Cleveland v. Whirlpool Corporation

Background

Five named plaintiffs—Elisabeth Cleveland, Amy Larchuk, Christopher Redmon, Dhaval Shah, and Thomas McCormick—brought putative class actions against Whirlpool Corporation alleging that certain dishwashers had a defect involving the diverter shaft seal in the sump assembly. The alleged defect could allow a leak to develop. Related lawsuits were filed in Minnesota, Illinois, Pennsylvania, and California. The plaintiffs later filed a consolidated amended complaint in the Minnesota case for settlement purposes.

Before settlement, Whirlpool filed motions to dismiss in the Minnesota, Illinois, and Pennsylvania cases. In the Minnesota case, the court had granted in part and denied in part Whirlpool’s motion to dismiss: it dismissed without prejudice the contract and unjust-enrichment claims, while allowing claims involving express and implied warranties and several Minnesota consumer-protection statutes to proceed. The other related cases had different rulings, and the Pennsylvania and California plaintiffs voluntarily dismissed their cases before the court ruled on Whirlpool’s motions to dismiss.

The parties negotiated after fact discovery, expert work, motion practice, mediation, and additional negotiations. In December 2021, the court preliminarily approved the proposed settlement and certified a settlement class for settlement purposes only. The court held a final approval hearing on June 8, 2022. The motions for final approval and for attorneys’ fees, litigation costs, and service awards were unopposed.

Settlement Benefits

The settlement class includes people in the United States and its territories who bought a new qualifying dishwasher, acquired one as part of buying or remodeling a home, or received one as a qualifying gift. The settlement excludes specified categories, including Whirlpool’s officers, directors, and employees and certain insurers, subrogees, used-dishwasher purchasers, extended-warranty or service-contract providers, and people who timely opted out.

For a qualifying repair or replacement because of a past or future diverter seal leak, the settlement provides benefits based on the dishwasher’s age. The schedule provides 100 percent of the stated average repair cost of $225 for years one and two; 90 percent, or $202.50, in year three; 80 percent, or $180, in years four and five; 60 percent, or $135, in year six; and 30 percent, or $67.50, in year seven. Class members may instead qualify for specified cash rebates toward new KitchenAid, Whirlpool, or Maytag dishwashers. In year eight, the agreement provides a $100 rebate toward a new qualifying dishwasher.

Class members with past leaks had 180 days after the notice date to submit a valid claim. Class members with future leaks occurring after the notice date and within eight years of manufacture had 90 days after the leak to submit a claim. The settlement’s estimated value to the class was approximately $15,705,328 to $21,327,800, according to an expert analysis. Whirlpool separately agreed to pay the notice and administration costs, estimated at $1,249,240 as of March 30, 2022.

In exchange for the settlement benefits, class members who did not opt out released claims arising from or related to the identified diverter parts and sump assemblies. The release does not include claims for personal injury or damage to property other than the dishwasher itself. Three objections were filed, one was withdrawn, and 39 class members opted out. The court considered the two remaining objections but concluded that they did not prevent approval.

Court’s Analysis and Rulings

Under Federal Rule of Civil Procedure 23, a class-action settlement requires court approval. The court must determine whether the settlement is fair, reasonable, and adequate. The court found that the named plaintiffs and class counsel adequately represented the class, the negotiations occurred at arm’s length, and there was no evidence of collusion or that counsel placed their own interests above the class’s interests.

The court concluded that the settlement offered substantial and immediate benefits while avoiding the risks, expense, and delay of continued litigation. It considered the alleged defect, the parties’ litigation efforts, the possibility of challenges to expert testimony and class certification, the possibility of summary judgment, Whirlpool’s financial condition, and the limited number of objections. The court also found that the settlement class met the requirements for certification under Rule 23(a) and Rule 23(b)(3), including numerosity, commonality, typicality, adequate representation, predominance, and superiority, for settlement purposes only.

The court found that the notice plan complied with Rule 23, due process, and the Class Action Fairness Act. Notice was sent through email and mail when addresses were available, and through internet and social-media notices. A settlement website and toll-free telephone number were also provided.

The court granted the plaintiffs’ unopposed motion for final approval of the class-action settlement. It finally certified the settlement class for settlement purposes only, approved the settlement as fair, reasonable, and adequate, confirmed the five class representatives and class counsel, confirmed the notice plan, and bound class members who did not timely opt out to the settlement’s terms. The court directed that judgment be entered.

The court also granted the unopposed motion for attorneys’ fees, litigation costs, and service awards. It awarded $1,456,002.33 in attorneys’ fees, $33,997.67 in litigation costs, and $2,500 to each class representative. The court retained jurisdiction to resolve disputes concerning the settlement’s interpretation, administration, implementation, effectuation, and enforcement.