revenue for the state. Those outside of Delaware contended the rules moved important business disputes into private, perhaps to the detriment of shareholders and other stakeholders in the corporation. However, reportedly, this experiment also had strong proponents. They argued that judges regularly participate in mediation. Moreover, parties could agree to arbitrate their disputes without these judges. Delaware's need to compete, they argued, made arbitration a natural extension of its corporate law expertise. The Delaware Coalition for Open Government sued in federal court, claiming that the arbitration statute was unconstitutional. A lower court struck down the statute in 2012 holding that these arbitration cases were essentially confidential civil trials since the judges, place and proceedings were the same. The appellate court applied an experience and logic test, finding that these proceedings had traditionally been open to the public, and should remain open, even if called arbitration. The lone dissenter in a 2-1 decision stated that the Court of Chancery "may not be able to compete with the new arbitration systems being set up in other states and countries.” Apparently, less than a dozen cases were actually decided under the program. See stories here-- http://nyti.ms/I8sfs9 and http://on.wsj.com/163Rl3r

DOJ Settles Airline Antitrust

The U.S. Justice Department agreed to settle with American Airlines and US Airways, ending the government’s antitrust lawsuit trying to block a merger creating the world's largest airline. The case was headed to trial this month in federal court and the parties previously agreed to a mediator suggested by the court. The Justice Department maintained the planned merger would create a monopoly, thereby reducing competition and leading to higher fares. The settlement calls for certain slots to be divested in major cities, including Boston, New York, Chicago, Dallas, Miami and Los Angeles. U.S. District Judge Kollar-Kotelly, who presided over the Microsoft antitrust case, is overseeing the litigation and must still approve the settlement. American, which has been in bankruptcy, will now exit court protection by merging with US Airways. The companies reportedly expect the merger to generate more than $1 billion in annual net synergies beginning in 2015. The merger will likely close in December, subject to the approval of the settlement by the U.S. Bankruptcy Court. See story here-- http://fxn.ws/1gGczKR