Court File and Parties

COURT FILE NO.: CV-16-549639-CP

DATE: 20200923

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

MATTHEW ROBERT QUENNEVILLE, LUCIANO TAURO, MICHAEL JOSEPH PARE, THERESE H. GADOURY, AMY FITZGERALD, RENEE JAMES, AL-NOOR WISSANJI, JACK MASTROMATTEI, JAY MACDONALD, and JUDITH ANNE BECKETT

Plaintiffs

• and -

ROBERT BOSCH GmbH and ROBERT BOSCH LLC

Defendants

Proceeding under the Class Proceedings Act, 1992

BEFORE: Justice Edward P. Belobaba

COUNSEL: Charles Wright, James Sayce and Luciana Brasil for the Plaintiffs Robert Kwinter and Nicole Henderson for the Defendants

HEARD: August 28, 2020 with further written submissions

SETTLEMENT AND FEES APPROVAL

[1] This class action relates to the “defeat device” that was installed in certain Volkswagen diesel vehicles and allegedly designed and supplied by Bosch. The settlements with the Volkswagen defendants have been approved by this court.[^1] The plaintiffs now seek the approval of the settlement with the Bosch defendants and the payment of class counsels’ legal fees.

Settlement approval

[2] The action against the Bosch defendants has settled for US$7 million or about $9.7 million in Canadian funds. This settlement applies to a national class, excluding Quebec.

[3] The settlement will benefit the same class members who took part in the settlements of the Volkswagen 2L and 3L diesel class actions but who were not made 100 per cent whole under these settlements. The settlement is intended to target these “leftover damages” claims.

[4] Bosch disputes the suggestion that there were any “leftover damages” given the generous VW settlements but has agreed to settle the action for US $7 million. The distribution protocol was determined by class counsel working with their expert, with no input from the defendants. The distribution protocol does not form part of the settlement agreement.

[5] I pause here to note the following: (i) the conspiracy claim against Bosch was challenging at best and would have been difficult to prove at trial; and (ii) there is much to be said for Bosch’ position that almost all class members have already been generously compensated. Therefore, any settlement amount with the Bosch defendants that would result in a more than nominal payment to that small percentage of deserving class members would be a net win. The settlement amount herein, in my view, satisfies this criterion.

[6] Class counsel, in consultation with their expert, identified four categories of leftover losses that could be dealt with fairly and quickly:

a. Eligible 3L Gen 2 Lessees: Persons who leased 3L Generation 2 VW, Audi or Porsche vehicles and who received corresponding lessee benefits pursuant to the 3L Settlement; eligible 3L Gen 2 Lessees will receive an additional $1000 per vehicle; this category will include 2367 class members (excluding Quebec) for a total settlement value of US $2,367,000.

b. Eligible 2L Sellers: Persons who owned 2L VW or Audi Vehicles as of September 18, 2015 but sold their eligible vehicles before the 2L Settlement pre-approval notice date (January 4, 2017) and for that reason received a lower settlement benefit as a "Seller" rather than an "Owner"; eligible 2L Sellers will receive an additional $750 per vehicle; this category will include 3063 class members (excluding Quebec) for a total settlement value of US$2,297,250.

c. Eligible 3L Sellers: Persons who owned 3L VW, Audi or Porsche vehicles as of November 2, 2015 but sold their eligible vehicles before the 3L Settlement pre-approval notice date (January 17, 2018) and for that reason received a lower settlement benefit as a "Seller" rather than as "Owner"; eligible 3L Sellers will receive an additional $2500 per Vehicle; this category will include 534 class members (excluding Quebec) for a total settlement value of US$1,335,000.

d. Eligible 2L Extended Warranty Claimants: Persons who successfully claimed a Buyback or Buyback with Trade-In benefit pursuant to the 2L Settlement, and at the time they surrendered their 2L Vehicle, had an unused portion of extended warranty coverage purchased for the surrendered 2L Vehicle that could not be transferred to another Vehicle; eligible 2L Extended Warranty Claimants will receive a pro-rata share of the amounts available for distribution in the Extended Warranty Payment Pool, calculated by allocating a notional entitlement of $100 for each period of up to 12 months of unused Extended Warranty coverage remaining at the surrender of their 2L Vehicles, put to a maximum of $500 per Extended Warranty Claim; this last category includes an unknown number of class members, estimated to be in the thousands (excluding Quebec). The amount of US$1 million has been set aside for the pro-rated claims process.

[7] By focusing on sellers, lessees, and extended warranties, class counsel believe they will be able to quickly and fairly compensate those with the best leftover damages claims. I do not disagree. I also acknowledge that the leftover loss payment amounts as set out above are, in the circumstances, fair and reasonable.

[8] Class counsel considered but then abandoned a fifth category of potential leftover losses - the leftover losses sustained by class members who owned more expensive VW vehicles with a higher “trim” level. Because they received the same VW damage payments as those with regular vehicles, the “high trim” owners had plausible leftover loss claims. Class counsel abandoned this category of claim because Bosch rejected the premise of any such losses and because the high-trim loss calculations were inherently unworkable and would involve extensive individualized assessments. The settlement negotiation would have foundered and the US$7 million “net win” would not have been achieved.

[9] I therefore agree with class counsels’ decision to discard the risky “high trim” negotiation in favour of a more workable and pragmatic distribution protocol that would deliver significant payments to deserving claimants as efficiently as possible.

[10] Class counsel advise that there were six opt-outs and four objections. I have reviewed the four objections. Three complain about under-compensation or faulty repair under the earlier VW settlements and the fourth objection has been resolved. The objectors’ concerns are no doubt genuine but on balance, cannot impede the approval of a settlement that will deliver immediate benefits to literally thousands of deserving claimants.

[11] I note that a direct email notice campaign was undertaken with more than 100,000 class members receiving notice of the settlement and only a handful of objections and opt-outs materialized. An overwhelming majority of class members appear to be satisfied with the settlement. As am I.

[12] I conclude that the US$7 million settlement with the Bosch defendants is fair and reasonable and in the best interests of the class. The settlement is approved.

Legal fees approval

[13] Based on the retainer agreements, class counsel are entitled to a 25 per cent contingency fee, plus disbursements and taxes. As discussed in Cannon,[^2] and as further refined in Brown,[^3] this contingency fee amount is presumptively valid on the facts herein and is approved.

[14] My only concern about the legal fees, as I advised counsel, was the possibility of little to no take-up. If only a small percentage of eligible claimants came forward and if the bulk of the settlement amount remained undistributed and had to go cy-pres, I would probably not approve the requested legal fees.

[15] I asked class counsel if the approval of legal fees should be deferred until a substantial take-up was established. Class counsel reassured me in this regard by noting that 86 per cent of the eligible class member recipients would not even have to submit a claim – the pre-existing VW data base would allow a cheque to be sent out automatically following settlement approval. That is, there will be no take-up problem.

[16] I accept this submission. The requested legal fees are approved.

Disposition

[17] The settlement agreement and requested legal fees are approved. I was pleased to sign the draft Orders on September 22, 2020.

[18] I am obliged to counsel on both sides for their helpful written submissions.

Signed: Justice Edward P. Belobaba

Notwithstanding Rule 59.05, this Judgment [Order] is effective from the date it is made, and is enforceable without any need for entry and filing. In accordance with Rules 77.07(6) and 1.04, no formal Judgment [Order] need be entered and filed unless an appeal or a motion for leave to appeal is brought to an appellate court. Any party to this Judgment [Order] may nonetheless submit a formal Judgment [Order] for original signing, entry and filing when the Court returns to regular operations.

Date: September 23, 2020

[^1]: Quenneville v Volkswagen, 2017 ONSC 2448 (2L) and Quenneville v Volkswagen, 2018 ONSC 2516 (3L). [^2]: Cannon v. Funds for Canada Foundation, 2013 ONSC 7686. [^3]: Brown v. Canada (Attorney General), 2018 ONSC 3429.