Petition for Writ of Certiorari — Ronald Clark Fleshman, Jr., Petitioner v. Volkswagen, AG, et al.

Supreme Court briefMar 28, 2019

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No. _______

In The

Supreme Court of the United States

RONALD CLARK FLESHMAN, JR.,

Petitioner,

VOLKSWAGEN, AG, ET AL.,

Respondents.

On Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

APPENDIX

Elwood Earl Sanders, Jr., Esq.

Counsel of Record

8357 Curnow Drive

Mechanicsville, VA 23111

(804) 644-0477

(804) 644-3336 (Fax)

eesjresquire@netscape.net

James B. Feinman, Esq.

1003 Church Street

P. O. Box 697

Lynchburg, VA 24505

(434) 846-7603

(434) 846-0158 (Fax)

jb@jfeinman.com

Counsel for Petitioner

LANTAGNE LEGAL PRINTING

801 East Main Street Suite 100 Richmond, Virginia 23219 (800) 847-0477

APPENDIX TABLE OF CONTENTS

United States Court of Appeals for the Ninth

Circuit Opinion, 16-17157, et al., dated July 9,

2018 .......................................................................... A1

United States Court of Appeals for the Ninth

Circuit Opinion, 16-17060, dated July 3, 2018 ..... A42

United States District Court, Northern

District of California Order, dated October 26,

2016 ........................................................................ A76

United States District Court, Northern

District of California Order, dated October 4,

2016 .......................................................................A152

United States Court of Appeals for the Ninth

Circuit Order on Rehearing, 16-17183, dated

October 29, 2018....................................................A169

United States Court of Appeals for the Ninth

Circuit Order on Rehearing, 16-17060, dated

October 29, 2018....................................................A172

U.S.C.A. Const. Art. I § 1 ......................................A175

42 U.S.C.A. § 7522 (excerpt) .................................A176

42 U.S.C.A. § 7521 (excerpt) .................................A181

19 U.S.C.A. § 1595a ..............................................A189

42 U.S.C.A. § 7604 ................................................A193

Various State Statutes:

Ala. Admin Code 335-3-9-.04...........................A200

Ariz. Admin Code R18-2-1029 .........................A200

Conn Agencies Reg 14-164c-4a........................A201

7 Del. Admin Code 1126-3.0 ............................A202

18 DCMR Chapter 7 ........................................A202

Ga. Comp. R. & Regs. 391-3-20-.06 .................A203

Haw. Code R. 11-60.1-34 .................................A204

Ill. Admin. Code tit. 35, § 240.103...................A204

COMAR 11.14.08.06 ........................................A205

Minn. R. 7023.0120 ..........................................A206

Nev. Admin Code 4458.575 .............................A206

N.J. Admin. Code § 7:27-14.3 ..........................A207

N.D. Admin. Code 33-15-08-02........................A208

R.I. Code R. 47-1-37:1.12 .................................A208

9 VAC 5-40-5670 ..............................................A208

VA Code Ann. § 46.2-1048 ...............................A210

Wis. Admin. Code NR § 485.06 .......................A212

Wyo. Admin. Code § ENV AQ Ch. 13 s 2 ........A210

Exhibit 2 – Statement of Facts .............................A214

Notice of Violation Letter .....................................A243

Frequent Questions about Volkswagen

Violations ...............................................................A255

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE VOLKSWAGEN “CLEAN

DIESEL” MARKETING, SALES

PRACTICES, AND PRODUCTS

LIABILITY LITIGATION,

JASON HILL et al.,

Plaintiffs-Appellees,

TORI PARTL; MARCIA WEESE;

RUDOLF SODAMIN; GREG R.

SIEWERT and SCOTT SIEWERT;

RONALD CLARK FLESHMAN, JR.;

DEREK R. JOHNSON,

Objectors-Appellants,

VOLKSWAGEN, AG; VOLKSWAGEN

GROUP OF AMERICA, INC.; AUDI,

AG; AUDI OF AMERICA, LLC;

PORSCHE CARS NORTH AMERICA,

INC.; ROBERT BOSCH GMBH;

ROBERT BOSCH, LLC,

Defendants-Appellees,

Nos. 16-17157

16-17158

16-17166

16-17168

16-17183

16-17185

D.C. No.

3:15-md-02672CRB

OPINION

IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

Appeal from the United States District Court

for the Northern District of California

Charles R. Breyer, Senior District Judge, Presiding

Argued and Submitted December 7, 2017

Pasadena, California

Filed July 9, 2018

Before: A. Wallace Tashima, William A. Fletcher,

and Marsha S. Berzon, Circuit Judges.

Opinion by Judge Berzon

IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

SUMMARY*

Class Action / Settlement

The panel affirmed the district court’s judgments

certifying a class, approving a settlement, and denying Tori

Patl’s motion to opt out of the settlement that was entered by

Volkswagen and a class of consumers after Volkswagen

admitted that it had installed “defeat devices” in certain 20092015 model year 2.0-liter diesel cars.

The class settlement set aside ten billion dollars to fund a

suite of remedies for class members. The settlement was

reached before class certification. The objectors raised a

variety of challenges.

The panel held that the district court did not abuse its

discretion in certifying the class. The primary objection to

the certification concerned whether the interests of “eligible

sellers” – class members who owned vehicles with defeat

devices when VW’s scheme became public, but sold them

before the proposed settlement was filed – were adequately

represented during settlement negotiations. The panel held

that the eligible sellers benefitted from being in the class

alongside vehicle owners. The panel further held that there

were no signs of an improper conflict of interest that denied

absent class members adequate representation.

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

The panel held that the district court more than discharged

its duty in ensuring that the settlement was fair and adequate

to the class, and affirmed the district court’s approval of the

settlement. The panel considered the objections to the

settlement, and concluded that the district court considered

the proper factors, asked the correct questions, and did not

abuse its discretion in approving the settlement. Except with

respect to a reversion provision, the appeals did not directly

challenge the substantive fairness of the settlement, and

therefore the panel held that it had no reason to comment

upon it.

Under the terms of the settlement, money not paid out

from the settlement pool reverted to Volkswagen, and one

objector alleged that this “reversion provision” made it

impossible to know the true value of the settlement to the

class and provided incentive to Volkswagen to discourage

participation in the settlement. The panel held that the

district court adequately explained why the reversion here

raised no specter of collusion. The panel further held that the

incentives for class members to participate in the settlement,

the complementary inducement for Volkswagen to encourage

them to participate, the value of the claims, and the actual

trend in class member participation all indicated that the

reversion clause did not, in design or in effect, allow VW to

recoup a large fraction of the funding pool.

The panel held that the district court did not abuse its

discretion in denying Tori Partl’s motion to opt out of the

class after the deadline to do so had passed. The panel held

that the district court reasonably concluded that Partl had

actual notice of the correct procedure to exclude herself from

IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

the class, she seemingly misunderstood clear directions, and

such a mistake did not constitute excusable neglect or good

cause.

COUNSEL

James Ben Feinman (argued), James B. Feinman &

Associates, Lynchburg, Virginia, for Movant-Appellant

Ronald Clark Fleshman, Jr.

Sharon Nelles (argued), William B. Monahan, and Robert J.

Giuffra Jr., Sullivan & Cromwell LLP, New York, New

York, for Defendants-Appellants.

N. Albert Bacharach Jr., N. Albert Bacharach Jr. P.A.,

Gainesville, Florida, for Objectors-Appellants Greg R.

Siewert and Scott Siewert.

Bryan E. Brody, Brody & Cornwell, St. Louis, Missouri, for

Objector-Appellant Tori Partl.

Brian Thomas Giles, Giles Lenox, Cincinnati, Ohio, for

Objector-Appellant Derek R. Johnson.

Stephen D. Field, Stephen D. Field P.A., Hialeah, Florida, for

Objector-Appellant Rudolf Sodamin.

Caroline V. Tucker, Tucker Pollard, Irvine, California, for

Objector-Appellant Marcia Weese.

Kevin R. Budner, David S. Stellings, and Elizabeth J.

Cabraser, Lieff Cabraser Heimann & Bernstein LLP, San

Francisco, California; Benjamin L. Bailey, Bailey Glasser

IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

LLP, Charleston, West Virginia; Roland K. Tellis, Baron &

Budd P.C., Encino, California; W. Daniel “Dee” Miles III,

Beasley Allen Law Firm, Montgomery, Alabama; Lesley E.

Weaver, Bleichmar Fonti & Auld LLP, Oakland, California;

David Boies, Boies Schiller & Flexner LLP, Armonk, New

York; J. Gerard Stranch IV, Branstetter Stranch & Jennings

PLLC, Nashville, Tennessee; James E. Cecchi, Carella Byrne

Cecchi Olstein Brody & Agnello P.C., Roseland, New Jersey;

David Seabold Casey Jr., Casey Gerry Schenk Francavilla

Blatt & Penfield LLP, San Diego, California; Frank Mario

Pitre, Cotchett Pitre & McCarthy LLP, Burlingame,

California; Rosemary M. Rivas, Levi & Korsinsky LLP, San

Francisco, California; Adam J. Levitt, Dicello Levitt & Casey

LLP, Chicago, Illinois; Steve W. Berman, Hagens Berman,

Seattle, Washington; Michael D. Hausfeld, Hausfeld,

Washington, D.C.; Michael Everett Heygood, Heygood Orr

& Pearson, Irving, Texas; Lynn Lincoln Sarko, Keller

Rorhback LLP, Seattle, Washington; Joseph F. Rice, Motley

Rice LLC, Mount Pleasant, South Carolina; Paul J. Geller,

Robbins Geller Rudman & Dowd LLP, Boca Raton, Florida;

Roxanna Barton Conlin, Roxanne Conlin & Associates P.C.,

Des Moines, Iowa; Christopher A. Seeger, Seeger Weiss

LLP, New York, New York; Jayne Conroy, Simmons Hanly

Conroy LLP, New York, New York; Robin L. Greenwald,

Weitz & Luxenberg P.C., New York, New York; Samuel

Issacharoff, New York, New York; for Plaintiffs-Appellees.

IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

OPINION

BERZON, Circuit Judge:

Striving to better, oft we mar what’s well.1

Volkswagen duped half a million Americans into buying

cars advertised as “clean diesel.” They were anything but.

As the lawsuits piled up, the car manufacturer hammered out

a ten-billion-dollar settlement with a class of consumers,

agreeing to fix or buy back the affected vehicles and

providing some additional money as well. Following a

thorough review, the district court blessed the agreement. Of

the half million class members, a handful take issue with the

settlement. We consider those appeals.

BACKGROUND

I. Litigation and settlement talks

In September 2015, Volkswagen (or VW) admitted that

it had installed “defeat devices” in certain of its 2009–2015

model year 2.0-liter diesel cars. These devices—bits of

software in the cars—were at the center of a massive scheme

by VW to cheat on U.S. emissions tests. The clever software

could detect that a car was undergoing government-mandated

testing and activate emissions-control mechanisms. Those

mechanisms ensured that the car emitted permissible levels of

atmospheric pollutants when the test was in progress. During

normal road use, however, the emission-control system was

dialed down considerably. As a result, the affected cars

William Shakespeare, King Lear, act 1, sc. 4.

IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

usually emitted on the road between 10 and 40 times the

permissible level of nitrogen oxide, a gas that reacts with

other gases to create ozone and smog. This was no smalltime con: over 475,000 vehicles in the United States alone

contained a defeat device.2

The scheme became public when the Environmental

Protection Agency (EPA) sent a “Notice of Violation” to

Volkswagen alleging that installation of the defeat devices

violated the Clean Air Act, 42 U.S.C. § 7522. The notice

mentioned the possibility of a civil enforcement action by the

Department of Justice.

Vehicle owners were not far behind. Within three

months, hundreds of lawsuits against VW, most of them class

actions, had been filed in or removed to over sixty federal

district courts. See In re Volkswagen “Clean Diesel” Mktg.,

Sales Practices & Prods. Liab. Litig., 148 F. Supp. 3d 1367,

1368 (J.P.M.L. Dec. 8, 2015). The complaints alleged a bevy

of claims under state and federal law, including—to name just

a few—breach of warranty, breach of contract, unjust

enrichment, and violation of consumer protection, securities,

and racketeering laws.

The Judicial Panel on Multidistrict Litigation transferred

all VW defeat device-related cases to Judge Charles Breyer

in the Northern District of California (“district court” or

“MDL court”) for “coordinated or consolidated pretrial

proceedings.” Id. at 1370. In short order the district court

appointed Elizabeth Cabraser lead counsel for the putative

Because some of the vehicles had several owners, and the class

included some former owners of the vehicles, the eventual plaintiff class

numbered approximately 490,000.

IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

consumer class actions and chair of the Plaintiffs’ Steering

Committee (PSC) charged with coordinating pretrial work on

behalf of the class. Around the same time, the United States’

newly filed enforcement action was transferred into the MDL

court.3

Settlement talks began early and went quickly. With the

aid of a court-appointed settlement master, Robert Mueller,

the parties—including the United States and the FTC—had

reached agreements in principle by April 2016. Two months

later—and just seven months after the cases were

consolidated in the MDL court—a trio of proposed settlement

agreements were filed by the private plaintiffs’ class counsel,

the United States, and the FTC.4

II. The settlement agreement

The proposed class settlement set aside ten billion dollars

to fund a suite of remedies for class members. A particular

class member’s choices depended on whether she owned,

While settlement talks were underway, a separate FTC enforcement

action was also brought into the MDL court. See FTC v. Volkswagen Grp.

of Am., Inc., 3:16-cv-01534-CRB (N.D. Cal. March 29, 2016), ECF No. 3.

The consent decree with the United States required VW to (1) buy

back or fix 85% of the affected vehicles before June 2019 and (2) pay

$4.7 billion to mitigate the effects of the pollution caused by its

noncompliant cars and to promote zero-emissions vehicles. The consent

order with the FTC largely overlapped with the terms of the class action

settlement. For instance, it entered judgment in favor of the FTC in the

amount of $10.033 billion, which could be satisfied by establishing a

funding pool for the consumer settlement in that amount. The additional

relief in the FTC consent order is not relevant to these appeals.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

leased, or had previously owned, but sold, a vehicle with a

defeat device:

1. Owners. Owners had the option to (1) sell

the car back to VW at its pre-defeat device

value (the “buyback” option) or (2) have the

car fixed, provided Volkswagen could

develop an EPA-approved emissions

modification.5 In addition, owners would

receive “owner restitution.” For owners who

bought their cars before September 18, 2015

(“eligible owners”), that was a cash payment

of at least $5,100, but possibly more,

depending on the value of the vehicle.

Owners who acquired their vehicles after that

date (“eligible new owners”) would receive

half the eligible owner restitution described

above—a cash payment of at least $2,550.

2. Lessees. Lessees had the option to

(1) terminate their leases without penalty or

(2) have the car fixed subject to development

of an approved modification. In addition,

lessees would receive “lessee restitution,” a

Volkswagen was required to have the modifications approved by the

California Air Resources Board (CARB). If VW was unable to develop

a government-approved modification by deadlines set out in the settlement

agreement, class members would still have time to accept the buyback and

would have an additional window of time to opt out of the settlement. As

of July 27, 2017, the EPA and CARB had approved emissions

modifications for most of the affected 2.0-liter affected vehicles. See

Volkswagen Clean Air Act Civil Settlement, U.S. Envtl. Protection

Agency, https://www.epa.gov/enforcement/volkswagen-clean-air-actcivil-settlement (last visited June 10, 2018).

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

cash payment of $1,529 plus 10% of the

vehicle’s value.

3. Sellers. “Eligible sellers”—those who sold

their cars after the defeat device scheme

became public but before the filing of the

settlement with the court in June

2016—would receive “seller restitution” equal

to one-half of full owner restitution (a cash

payment of at least $2,550, but possibly more,

depending on the value of the vehicle).6

To receive benefits, a class member submits a claim and

supporting documentation; a claims processor verifies the

class member’s eligibility; and the class member elects a

remedy, executes a release, and then obtains the benefit. The

last step varies somewhat according to remedy. The deadline

for submitting a claim is September 1, 2018.

The settlement figure of $10.033 billion was calculated to

cover the most expensive option—the buyback—for all

eligible owners, as well as the remedies selected by all nonowner class members. Any money left over in the funding

pool will revert to Volkswagen after the claims period runs.7

The settlement provided other benefits not pertinent to these appeals,

such as loan forgiveness for class members who still owed money on their

vehicles.

The full amount will likely not be disbursed. Some class members

have chosen the less expensive modification remedy; some have opted out

of the settlement; and some will not claim the benefits available to them.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

III.

Settlement approval

One month after the proposed settlement was filed with

it, the district court granted preliminary approval and ordered

extensive notice to the class. The following schedule was set:

August 10, 2016

Additional information regarding

class counsel’s prospective

request for attorneys’ fees due.

September 16, 2016

Class members’ objections to the

settlement and requests for

exclusion from it (i.e., opt out)

due.

October 18, 2016

Final fairness hearing on the

settlement.

Eighteen class members appeared at the fairness hearing to

voice concerns about, or objections to, the settlement. By

that point—just four months after the first proposed

settlement was filed and three months after preliminary

approval was granted—over 63% of class members had

registered for benefits under the settlement. Of the 490,000

class members, some 3,300 had opted out (although the

district court noted a trend of those opt outs reversing course

and later claiming benefits), and 462 had timely objected to

the settlement.

One week after the fairness hearing, the district court, in

a 48-page order, granted final approval of the settlement. The

approval order first found that (1) the class met the threshold

requirements to be certified under Rules 23(a) and 23(b)(3),

and (2) notice to the class was adequate, see Fed. R. Civ. P.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

23(c)(2). Next, it determined that the settlement was “fair,

reasonable, and adequate,” see Fed. R. Civ. P. 23(e)(2),

devoting over thirty pages to an analysis of eleven separate

factors going to the fairness of the settlement and to the

objections of class members. The district court noted that the

overwhelming early participation in the settlement and the

very low numbers of opt outs and objections signaled the

strength of the settlement. Assessing factors derived from In

re Bluetooth Headset Products Liability Litigation, 654 F.3d

935, 946–47 (9th Cir. 2011), the district court found that none

of the settlement terms evinced collusion or militated against

a finding that the settlement was fair, reasonable, and

adequate.

In her motion for final approval of the settlement, class

counsel stated that she would seek no more than $333 million

in attorneys’ fees and costs.8 The court’s order granting final

approval directed her to submit a motion for fees by

November 8, 2016, and set a deadline for objections to that

motion for six weeks after that.

Fourteen appeals from the order approving settlement

were consolidated with one related appeal. Of those, this

opinion addresses six.9

As it turned out, the fee request, granted by the district court, was for

$175 million, little more than half the maximum that lead counsel had

earlier specified. Appeals from the district court’s orders on attorneys’

fees were taken separately and are not addressed in this opinion.

Of the fifteen appeals, five have been voluntarily dismissed. In

separately filed orders, we dismiss another two for lack of standing and a

third for failure to prosecute. We address a fourth on the merits in a

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

DISCUSSION

“Especially in the context of a case in which the parties

reach a settlement agreement prior to class certification,

courts must peruse the proposed compromise to ratify both

the propriety of the certification and the fairness of the

settlement.” Staton v. Boeing Co., 327 F.3d 938, 952 (9th

Cir. 2003). The settlement here was reached before class

certification, so Staton’s dual direction applies.

The objectors bring a hodgepodge of challenges. One

contests the district court’s decision to approve certification

of the class. Several others dispute the fairness of the

settlement itself or the adequacy of the district court’s process

in approving it. And one appeals the district court’s denial of

her motion to opt out of the class after the deadline had

passed.

The district court’s decision to certify a class action and

its conclusion that a class action settlement is “fair,

reasonable, and adequate” are reviewed for abuse of

discretion. See id. at 960. So is its denial of a class

member’s motion to exclude herself from the class out of

time. See Silber v. Mabon, 18 F.3d 1449, 1453 (9th Cir.

1994). As we explain below, the district court appropriately

exercised its considerable discretion in making its

determinations. We affirm.

separate memorandum disposition. Of the six appeals we address, two

(Nos. 16-17158 and 16-17166) were jointly briefed and present the same

issues.

A15

IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

I. Certification of the class

We begin by considering whether the class was

appropriately certified. Before certifying a class, a court must

ensure that it satisfies the prerequisites of Rule 23, including

that “the representative parties will fairly and adequately

protect the interests of the class.” Fed. R. Civ. P. 23(a)(4).

In the settlement context, a court “must pay ‘undiluted, even

heightened, attention’ to class certification requirements.”

Staton, 327 F.3d at 952 (quoting Amchem Prods., Inc. v.

Windsor, 521 U.S. 591, 620 (1997)).

The primary objection before us to the district court’s

certification decision concerns whether the interests of

“eligible sellers”10 in the class were adequately represented

during settlement negotiations. Distilled down, objector

Derek Johnson posits a conflict of interest between the

eligible sellers and the vehicle owners—both the eligible

owners and the “eligible new owners”11—in the class. As

evidence of the conflict, he mainly points to the fact that

eligible sellers receive only half the restitution payment

accorded to eligible owners: In effect, eligible sellers

“split”—figuratively—the amount provided eligible owners

with the eligible new owners, who presumably purchased the

As described earlier, eligible sellers are class members who owned

vehicles with defeat devices on September 18, 2015, when VW’s scheme

to evade emissions standards became public, but sold them before the

proposed settlement was filed on June 28, 2016.

Those are the class members who own an affected Volkswagen but

did not purchase it until after the defeat device became public knowledge.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

sellers’ cars with full knowledge of the vehicle’s defect.12

According to Johnson, this equivalent distribution to eligible

new owners and sellers is so unfair to sellers that it

demonstrates the sellers were not adequately represented by

the named class representatives, only one of whom was a

seller.

“The adequacy [of representation] inquiry under Rule

23(a)(4) serves to uncover conflicts of interest between

named parties and the class they seek to represent.” Amchem,

521 U.S. at 625. Serious conflicts of interest can impair

adequate representation by the named plaintiffs, yet leave

absent class members bound to the final judgment, thereby

violating due process. See Hanlon v. Chrysler Corp.,

150 F.3d 1011, 1020 (9th Cir. 1998) (citing Hansberry v. Lee,

311 U.S. 32, 42–43 (1940)).13

See Frequently Asked Questions, Volkswagen,

https://www.vwcourtsettlement.com/en/2-0-models/ (last visited June 10,

2018) (“I sold my car after September 18, 2015. Why is my payment

different from eligible owners?” “Class members who have sold their

eligible vehicle between September 18, 2015 and June 28, 2016 receive

the Seller Restitution because they no longer possess the vehicle to pursue

a Buyback or Approved Emissions Modification. Because the Settlements

also compensate the current owners of these vehicles, the eligible sellers

split the Owner Restitution compensation with the current eligible

owner.”).

The existence of a conflict does not categorically foreclose class

certification. Where a conflict of interest exists within a class, however,

additional due process safeguards—such as creating subclasses for groups

with disparate interests and appointing separate counsel to represent the

interests of each—may be required. See Amchem, 521 U.S. at 627;

Hanlon, 150 F.3d at 1021.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

The initial inquiry in assessing adequacy of

representation, then, is whether “the named plaintiffs and

their counsel have any conflicts of interest with other class

members.”14 Id. at 1020. That general standard must be

broken down for specific application; conflicts within classes

come in many guises. For example, two subgroups may have

differing, even adversarial, interests in the allocation of

limited settlement funds. See Amchem, 521 U.S. at 626.

Class members with higher-value claims may have interests

in protecting those claims from class members with much

weaker ones, see Ortiz v. Fibreboard Corp., 527 U.S. 815,

857 (1999), or from being compromised by a class

representative with lesser injuries who may settle more

valuable claims cheaply, see Molski v. Gleich, 318 F.3d 937,

955 (9th Cir. 2003), overruled en banc on other grounds by

Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010),

rev’d, 564 U.S. 338 (2011). Aside from such evident

structural conflicts, some proposed agreements are so unfair

in their terms to one subset of class members that they cannot

but be the product of inadequate representation of that subset.

See, e.g., In re GMC Pick-Up Truck Fuel Tank Prods. Liab.

Litig., 55 F.3d 768, 801 (3d Cir. 1995).

Perusing the settlement before us, we see no indication of

an “irreparable conflict of interest,” either in the structure of

the class or the terms of the settlement, that prevented the

named class representatives from adequately representing

sellers, or prohibited the commingling of the two in a single

class. Hanlon, 150 F.3d at 1021.

Adequacy “also factors in competency and conflicts of class

counsel.” Amchem, 521 U.S. at 626 n.20; see also Hanlon, 150 F.3d at

1021. The objection here raises no questions about that aspect of

adequacy of representation.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

Far from getting the short end of the stick, the eligible

sellers gained enormously from being in the class with

vehicle owners. The eligible owners—who comprise the vast

majority of the class—were the ones with leverage enough to

obtain benefits for the class. First, they had individually

valuable and near-ironclad claims for rescission or restitution

against VW. Second, the DOJ consent decree required VW

to fix or buy back a large percentage—85%—of the affected

vehicles. Failure to do so would result in immense fines.

That Volkswagen thus needed to reach a deal with vehicle

owners—a group including both eligible owners and eligible

new owners—gave the class as a whole enormous collective

power in bargaining.

By contrast, the eligible sellers’ claims, viewed in

isolation, were fairly weak. The eligible sellers no longer had

the cars whose purchase allegedly caused them injury; their

theory would have been that they sold their defective cars at

a loss attributable to VW’s installation of the defeat device

(and the subsequent public revelation). But it would be

difficult to prove why any eligible seller chose to sell his car

or the degree to which, if any, the sale price reflected a

discount for the defeat device. As one class member

conceded at the fairness hearing, “[n]o one forced eligible

sellers to sell their vehicles.” Given the speed with which the

putative classes were consolidated and settlement talks began,

it is likely that many eligible sellers knew of the lawsuit, and

some of the looming settlement, when they sold. The cars,

moreover, were still functional and safe to drive, and the

federal government made it clear from the beginning that it

would not punish those driving cars with defeat devices—all

of which puts a question mark over how much value the

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

vehicles lost as a result of the scandal.15 So eligible sellers

would face challenging, if not insurmountable, questions of

causation and damages if they litigated their cases against

VW.

Instead of getting nothing, eligible sellers received several

thousand dollars in compensation. They quite possibly

obtained it because they were in the same class as vehicle

owners who had leverage against Volkswagen, not in spite of

that inclusion. The patent upside of the settlement to eligible

sellers defeats Johnson’s central argument that the settlement

was so unfair to sellers that it could only have been the result

of inadequate representation. In that respect, this case bears

no resemblance to ones in which the settlement terms are so

skewed that it may be confidently inferred that some class

members were not adequately represented. See Amchem,

521 U.S. at 627; Molski, 318 F.3d at 956; In re GMC, 55 F.3d

at 801.

Further, even if the eligible sellers’ claims were viable,

the seller restitution, if evaluated as covering the economic

losses incurred, was in an amount that generally fairly

compensated for such losses. Class counsel explained at the

fairness hearing that the restitution figure “in most instances”

In a press release, the EPA told drivers: “Car owners should know

that although these vehicles have emissions exceeding standards, these

violations do not present a safety hazard and the cars remain legal to drive

and resell.” The EPA website advises that “EPA will not confiscate your

vehicle or require you to stop driving.” Frequent Questions About

Volkswagen Violations, U.S. Envtl. Protection Agency,

https://www.epa.gov/vw/frequent-questions-about-volkswagen-violations

(last visited June 12, 2018). Most state attorneys general have also

publicly disclaimed any intent to punish drivers of defeat device-equipped

vehicles.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

accounted for the loss realized by eligible sellers when they

sold their vehicles. That Johnson and some others were not

made whole by it does not render the benefit amount

unreasonable,16 much less demonstrate that it was necessarily

the product of inadequate representation of the sellers. See

Molski, 318 F.3d at 955 (representation held inadequate

because “the consent decree released almost all of the absent

class members’ claims with little or no compensation”).

Moreover, the restitution payments overall more closely

resemble compensatory damages awards or penalty

payments, as they are for most class members an amount of

money over and above the economic value of any fix or

buyback. It was therefore sensible that Volkswagen should

be required to pay that “bonus” amount only once per car.

The fact that eligible sellers “split” the restitution payment

with eligible new owners is thus fully explicable, and does

not alter our analysis, demonstrate unfairness to eligible

sellers, or otherwise reveal an intra-class conflict.

In sum, the eligible sellers benefitted from being in the

class alongside vehicle owners. We see no signs of an

“improper conflict of interest . . . which would deny absent

class members adequate representation.” Hanlon, 150 F.3d

Any settlement value based on averages will undercompensate

some and overcompensate others. See Robert G. Bone, Agreeing to Fair

Process: The Problem with Contractarian Theories of Procedural

Fairness, 83 B.U. L. Rev. 485, 552 (2003) (“[W]ealth transfers are

endemic to damage class actions that settle for average amounts . . . .”);

see also Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1146 (8th Cir. 1999).

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

at 1021. There was no abuse of discretion in certifying the

class.17

II. The settlement

We turn now to the settlement itself. Judicial review of

class settlements is replete with contrasts. The district court

must undertake a stringent review, “explor[ing]

comprehensively all factors, and . . . giv[ing] a reasoned

response to all non-frivolous objections,” Dennis v. Kellogg

Co., 697 F.3d 858, 864 (9th Cir. 2012) (citation and quotation

marks omitted), whereas our own review of the district

court’s reasoning is “extremely limited”; we reverse “only

upon a strong showing that the district court’s decision was

a clear abuse of discretion.” Hanlon, 150 F.3d at 1026, 1027

(citation and quotation marks omitted).

In another

dichotomy, “we hold district courts to a high[] procedural

standard” in their review of a settlement, Allen v. Bedolla,

787 F.3d 1218, 1223 (9th Cir. 2015), but we “rarely overturn

an approval of a class action consent decree on appellate

review for substantive reasons.” Staton, 327 F.3d at 960

(emphasis added). Our decision here reflects the interplay of

these standards.

This settlement is highly unusual. Most class members’

compensation—buybacks, fixes, or lease terminations plus

some cash—is as much as, perhaps more than, they could

This conclusion is not affected by this court’s recent decision in In

re Hyundai & Kia Fuel Economy Litigation, 881 F.3d 679 (9th Cir. 2018),

petition for reh’g en banc filed, No. 15-56014 (9th Cir. Mar. 8, 2018).

Unlike in that case, the district court here provided a thorough

predominance analysis under Rule 23(b)(3), sufficient under In re

Hyundai. Cf. id. at 702.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

expect to receive in a successful suit litigated to judgment.

And not just some of them: the $10.033 billion set aside

would fund the most expensive remedy option for every

single class member. Class members did not loiter in

claiming these benefits. By the time these appeals were

briefed, Volkswagen had paid out or committed to pay over

$7 billion. And according to the last report from the courtappointed independent claims supervisor, by May 2018

Volkswagen had fixed or removed from the road 85.8% of all

affected vehicles; paid out $7.4 billion to over 350,000 class

members; and paid out or committed $8.1 billion to almost

450,000 class members.

Terming the settlement a

“compromise” of claims, although true of most class action

settlements, is largely inapt here. The district court so noted,

stating that the class members generally “are made whole” by

the settlement.

Not surprisingly given the scope of the remedies afforded,

most of the objections to the settlement are in some sense

procedural: the district court did not sufficiently examine the

settlement for signs of collusion between the defendants and

class counsel; or misinterpreted what signs of collusion there

were; or failed to respond specifically to an objection; or did

not give class members a real shot to respond to class

counsel’s fee motion. In considering these objections, we

keep in mind that the fundamental issue before the district

court was whether the proposed settlement is “fair,

reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2).

A. Review of class settlements

A proposed settlement that is “fair, adequate and free

from collusion” will pass judicial muster. Hanlon, 150 F.3d

at 1027. The inquiry is not a casual one; the uncommon risks

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

posed by class action settlements demand serious review by

the district court. An entire jurisprudence has grown up

around the need to protect class members—who often lack

the ability, positioning, or incentive to monitor negotiations

between class counsel and settling defendants—from the

danger of a collusive settlement. See, e.g., Staton, 327 F.3d

at 959–60; In re Bluetooth, 654 F.3d at 946–47; Mirfasihi v.

Fleet Mortg. Corp., 356 F.3d 781, 785 (7th Cir. 2004).

Because of “the inherent tensions among class representation,

defendant’s interests in minimizing the cost of the total

settlement package, and class counsel’s interest in fees,”

Staton, 327 F.3d at 972 n.22, we impose upon district courts

“a fiduciary duty to look after the interests of . . . absent class

members,” Allen, 787 F.3d at 1223.

At the same time, there are few, if any, hard-and-fast rules

about what makes a settlement “fair” or “reasonable.” We

have identified a lengthy but non-exhaustive list of factors

that a district court may consider when weighing a proposed

settlement.18 When, as here, the settlement was negotiated

before the district court certified the class, “there is an even

greater potential for a breach of fiduciary duty” by class

counsel, so we require the district court to undertake an

additional search for “more subtle signs that class counsel

have allowed pursuit of their own self-interests and that of

These factors include “the strength of the plaintiffs’ case; the risk,

expense, complexity, and likely duration of further litigation; the risk of

maintaining class action status throughout the trial; the amount offered in

settlement; the extent of discovery completed and the stage of the

proceedings; the experience and views of counsel; the presence of a

governmental participant; and the reaction of the class members to the

proposed settlement.” Hanlon, 150 F.3d at 1026; Officers for Justice v.

Civil Serv. Comm’n, 688 F.2d 615, 625 (9th Cir. 1982).

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

certain class members to infect the negotiations.” In re

Bluetooth, 654 F.3d at 946–47.19

For all these factors, considerations, “subtle signs,” and

red flags, however, the underlying question remains this: Is

the settlement fair? The factors and warning signs identified

in Hanlon, Staton, In re Bluetooth, and other cases are useful,

but in the end are just guideposts. “The relative degree of

importance to be attached to any particular factor will depend

upon . . . the unique facts and circumstances presented by

each individual case.” Officers for Justice, 688 F.2d at 625.

Deciding whether a settlement is fair is ultimately “an

amalgam of delicate balancing, gross approximations and

rough justice,” id. (citation omitted), best left to the district

judge, who has or can develop a firsthand grasp of the claims,

the class, the evidence, and the course of the

proceedings—the whole gestalt of the case. Accordingly,

“the decision to approve or reject a settlement is committed

to the sound discretion of the trial judge.” Hanlon, 150 F.3d

at 1026. “As a practical matter we will rarely overturn an

approval of a class action consent decree on appellate review

for substantive reasons unless the terms of the agreement

contain convincing indications that the incentives favoring

pursuit of self-interest rather than the class’s interests in fact

influenced the outcome of the negotiations and that the

district court was wrong in concluding otherwise.” Staton,

327 F.3d at 960.

A few such “warning signs” are attorneys’ fees out of proportion to

class member compensation, “clear sailing” arrangements, and agreements

in which unawarded attorneys’ fees revert to the defendants. See In re

Bluetooth, 654 F.3d at 947. A “clear sailing” arrangement is one in which

defendants agree not to object to class counsel’s prospective motion for

attorneys’ fees provided the request does not exceed a certain amount. See

Allen, 787 F.3d at 1224.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

With these principles in mind, we turn to the objections.

B. The district court’s examination of signs of

possible collusion

The sole substantive objection before us to the terms of

the settlement centers on its so-called “reversion clause.”

Under the settlement, money not paid out from the $10.033

billion settlement pool will revert to Volkswagen. According

to one objector, the potential for reversion makes it

impossible to know the true value of the settlement to the

class, and creates perverse incentives for Volkswagen to

discourage participation in the settlement.

A “kicker” or reversion clause directs unclaimed portions

of a settlement fund, or in some cases money set aside for

attorneys’ fees but not awarded by the court, to be paid back

to the defendant. See In re Bluetooth, 654 F.3d at 947;

Mirfasihi, 356 F.3d at 783. A reversion can benefit both

defendants and class counsel, and thus raise the specter of

their collusion, by (1) reducing the actual amount defendants

are on the hook for, especially if the individual claims are

relatively low-value, or the cost of claiming benefits

relatively high; and (2) giving counsel an inflated commonfund value against which to base a fee motion.20 See Allen,

See also Mirfasihi, 356 F.3d at 783 (“The part of the $2.4 million

that is not claimed will revert to Fleet, and it is likely to be a large part

because many people won’t bother to do the paperwork necessary to

obtain $10 . . . .”).

Some commentators and courts disfavor reversions because they

arguably undermine the deterrent effect of class actions. See 4 William B.

Rubenstein, Newberg on Class Actions § 12:29 & n.5 (5th ed. 2014). That

is not the basis of the objection here—as it hardly could be, with VW on

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

787 F.3d at 1224 & n.4. Given these possibilities, a reversion

clause can be a tipoff that “class counsel have allowed pursuit

of their own self-interests and that of certain class members

to infect the negotiations.” In re Bluetooth, 654 F.3d at 947.

But reversion clauses can also have perfectly benign

purposes and impacts, and so are not per se forbidden.

Rather, to exercise its discretion appropriately, a district court

must explain why the reversionary component of a settlement

negotiated before certification is consistent with proper

dealing by class counsel and defendants. See id. at 950.

The district court adequately explained why the reversion

here raises no specter of collusion. First, as the district court

noted, Volkswagen has every incentive to “to buy back or fix

as many Eligible Vehicles as possible.” Under the terms of

the DOJ consent decree, if Volkswagen fails to fix or remove

from the road 85% of the affected vehicles, it will be fined

$85 million for each percentage point it comes up short.

Second, from a class member’s perspective, the benefits

available are quite substantial, worth at least thousands of

dollars, and in some cases more, to each class member.

Given the amounts at stake, there is little chance class

members will forego the benefits because of the effort of

lodging a claim. Indeed, we needn’t speculate as to

participation. As of the date of the fairness hearing, 336,000

class members (of 490,000 total) had already registered to

claim settlement benefits, and the numbers have only grown.

The incentives for class members to participate in the

settlement, the complementary inducement for Volkswagen

the hook for billions of dollars by the time of the approval hearing on the

settlement.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

to encourage them to participate, the value of the claims, and

the actual trend in class member participation all indicate that

the reversion clause did not, in design or in effect, allow VW

to recoup a large fraction of the funding pool.21

The district court did not abuse its discretion in

determining that the reversion clause was a reasonable

provision in this settlement, given the incentives to the class

to claim quite substantial benefits, and was in no way a sign

of collusion or unfairness. See Allen, 787 F.3d at 1225.22

C. The district court’s obligation to respond to every

objection

One objector finds fault in the district court’s failure to

respond specifically to her objection to the settlement.

“To survive appellate review, the district court must show

it has explored comprehensively all factors, and must give a

reasoned response to all non-frivolous objections.” Dennis,

697 F.3d at 864 (citations and quotation marks omitted). That

“procedural burden” on the district court helps to ensure the

As noted in the district court’s order, the $10.033 billion figure was

arrived at by estimating the cost of the most expensive remedy—the

buyback—for all owners in the class. Money would be left over in the

funding pool if, as happened, some class members chose the lessexpensive engine modification remedy and others opted out.

The same objector argues that the district court abused its discretion

by failing to examine the settlement for the signs of collusion laid out in

In re Bluetooth, 654 F.3d at 947. To the contrary, the district court

explicitly discussed those factors over several pages in its order. We find

no error in its analysis.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

substantive fairness of the settlement. See Allen, 787 F.3d at

1223.

Class member Marcia Weese objected to the settlement

on two grounds relevant here. First, she maintained that

different claims-processing procedures for class members

with liens on their vehicles meant that Rule 23’s

“predominance requirement” was not met.23 Second, and

relatedly, she contended that the long-form notice to the class

did not adequately explain the effects of a class member’s

vehicle lien on her eligibility for settlement benefits. The

district court did not respond to either argument in its order.

As a threshold matter, even assuming Weese’s arguments

were “non-frivolous,” Dennis, 697 F.3d at 864, we would be

reluctant in the extreme, on the procedural ground raised, to

upset a settlement—especially one of such overall benefit to

the class—that otherwise evinced no signs of collusion,

unfairness, or irregularity. See Torrisi v. Tucson Elec. Power

Co., 8 F.3d 1370, 1378–79 (9th Cir. 1993). That is all the

more true here because the objector’s complaint appears to be

purely technical—it draws no link between the district court’s

supposed oversight and any substantive deficiency in the

settlement. By so noting, we are not suggesting a harmless

error standard for class action settlement review or otherwise

disparaging the importance of procedural rigor in the review

of such settlements. We merely emphasize that a reviewing

court is concerned with the overall adequacy of the district

Class actions certified under Rule 23(b)(3), such as this one, may

be maintained only if “questions of law or fact common to class members

predominate over any questions affecting only individual members.” Fed.

R. Civ. P. 23(b)(3).

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

court’s fairness determination, not with parliamentary points

of order about its process.

In any event, Weese’s objections were frivolous, and so

did not demand a response from the district court. In three

sentences, she argues that additional claims-processing steps

for class members with liens create individualized questions

of law or fact that defeat predominance under Rule 23. But

that objection is faulty on its face. The settlement does not

“den[y] recovery” to, or exclude from class membership,

vehicle owners with liens or loans. It just provides that,

because of technical issues raised by the loan or lien as to the

vehicle’s title, those individuals—who still have the same

legal claims, based on the same questions of law and fact, as

other class members—must take additional steps to claim

their benefits under the settlement. The district court

properly concluded that class members—including those with

liens—asserted the same injury and invoked the same basic

legal theories against Volkswagen, thereby satisfying Rule

23(b)(3).

Again contrary to Weese’s objection, the long-form notice

to class members makes eminently clear how outstanding

loans impact a class member’s compensation. As the notice

explains, the settlement provides additional compensation to

class members with outstanding loans, over and above

buyback value, to help them clean up title and deliver their

vehicles to Volkswagen. The challenge to the notice was thus

frivolous.24

The long-form notice discusses outstanding “loans,” rather than

“liens” on the vehicles, but we do not think the distinction significant. A

class member reading the notice would understand that she could

participate in the buyback even if she did not own her vehicle outright.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

Because Weese’s arguments entirely lacked merit, the

district court was not obligated to respond. See Dennis,

697 F.3d at 864.

D. The notice and timing of class counsel’s motion

for fees

Objections were raised with regard to both the timing and

notice of class counsel’s fee application.

Challenges to the notice and timing of fees under Rule

23(h) are typically framed and analyzed as challenges to the

fee award, not the settlement. See In re Mercury Interactive

Corp. Sec. Litig., 618 F.3d 988, 992 (9th Cir. 2010); Allen,

787 F.3d at 1225; Keil v. Lopez, 862 F.3d 685, 703 (8th Cir.

2017). Here, the district court’s fee orders have been

separately appealed.25 By pressing fee-related arguments in

these appeals, we understand appellants to be arguing that the

district court’s scheduling and notice with regard to fee

objections under Rule 23(h) rendered the substantive

settlement, not the fee award, unfair. See Fed. R. Civ. P.

23(e)(2); In re NFL Players Concussion Injury Litig.,

821 F.3d 410, 444 (3d Cir. 2016) (considering whether feescheduling issues merited reversal of the order approving

settlement, even though fees would be separately ruled upon

and appealed). In rejecting these Rule 23(h) arguments in

this appeal, we express no opinion as to the reasonableness or

procedural propriety of the district court’s fee award.

One of the two objectors challenging fees in these appeals has also

separately appealed the district court’s order awarding fees to class

counsel.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

i. The timing of objections to class counsel’s fee

motion

Several objectors contend that the district court

misapplied Rule 23 by setting the deadline for class members

to object to the settlement before the date by which class

counsel had to file a motion for fees. We disagree.

A court may award reasonable attorneys’ fees in a

certified class action. Fed. R. Civ. P. 23(h). Class counsel

seeking a fee award must make a motion for fees under Rule

54, and notice of the motion must be “directed to class

members in a reasonable manner.” Fed. R. Civ. P. 23(h)(1);

see also Fed. R. Civ. P. 54(d)(2) (laying out the requirements

for an attorney’s motion for fees). Any class member “may

object to the motion.” Fed. R. Civ. P. 23(h)(2).

Rule 23(h) is silent as to the timing of fee motions, but the

requirement that a class member be able to object by

necessity imposes one. After all, a class member can’t object

to a nonexistent motion for fees. “The plain text of [Rule 23]

requires a district court to set the deadline for objections to

counsel’s fee request on a date after the motion and

documents supporting it have been filed.” In re Mercury,

618 F.3d at 993 (emphasis omitted).

In In re Mercury, class members received notice

describing the terms of the settlement and informing them

that class counsel would seek 25% of the nine-figure

settlement sum—almost $30 million—in fees. Id. at 991.

The district court set a deadline for class members to object

to the settlement and the “application” for attorneys’ fees. Id.

But class counsel’s actual fee application was not filed until

two weeks after that deadline. Id. at 990–91. We concluded

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

that Rule 23(h) plainly requires that class members have a

chance “to object to the fee ‘motion’ itself, not merely to the

preliminary notice that such a motion will be filed,” even if

counsel specifies in its preliminary notice to the class the

amount in fees it will later request. Id. at 993–94. Setting a

schedule that denies class members a chance to object

meaningfully to a fee motion by class counsel “borders on a

denial of due process,” id. at 993, and represents a failure by

the district court “to fulfill its fiduciary responsibilities to the

class,” id. at 994–95; see also Allen, 787 F.3d at 1225–26; In

re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 954 (9th

Cir. 2015) (explaining that In re Mercury “rejected as

insufficient Rule 23(h) notice when the motion for attorneys’

fees was due after the deadline for class members to object to

the attorneys’ fees motion” (emphasis added)).

But Rule 23(h) does not require that class counsel’s fee

motion be filed before the deadline for class members to

object to, or opt out of, the substantive settlement. Rather, the

rule demands that class members be able to “object to the

motion”—that is, the motion that class counsel must file to

make a claim for fees under Rule 23. Fed. R. Civ. P.

23(h)(1)–(2) (emphasis added). An entirely separate

provision of Rule 23 provides for class members’ objections

to the terms of a proposed settlement. See Fed. R. Civ. P.

23(e)(5). If Rule 23(h)(2) required that class members be

able to object to the settlement as a whole only after class

counsel’s fee motion had been filed, it would say so.26

The Third Circuit—the only circuit that has squarely decided the

issue—agrees that deferring consideration of class counsel’s fees until

after a settlement is approved—and, consequently, until after objections

to the settlement are heard and ruled upon—is no affront to Rule 23. See

In re NFL, 821 F.3d at 445–46 (holding that “the separation of a fee award

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

In sum, approving a settlement before class counsel has

filed a fee motion does not violate Rule 23(h). What matters

is that class members have a chance to object to the fee

motion when it is filed.27

Here, the district court gave class members six weeks to

object to class counsel’s completed fee motion, and several of

them did so.28 That period of time was more than enough for

class members to “object to the motion.” Fed. R. Civ. P.

23(h)(2). See In re Online DVD-Rental Antitrust Litig.,

779 F.3d at 954 (fifteen-day period to object to class

from final approval of the settlement does not violate Rule 23(h)”); id. at

445 (observing that “the practice of deferring consideration of a fee award

is not so irregular” and collecting cases).

We appreciate that the Advisory Committee Notes to Rule 23

encourage the simultaneous filing of notice of the terms of a proposed

settlement and of class counsel’s fee motion. See Fed. R. Civ. P. 23(h)

advisory committee’s note to 2003 amendment (“In cases in which

settlement approval is contemplated under Rule 23(e), notice of class

counsel’s fee motion should be combined with notice of the proposed

settlement . . . .”). A fee motion in some circumstances can “play[] an

important role in class members’ capacity to evaluate the fairness of the

settlement itself.” 4 Rubenstein, supra, § 8:22. But we cannot say that

separating consideration of the settlement from consideration of class

counsel’s fees violates Rule 23(h). We leave for another day, and a more

dubious settlement, the question of whether the inability of class members

to object to a settlement after seeing a completed fee motion from class

counsel could render the whole settlement unfair or unreasonable.

To boot, the class had reason to know as early as August 10,

2016—more than a month before the deadline to opt out—that class

counsel would seek no more than $333 million in attorneys’ fees and

costs. See supra note 8. Providing a dollar amount to class members does

not by itself satisfy Rule 23(h), see In re Mercury, 618 F.3d at 994, but

here it gave class members a ballpark estimate early on, in addition to the

more-than-adequate six weeks they had to respond to the fee motion itself.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

counsel’s fee motion satisfied Rule 23). Because the

scheduling orders did not violate Rule 23(h), they provide no

basis for upsetting the settlement.

ii. Notice of class counsel’s fee motion

Relatedly, two objectors argue that the district court erred

by not ensuring that notice of class counsel’s fee motion was

“directed to class members in a reasonable manner.” Fed. R.

Civ. P. 23(h)(1). Because the fee motion was only posted on

the settlement website, the argument goes, rather than

individually mailed or emailed to class members, the notice

was unreasonable and inadequate under Rule 23(h). For their

part, plaintiffs-appellees respond that together, the long-form

settlement notice and the district court’s order granting final

approval sufficiently advised class members to look for a

prospective fee motion posted online.

We do not reach this objection. No matter how construed,

it is a challenge to the fee award, not to the district court’s

order approving the settlement. Unlike the Rule 23(h)

argument regarding the scheduling of class counsel’s fee

motion, the objectors draw no link between the notice of class

counsel’s fee motion—which occurred after the settlement

was approved—and whether the settlement is “fair,

reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2). If

meritorious, objectors’ notice argument goes to whether the

district court’s order awarding fees to class counsel may

stand. For all we know, this court will later address this

objection in the fee award appeals. But as briefed here, the

objection does not point to any possible defect in the

settlement order. We therefore do not pass upon the

objection.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

E. Remaining objections

The last objector, Ronald Clark Fleshman, Jr., asks that

we overturn the district court’s approval of the settlement

because it unfairly exposes some class members to future

liability under the Clean Air Act, and because it assertedly

permits the ongoing unlawful use of unmodified

Volkswagens.

We discussed these same arguments at length in our

opinion affirming the district court’s denial of Fleshman’s

attempted intervention in the United States’ enforcement

action. See In re VW “Clean Diesel” Mktg., Sales Practices

& Prods. Liab. Litig., No. 16-17060 (9th Cir. July 3, 2018).

In a nutshell, Fleshman contended there, and maintains here,

that under a proper reading of the Clean Air Act and its statelevel implementations, it is unlawful to drive or resell an

unmodified Volkswagen with a defeat device. Because the

settlement allows class members to wait for an approved

emissions modification—and drive their vehicles in the

meantime—and because class members can decline to

participate in the settlement and continue to drive their

unmodified vehicles as long as they wish, the settlement

permits ongoing illegal conduct. That conduct could,

Fleshman maintains, expose hundreds of thousands of class

members to criminal or civil liability, as well as to the

possibility that their vehicles will be confiscated. At that

point, Fleshman represents, the class members’ claims against

Volkswagen will have been released by the settlement

agreement. That concatenation of risks, and the settlement

notice’s failure to advise class members of them, says

Fleshman, renders the settlement unfair and unreasonable.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

That argument did not persuade us in Fleshman’s last

appeal, and it does not persuade us here. Leaving to one side

whether his interpretation of the Clean Air Act is correct, his

central premise—that class members may be subjected to a

civil or criminal sanction for driving unmodified

Volkswagens—is wholly speculative. As the district court

noted, the EPA and the vast majority of states have stated

unequivocally that they will permit unmodified vehicles to

stay on the road, and none has specifically declared them

illegal to drive. Because the risks and dangers Fleshman

warns about were completely improbable at the time of

settlement (and remain so), the settlement notice need not

have advertised them to class members, nor need the

settlement have protected against them. The district court did

not abuse its discretion in finding the settlement fair and

reasonable over Fleshman’s objections.29

Again, the district court’s task in reviewing a settlement

is to make sure it is “not the product of fraud or overreaching

by, or collusion between, the negotiating parties, and that the

settlement, taken as a whole, is fair, reasonable and adequate

to all concerned.” Officers for Justice, 688 F.2d at 625. Our

thorough consideration of the objections before us does not

betoken any doubts on our part that the district court

considered the proper factors, asked the correct questions, and

did not abuse its discretion in approving this settlement.

Except as noted—with respect to the reversion

provision—these appeals did not directly challenge the

Likewise, Fleshman’s predictions that Volkswagen would not be

able to develop an EPA-approved modification, or to buy back or fix at

least 85% of the vehicles, have proven wrong.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

substantive fairness of the settlement, and we therefore had

no reason to comment upon it directly other than as to that

provision. We do note that the settlement delivered tangible,

substantial benefits to class members, seemingly the

equivalent of—or superior to—those obtainable after

successful litigation, and was arrived at after a momentous

effort by the parties, the settlement master, and the district

court. The district court more than discharged its duty in

ensuring that the settlement was fair and adequate to the

class. We affirm its order approving the settlement.

III.

Belated opt-out

In her related appeal, Tori Partl challenges the district

court’s denial of her motion to opt out of the settlement class

after the deadline to do so had passed. Discerning no abuse

of discretion, we affirm.

A. Facts

Partl sued Volkswagen in 2013 for problems related to

water leaks and “abnormal noises” in her vehicle. On August

7, 2016, Partl received an email regarding the class action

settlement. The email included a link to the settlement

webpage. Partl forwarded the email, along with the 32-page

long-form settlement notice available at the settlement

website, to her attorney. The relevant portions of the

settlement notice read:

2. How do I claim Class Action Settlement

benefits?

To claim Class Action Settlement benefits,

you will need to make a claim online at

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

www.VWCourtSettlement.com, or by mail or

fax, as the Claims Supervisor provides.

...

50. How do I get out of the Class Action

Settlement?

If you do not want to receive benefits from the

Class Action Settlement, and you want to

retain the right to sue Volkswagen about the

legal issues in this case, then you must take

steps to remove yourself from the Class

Action Settlement. You may do this by

asking to be excluded—sometimes referred to

as “opting out” of—the Class Action

Settlement. To do so, you must mail a letter

or other written document to the CourtAppointed claims supervisor.

...

You must mail your exclusion request,

postmarked no later than September 16, 2016,

to Opt Out VW Settlement, P.O. Box 57424,

Washington, DC 20037 (emphasis added).

Partl and her lawyer spoke by phone later that day and

agreed that Partl would opt out of the settlement. After their

conversation, Partl returned to the settlement website and

completed what she believed were all the steps needed to opt

out of the settlement.

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

The deadline to opt out—September 16, 2016—came and

went. On September 30, Partl learned at a mediation session

in her state-court action that she had missed the deadline.

Following that discovery, her lawyer undertook the necessary

steps to be admitted pro hac vice in the MDL court so he

could attempt to remedy the situation. Finally, on October

17, 2016—one month after the deadline had passed—Partl

filed her belated motion to opt out of the settlement.

The district court denied her motion, noting that the longform settlement notice “clearly provide[d]” that to opt out,

class members had to mail in their notices of exclusion by

September 16, 2016. The court held that Partl had actual

notice of the correct procedure to exclude herself from the

class. She seemingly misunderstood clear directions. Such

a mistake does not constitute excusable neglect or good

cause.

B. Discussion

A court may, in cases of “excusable neglect,” extend the

time in which a class member may opt out of a settlement.

See Fed. R. Civ. P. 6(b), 60(b)(1); Silber, 18 F.3d at 1455. In

the context of a tardy opt-out from a class action settlement,

we have specifically identified as the relevant “excusable

neglect” factors “the degree of compliance with the best

practicable notice procedures; when notice was actually

received and if not timely received, why not; what caused the

delay, and whose responsibility was it; how quickly the

belated opt-out request was made once notice was received;

how many class members want to opt out; and whether

allowing a belated opt out would affect either the settlement

or finality of the judgment.” Id.; see also Pioneer Inv. Servs.

Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 395

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

(1993) (stating the factors for determining “excusable

neglect” generally). “The scope of appellate review of the

district court’s disallowance of a late claim is narrow. . . .

[W]e are not to substitute our ideas of fairness for those of the

district judge in the absence of evidence that he acted

arbitrarily, and such evidence must constitute a ‘clear

showing’ of abuse of discretion.” Silber, 18 F.3d at 1455

(internal quotation marks omitted) (quoting In re Gypsum

Antitrust Cases, 565 F.2d 1123, 1128 (9th Cir. 1977)).

The district court did not abuse its discretion in refusing

to grant Partl’s opt-out request. Properly identifying Silber as

governing the excusable neglect inquiry in this context, the

court zeroed in on the two Silber factors most relevant here:

whether Partl received notice, and who was responsible for

the delay. See id. Weighing them, the court concluded Partl’s

neglect was not excusable because (1) she had actual and

timely notice of the proper method of excluding herself from

the settlement; and (2) she was therefore herself squarely

responsible for the failure to opt out on time. That conclusion

is reasonable, supported by the record, and grounded in the

relevant legal standard. Cf. Kyle v. Campbell Soup Co.,

28 F.3d 928, 932 (9th Cir. 1994) (attorney’s two-day-late

filing caused by a mistake in interpreting the court’s

“nonambiguous” local rules was not excusable neglect).

Under the “narrow” review appropriate here, there was no

abuse of discretion in denying Partl’s motion to opt out late.

See id.; In re Gypsum Antitrust Cases, 565 F.2d at 1128.

CONCLUSION

The district court did not abuse its discretion in certifying

the class, approving the settlement, or denying Tori Partl’s

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IN RE VOLKSWAGEN “CLEAN DIESEL” LITIGATION

motion to opt out of the settlement. Its judgments are

AFFIRMED.

A42

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE VOLKSWAGEN “CLEAN

DIESEL” MARKETING, SALES

PRACTICES, AND PRODUCTS

LIABILITY LITIGATION,

No. 16-17060

D.C. No.

3:15-md-02672CRB

JASON HILL ET AL.,

Plaintiffs,

and

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VOLKSWAGEN, AG; VOLKSWAGEN

GROUP OF AMERICA, INC.; AUDI,

AG; AUDI OF AMERICA, LLC;

PORSCHE CARS NORTH AMERICA,

INC.; ROBERT BOSCH GMBH;

ROBERT BOSCH, LLC,

Defendants-Appellees,

RONALD CLARK FLESHMAN, JR.,

Proposed Intervenor,

Movant-Appellant.

OPINION

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IN RE VOLKSWAGEN LITIGATION

Appeal from the United States District Court

for the Northern District of California

Charles R. Breyer, Senior District Judge, Presiding

Argued and Submitted December 7, 2017

Pasadena, California

Filed July 3, 2018

Before: A. Wallace Tashima, William A. Fletcher,

and Marsha S. Berzon, Circuit Judges.

Opinion by Judge Berzon

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IN RE VOLKSWAGEN LITIGATION

SUMMARY*

Intervention / Clean Air Act

The panel affirmed the district court’s denial of a motion

to intervene, filed by a disgruntled owner of a 2012

Volkswagen, in the federal government’s Clean Air Act

enforcement action against Volkswagen.

The government’s suit arose from the car manufacturer’s

installation in some of its cars of “defeat devices” that

allowed Volkswagen to cheat on emissions tests. The parties

reached a final proposed consent decree, and the government

filed its enforcement action with the court.

The panel held that the Clean Air Act’s citizen suit

provision, 42 U.S.C. § 7604, did not grant the movant an

“unconditional right” to intervene under Fed. R. Civ. P.

24(a)(1). First, the panel held that § 7604(b)(1)(B)’s diligent

prosecution bar circumscribed a citizen’s right to intervene in

an enforcement action under that same provision. The panel

further held that a citizen who retained the right to file suit on

his own, despite a government enforcement action, had no

statutory right to intervene in that action. Second, the panel

held that the government was not suing to enforce a

“standard, limitation, or order” within the meaning of the

Clean Air Act, and therefore the diligent prosecution bar did

not preclude movant’s claims and he was free to bring his

own citizen suit. Accordingly, the movant had no statutory

right to intervene in the government enforcement action

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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IN RE VOLKSWAGEN LITIGATION

under the Clean Air Act. Alternatively, the panel held that

movant’s proposed complaints-in-intervention demonstrated

that he was not seeking to enforce the provisions invoked by

the government, and therefore he could have filed his own

suit and was not entitled to intervene in the government’s

action.

The panel held that movant could not intervene as of

right under Fed. R. Civ. P. 24(a)(2) because he had no

standing for the relief he sought.

COUNSEL

James Ben Feinman (argued), Lynchburg, Virginia, for

Movant-Appellant.

Brian C. Toth (argued), Washington, D.C., for DefendantsAppellees.

Sharon Nelles (argued), New York, New York, for

Defendants-Appellees.

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IN RE VOLKSWAGEN LITIGATION

OPINION

BERZON, Circuit Judge:

Ronald Clark Fleshman, Jr., the disgruntled owner of a

2012 Volkswagen Jetta, appeals the denial of his motion to

intervene in the federal government’s Clean Air Act suit

against Volkswagen, AG and several of its subsidiaries

(collectively Volkswagen or VW). The government’s suit

arose from the car manufacturer’s installation in some of its

cars of “defeat devices”—surreptitious pieces of software that

allowed VW to cheat on emissions tests. Six months after

filing suit, the parties reached a final proposed consent

decree, and the government filed it with the court. Our

question is whether Fleshman was entitled to intervene in the

government’s enforcement action. We conclude that he was

not.

A. The Clean Air Act

The Clean Air Act “protect[s] and enhance[s] the quality

of the Nation’s air resources so as to promote the public

health and welfare and the productive capacity of its

population.” 42 U.S.C. § 7401(b)(1).1 Toward that end, the

Act directs the Environmental Protection Agency (EPA)

Administrator to prescribe emissions standards for new

automobiles. See § 7521(a)(1); Massachusetts v. EPA,

549 U.S. 497, 506 (2007). Each model year of a

manufacturer’s vehicles must carry a “certificate of

All statutory citations are to the Clean Air Act, 42 U.S.C. § 7401 et

seq., unless otherwise stated.

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IN RE VOLKSWAGEN LITIGATION

conformity” (COC) establishing those vehicles’ compliance

with the relevant emissions standards. § 7522(a)(1);

40 C.F.R. § 86.1848-01. The Act prohibits the installation in

a new automobile of any device that bypasses or defeats the

operation of emission control systems. § 7522(a)(3).

As to enforcement, the Act also grants “any person” the

right to bring a civil action challenging the violation of

“(A) an emission standard or limitation under this chapter or

(B) an order issued by the [EPA] Administrator or a State

with respect to such a standard or limitation.” § 7604(a)(1).

Such a suit may not be brought, however, “if the

Administrator or State has commenced and is diligently

prosecuting a civil action . . . to require compliance with the

standard, limitation, or order.” § 7604(b)(1)(B). But “in any

such action . . . any person may intervene as a matter of

right.” Id.

B. State implementation plans (SIPs)

The Clean Air Act “ma[kes] the States and the Federal

Government partners in the struggle against air pollution.”

Gen. Motors Corp. v. United States, 496 U.S. 530, 532

(1990). Pursuant to that cooperative scheme, the EPA sets

national ambient air quality standards, and the states develop

state implementation plans (SIPs), subject to the approval of

the EPA, to implement those standards. See id. at 532–33;

see also § 7410(a).

The SIPs work toward attainment of national air quality

standards primarily by regulating “stationary sources” like

power plants and factories. See Engine Mfrs. Ass’n v. EPA,

88 F.3d 1075, 1078–79 (D.C. Cir. 1996); Jensen Family

Farms, Inc. v. Monterey Bay Unified Air Pollution Control

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IN RE VOLKSWAGEN LITIGATION

Dist., 644 F.3d 934, 938 (9th Cir. 2011). Regulation of

“mobile sources” is the province of the federal government.

In fact, the Act prohibits the states from setting emissions

standards for new automobiles; only the EPA may do that.2

See Engine Mfrs. Ass’n, 88 F.3d at 1079; § 7543(a). With

that exception, the Act “preserves the right of states

‘otherwise to control, regulate, or restrict the use, operation,

or movement of registered or licensed motor vehicles.’”

Engine Mfrs. Ass’n, 88 F.3d at 1093 (quoting § 7543(d)).

A. Discovery of “defeat devices” & ensuing litigation

In May 2014, researchers at West Virginia University

published a study showing that two of Volkswagen’s 2.0-liter

“light diesel” models emitted significantly higher quantities

of pollutants during normal road operation than during

emissions testing.3 Following publication of the study,

Volkswagen represented to the EPA and to the California Air

Resources Board (CARB) that the identified discrepancies

were caused by “technical issues and unexpected in-use

[driving] conditions.” Testing by the EPA and CARB

demonstrated that Volkswagen’s explanations did not account

Except for California, or states that adopt emissions standards

identical to California’s. See § 7543(b)(1); Engine Mfrs. Ass’n, 88 F.3d

at 1079–80.

The study referred to the models as “Vehicle A” and “Vehicle B.”

The EPA and CARB identified them as the 2012 Jetta and 2013

Passat. W. Va. Univ. Ctr. for Alt. Fuels, Engines & Emissions, In-Use

Emissions Testing of Light-Duty Vehicles in the U.S. 9 (2014),

https://www.theicct.org/sites/default/files/publications/WVU_LDDV_inuse_ICCT_Report_Final_may2014.pdf.

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IN RE VOLKSWAGEN LITIGATION

for the disparate emissions levels. Unsatisfied, the two

agencies threatened to withhold certificates of conformity for

Volkswagen’s 2016 model year light diesel cars, without

which the company could not sell the cars in the United

States.

Under that pressure Volkswagen confessed: its 2.0-liter

light diesel models released between 2009 and 2015

contained a “defeat device.” The device was designed so that

when it sensed—and only when it sensed—the precise

driving conditions of an emissions compliance test, software

in the car altered engine performance so the vehicle emitted

permissible levels of nitrogen oxide (NOx). Nitrogen oxide

reacts with other compounds in the atmosphere to form ozone

and smog. When the cars equipped with a defeat device

operated under normal “in-use” road conditions, they emitted

between 10 and 40 times the EPA-compliant level of NOx.

On September 18, 2015, the EPA sent a “Notice of

Violation” (NOV) to Volkswagen stating that VW’s

installation of the defeat device on certain 2.0-liter VW diesel

automobiles (the “affected vehicles”) violated the Clean Air

Act. Soon after, the EPA issued a press release, which

contained the following message for vehicle owners:

Car owners should know that although these

vehicles have emissions exceeding standards,

these violations do not present a safety hazard

and the cars remain legal to drive and resell.

Owners of cars of these models and years do

not need to take any action at this time.

(emphasis added).

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IN RE VOLKSWAGEN LITIGATION

The VW defeat device scheme became front page news

across the country. By December 2015, hundreds of private

lawsuits against Volkswagen, most of them class actions,

were filed in or removed to federal court. See In re

Volkswagen “Clean Diesel” Mktg., Sales Practices, and

Prods. Liab. Litig., 148 F. Supp. 3d 1367, 1368 (J.P.M.L.

2015). The Judicial Panel on Multidistrict Litigation (JPML)

transferred all pending defeat device-related cases to Judge

Charles Breyer in the Northern District of California (district

court or MDL court) for “coordinated or consolidated pretrial

proceedings.” Id. at 1370.

The government soon joined in. On January 4, 2016, the

United States filed a civil enforcement action against VW,

under Section 203 of the Clean Air Act, 42 U.S.C. § 7522, in

the Eastern District of Michigan. The complaint alleged four

violations of the Clean Air Act:

1. Certificates of conformity (COCs). VW imported

and sold cars not covered by a certificate of

conformity, because the vehicles equipped with defeat

devices did not “conform in all material respects” to

the specifications described in the applications for

those vehicles’ certificates of conformity, in violation

of Section 203(a)(1) of the Act, 42 U.S.C.

§ 7522(a)(1). Complaint at 8–9, 20–21, United States

v. Volkswagen AG, No. 1:16-cv-10006 (E.D. Mich.

Jan. 4, 2016) [hereinafter Gov’t Compl.].

2. Defeat devices. VW manufactured and sold vehicles

equipped with a “defeat device,” in violation of

Section 203(a)(3)(B) of the Act, 42 U.S.C.

§ 7522(a)(3)(B). Gov’t Compl. at 9–10, 21–22; see

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IN RE VOLKSWAGEN LITIGATION

also 40 C.F.R. § 86.1803-01 (defining “defeat

device”).

3. Tampering. VW’s defeat device was an “auxiliary

emission control device” (AECD) that “ha[d] the

effect of removing or rendering inoperative devices or

elements of design” of its vehicles, in violation of

Section 203(a)(3)(A) of the Act, 42 U.S.C.

§ 7522(a)(3)(A). Gov’t Compl. at 9–11, 23–24.

4. Reporting. VW violated its reporting obligations

under the Act by not disclosing the AECD/defeat

device in its applications for COCs, in violation of

Section 203(a)(2) of the Act, 42 U.S.C. § 7522(a)(2).

Gov’t Compl. at 11–12, 24–25.

The complaint covered both 2.0-liter and 3.0-liter diesel

vehicles. The government sought (1) injunctive relief

prohibiting VW from continuing to engage in the conduct

alleged; (2) an order mandating appropriate steps by VW,

including mitigation of NOx emissions, to remedy the

violations of the Act; and (3) civil penalties for each violation

of the Act. The JPML transferred the enforcement action to

the MDL court on January 15, 2016.

B. The settlement process

Shortly after the government filed suit, the district court

appointed Robert S. Mueller III as Settlement Master to “to

facilitate settlement discussions among all parties to this

multi-district litigation as soon as is feasible.” The court

selected lead counsel and a 22-member Plaintiffs’ Steering

Committee (PSC) to manage consolidated pre-trial litigation

for the class. A “government coordinating counsel” was

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IN RE VOLKSWAGEN LITIGATION

appointed to represent the government’s interests during pretrial proceedings and settlement talks.4

The parties to the various cases reached an agreement in

principle concerning the 2.0-liter vehicles. On June 28, 2016,

the United States filed a proposed consent decree for this civil

enforcement action, and the PSC filed a settlement agreement

for preliminary approval in the class action. The consent

decree established a program by which VW would buy back,

permit the termination of leases of, or perform modifications

on the emissions systems of all affected vehicles.5 VW would

also pay $2.7 billion into a “mitigation trust” to offset the

increased NOx emissions caused by the affected vehicles, and

pay another $2 billion to support public awareness of zeroemissions vehicles. For the buyback-lease terminationmodification program, the consent decree set a participation

target of 85% of the affected vehicles; for each percentage

point below 85%, VW had to pay additional funds into the

mitigation trust. The terms of the class action settlement

largely overlapped with the terms of the consent decree

between VW and the government and also with a separate

consent order filed by the Federal Trade Commission.

Pursuant to 28 C.F.R. § 50.7(b), notice of the partial consent

decree appeared in the Federal Register on July 6, 2016, and

In addition to the United States, the Federal Trade Commission

(FTC), represented by separate counsel, brought claims against VW for

violations of the FTC Act, 15 U.S.C. §§ 45, 53, and California sued VW

for violations of state and federal law. The FTC and California actions

were consolidated into the MDL proceeding. Throughout the opinion,

“the government” refers to the United States unless otherwise noted.

The consent decree, class action settlement, and FTC consent order

covered 2.0-liter diesel vehicles. A separate settlement was reached with

respect to 3.0-liter diesel vehicles.

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IN RE VOLKSWAGEN LITIGATION

a 30-day public comment period ensued. See Notice of

Lodging of Proposed Partial Consent Decree Under the Clean

Air Act, 81 Fed. Reg. 44,051 (July 6, 2016).

C. Fleshman’s attempt to intervene

While settlement talks were well underway in the cases

proceeding in California, Fleshman filed suit against VW in

the Circuit Court of Campbell County, Virginia.6 At the time

Fleshman filed suit, he owned a 2012 model year light diesel

Jetta.

Later, when the settlement talks were close to fruition,

Fleshman moved to intervene in the class action, “to object to

the proposed Consumer Class Action Settlement Agreement

and Release.” The district court refused to allow the

intervention.

Undeterred, Fleshman moved a week later to intervene in

the government’s enforcement action. He argued that the

consent decree “violate[d] Federal and Virginia law” because

it did not require rescission of sale for all affected vehicles;

instead, it permitted vehicle owners and lessees to keep their

unmodified vehicles if they wished. Fleshman also alleged

that Virginia’s SIP prohibited the owners of affected vehicles

from driving them, so the buyback should have been

mandatory.

The specific SIP provision Fleshman relied upon reads in

full: “No motor vehicle or engine shall be operated with the

See Fleshman v. Volkswagen Grp. of Am., Inc., No. 6:16-cv-00021GEC (W.D. Va. May 2, 2016), ECF No. 1-1. The case was removed to

federal court and then remanded back to state court. See id., ECF No. 17.

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IN RE VOLKSWAGEN LITIGATION

motor vehicle pollution control system or device removed or

otherwise rendered inoperable.” 9 Va. Admin. Code § 5-405670(A)(3). Under Fleshman’s reading, this SIP provision

prohibited vehicle owners from driving unmodified affected

vehicles. Fleshman maintained in his intervention motion

that the EPA’s statement of September 18, 2015, advising

that “the [affected] cars remain[ed] legal to drive and resell”

was inconsistent with the Virginia SIP. Fleshman sought

intervention to “protect his interest as a Virginian[] in

enforcing the laws of Virginia . . . incorporated into the Clean

Air Act by way of Virginia’s [SIP].”7 He argued that the

Clean Air Act’s citizen-suit provision provided him with a

statutory right to intervene, presumably pursuant to Federal

Rule of Civil Procedure 24(a)(1).8 Fleshman further

contended that he had a protectable interest in the

enforcement of Virginia’s SIP not adequately protected by the

parties to the litigation, presumably invoking Rule 24(a)(2).

The government observed in its opposition papers that

Fleshman had not appended a complaint to his motion to

intervene. In response, Fleshman attached one to his reply

brief, and shortly thereafter he filed a First Amended

See Cal. Dump Truck Owners Ass’n v. Nichols, 784 F.3d 500, 503

(9th Cir. 2015) (“Once approved by the EPA, a SIP becomes federal law

and must be carried out by the state.”). Fleshman alleged that the consent

decree also violated the SIPs of more than a dozen other states and the

District of Columbia.

Rule 24(a) provides: “On timely motion, the court must permit

anyone to intervene who: (1) is given an unconditional right to intervene

by a federal statute; or (2) claims an interest relating to the property or

transaction that is the subject of the action, and is so situated that

disposing of the action may as a practical matter impair or impede the

movant’s ability to protect its interest, unless existing parties adequately

represent that interest.” Fed. R. Civ. P. 24(a).

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IN RE VOLKSWAGEN LITIGATION

The complaint

Proposed Complaint-in-Intervention.9

consisted largely of allegations that the EPA was not

adequately prosecuting the action against VW.10 In his prayer

for relief, Fleshman sought various declarations and orders

against the EPA (e.g., “[f]ind and order that the EPA cannot

propose and support a monetary penalty which is an incentive

to violate the Clean Air Act”); none of the requested relief

was directed at Volkswagen.11

The district court denied Fleshman’s motion to intervene

in this civil enforcement action. The court held that the Clean

Air Act’s citizen-suit provision permits intervention of right

only when the intervenor seeks to enforce the same “standard,

limitation, or order” as the government does in its action.

Because Fleshman sought to enforce Virginia’s SIP—not the

same “standard, limitation, or order” as the Clean Air Act

provisions underlying the government’s complaint—the Act

did not permit him to intervene as a matter of right.

For simplicity, we refer to Fleshman’s First Amended Proposed

Complaint-in-Intervention as “the complaint” or “Fleshman Compl.”

except when necessary to distinguish it from the first proposed complaintin-intervention.

The two main sections of the complaint are titled “The

Administrator and the EPA Have Not Diligently Prosecuted the Clean Air

Act” and “The Specific Failures of the Administrator to Enforce the Clean

Air Act.”

Fleshman did not bring his suit as a class action.

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IN RE VOLKSWAGEN LITIGATION

Shortly thereafter, the district court entered the proposed

consent decree in the government enforcement action.12

Fleshman appeals the denial of his motion to intervene.

III

Under Rule 24, a stranger to a lawsuit may intervene “of

right” where (1) a federal statute gives the would-be

intervenor an “unconditional right” to intervene in the suit, or

(2) letting the lawsuit proceed without that person could

imperil some cognizable interest of his. Fed. R. Civ. P. 24(a).

“Rule 24(a) is construed broadly, in favor of the applicants

for intervention.” Scotts Valley Band of Pomo Indians v.

United States, 921 F.2d 924, 926 (9th Cir. 1990). Fleshman

argues that both subsections of Rule 24(a) entitle him to

intervene. We address each subsection in turn.

A. Intervention under Rule 24(a)(1)

Fleshman first argues that he may intervene in the

government’s action by grace of the Clean Air Act’s citizensuit provision, § 7604. The issue is whether that provision

grants him an “unconditional right” to intervene. Fed. R. Civ.

P. 24(a)(1). It does not.

i. Scope of intervention under the Clean Air Act

The Clean Air Act entitles any person to sue for a

violation of “an emission standard or limitation under this

chapter” or “an order issued by the Administrator or a State

The district court approved the class action settlement on the same

day. The district court’s denial of Fleshman’s objections to the class

action settlement are the subject of a separate appeal.

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with respect to such a standard or limitation.” § 7604(a)(1).

A citizen’s right to sue under the Act has limitations,

however:

No action may be commenced—

(1) under subsection (a)(1) of this section—

(A) prior to 60 days after the plaintiff has

given notice of the violation (i) to the

Administrator, (ii) to the State in which

the violation occurs, and (iii) to any

alleged violator of the standard, limitation,

or order, or

(B) if the Administrator or State has

commenced and is diligently prosecuting

a civil action in a court of the United

States or a State to require compliance

with the standard, limitation, or order, but

in any such action in a court of the United

States any person may intervene as a

matter of right.

§ 7604(b)(1). This tripartite structure for citizen suits—a

right of action, qualified by a notice requirement and a

“diligent prosecution” bar, which in turn is leavened by a

right to intervene—is replicated in a host of other federal

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IN RE VOLKSWAGEN LITIGATION

environmental statutes.13 See United States v. Hooker Chems.

& Plastics Corp., 749 F.2d 968, 977–78 (2d Cir. 1984).

Our threshold question in deciding whether Fleshman had

a right to intervene in this action is whether a citizen who is

not barred from bringing his own citizen suit by a diligently

prosecuted government enforcement action may nonetheless

intervene in that government action. After examining the

parameters of § 7604(b)(1)(B)’s diligent prosecution bar, we

hold that it circumscribes a citizen’s right to intervene in an

enforcement action under that same provision. That is, a

citizen who retains the right to file suit on his own, despite a

government enforcement action, has no statutory right to

intervene in that action.14

Section 7604(b)’s two subparts work together to delimit

citizen suits against alleged violators of the Act. First, before

filing suit, a plaintiff must give sixty days’ notice to the EPA,

the relevant State, and the alleged violator. § 7604(b)(1)(A).

Second, no citizen suit may be commenced if the EPA or a

See Clean Water Act, 33 U.S.C. § 1365(a)–(b); Resource

Conservation and Recovery Act, 42 U.S.C. § 6972(a)–(b); Safe Drinking

Water Act, 42 U.S.C. § 300j-8(a)–(b); Surface Mining Control and

Reclamation Act, 30 U.S.C. § 1270(a)–(b); cf. Endangered Species Act,

16 U.S.C. § 1540(g)(2)(A)(iii) (stating a diligent prosecution bar, but

without a corresponding right to intervene).

This circuit has not yet considered the contours of the Act’s

intervention provision. United States v. Stone Container Corp., 196 F.3d

1066, 1069 (9th Cir. 1999), held that § 7604(d) of the Act did not entitle

the citizen plaintiffs, who had intervened in a government enforcement

action under § 7604(b)(1)(B), to attorneys’ fees, because such an action

was not “brought pursuant to subsection (a) [the citizen-suit provision] of

this section.” § 7604(d). We did not discuss, however, the scope of the

right to intervene under § 7604(b)(1)(B).

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state is already diligently litigating an action “to require

compliance with the standard, limitation, or order.”

§ 7604(b)(1)(B). “The time between notice and filing of the

action should give the administrative enforcement office an

opportunity to act on the alleged violation.” S. Rep. No. 911196, at 37 (1970) (report of the Senate Committee on Public

Works). “If the Administrator or the State commences

enforcement action within that 60-day period, the citizen suit

is barred, presumably because governmental action has

rendered it unnecessary.” Gwaltney of Smithfield, Ltd. v.

Chesapeake Bay Found., Inc., 484 U.S. 49, 59 (1987)

(discussing the citizen-suit and intervention provisions of the

Clean Water Act). Taken as a whole, the statutory

architecture indicates that “the citizen suit is meant to

supplement rather than to supplant governmental action.” Id.

at 60.

But not every citizen suit is verboten once the government

files suit. The diligent prosecution bar prevents a citizen

from suing under § 7604(a)(1) if the government is

prosecuting an action “to require compliance with the

standard, limitation, or order.” § 7604(b)(1)(B) (emphasis

added). “[T]he standard, limitation, or order” in (b)(1)(B)

refers back to the “emission standard or limitation” or “order

issued . . . with respect to such a standard or limitation”

described in the citizen-suit provision, § 7604(a)(1), the

violation of which any person may sue to enjoin, “[e]xcept as

provided in subsection (b).” Id. The explicit textual crossreferences between subsections (a) and (b), and the use of the

definite article (“the standard, limitation, or order”),15 signify

“[T]he definite article ‘the’ particularizes the subject spoken of,

suggesting that Congress meant to refer to a single object . . . .”

Hernandez v. Williams, Zinman & Parham PC, 829 F.3d 1068, 1074 (9th

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IN RE VOLKSWAGEN LITIGATION

with precision that the diligent prosecution bar forecloses

only citizen suits that seek to enforce the same “standard,

limitation, or order” as the government enforcement action.

See Hooker Chems., 749 F.2d at 978.16 A person suing to

enforce a different “standard, limitation, or order” with regard

to certain emissions from that invoked by the government in

its enforcement action is not barred from doing so by

§ 7604(b).

The diligent prosecution bar in turn defines the right of

intervention granted by § 7604(b)(1)(B). No citizen suit for

a violation of a “standard, limitation, or order” may be

commenced in the face of an enforcement action “to require

compliance with the [same] standard, limitation, or order, but

in any such action . . . any person may intervene as a matter

of right.” Id. (emphasis added). Once again, the text and

context are plain: a person may “intervene as a matter of

right” in an enforcement action—“such action”—only if that

action has barred the person from bringing his own citizen

suit under § 7604(a)(1). The word “such” restricts the actions

in which a person may intervene to those mentioned in the

preceding clause—that is, diligently prosecuted enforcement

actions that bar a citizen suit under subsection (a)(1). The

connective “but” sets the grant of intervention in opposition

Cir. 2016) (internal quotation marks omitted) (quoting The, Black’s Law

Dictionary (4th ed. 1968)).

In the past, we have described the bar in broad terms as “expressly

preclud[ing] commencement of suits . . . when the United States has

already commenced and is diligently prosecuting an action asserting the

same claims.” Stone Container Corp., 196 F.3d at 1068 (emphasis

added). Because the statute speaks of a “standard, limitation, or order”

rather than a “claim,” we avoid importing the latter term into our more

specific analysis.

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to the diligent prosecution bar: you can’t bring your own suit,

but you’re allowed to intervene in this one. Lastly, “[t]he

right to intervene is conferred in the same sentence that limits

the rights of citizens who would otherwise bring private

enforcement actions, which suggests that Congress intended

to confer that right only on those particular citizens.” United

States v. Metro. St. Louis Sewer Dist., 569 F.3d 829, 837–38

(8th Cir. 2009) (construing the scope of the Clean Water

Act’s analogous right of intervention).

The phrase “any person” in the intervention clause might

appear to broaden the grant of intervention beyond simply

those “citizens who would otherwise bring private

enforcement actions,” but are precluded from doing so by the

government’s action. Id. “[U]se of the word ‘any’ will

sometimes indicate that Congress intended particular

statutory text to sweep broadly.” Nat’l Ass’n of Mfrs. v.

Dep’t of Def., 138 S. Ct. 617, 629 (2018). But whether “any”

has that import in a particular statute “necessarily depends on

the statutory context.” Id. Here, that context—and the other

words of the provision—cabin “any person” to those whose

suits were barred by the diligent prosecution bar.

Stone Container Corp. demonstrates how § 7604’s pieces

fit together. 196 F.3d at 1067. In that case, the United States

filed suit against the defendant for violations of the Clean Air

Act, after receiving notice under § 7604(b)(1)(A) of the

private plaintiff’s intent to sue. Id. The private plaintiff then

filed its own 21-count suit against the defendant. Three of the

21 counts “mirrored” counts in the government’s complaint.

Those “duplicative” counts were dismissed by the plaintiff

“subject to intervention in the United States enforcement

action.” Id. The plaintiff then negotiated a separate consent

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IN RE VOLKSWAGEN LITIGATION

decree for the remaining, non-duplicative—and nonbarred—claims in its complaint. See id. at 1067–68.

Every circuit to consider the Clean Air Act’s right of

intervention—or the identically worded provisions in other

environmental statutes, see supra note 13—has reached the

same result we do. For example, the Second Circuit held, as

do we, that “[i]ntervention is limited to government initiated

actions that could have been brought by the individual but for

the government action.” Hooker Chems., 749 F.2d at 978.17

Similarly, the Third Circuit recognized that “[s]ection

7604(b) . . . does not establish a right to intervene

independent from the other provisions in § 7604.” Del.

Valley Citizens’ Council for Clean Air v. Pennsylvania,

674 F.2d 970, 972–73 (3d Cir. 1982).

In short, a party may intervene as a matter of right in a

Clean Air Act enforcement action only if he is barred under

the Act by that enforcement action from maintaining his own

suit to remedy a violation of the “standard, limitation, or

order” at issue.

See also Metro. St. Louis Sewer Dist., 569 F.3d at 838 (holding that

under the Clean Water Act, “only a citizen whose suit has been displaced

by the government action is entitled to intervene”); United States v. City

of New York, 198 F.3d 360, 364 (2d Cir. 1999) (holding that the Safe

Drinking Water Act “authorizes intervention as of right by private parties

in suits that could have been brought by the parties but for the fact that

they are being pursued by the United States or a state”).

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IN RE VOLKSWAGEN LITIGATION

ii. The government was not suing to enforce a

“standard, limitation, or order” within the

meaning of the Act

Our next question, then, is whether Fleshman aimed to

enjoin violations of one of the “standard[s], limitation[s], or

order[s]” underlying the government’s enforcement action

against Volkswagen. If so, the diligent prosecution bar

precluded his action and he was entitled to intervene “as a

matter of right” in the enforcement action under

§ 7604(b)(1)(B) and Rule 24(a)(1). If not, then he had no

statutory right to intervene in the government’s case.

The government brought suit to enjoin four distinct

violations of Section 203 of the Clean Air Act, 42 U.S.C.

§ 7522. It alleged that VW violated the Act by selling

vehicles not covered by certificates of conformity, equipping

those vehicles with unlawful “defeat devices” and auxiliary

emission control devices, and failing to report those devices

in its COC applications.18 See supra pages 9–10. For relief,

Section 7522(a) provides: “The following acts and the causing

thereof are prohibited—

(1) in the case of a manufacturer of new motor vehicles

or new motor vehicle engines for distribution in

commerce, the sale, or the offering for sale, or the

introduction, or delivery for introduction, into

commerce, or (in the case of any person, except as

provided by regulation of the Administrator), the

importation into the United States, of any new motor

vehicle or new motor vehicle engine, manufactured

after the effective date of regulations under this part

which are applicable to such vehicle or engine unless

such vehicle or engine is covered by a certificate of

conformity . . . .

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IN RE VOLKSWAGEN LITIGATION

the government sought an injunction, mitigation of excess

NOx emissions, and civil penalties.

The prohibitions contained in § 7522 do not appear to be

“emission standard[s] or limitation[s]” or “orders issued . . .

with respect to” such standards or limitations within the

meaning of § 7604(a)(1). Section 7604(f) explains that the

term “emission standard or limitation,” for purposes of

the citizen-suit provision, covers several broad categories

of regulatory requirements, including—somewhat

unhelpfully—“emission standard[s]” and “emission

(2)(A) for any person to fail or refuse to permit access

to or copying of records or to fail to make reports or

provide information required under section 7542 of this

title; . . .

(3)(A) for any person to remove or render inoperative

any device or element of design installed on or in a

motor vehicle or motor vehicle engine in compliance

with regulations under this subchapter prior to its sale

and delivery to the ultimate purchaser, or for any person

knowingly to remove or render inoperative any such

device or element of design after such sale and delivery

to the ultimate purchaser; or

(B) for any person to manufacture or sell, or offer to

sell, or install, any part or component intended for use

with, or as part of, any motor vehicle or motor vehicle

engine, where a principal effect of the part or

component is to bypass, defeat, or render inoperative

any device or element of design installed on or in a

motor vehicle or motor vehicle engine in compliance

with regulations under this subchapter . . . .”

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IN RE VOLKSWAGEN LITIGATION

limitation[s].”19 Section 7602, which defines terms used

throughout the Clean Air Act, more concretely defines

“emission limitation” and “emission standard” to mean “a

requirement established by the State or the Administrator

which limits the quantity, rate, or concentration of emissions

of air pollutants on a continuous basis, including any

requirement relating to the operation or maintenance of a

source to assure continuous emission reduction, and any

design, equipment, work practice or operational standard

promulgated under this chapter.” § 7602(k). Neither the

§ 7602(k) definition nor the § 7604(f) list of categories of

“emission standard[s]” and “emission limitation[s]”

encompasses the generic statutory prohibitions in § 7522.

For an example of an “emission standard,” consider

40 C.F.R. § 86.1811-04. That regulation establishes

permissible emission levels of nitrogen oxide (NOx) for

“light-duty vehicles” like the vehicles at issue in this case.

See id. § 81.1811-04(c) (“Exhaust emissions from Tier 2

vehicles must not exceed the standards in Table S04–1 of this

section at full useful life . . . .”). Unlike the statutory

prohibitions in § 7522, which were enacted by Congress, the

regulation is “a requirement established by . . . the

Administrator which limits the quantity, rate, or concentration

of emissions of air pollutants on a continuous basis.”

§ 7602(k).

Examples of an “emission standard or limitation” include “a

schedule or timetable of compliance, emission limitation, standard of

performance or emission standard,” “a control or prohibition respecting

a motor vehicle fuel or fuel additive,” requirements or conditions of

permits relating to other non-motor-vehicle related portions of the Clean

Air Act, and—relevant later—regulatory requirements promulgated

“under any applicable State implementation plan approved by the [EPA].”

§ 7604(f).

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The United States did not sue VW for violations of

40 C.F.R. § 86.1811-04—that is, of an “emission standard or

limitation” as encompassed by § 7604(a)(1)—nor for

violations of any other standard or limitation promulgated

under § 7521.20 Instead, the United States sued VW for

violations of statutory provisions that are not, and do not

incorporate, “standard[s], limitation[s], or order[s]” within the

meaning of § 7604(a)(1). The diligent prosecution bar

applies only when the government is enforcing a “standard or

limitation under this chapter” or an “order . . . with respect to

such a standard or limitation.” § 7604(a)(1). Fleshman’s

claims were thus not precluded by that bar, and he was free

to bring his own citizen suit alleging them. And because a

citizen has a statutory right to intervene in a government

enforcement action under the Clean Air Act only if precluded

by the diligent prosecution bar from bringing his own suit,

Fleshman had no right to intervene here.

iii. Fleshman sought to enforce the Virginia SIP, not

the requirements of § 7522

There is an alternative reason Fleshman had no statutory

right to intervene in this action. Even if § 7522’s statutory

prohibitions were “standard[s], limitation[s], or order[s]” that

would foreclose, through § 7604(b)(1)(B), a citizen suit, this

government enforcement action would not bar Fleshman from

litigating the claims in his proposed suit. Properly viewed,

Section 7521 directs the EPA administrator to prescribe by

regulation “standards applicable to the emission of any air pollutant from

any class or classes of new motor vehicles or new motor vehicle engines,

which in his judgment cause, or contribute to, air pollution which may

reasonably be anticipated to endanger public health or welfare.”

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IN RE VOLKSWAGEN LITIGATION

Fleshman’s claims are not predicated on any § 7522

violations.

Fleshman’s first proposed complaint-in-intervention

focused entirely on the EPA’s inadequate enforcement of

state SIPs. He sought declaratory relief to remedy the

inadequacy and unlawfulness of the consent decree flowing

from its inattention to state SIPs. In particular, Fleshman’s

first complaint—which does not refer to § 7522 at

all—alleged a violation of a provision of Virginia’s SIP that

prohibits the operation of cars whose “pollution control

system[s] or device[s]” had been “removed or otherwise

rendered inoperable.” 9 Va. Admin. Code § 5-405670(A)(3).

The government’s enforcement action did not allege that

VW had not complied with Virginia’s (or any state’s) SIP, or

seek relief connected with SIP compliance. That, indeed, was

Fleshman’s central gripe in his original intervention

complaint. Because Fleshman’s original complaint alleged

violations entirely distinct from those the government

identified, Fleshman could have proceeded with his own

citizen suit. § 7604(b)(1)(B); see also § 7604(f)(4) (private

plaintiffs may sue to enforce a “standard, limitation, or

scheduled established under . . . any applicable State

implementation plan approved by the [EPA]”). He therefore

had no statutory right to intervene in the government’s action

based on his original complaint-in-intervention.

In his amended proposed complaint-in-intervention,

Fleshman emphasized somewhat different purported

violations—namely, the EPA’s failure to demand that all of

Volkswagen’s non-conforming cars be removed from the

road, all sales be rescinded, and all purchase prices be

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IN RE VOLKSWAGEN LITIGATION

refunded, relief that he argues was mandated by the Clean Air

Act. Fleshman Compl. at 11. Like the earlier complaint,

however, the second one did not identify any of the

subsections of § 7522 as the source of the violations alleged

or the relief sought.21 In fact, Fleshman’s proposed amended

complaint-in-intervention does not actually set forth any

claims or causes of action; it contains many paragraphs of

allegations followed by a request for relief.22 If anything,

Fleshman’s refrain that the EPA failed to enforce the

“mandatory, non-discretionary” requirements of the Clean

Air Act, Fleshman Compl. at 2–8, indicates that his claims

are, in reality, claims against the EPA under a different

provision of the Act from § 7522. See § 7604(a)(2) (“[A]ny

person may commence a civil action on his own behalf . . .

against the Administrator [of the EPA] where there is alleged

a failure of the Administrator to perform any act or duty

under this chapter which is not discretionary . . . .” (emphasis

added)).

Fleshman’s complaint does allude to violations of § 7522. See

Fleshman Compl. at 2 ¶¶ 4–6, 6 ¶ 15A, 8 ¶ 15C–D, 11. But the references

to § 7522 are intermingled with allegations that VW’s conduct, and the

consent decree itself, also violated §§ 7410, 7413, 7522(a)(4)(D), 7523,

and 7541—provisions of the Act that did not underpin the government’s

enforcement action against VW. What is clear is that Fleshman’s

complaint is not founded upon violations of § 7522, notwithstanding that

he mentions the section at various points in his complaint.

Fleshman’s blanket attempt to incorporate by reference all of the

allegations in the government’s complaint does not transform his suit into

one alleging violations of the same “standard, limitation, or order” as the

government. See Fleshman Compl. at 1 ¶1. The complaint incorporates

the government’s allegations, not its claims or causes of action. Mirroring

the allegations in the government’s complaint does not change the basic

thrust of Fleshman’s complaint.

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IN RE VOLKSWAGEN LITIGATION

In sum, the government’s enforcement action did not bar

Fleshman’s suit under the diligent prosecution bar,

§ 7604(b)(1)(B). The statutory provisions the United States

sued to enforce—§ 7522—are not “standard[s], limitation[s],

or order[s]” that would preclude a citizen suit under

§ 7604(a)(1). Even if they were, Fleshman’s proposed

complaints-in-intervention demonstrate that he was not

seeking to enforce the provisions of § 7522 invoked by the

government. For both reasons, Fleshman could have filed his

own suit against Volkswagen or the EPA to enforce

Virginia’s SIP. Ergo, he was not entitled to intervene in the

government’s action. See § 7604(b)(1)(B). And because the

Clean Air Act did not grant Fleshman an “unconditional right

to intervene,” he was not entitled to do so under Rule

24(a)(1).

B. Intervention under Rule 24(a)(2)

Fleshman argues—albeit indistinctly—that he is entitled

to intervene of right under Rule 24(a)(2) to protect his interest

in the proper enforcement of the Clean Air Act and Virginia’s

SIP. Fleshman, however, lacks standing for the relief in his

complaint-in-intervention that goes beyond what the United

States sought in its suit, and so may not intervene of right.

See Town of Chester v. Laroe Estates, Inc., 137 S. Ct. 1645,

1651 (2017).23

Under Rule 24(a)(2), a court “must permit anyone to intervene who

. . . claims an interest relating to the property or transaction that is the

subject of the action, and is so situated that disposing of the action may as

a practical matter impair or impede the movant’s ability to protect its

interest, unless existing parties adequately represent that interest.” We

assume, because no party has argued otherwise, that Fleshman could meet

the “impairment” prong under 24(a)(2). But it is not at all clear that he

could. Fleshman’s ability under § 7604(a)(1) to maintain a separate

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IN RE VOLKSWAGEN LITIGATION

“[A]n intervenor of right must have Article III standing in

order to pursue relief that is different from that which is

sought by a party with standing.” Id. The relief Fleshman

seeks is completely different from that sought by the

government in its action.

The United States asked the court permanently to enjoin

Volkswagen’s violations of § 7522, order Volkswagen to

mitigate the excess NOx emissions from its vehicles, and

assess civil penalties against Volkswagen for each violation

of the Act. By contrast, Fleshman asked the court to:

(1) declare that enforcement of § 7522

requires the rescission of the sale of each of

the hundreds of thousands of affected

vehicles;

(2) declare that the EPA had no authority to

“annul or repeal” the SIPs of various states, or

to “impair or impede” the enforcement of

SIPs, by “promoting and endorsing” an

allegedly deficient and unlawful consent

decree;

lawsuit against Volkswagen, or the EPA, to enforce the Clean Air Act

would seem to defeat any argument that adjudication of the government’s

enforcement action without his participation will impair his interests. See

United States v. City of Los Angeles, 288 F.3d 391, 402 (9th Cir. 2002)

(considering it “doubtful” that the proposed intervenors’ interests would

be impaired where “[t]he litigation d[id] not prevent any individual from

initiating suit” to enjoin the defendants’ unlawful conduct). In practice,

the denial of intervention under § 7604(b)(1)(B) and Rule 24(a)(1) might

effectively preclude would-be intervenors from arguing they are

alternatively entitled to intervene under Rule 24(a)(2).

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IN RE VOLKSWAGEN LITIGATION

(3) declare that §§ 7413 and 7541 require the

EPA to notify other owners and lessees that it

is illegal to operate their vehicles in the

United States, and to notify the States of

“widespread” violations of various provisions

of the Clean Air Act and numerous SIPs;

(4) and declare that the EPA could not

“support a monetary penalty which is an

incentive to violate the Clean Air Act.”24

In short, Fleshman desires a series of declarations that the

Clean Air Act requires the United States to seek a fullrescission remedy, and, conversely, prohibits it from pursuing

anything short of that in a settlement with VW. For him, only

the removal of all affected cars from the road will ensure that

neither he nor the “many thousands of innocent owners and

lessees,” Fleshman Compl. at 6 ¶ 14, will later face liability

for driving their allegedly SIP- and Clean Air Actnoncompliant cars.

But Fleshman lacks standing for such sweeping relief.

“[T]he standing inquiry requires careful judicial examination

of a complaint’s allegations to ascertain whether the

particular plaintiff is entitled to an adjudication of the

particular claims asserted.”

Or. Prescription Drug

Monitoring Program v. DEA, 860 F.3d 1228, 1233 (9th Cir.

2017) (citation omitted). For Fleshman to have standing for

Although Fleshman’s prayer for relief asks the court to “[f]ind and

order” the relief listed above, which suggests affirmative injunctive relief,

each item of specified relief seeks only a declaration that the Clean Air

Act requires the EPA to do specific things, and prohibits it from doing

others.

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IN RE VOLKSWAGEN LITIGATION

these claims for relief, he must show that the threatened harm

to him—caused by the government’s failure to enforce the

Clean Air Act appropriately—is “certainly impending” or that

“there is a substantial risk that the harm will occur,” Susan B.

Anthony List v. Driehaus, 134 S. Ct. 2334, 2341 (2014)

(internal quotation marks and citations omitted), and that only

rescission of the sale of every affected vehicle will remedy

that harm.

Assuming that Fleshman is correct that the letter of the

Virginia SIP would prohibit him from driving an unmodified

vehicle in the future, he has myriad ways to avoid potential

liability under the SIP. He is aware of that risk,

notwithstanding the theoretical ignorance of other owners or

lessees. And he could participate in the class action

settlement, by choosing to have Volkswagen either buy back

his car or perform an approved emissions modification on it.25

Moreover, Fleshman’s arguments that the EPA or any

state would enforce a SIP against him for continuing to drive

his car are entirely speculative. There are no plausible

allegations, nor reason to believe from the record, that the

EPA or any state will attempt to subject operators of

unmodified Volkswagen vehicles to liability. The available

evidence indicates the opposite—that “the threat of

enforcement” is “chimerical,” rather than “credib[le]” and

Fleshman has until September 1, 2018, to file a claim for benefits

under the settlement. See Volkswagen/Audi/Porsche Diesel Emissions

Settlement Program, Volkswagen, https://www.vwcourtsettlement.com/

(last visited June 2, 2018). After briefing was completed in this appeal,

the EPA and CARB approved an emissions modification program for

“Generation 1” vehicles, including Fleshman’s 2012 Jetta.

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IN RE VOLKSWAGEN LITIGATION

“substantial.”26 Susan B. Anthony List, 134 S. Ct. at 2342,

2345 (quoting Steffel v. Thompson, 415 U.S. 452, 459

(1974)). Fleshman’s fears of enforcement thus “rest on mere

conjecture about possible governmental actions.” Clapper v.

Amnesty Int’l USA, 568 U.S. 398, 420 (2013) (holding that

putative injuries depending on the plaintiffs’ surmise about

government surveillance activities did not give rise to

standing); cf. Lopez v. Candaele, 630 F.3d 775, 788 (9th Cir.

2010) (“[C]laims of future harm lack credibility when . . . the

enforcing authority has disavowed the applicability of the

challenged law to the plaintiffs.”).

Further, and critically, Fleshman’s potential future

liability for driving his own car does not entitle him to seek,

as he does, rescission of all the sales of the affected cars,

including those belonging to hundreds of thousands of other

people. His own awareness of the theoretical future

enforcement problem, and the severe disjuncture between the

injuries to himself he asserts and the relief he seeks,

underscore that he is, primarily, asserting potential harms to

third parties. See Fleshman Compl. at 5 ¶ 14 (“[After the

settlement,] the owners and lessees [of the affected vehicles]

will learn for the first time their vehicles are illegal to use, but

See Frequent Questions about Volkswagen Violations, U.S. Envtl.

Protection Agency, https://www.epa.gov/vw/frequent-questions-aboutvolkswagen-violations (last visited June 2, 2018) (“Will EPA take or

confiscate my vehicle? Absolutely not. EPA will not confiscate your

vehicle or require you to stop driving.”); Press Release, Va. Office of the

Attorney Gen., Herring Announces Compensation for Virginia

Consumers Under Settlements with Volkswagen over Emissions Fraud

(June 28, 2016), http://ag.virginia.gov/media-center/news-releases/773june-28-2016-herring-announces-compensation-for-virginia-consumersunder-settlements-withvolkswagen-over-emissions-fraud (praising the

settlements and their value to Virginians).

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IN RE VOLKSWAGEN LITIGATION

will have already released all claims against the defendants

responsible for the illegality.”).27 Absent some exception not

here applicable, Fleshman “must assert his own legal rights

and interests, and cannot rest his claim to relief on the legal

rights or interests” of other owners or lessees. Ray Charles

Found. v. Robinson, 795 F.3d 1109, 1118 (9th Cir. 2015)

(quoting Warth v. Seldin, 422 U.S. 490, 499 (1975)); see also

Mills v. United States, 742 F.3d 400, 407 (9th Cir. 2014)

(describing when third-party standing is permitted).

In short, Fleshman has no standing for the relief he seeks

that the government does not, and so may not intervene as of

right under Rule 24(a)(2). See Town of Chester, 137 S. Ct. at

1651.

The Clean Air Act did not grant Fleshman an

“unconditional right” to intervene in the government’s suit.

Fed. R. Civ. P. 24(a)(1). The United States was not seeking

to enforce any “standard, limitation, or order” as those terms

are used in the Clean Air Act, and in any event, Fleshman is

seeking to enforce different purported requirements of the

Act. As the government’s action therefore did not bar

Fleshman from suing on his own, he is not entitled to

intervene. § 7604(b)(1)(B). Rule 24(a)(2) is no help to

Fleshman, because he lacks standing to pursue the relief in

See also Fleshman Compl. at 6 ¶ 14 (alleging that the EPA’s

statements that the affected vehicles were legal to drive “set a trap for

many thousands of innocent owners and lessees”); id. at 10 (requesting

that the court order the EPA to “notify each owner and lessee of a Dirty

Diesel vehicle that it is illegal to use their vehicles in the United States”).

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IN RE VOLKSWAGEN LITIGATION

his complaint. Accordingly, the district court’s judgment is

AFFIRMED.

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MDL No. 2672 CRB (JSC)

IN RE: VOLKSWAGEN “CLEAN DIESEL”

MARKETING, SALES PRACTICES, AND

PRODUCTS LIABILITY LITIGATION

_____________________________________/

This Order Relates To:

ALL ACTIONS (except the securities action)

______________________________________/

ORDER GRANTING FINAL APPROVAL OF

THE 2.0-LITER TDI CONSUMER AND

RESELLER DEALERSHIP CLASS ACTION

SETTLEMENT

Just over one year ago, Volkswagen publicly

admitted it had secretly and deliberately installed a

defeat device—software designed to cheat emissions

tests and deceive federal and state regulators—in

nearly 500,000 Volkswagen- and Audi-branded TDI

diesel vehicles sold to American consumers.

Litigation quickly ensued, and hundreds of

consumers’ lawsuits were assigned to this Court as a

multidistrict litigation (“MDL”).

After five months of intensive negotiations

conducted under the guidance of a Court-appointed

Settlement Master, Plaintiffs and Defendants

Volkswagen AG, Audi AG, and Volkswagen Group of

America, Inc. (collectively, “Volkswagen”) reached a

settlement that resolves consumer claims concerning

the 2.0-liter TDI diesel vehicles. The Court

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preliminarily approved the Amended Consumer

Class Action Settlement Agreement (“Settlement”)

on July 26, 2016 (Dkt. No. 1688) and entered its

Amended Order on July 29, 2016 (Dkt. No. 1698).

The Settlement Class Representatives now move the

Court to finally approve the Settlement. (Dkt. No.

1784.) On October 18, 2016, the Court held a

fairness hearing regarding final approval, during

which 18 Class Members or attorneys for Class

Members addressed the Court. Having considered

the parties’ submissions and with the benefit of oral

argument, the Court GRANTS final approval of the

Settlement Agreement. The Settlement is fair,

reasonable, and adequate.

I. BACKGROUND

A. Factual Background

Over the course of six years, Volkswagen sold

nearly 500,000 Volkswagen- and Audi-branded TDI

“clean diesel” vehicles, which they marketed as being

environmentally friendly, fuel efficient, and high

performing. Consumers were unaware, however,

that Volkswagen had secretly equipped these

vehicles with a defeat device that allowed

Volkswagen to evade United States Environmental

Protection Agency (“EPA”) and California Air

Resources Board (“CARB”) emissions test

procedures. Specifically, the defeat device produces

regulation-compliant results when it senses the

vehicle is undergoing testing, but operates a less

effective emissions control system when the vehicle

is driven under normal circumstances. It was only by

using the defeat device that Volkswagen was able to

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obtain Certificates of Conformity from EPA and

Executive Orders from CARB for its TDI diesel

engine vehicles. In reality, these vehicles emit

nitrogen oxides (“NOx”) at a factor of up to 40 times

over the permitted limit.

B. Procedural History

On September 3, 2015, Volkswagen admitted to

EPA and CARB that it had installed defeat devices

on its model years 2009 through 2015 Volkswagen

and Audi 2.0-liter diesel engine vehicles. The public

learned of this admission on September 18, 2015,

when the EPA issued a Notice of Violation (“NOV”)

that alleged Volkswagen’s use of the defeat device

violated provisions of the Clean Air Act, 42 U.S.C. §

7401 et seq. That same day, CARB sent Volkswagen

a notification letter stating CARB had commenced

an enforcement investigation concerning the defeat

device.

Two months later, EPA issued a second NOV to

Volkswagen, as well as Dr. Ing. h.c. F. Porsche AG

(“Porsche AG”) and Porsche Cars North America,

Inc. (“PCNA”), which alleged Volkswagen had

installed in its 3.0-liter diesel engine vehicles a

defeat device similar to the one described in the

September 18 NOV. CARB also sent a second letter

concerning the same matter.

1. Consumer Actions

Consumers nationwide filed hundreds of

lawsuits after Volkswagen’s use of the defeat device

became public, and on December 8, 2015, the

Judicial Panel on Multidistrict Litigation (“JPML”)

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transferred 56 related actions, including numerous

putative class actions, to this Court for coordinated

pretrial proceedings in the above-captioned MDL.

(Dkt. No. 1.) The JPML has since transferred an

additional 1,101 tag-along actions to the Court. (Dkt.

No. 2092.)

In January 2016, the Court appointed Elizabeth

J. Cabraser of Lieff, Cabraser, Heimann &

Bernstein, LLP as Lead Plaintiffs’ Counsel and

Chair of the Plaintiffs’ Steering Committee (“PSC”),

to which the Court also named 21 attorneys. (Dkt.

No. 1084.) On February 22, 2016, the PSC filed its

Consolidated Consumer Class Action Complaint

against 13 Defendants: VWGoA; VWAG; Audi AG;

Audi of America, LLC; Porsche AG; PCNA; Martin

Winterkorn; Mattias Müller; Michael Horn; Rupert

Stadler; Robert Bosch GmbH (“Bosch GmbH”);

Robert Bosch, LLC (“Bosch LLC”); and Volkmar

Denner. (Dkt. No. 1230.) The Consolidated

Complaint asserted claims under (1) the Racketeer

Influenced and Corrupt Organizations Act (“RICO”),

18 U.S.C. § 1962(c)-(d), and the Magnusson-Moss

Warranty Act, 15 U.S.C. § 2301 et seq.; (2) state

fraud, breach of contract, and unjust enrichment

laws; and (3) all fifty States’ consumer protection

laws. (Id. ¶¶ 361-3432.) The PSC also filed a

Consolidated Amended Reseller Dealership Class

Action Complaint against the same 13 Defendants,

which asserted RICO, fraud, failure to recall/retrofit,

and unjust enrichment claims. (Dkt. No. 1231 ¶¶

179-292.) The PSC subsequently filed an Amended

Consolidated Consumer Class Action Complaint

(“Amended Consumer Complaint,” Dkt. No. 1804)

and a Second Amended Consolidated Reseller

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Dealership Class Action Complaint (“Second

Amended Reseller Complaint,” Dkt. No. 1805).

2. Government Actions

This MDL also includes actions brought by

federal and state government entities. The United

States Department of Justice (“United States”) on

behalf of EPA has sued VWAG, Audi AG, VWGoA;

Volkswagen Group of America Chattanooga

Operations, LLC (“VW Chattanooga”), Porsche AG,

and PCNA for claims arising under Sections 204 and

205 of the Clean Air Act, 42 U.S.C. §§ 7523 and

7524. The Federal Trade Commission (“FTC”) has

also brought an action against VWGoA. The FTC

brings its claims pursuant to Section 13(b) of the

Federal Trade Commission Act (“FTC Act”), 15

U.S.C. §53(b), and alleges violations of Section 5(a) of

the FTC Act, 15 U.S.C. § 45(a). Additionally, the

State of California, on behalf of the People and

CARB, has sued VWAG, VWGoA, VW Chattanooga,

Audi AG, Porsche AG, and PCNA for violations of

the Consumer Financial Protection Act, 12 U.S.C. §

5536, and various California state laws.

3. Settlement Negotiations

In January 2016 the Court appointed former

Director of the Federal Bureau of Investigation

Robert S. Mueller III as Settlement Master to

oversee settlement negotiations between the parties.

(Dkt. No. 973.) Settlement talks began almost

immediately, and by April 2016, the parties reached

agreements in principle regarding 2.0-liter diesel

engine vehicles. (Dkt. No. 1439 at 4:25-6:15.) On

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June 28, 2016, the United States, the PSC, and the

FTC filed a Partial Consent Decree, proposed

Consumer Class Action Settlement Agreement, and

Partial Consent Order, respectively. (Dkt. Nos. 160507.) Additionally, on July 7, 2016, the State of

California filed a Partial Consent Decree resolving

claims brought on behalf of the People. (Dkt. No.

1642.) The PSC and the United States subsequently

filed an Amended Settlement and an Amended

Partial Consent Decree. (See Dkt. Nos. 1685, 19731.) Negotiations concerning the 3.0-liter diesel

engine vehicles remain ongoing.

4. Approval of Settlements

The Court granted preliminary approval of the

Settlement on July 26, 2016. Thereafter, the Court

entered the State of California’s consent decree on

September 1, 2016 (Dkt. No. 1801).

In accordance with the Court’s Order Granting

Preliminary Approval, Plaintiffs filed a statement

regarding their prospective request for attorneys’

fees and costs on August 10, 2016 and a motion for

final approval on August 26, 2016. (Dkt. Nos. 1730,

1784.) The Notice Administrator implemented the

Court-approved Notice Program on July 28, 2016 by

sending email notice to potential Class Members,

and on August 10, 2016, the Notice Administrator

mailed Notice of the proposed Settlement Agreement

to the putative Class via first class U.S. Mail. (Dkt.

No. 1978 ¶¶ 10, 12; Dkt. No. 1979 ¶¶ 8, 13.) By

September 30, 2016, there were 462 timely

objections and 3,298 exclusions. (Dkt. No. 1976 at 34; Dkt. No. 1976-2 ¶ 6.)

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II. SETTLEMENT TERMS1

The key provisions of the Settlement are as

follows. The Settlement Class is defined as

all persons (including individuals and

entities) who, on September 18, 2015, were

registered owners or lessees of, or, in the

case of Non-Volkswagen Dealers, held title to

or held by bill of sale dated on or before

September 18, 2015, a Volkswagen or Audi

2.0-liter TDI vehicle in the United States or

its territories (an “Eligible Vehicle”), or who,

between September 18, 2015, and the end of

the Claim Period, become a registered owner

of, or, in the case of Non-Volkswagen

Dealers, hold title to or hold by bill of sale

dated after September 18, 2015, but before

the end of the Claims Period, an Eligible

Vehicle in the United States or its

territories.

(Dkt. No. 1685 ¶ 2.6.) Eligible Vehicles are

Model Year 2009 through 2015 Volkswagen

and Audi light-duty vehicles equipped with

2.0-liter TDI engines that (1) are covered, or

purported to be covered, by the EPA Test

Groups in the table [in paragraph 2.33]; (2)

are, at any point during the period

September 18, 2015 to June 28, 2016,

registered with a state Department of Motor

Vehicles or equivalent agency or owned by a

1 A more detailed explanation of the Settlement terms can be

found in the Court’s Amended Order. (Dkt. No. 1698 at 4-14.)

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Non-Volkswagen Dealer in the United States

or its territories that (a) holds title to the

vehicle or (b) holds the vehicle by bill of sale;

(3) for an Eligible Owner, are currently

Operable or cease to be Operable only after

the Opt-Out Deadline; and (4) have not been

modified pursuant to an Approved Emissions

Modification. Eligible Vehicle also excludes

any Volkswagen or Audi vehicle that was

never sold in the United States or its

territories.

(Id. ¶ 2.33.)

Class Members are categorized as Eligible

Owners, Eligible Lessees, or Eligible Sellers. An

Eligible Owner is

the registered owner or owners of an Eligible

Vehicle on June 28, 2016, or the registered

owner or owners who acquire an Eligible

Vehicle after June 28, 2016, but before the

end of the Claim Period, except that the

owner of an Eligible Vehicle who had an

active lease issued by VW Credit, Inc. as of

September 18, 2015, and purchased an

Eligible Vehicle previously leased by that

owner after June 28, 2016 shall be an

Eligible Lessee. A Non-Volkswagen Dealer

who, on or after June 28, 2016, holds title to

or holds by bill of sale an Eligible Vehicle in

the United States or its territories shall

qualify as an Eligible Owner regardless of

whether that Non-Volkswagen Dealer is

registered as the owner of the Eligible

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Vehicle, provided that the Non-Volkswagen

Dealer otherwise meets the definition of

Eligible Owner.

(Id. ¶ 2.30.) An Eligible Lessee is

(1) the current lessee or lessees of an Eligible

Vehicle with a lease issued by VW Credit,

Inc.; (2) the former lessee or lessees of an

Eligible Vehicle who had an active lease

issued by VW Credit, Inc. as of September

18, 2015 and who surrendered or surrenders

the leased Eligible Vehicle to Volkswagen; or

(3) the owner of an Eligible Vehicle who had

an active lease issued by VW Credit, Inc. as

of September 18, 2015, and who acquired

ownership of the previously leased Eligible

Vehicle at the conclusion of the lease after

June 28, 2016. For avoidance of doubt, no

person shall be considered an Eligible Lessee

by virtue of holding a lease issued by a lessor

other than VW Credit, Inc.

(Id. ¶ 2.29.) An Eligible Seller is

a person who purchased or otherwise

acquired an Eligible Vehicle on or before

September 18, 2015, and sold or otherwise

transferred ownership of such vehicle after

September 18, 2015, but before June 28,

2016. For avoidance of doubt, Eligible Seller

includes any owner (1) who acquired his, her,

or its Eligible Vehicle on or before September

18, 2015, (2) whose Eligible Vehicle was

totaled, and (3) who consequently

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transferred title of his, her, or its vehicle to

an insurance company after September 18,

2015, but before June 28, 2016.

(Id. ¶ 2.31.)

The Settlement gives Class Members choices as

to remedies. Eligible Owners have two options:

Volkswagen will pay cash (“Owner Restitution”) and

either (1) buy the Class Member’s Eligible Vehicle at

its pre-defeat device disclosure value (“the

Buyback”), or (2) fix the Class Member’s vehicle

when and if EPA and CARB approve an emissions

modification (a “Fix”).2 (Dkt. No. 1685 ¶¶ 4.2.1-4.2.2,

4.3.1, 4.3.3.) Eligible Lessees also have two options.

They may (1) terminate their leases without penalty

plus receive additional cash (“Lessee Restitution”),

or (2) if a Fix is approved, have their leased car fixed

plus receive Lessee Restitution. (Id. ¶¶ 4.2.3-4.2.4,

4.3.1, 4.3.3.) Finally, Eligible Sellers, that is,

consumers who sold their Eligible Vehicle prior to

the filing of the Settlement, receive cash (“Seller

Restitution”). (Id. ¶ 2.60.) The Buyback price and

Restitution amounts are based on the September

2015 National Automobile Dealers Association

(“NADA”) Clean Trade-In value for each Eligible

Vehicle. (Id. ¶¶ 2.5, 2.64.) Compensation for

Buybacks, Lease Terminations, and Restitution will

be drawn from a $10.033 billion funding pool. (Id. ¶

1.)

2 The schedule for Volkswagen to submit proposed Fixes can be

found in Exhibit 1 to the Settlement (Dkt. No. 1685-1 at 6-7)

and the Long Form Notice (Dkt. No. 1685-3 at 19).

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The Settlement further requires Volkswagen to

pay reasonable attorneys’ fees and costs. (Id. ¶ 11.1.)

Class Counsel has agreed to seek no more than $324

million, plus no more than $8.5 million in actual and

reasonable out-of-pocket costs, for expenses incurred

through October 18, 2016. (Dkt. No. 1730 at 2-3.)

In exchange for benefits under the Settlement,

Class Members agree to release all “Released

Claims” against “Released Parties.” The Settlement

defines “Released Parties” as

(1) Volkswagen AG, Volkswagen Group of

America, Inc. (d/b/a Volkswagen of America,

Inc. or Audi of America, Inc.), Volkswagen

Group of America Chattanooga Operations,

LLC, Audi AG, Audi of America, LLC, VW

Credit, Inc., VW Credit Leasing, Ltd., VCI

Loan Services, LLC, and any former,

present, and future owners, shareholders,

directors, officers, employees, attorneys,

affiliates, parent companies, subsidiaries,

predecessors, and successors of any of the

foregoing (the “VW Released Entities”);

(2) any and all contractors, subcontractors,

and suppliers of the VW Released Entities;

(3) any and all persons and entities

indemnified by any VW Released Entity with

respect to the 2.0-liter TDI Matter;

(4) any and all other persons and entities

involved in the design, research,

development, manufacture, assembly,

testing, sale, leasing, repair, warranting,

marketing, advertising, public relations,

promotion, or distribution of any Eligible

Vehicle, even if such persons are not

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specifically named in this paragraph,

including without limitation all Volkswagen

Dealers, as well as non-authorized dealers

and sellers;

(5) Claims Supervisor;

(6) Notice Administrator;

(7) lenders, creditors, financial institutions,

or any other parties that financed any

purchase or lease of an Eligible Vehicle; and

(8) for each of the foregoing, their respective

former, present, and future affiliates, parent

companies, subsidiaries, predecessors,

successors, shareholders, indemnitors,

subrogees, spouses, joint ventures, general or

limited partners, attorneys, assigns,

principals, officers, directors, employees,

members, agents, representatives, trustees,

insurers, reinsurers, heirs, beneficiaries,

wards, estates, executors, administrators,

receivers, conservators, personal

representatives, divisions, dealers, and

suppliers.

(Dkt. No. 1685 ¶ 9.2.) The Settlement does not,

however, release any claims against Bosch GmbH;

Bosch LLC; or any of its any of its former, present,

and future owners, shareholders, directors, officers,

employees, attorneys, affiliates, parent companies,

subsidiaries, predecessors, or successors. (Id.; Dkt.

No. 1685-5 ¶ 6.)

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In exchange for benefits under the Settlement,

Class members release

any and all claims, demands, actions, or

causes of action of any kind or nature

whatsoever, whether in law or in equity,

known or unknown, direct, indirect or

consequential, liquidated or unliquidated,

past, present or future, foreseen or

unforeseen, developed or undeveloped,

contingent or noncontingent, suspected or

unsuspected, whether or not concealed or

hidden, arising from or in any way related to

the 2.0-liter TDI Matter, including without

limitation (1) any claims that were or could

have been asserted in the Action; and (2) any

claims for fines, penalties, criminal

assessments, economic damages, punitive

damages, exemplary damages, liens,

injunctive relief, attorneys’, expert,

consultant, or other litigation fees or costs

other than fees and costs awarded by the

Court in connection with this Settlement, or

any other liabilities, that were or could have

been asserted in any civil, criminal,

administrative, or other proceeding,

including arbitration.

(Dkt. No. 1685 ¶ 9.3.)

Class Members also expressly waive and

relinquish any rights they may have under

California Civil Code section 1542 or similar federal

or state law. (Id. ¶ 9.9; Dkt. No. 1685-5 ¶ 3); see Cal.

Civ. Code § 1542 (“A general release does not extend

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to claims which the creditor does not know or

suspect to exist in his or her favor at the time of

executing the release, which if known by him or her

must have materially affected his or her settlement

with the debtor.”).

III. DISCUSSION – FINAL APPROVAL

OF SETTLEMENT

A. Legal Standard

The Ninth Circuit maintains “a strong judicial

policy” that favors class action settlements. Allen v.

Bedolla, 787 F.3d 1218, 1223 (9th Cir. 2015).

Nevertheless, Federal Rule of Civil Procedure

(“Rule”) 23(e) requires courts to approve any class

action settlement. Fed. R. Civ. P. 23(e). “[S]ettlement

class actions present unique due process concerns for

absent class members.” Hanlon v. Chrysler Corp.,

150 F.3d 1011, 1026 (9th Cir. 1998). As such, “the

district court has a fiduciary duty to look after the

interests of those absent class members.” Allen, 787

F.3d at 1223 (collecting cases). Specifically, courts

must “determine whether a proposed settlement is

fundamentally fair, adequate, and reasonable.”

Hanlon, 150 F.3d at 1026; see Fed. R. Civ. P.

23(e)(2). In particular, where “the parties reach a

settlement agreement prior to class certification,

courts must peruse the proposed compromise to

ratify both the propriety of the certification and the

fairness of the settlement.” Staton v. Boeing Co., 327

F.3d 938, 952 (9th Cir. 2003).

Approval of a settlement is a two-step process.

Courts first “determine[] whether a proposed class

action settlement deserves preliminary approval and

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then, after notice is given to class members, whether

final approval is warranted.” In re High-Tech

Employee Antitrust Litig., 2014 WL 3917126, at *3

(N.D. Cal. Aug. 8, 2014). “At the fairness hearing, . . .

after notice is given to putative class members, the

court entertains any of their objections to (1) the

treatment of the litigation as a class action and/or (2)

the terms of the settlement.” Ontiveros v. Zamora,

303 F.R.D. 356, 363 (E.D. Cal. 2014) (citing Diaz v.

Trust Territory of Pac. Islands, 876 F.2d 1401, 1408

(9th Cir. 1989)). After the fairness hearing, the court

determines whether the parties should be allowed to

settle the class action pursuant to the agreed-upon

terms. Chavez v. Lumber Liquidators, Inc., 2015 WL

2174168, at *3 (N.D. Cal. May 8, 2015) (citing Nat’l

Rural Telecomms. Coop. v. DIRECTV, Inc., 221

F.R.D. 523, 525 (C.D. Cal. 2004)).

B. Final Certification of the Settlement Class

1. Rule 23(a) and (b) Requirements

A class action is maintainable only if it

meets the four Rule 23(a) prerequisites:

(1) the class is so numerous that joinder of

all members is impracticable;

(2) there are questions of law or fact common

to the class;

(3) the claims or defenses of the

representative parties are typical of the

claims or defenses of the class; and

(4) the representative parties will fairly and

adequately protect the interests of the class.

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Fed. R. Civ. P. 23(a). In a settlement-only

certification context, the “specifications of the Rule . .

. designed to protect absentees by blocking

unwarranted or overbroad class definitions . . .

demand undiluted, even heightened, attention[.]”

Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620

(1997). “Such attention is of vital importance, for a

court asked to certify a settlement class will lack the

opportunity, present when a case is litigated, to

adjust the class, informed by the proceedings as they

unfold.” (Id.)

In addition to the Rule 23(a) prerequisites,

“parties seeking class certification must show that

the action is maintainable under Rule 23(b)(1), (2),

or (3).” Amchem Prods., Inc., 521 U.S. at 614. Rule

23(b)(3), relevant here, requires that (1) “questions of

law or fact common to class members predominate

over any questions affecting only individual

members” and (2) “a class action is superior to other

available methods for fairly and efficiently

adjudicating the controversy.” Fed. R. Civ. P.

23(b)(3). The “pertinent” matters to these findings

include

(A) the class members’ interests in

individually controlling the prosecution or

defense of separate actions;

(B) the extent and nature of any litigation

concerning the controversy already begun by

or against class members;

concentrating the litigation of the claims in

the particular forum; and

(D) the likely difficulties in managing a class

action.

(Id.)

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In its Amended Order, the Court carefully

considered whether Plaintiffs satisfied the Rule

23(a) and (b)(3) requirements. (See Dkt. No. 1698 at

15-20.) “Because the Settlement Class has not

changed, the Court sees no reason to revisit the

analysis of Rule 23.” G.F. v. Contra Costa Cty., 2015

WL 7571789, at *11 (N.D. Cal. Nov. 25, 2015)

(internal quotation marks and citation omitted).

2. Rule 23(c) Requirements

“Adequate notice is critical to court approval of a

class settlement under Rule 23(e).”

Hanlon, 150 F.3d at 1025. Rule 23(c)(2)(B) requires

that “[f]or any class certified under Rule 23(b)(3), the

court must direct to class members the best notice

that is practicable under the circumstances,

including individual notice to all members who can

be identified through reasonable effort.” Fed. R. Civ.

P. 23(c)(2)(B). “[T]he express language and intent of

Rule 23(c)(2) leave no doubt that individual notice

must be provided to those class members who are

identifiable through reasonable effort.” Eisen v.

Carlisle & Jacquelin, 417 U.S. 156, 175 (1974).

a. Implementation of the Notice Program

The Court previously approved the form and

content of the Long and Short Form Notices, as well

as the Notice Program as set forth in the Settlement.

(Dkt. No. 1698 at 28-31; see Dkt. Nos. 1680; Dkt. No.

1685 ¶¶ 8.1-8.8.) The Court appointed Kinsella

Media LLC (“KM”) as Notice Administrator to

implement the Notice Program on July 27, 2016.

(Dkt. No. 1698 at 32.)

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Individual direct notice served as the primary

means of notification. (Dkt. No. 1784 at 38.)

Rust Consulting, Inc. (“Rust”), of which KM is a

subsidiary, provided direct mail services. (Dkt. No.

1978 ¶¶ 7-8.) Between August 10 and 16, 2016, Rust

mailed via First Class U.S. Mail a personalized cover

letter and the Long Form Notice to 811,944

identified Class Members. (Dkt. No. 1784 at 37-38;

Dkt. No. 1978 ¶ 10; Dkt. No. 1979 ¶ 8; see Dkt. Nos.

1979-1, 1979-2.) Rust obtained Class Members’

addresses through Volkswagen’s records and/or

registration data and by purchasing a mailing list of

non-Volkswagen/Audi new and used car dealers.

(Dkt. No. 1784 at 38; Dkt. No. 1979 ¶¶ 5-6.) Rust

checked these addresses against the United States

Postal Service’s National Change of Address

database prior to mailing. (Dkt. No. 1784 at 38; Dkt.

No. 1979 ¶ 7.) As of September 28, 2016, Rust

received 732 undeliverable Notices with a

forwarding address, of which 531 have been remailed. (Dkt. No. 1979 ¶ 9.) As of September 28,

2016, Rust received an additional 29,257

undeliverable Notices without a forwarding address.

(Id. ¶ 10.) After running these Notices through an

advance address search, such as a skip trace, to

locate a more current address, Rust obtained

updated addresses for 12,885 records and has remailed 8,767 Notices. (Id.) As of September 29, 2016,

16,372 mailed Notices remained undelivered. (Dkt.

No. 1978 ¶ 11.) Put another way, 97.98% of mailings

were delivered. (Id.)

To supplement the direct mail notice, Rust sent

79,772 email notifications to individuals who

registered on the Settlement Website

(www.VWCourtSettlement.com) and provided an

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email address. (Dkt. No. 1979 ¶ 12; see Dkt. No.

1979-4.) Of those, 76,806 (96.28%) were delivered.

(Id.) Rust also sent 374,025 email notifications to

individuals who signed up for the Volkswagen or

Audi Goodwill Programs.3 (Dkt. No. 1784 at 37-39;

Dkt. No. 1979 ¶¶ 12, 14; see Dkt. No. 1979-5.) Out of

those 374,025 emails, 357,103 (95.48%) were

delivered. (Dkt. No. 1979 ¶ 12.) In total, Rust sent

453,797 emails. (Dkt. No. 1978.) Class Members will

again receive direct notice via mail or email when

EPA and CARB approve or reject Volkswagen’s

proposed fixes. (Dkt. No. 1784 at 39.)

The Notice Program also provided for notice by

publication, both in print and digital form. There

have been 125 strategically-placed print notifications

in national and regional publications. (Dkt. No. 1784

at 37.) Specifically, the Short Form Notice appeared

as a two-color advertisement (where available) in the

Sunday edition of The New York Times; the daily

edition of The Wall Street Journal; the daily edition

of USA Today; both the Sunday and daily editions of

nineteen newspapers covering markets with 5,000 or

more Eligible Vehicles; the Sunday edition of 26

newspapers covering markets with 2,000-4,999

Eligible Vehicles; the weekly editions of 31 Hispanic

newspapers, with the Notice translated into

Spanish; and the weekly editions of 27 African

American newspapers. (Id. at 39; Dkt. No. 1978 ¶¶

14-16; see Dkt. Nos. 1978-1, 1978-2.) Together, these

publications have circulations in the millions. (See

Dkt. No. 1784 at 37, 39; see Dkt. No. 1978-1 at 4.)

The digital and social media campaign consisted

of publishing more than 112,582,506 digital

3 The Volkswagen and Audi TDI Goodwill Programs are not

part of the Settlement.

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impressions on dozens of relevant websites and on

leading social media platforms. (Dkt. No. 1784 at 37,

39-40; Dkt. No. 1978 ¶¶ 18-27.) Between July 27,

2016 and August 19, 2016, targeted banner

advertisements with a bold message and graphics

were published on automotive websites that Class

Members visited, according to IHS Automotive data.

(Dkt. No. 1784 at 39; Dkt. No. 1978 ¶¶ 18-19; see

Dkt. No. 1978-3.) These websites included the

National Automobile Dealers Association

(www.nada.org), Hemmings (www.hemmings.com),

Kelley Blue Book (www.kbb.com). (Dkt. No. 1784 at

39; Dkt. No. 1978 ¶ 21.) An individual who clicked on

a banner advertisement was taken directly to the

Settlement Website. (Dkt. No. 1978 ¶ 19.) Targeted

internet advertising generated 250,724 clicks to the

Settlement Website. (Id. ¶ 18.)

Additionally, to target individuals interested in

or researching automobiles, banner advertisements

and high-impact units appeared on websites

associated with popular consumer automotive

magazines, such as Automobile

(www.automobilemag.com), Car & Driver

(www.caranddriver.com), Motor Trend

(www.motortrend.com), and Road & Track

(www.roadandtrack.com). (Dkt. No. 1784 at 39; Dkt.

No. 1978 ¶ 21.) Targeted banner advertisements on

the National Association of Fleet Administrators

website (www.nafa.org) and other websites

associated with relevant trade publications,

including Automotive Fleet, Automotive News, Auto

Rental News, and FLEETSolutions, sought to reach

fleet owners who may be included in the Settlement.

(Dkt. No. 1784 at 40-41; Dkt. No. 1978 ¶ 22.)

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The digital publications also consisted of

Facebook, Instagram, and Twitter advertisements to

target consumers; banner and video advertisements

published on a broad and diverse range of websites

through the Google Display Network; and the use of

sponsored keywords/phrases on all major search

engines, such as Google AdWords, Bing Microsoft

Advertising, and their search partners. (Dkt. No.

1784 at 40; Dkt. No. 1978 ¶¶ 23-25.)

There was also significant media coverage of the

Settlement. Between June 28, 2016 and July 25,

2016, there were approximately 11,780 pieces from

U.S. media outlets. (Dkt. No. 1978 ¶ 28(a).) Between

July 26, 2016 and September 16, 2016, an additional

5,630 news pieces were generated. (Id.)

Approximately 72.3% of the total coverage came

from online and print news sources, 18.1% from

television news, and 9.4% from blogs. (Id.) On July

29, 2016, an earned media program consisting of a

“campaign hero microsite,” or a multimedia news

release, was distributed on PR Newswire’s US1

National Circuit, which reaches approximately 5,000

media outlets and 5,400 websites. (Dkt. No. 1784 at

40; Dkt. No. 1978 ¶ 28(b).)

Finally, the Short and Long Form Notices direct

Class Members to the Settlement Website and a tollfree telephone number (1-844-98-CLAIM). (Dkt. No.

1784 at 40; Dkt. No. 1978 ¶ 32; see Dkt. Nos. 1685-2,

1685-3.) Both the Website and the telephone number

allow Class Members to, among other things, obtain

additional information and access the Settlement

documents. As of September 29, 2016, there had

been 105,420 calls to the toll-free number. (Dkt. No.

1978 ¶ 32.) The Settlement Website has also

received 885,290 unique visits. (Dkt. No. 1976 at 3.)

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b. CAFA Compliance

The Class Action Fairness Act (“CAFA”) provides

that “each defendant that is participating in the

proposed settlement shall serve upon the

appropriate State official of each State in which a

class member resides and the appropriate Federal

official, a notice of the proposed settlement[.]” 28

U.S.C. § 1715(b). Volkswagen mailed notice of the

proposed Settlement and Release to the United

States Attorney General and all 50 States’ Attorneys

General on July 5, 2016. (Dkt. No. 1783 ¶ 2; see Dkt.

No. 1783-1.)

c. Adequacy of Notice

The Court is satisfied that the extensive Notice

Program was reasonably calculated to notify Class

Members of the proposed Settlement. The Notice

“apprise[d] interested parties of the pendency of the

action and afford them an opportunity to present

their objections.” Mullane v. Cent. Hanover Bank &

Trust Co., 339 U.S. 306, 314 (1950). Indeed, the

Notice Administrator reports the Notice Program

reached more than 90% of potential Class Members.

(Dkt. No. 1978 ¶ 35.)

Objector Autoport, LLC (“Autoport”) states it did

not receive actual notice and asserts that

“presumably hundreds if not thousands of other

dealers nationwide who are likewise unaware of

their rights under the settlement[.]” (Dkt. No. 1879

at 3-4.) But due process does not require that class

members receive actual notice, only that notice “be

the best practicable, ‘reasonably calculated, under all

the circumstances, to apprise interested parties of

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the pendency of the action and afford them an

opportunity to present their objections.’” Phillips

Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985)

(quoting Mullane, 339 U.S. at 314). Moreover,

Autoport’s timely-filed objection indicates it was

aware of the Settlement, and its claim that

“hundreds if not thousands of other dealers” did not

receive notice is unsupported speculation. The Court

therefore overrules Autoport’s objection regarding

notice.

*****

The Settlement Class satisfies Rules 23(a) and

23(b)(3), and Notice satisfies Rule 23(c). Accordingly,

the Court grants final class certification.

C. Fairness, Adequacy, and Reasonableness

Courts may approve a class action settlement

“only after a hearing and on finding that it is fair,

reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2).

Courts assessing the fairness of a settlement

generally weigh

(1) the strength of the plaintiff’s case; (2) the

risk, expense, complexity, and likely

duration of further litigation; (3) the risk of

maintaining class action status throughout

the trial; (4) the amount offered in

settlement; (5) the extent of discovery

completed and the stage of the proceedings;

(6) the experience and views of counsel; (7)

the presence of a governmental participant;

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and (8) the reaction of the class members of

the proposed settlement.

Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566,

575 (9th Cir. 2004).

But where, as here, the parties negotiate a

settlement before a class has been certified, “courts

must peruse the proposed compromise to ratify both

the propriety of the certification and the fairness of

the settlement.” Staton v. Boeing Co., 327 F.3d 938,

952 (9th Cir. 2003). Pre-class certification

settlements “must withstand an even higher level of

scrutiny for evidence of collusion or other conflicts of

interest than is ordinarily required under Rule 23(e)

before securing the court’s approval as fair.” In re

Bluetooth Prods. Liability Litig., 654 F.3d 935, 946

(9th Cir. 2011) (citing Hanlon, 150 F.3d at 1026).

This heightened scrutiny “ensure[s] that class

representatives and their counsel do not secure a

disproportionate benefit ‘at the expense of the

unnamed plaintiffs who class counsel had a duty to

represent.’” Lane v. Facebook, Inc., 696 F.3d 811, 819

(9th Cir. 2012) (quoting Hanlon, 150 F.3d at 1027).

As such, courts must evaluate the settlement for

evidence of collusion. (Id.)

Because “[c]ollusion may not always be evident

on the face of a settlement, . . . courts therefore must

be particularly vigilant not only for explicit collusion,

but also for more subtle signs that class counsel have

allowed pursuit of their own self-interests and that

of certain class members to infect the negotiations.”

In re Bluetooth, 654 F.3d at 947. Signs of subtle

collusion include, but are not limited to,

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(1) when counsel receive a disproportionate

distribution of the settlement, or when the

class receives no monetary distribution but

class counsel are amply rewarded,

(2) when the parties negotiate a “clear

sailing” arrangement providing for the

payment of attorneys’ fees separate and

apart from class funds, which carries “the

potential of enabling a defendant to pay class

counsel excessive fees and costs in exchange

for counsel accepting an unfair settlement on

behalf of the class”; and

(3) when the parties arrange for fees not

awarded to revert to defendants rather than

be added to the class fund[.]

Id. (internal quotations and citations omitted).

1. The Churchill Factors

a. Strength of Plaintiffs’ Case

The first Churchill factor does not favor

settlement. “Approval of a class settlement is

appropriate when plaintiffs must overcome

significant barriers to make their case.” G.F., 2015

WL 7571789, at *8 (citing Chun-Hoon v. McKee

Foods Corp., 716 F. Supp. 2d 848, 851 (N.D. Cal.

2010)). But courts need not “reach any ultimate

conclusions on the contested issues of fact and law

which underlie the merits of the dispute, for it is the

very uncertainty of outcome in litigation and

avoidance of wasteful and expensive litigation that

induce consensual settlements.” Officers for Justice

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v. Civil Serv. Comm’n of City & Cty. of San

Francisco, 688 F.2d 615, 625 (9th Cir. 1982).

Plaintiffs concede they have a strong case. (See

Dkt. No. 2079 at 19:4.) Liability is not an issue:

Volkswagen admits to installing and failing to

disclose the defeat device in its TDI diesel engine

vehicles, which it marketed as environmentally

friendly. Thus, only the amount of recovery is in

dispute. Plaintiffs submit the declaration of Andrew

Kull, Distinguished Senior Lecturer at the

University of Texas and former Reporter for the

American Law Institute, regarding the strength of

the Settlement’s remedies. (Dkt. No. 1784-2 ¶¶ 4, 9.)

Mr. Kull notes that “[a]n Eligible Owner who chose

to pursue an independent suit for rescission and

restitution would probably be allowed to do so,

because the threshold requirements that limit access

to the remedy would—in the context of the “clean

diesel” litigation—be liberally interpreted in favor of

the owner.” (Id. ¶ 12; see id. ¶ 16 (“[T]he facts

underlying the ‘clean diesel’ litigation make it

probable that courts would interpret these rules

[regarding rescission] liberally in favor of an Eligible

Owner seeking rescission and restitution against

Volkswagen.”). But recovery of damages is less

certain given that “[t]he direct harm caused by the

TDI engines’ nonconformity was not to the vehicle

owner—who obtained a vehicle that performed as

expected—but to the public at large. Something

could be allowed on account of the owner’s

frustration and inconvenience, but recovery on this

basis might be only modest.” (Id. ¶ 28(b); see id. ¶

29(a).) That said, Mr. Kull concedes that “[e]nhanced

or exemplary damages might be available in some

cases.” (Id. ¶ 28(c).)

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In their Amended Consumer Complaint and

Second Amended Reseller Complaint, Plaintiffs seek

rescission, restitution, and compensatory damages.

(Dkt. No. 1804 ¶¶ E-F; Dkt. No. 1805 at 110-11.)

Plaintiffs have a high probability of successfully

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