Kirkland & Ellis partners Rick Godfrey, Wendy Bloom and Andrew Bloomer successfully defended class actions against General Motors and Polaris.
Our Litigators of the Week are Kirkland & Ellis partners Richard (Rick) Godfrey, Wendy Bloom and Andrew Bloomer, who scored victories in separate class actions against General Motors and Polaris. Each win was impressive in its own right—but together, it put them over the top in a crowded field of nominations.
The GM class action stemmed from faulty ignition switches, which could cause cars including the Chevy Cobalt and Saturn Ion to stall, also preventing the airbags from inflating. GM’s ensuing legal troubles included a massive class action alleging economic loss damages by people who owned or leased the recalled vehicles.
When plaintiffs lawyers first filed the suit in 2014, they wanted $77 billion in damages. On March 27, they agreed to settle the case for less than 1% of that amount.
The Kirkland team’s second win was on behalf of all-terrain vehicle maker Polaris, which was hit with a class action by vehicle owners who alleged that several models of its Sportsman ATVs were defective because they emitted excessive heat. On March 31, U.S. District Judge Nancy Brasel declined to certify the class.
Godrey, Bloom and Bloomer discussed the wins with Lit Daily.
Lit Daily: You had quite a week, with remarkable class action outcomes for both GM and Polaris. Before we dive into specifics, tell us briefly about your team’s overall strategic approach in defending against class actions. What makes you effective?
Rick Godfrey: Obviously, every class action case differs, and the overall strategic approach must be tailored to the case-specific allegations and facts. That said, our basic strategic approach focuses on development of a mature factual and expert record for the court to consider when evaluating the propriety of class certification; defeating the nationwide class allegations, so as to mitigate the risks of any adverse certification decision; and demonstrating at a granular level the legal differences among the various state laws, as well as the factual differences among putative class representatives.
Wendy Bloom: In other words, showing the trial court precisely why a class trial won’t work and can’t properly be certified. Finally, where possible, we seek the opportunity to focus on plaintiffs’ experts, in order to illustrate why their opinions and methodologies create constitutional, legal or factual barriers to certifying any class. On this latter point, many times the plaintiffs’ expert work papers, methodology or data create opportunities to mount direct challenges to the propriety of class certification in an offensive sense.
Rick Godfrey: In both the GM and Polaris cases, for example, the plaintiffs’ experts’ work papers contained hard data showing that significant percentages of the class were not in fact injured. That data raised fundamental class standing issues under Article III as well as other issues under the Supreme Court’s decision in Amchem.
Focusing first on the GM case—what were the origins of the suit/ primary allegations against your client?
Andrew Bloomer: GM announced numerous recalls in 2014, beginning with the ignition switch assembly in Chevrolet Cobalt and other model vehicles, and adding recalls such as electronic power steering systems and side airbags. The recalls covered millions of vehicles manufactured by General Motors Corporation (Old GM), which had gone bankrupt in 2009, and by our client General Motors LLC (New GM).
Thousands of individuals filed lawsuits all over the country, which were consolidated in multidistrict litigation in the United States District Court for the Southern District of New York before Judge Jesse Furman.
Rick Godfrey: In addition to personal injury and wrongful death cases, plaintiffs who owned or leased recalled vehicles filed class action complaints alleging economic loss damages based on a variety of claims that included federal RICO and state consumer protection statutes. In general, the class action plaintiffs claimed they had suffered benefit-of-the-bargain damages because they had overpaid for their vehicles.
How big was the potential exposure (i.e. worst case scenario)?
Wendy Bloom: $77 billion (or many billions more) according to a declaration publicly filed by plaintiffs’ counsel! Although a daunting figure, our position was that the plaintiffs’ claim had no basis in actual marketplace data.
With New GM’s support, we assembled a team of economic and marketing professors from leading universities, including a Nobel Prize winner, to dig into the conjoint based damages methodology advanced by plaintiffs’ expert, a methodology previously accepted by other courts. Relying on admissions by plaintiffs’ expert that we obtained in depositions, the MDL court granted our summary judgment motion, holding that the analysis of plaintiffs’ expert failed to prove any of the named plaintiffs had incurred an economic loss as result of the 2014 recalls.
When and how did you get involved?
Andrew Bloomer: For the GM litigation, New GM’s then-General Counsel, Mike Milliken, called Rick in March 2014, asking him to put a Kirkland team together to defend the company in the ignition switch recall and recall litigation. In addition, a wonderfully complimentary “virtual law firm” including other firms was created, given the scale of the litigation—i.e., personal injury suits, class actions, governmental investigations, congressional investigations, NHTSA, etc.
Who was opposing counsel?
Andrew Bloomer: Lead Counsel for the economic loss plaintiffs are Steve Berman of Hagens Berman Sobol Shapiro LLP and Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein, LLP—true titans of the class action bar.
This was a complicated and multi-faceted case. What was your overarching theme in the litigation?
Rick Godfrey: The overarching theme was that while plaintiffs’ reasons for purchasing or leasing their vehicles—and their experience with those vehicles—differed considerably, New GM provided a free recall repair and thus plaintiffs received the benefit-of-their-bargain and could not prove any economic loss damages. In addition, the actual marketplace data showed that there was no class-wide impact from the recalls.
Give us a timeline of the key milestones.
Wendy Bloom: The MDL was created in June 2014. Thousands of personal injury and wrongful death claims were filed. In addition, the economic loss plaintiffs filed various consolidated class action complaints, which we moved to dismiss in order to winnow the claims and demonstrate individual legal and factual differences among the hundreds of named plaintiffs.
Plaintiffs’ nearly 1,700-page Fifth Amended Consolidated Complaint, filed in November 2017, asserted state law claims in all 50 states and the District of Columbia. The court and parties selected three bellwether states—California, Missouri and Texas—for summary judgment, class certification, and Daubert briefing.
In August 2019, the Court granted New GM’s motion for summary judgment against plaintiffs’ benefit-of-the-bargain economic loss damages claims, holding that the bellwether plaintiffs could not prove any such damages as a matter of law. In its opinion, the court recognized that its ruling “change[d] the landscape in dramatic ways.”
Immediately following that decision, lead counsel for plaintiffs approached us about resuming settlement discussions, and from late 2019 to late March 2020, New GM, plaintiffs and the Motors Liquidation Company GUC Trust (the successor to Old GM) negotiated and drafted a comprehensive class settlement, which was filed on March 27.
What were some of the biggest challenges you faced in the litigation? How did you respond?
Rick Godfrey: The biggest challenges were the basic facts regarding the ignition switch history and recall, the federal Deferred Prosecution Agreement of September 2015 and its comprehensive statement of admitted acts, the wide-spread and sustained adverse publicity about the ignition switch and other vehicle recalls, the multiplicity of adverse and/or investigatory parties or entities allegedly adverse precedent on the economic loss damages claims plaintiffs were pursuing, and the high quality and number of plaintiffs’ counsel.
How did you go about reaching a settlement? What does the deal entail?
Wendy Bloom: We got to this point as a result of our work developing a detailed record of factual and expert evidence, coupled with motion practice over several years, culminating in the MDL court’s August 2019 summary judgment decision rejecting the bellwether plaintiffs’ benefit-of-the-bargain economic loss damages claims, which the court reaffirmed on December 12 when it denied plaintiffs’ motion for reconsideration. Before then, efforts at settlement had failed. The MDL court’s decision dramatically changed the landscape.
Rick Godfrey: The settlement negotiations were hard fought and complicated. We were negotiating with veteran class action counsel, Steve Berman and Elizabeth Cabraser, plus we had to negotiate for a fair, reasonable and adequate contribution by the GUC Trust, the successor to bankrupt Old GM. With the skilled help of former Judge Layn Phillips as mediator, we reached a comprehensive settlement.
In this settlement, New GM will contribute $70M and the GUC Trust $50M to a non-reversionary settlement fund to be allocated among subclasses of owners and lessees of vehicles subject to seven different GM recalls according to a plan of allocation that plaintiffs’ counsel worked on with Judge Phillips. Also, New GM has agreed to pay up to a maximum of $34.5 million in attorneys’ fees and expenses. The preliminary approval hearing is set for April 23.
What makes this outcome a win for GM?
Andrew Bloomer: For New GM, the proposed class settlement, if approved, puts an end to six years of massive and contentious litigation over events that took place years ago, and does so for a small fraction —less than 1%—of the plaintiffs’ claimed damages. In addition, the proposed settlement puts an end to recall-related litigation pending in the bankruptcy court as well.
Shifting gears, tell us about Polaris and the allegations that the company faced.
Andrew Bloomer: In the Polaris class action, plaintiffs in six different states alleged that several models of Polaris Sportsman ATVs were defective because they emitted excessive heat. As in the GM litigation, plaintiffs claimed they suffered benefit-of-the-bargain economic loss damages because they overpaid for their vehicles. Plaintiffs sought certification of a nationwide class applying the law of Minnesota—the state where Polaris is headquartered. Alternatively, plaintiffs sought certification of a multi-state class.
Who was opposing counsel?
Andrew Bloomer: Plaintiffs are ably represented by Cohen Milstein Sellers & Toll PLLC, Gordon & Partners, P.A., and Lockridge Grindal Nauen PLLP.
You came into the case late. What tactics did you use to get up to speed?
Andrew Bloomer: While we came in late, we were able to get the discovery schedule adjusted somewhat and then deposed the named plaintiffs. We also quickly identified and worked closely with key company witnesses to master the technical details, which allowed us to frame the key issues and organize the company’s defenses, including to class certification.
We also retained certain of the same experts we had used in the GM litigation, who are intimately familiar with and preeminent experts in the conjoint survey and economic damages methodologies used by the plaintiffs’ experts. As a result, we were able to efficiently and effectively develop the mature factual and expert record necessary to respond to plaintiffs’ class certification motion and class-wide damages model on a very tight timeframe.
How did you frame your defense?
Wendy Bloom: The defense was framed around developing the factual and expert record showing (i) the differences in basic facts among the putative class representatives, (ii) the differences in state laws married to those factual differences, so that the court could understand why common facts did not predominate, (iii) the differences in design and operational facts among the different model and model year ATVs at issue, and finally (iv) using the plaintiffs’ experts’ own data to establish a lack of Article III standing on a class-wide basis.
Rick Godfrey: The tactics for illustrating why no class should be certified were to bring a summary judgment and Daubert motions, and to have those heard along with the class motion at the same time. That allowed the district court to understand at a granular level precisely why plaintiffs’ claims could never properly be tried as a certified class action, and why the facts for one plaintiff differed from those of another on core elements of the various claims.
Judge Nancy Brasel in an 84-page opinion rejected the plaintiffs’ class claims on several grounds. What to you were some highlights of the decision?
Andrew Bloomer: Perhaps the biggest highlight was the court’s rejection of plaintiffs’ argument that a single state’s consumer protection law—that of Minnesota—could constitutionally be applied to the claims of a nationwide class. Given the fundamental differences among state consumer protection laws, as well as the factual differences among individual plaintiff’s claims, we think Judge Brasel’s conclusion is entirely correct.
Another highlight, I think, is that even though the court denied Polaris’ motion for summary judgment and Daubert motions, that briefing played an important role in demonstrating the individual differences and uncommon characteristics of the plaintiffs’ claims, which supported denial of class certification. Finally, the court’s ruling on the lack of Article III standing for the proposed class is an important one.
If you weren’t socially isolating due to the coronavirus, how might you be celebrating? What will you remember most about these cases?
Godfrey: Typically, we would host a team dinner, along with the lawyers from the GM Legal Staff, to reflect on the six long years of litigation, to thank GM for the privilege of representing it, and to thank each of the many lawyers involved, for their years-long commitment to defending the company in this challenging, hard fought litigation. And then we would celebrate!
We separately would have a celebratory dinner with the Polaris legal staff.
Andrew Bloomer: As to what we remember most? August 6, 2019—Judge Furman’s summary judgment decision, which was a turning point in the class litigation, and also the Scheuer trial, the first personal injury bellwether trial in the Ignition Switch MDL, which ended precipitously in GM’s favor at the end of the second week of trial in January 2016.
That trial win—followed by three others—confirmed our judgment that the personal injury cases could be tried and won, and that in turn reinforced our view that the class could be defended, as it became very apparent during trial that the facts differed by each plaintiff, whether personal injury or economic loss.
Wendy Bloom: And as to Polaris, the oral argument last October, where it became apparent during the argument on the pending motions—summary judgment, class certification and Daubert—that individual fact questions predominated and that class certification was not appropriate.