Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.39989 Filed 05/09/22 Page 1 of 13
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`UNITED STATES DISTRICT COURT
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`FOR THE EASTERN DISTRICT OF MICHIGAN
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`SOUTHERN DIVISION
`__________________________________________________________________
`IN RE: AUTOMOTIVE PARTS
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`
`
`No. 12-md-02311
`ANTITRUST LITIGATION
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`
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`
`
`Hon. Sean F. Cox
`__________________________________________________________________
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` CASE NO. 2:12-CV-00103
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`
`
`IN RE : WIRE HARNESS
` CASE NO. 2:12-CV-00203
`IN RE : INSTRUMENT PANEL CLUSTERS
` CASE NO. 2:12-CV-00303
`IN RE : FUEL SENDERS
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`
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` CASE NO. 2:12-CV-00403
`IN RE : HEATER CONTROL PANELS
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` CASE NO. 2:12-CV-00503
`IN RE : BEARINGS
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`
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` CASE NO. 2:12-CV-00603
`IN RE : OCCUPANT SAFETY SYSTEMS
` CASE NO. 2:13-CV-00703
`IN RE : ALTERNATORS
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`
`
`IN RE : ANTI-VIBRATIONAL RUBBER PARTS CASE NO. 2:13-CV-00803
`IN RE : WINDSHIELD WIPERS
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` CASE NO. 2:13-CV-00903
`IN RE : RADIATORS
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` CASE NO. 2:13-CV-01003
`IN RE : STARTERS
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` CASE NO. 2:13-CV-01103
`IN RE : AUTOMOTIVE LAMPS
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` CASE NO. 2:13-CV-01203
`IN RE : SWITCHES
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` CASE NO. 2:13-CV-01303
`IN RE : IGNITION COILS
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` CASE NO. 2:13-CV-01403
`IN RE : MOTOR GENERATOR
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` CASE NO. 2:13-CV-01503
`IN RE : STEERING ANGLE SENSORS
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` CASE NO. 2:13-CV-01603
`IN RE : HID BALLASTS
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` CASE NO. 2:13-CV-01703
`IN RE : INVERTERS
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` CASE NO. 2:13-CV-01803
`IN RE : ELECTRONIC POWERED
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` CASE NO. 2:13-CV-01903
`STEERING ASSEMBLIES
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`
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`IN RE : AIR FLOW METERS
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`IN RE : FAN MOTORS
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`IN RE : FUEL INJECTION SYSTEMS
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`IN RE : POWER WINDOW MOTORS
`IN RE : AUTOMATIC TRANSMISSION
`FLUID WARMERS
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` CASE NO. 2:13-CV-02003
` CASE NO. 2:13-CV-02103
` CASE NO. 2:13-CV-02203
` CASE NO. 2:13-CV-02303
` CASE NO. 2:13-CV-02403
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.39990 Filed 05/09/22 Page 2 of 13
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`IN RE : VALVE TIMING CONTROL DEVICES CASE NO. 2:13-CV-02503
`IN RE : ELECTRONIC THROTTLE BODIES
` CASE NO. 2:13-CV-02603
`IN RE : AIR CONDITIONING SYSTEM
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` CASE NO. 2:13-CV-02703
`IN RE : WINDSHIELD WASHER
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` CASE NO. 2:13-CV-02803
`IN RE : AUTOMOTIVE CONSTANT
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` CASE NO. 2:14-CV-02903
`VELOCITY JOINT BOOT PRODUCTS
` CASE NO. 2:15-CV-03003
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`IN RE : SPARK PLUGS
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` CASE NO. 2:15-CV-03203
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`IN RE : AUTOMOTIVE HOSES
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` CASE NO. 2:15-CV-03303
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`IN RE : SHOCK ABSORBERS
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` CASE NO. 2:16-CV-03403
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`IN RE : BODY SEALING PRODUCTS
` CASE NO. 2:16-CV-03503
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`IN RE : INTERIOR TRIM PRODUCTS
` CASE NO. 2:16-CV-03603
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`IN RE : BRAKE HOSES
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` CASE NO. 2:16-CV-03703
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`IN RE : EXHAUST SYSTEMS
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` CASE NO. 2:16-CV-03803
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`IN RE : CERAMIC SUBSTRATES
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` CASE NO. 2:16-CV-03903
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`IN RE : POWER WINDOW SWITCHES
` CASE NO. 2:16-CV-04003
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`IN RE : AUTOMOTIVE STEEL TUBE
` CASE NO. 2:16-CV-04103
`IN RE : ACCESS MECHANISMS ACTIONS
` CASE NO. 2:17-CV-04303
`IN RE : DOOR LATCHES
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`__________________________________________________________________
`THIS DOCUMENT RELATES TO:
`End-Payor Actions
`__________________________________________________________________
`
`
`REPLY MEMORANDUM IN SUPPORT OF MOTION TO ENFORCE
`END-PAYOR SETTLEMENTS AND STRIKE CONTRADICTORY AND
`IMPROPER STIPULATION
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.39991 Filed 05/09/22 Page 3 of 13
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`TABLE OF CONTENTS
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`Page
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`B.
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`C.
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`INTRODUCTION............................................................................................................... 1
`ARGUMENT ........................................................................................................................ 2
`I.
`FMCs are without question members of the End-Payor
`Settlement Class. ............................................................................................. 2
`A.
`Leases are not sales and the settlements very clearly do not
`exclude lessors from the End-Payor class ....................................... 3
`Clear, unambiguous terms of the settlements prohibit
`EPPs’ reliance on extrinsic evidence of intent. ............................... 4
`Contrary to EPPs’ suggestion, FMCs are not part of the
`Dealer class and not eligible to recover from the Dealer
`settlements. .......................................................................................... 5
`FMCs’ position in the distribution chain is irrelevant to
`their inclusion in the end-payor settlement class, but even
`so, FMCs still have standing as end-payors. .................................... 6
`The Stipulation clearly applies to all FMCs and negotiates away
`the rights of all valid claimants. .................................................................... 7
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`D.
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`II.
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.39992 Filed 05/09/22 Page 4 of 13
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`Cases
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`TABLE OF AUTHORITIES
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` Page(s)
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`In re Autoparts Antitrust Litig.,
`997 F.3d 677 (6th Cir. 2021) ................................................................................... 3, 5, 6
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`Kyocera Corp. v. Hemlock Semiconductor, LLC,
`313 Mich. App. 437 (2015) .............................................................................................. 5
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`Request Foods, Inc. v. Am. Roland Food Corp.,
`No. 1-11-CV-128, 2012 WL 13018611 (W.D. Mich. Sept. 12, 2012) ........................ 6
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.39993 Filed 05/09/22 Page 5 of 13
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`INTRODUCTION
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`More than two years ago, End-Payor Plaintiffs’ class counsel (“EPPs”)
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`confirmed Enterprise Fleet Management’s (“EFM”) understanding that it was an End-
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`Payor Settlement Class member having “purchased or leased a new Vehicle in the
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`United States not for resale, which included one or more of [the applicable component
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`parts].” Three days after receiving the following explicit response from EPPs, EFM
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`filed a claim to the End-Payor Settlements:
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`As discussed on our call, we will address many of the issues related to fleet
`management companies on a case-by-case basis. However, assuming for
`purposes of this response that the fleet management company at
`issue [1] purchased new vehicles and [2] retained title to those new
`vehicles while leasing them to customers under long term leases,
`those fleet management companies would be included in the class.
`PageID.39770 (emphasis added).1
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` EPPs’ 2019 response makes clear that they knew FMCs engaged in long-term leases
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`and that fact did not exclude them from the Class. Now, over two years since EFM
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`filed a timely claim, EPPs seek to mischaracterize EFM as a “reseller” and try to insert
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`terms like “end user” into the class definition—despite the fact that (1) the settlements
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`themselves expressly limit outside evidence, and (2) Michigan law prohibits courts from
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`considering extrinsic evidence where settlement language is clear and unambiguous.
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`Further, EPPs’ efforts to invoke “intent” in an attempt to exclude EFM from
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`1 As a Settlement Class member, EFM is a party to these proceedings and under no obligation to
`seek leave to intervene; EPPs’ 2019 written confirmation of FMC inclusion in the End-Payor class
`should, alone, moot any question of intervention here.
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`1
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.39994 Filed 05/09/22 Page 6 of 13
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`the End-Payor class is misplaced. Over the course of four rounds of settlements, the
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`parties’ “intent” is memorialized in all but one of the settlement agreements as follows:
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`This Agreement shall be construed and interpreted to effectuate the
`intent of the parties, which is to provide, through this Agreement,
`for a complete resolution of the relevant claims with respect to each
`Releasee as provided in this Agreement.
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`See, e.g., Meritor Settlement Agreement, 16-cv-03703 PageID.3841 (emphasis added).
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`Defendants clearly intended for a broad release that encompassed all indirect
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`purchasers, and had they wanted to exclude vehicles purchased for lease, they could
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`and would have done so. Given the clear and unambiguous terms before this Court,
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`EPPs cannot now change those agreed-upon, Court-approved terms post-factum.
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`Finally, EPPs also seek to prevent EFM from challenging the FMC Stipulation,
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`suggesting that it somehow does not apply to other FMCs, despite clear and express
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`language that the stipulation will apply to “any FMC or customer of an FMC” that filed
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`a claim, EFM included. PageID.39702 (emphasis added).
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`ARGUMENT
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`I.
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`FMCs are without question members of the End-Payor Settlement Class.
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`FMCs, including EFM, are unequivocally class members under the End-Payor
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`settlement agreements’ plain language, which defines class members as:
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`All persons and entities that . . . [1] purchased or leased a new Vehicle in
`the United States [2] not for resale, which included one or more [of the
`applicable component parts].
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`PageID.12034-12036. EFM’s claimed vehicle purchases fall within the class definition’s
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`2
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.39995 Filed 05/09/22 Page 7 of 13
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`exact language—which EPPs confirmed, writing that FMCs “would be included in the
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`class” where they “[1] purchased new vehicles and [2] retained title to those new vehicles
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`while leasing them to customers under long term leases.” PageID.39770.
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`There is no dispute that EFM purchased its vehicles new and held title to its
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`vehicles for the full duration of leases to its customers. There should be no question
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`that EFM’s vehicle purchases were not for purposes of resale. Further, as the settlement
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`terms are clear and unambiguous, both the settlements’ language and Michigan law
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`prohibit courts from considering extrinsic evidence of intent. See In re Autoparts Antitrust
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`Litig., 997 F.3d 677, 685 (6th Cir. 2021) (“Rubber Parts”).
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`A.
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`Leases are not sales and the settlements very clearly do not
`exclude lessors from the End-Payor class
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`EFM purchases vehicles for the sole purpose of leasing them to its customers
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`under long-term leases. As the other FMCs detailed at length in their motion, a lease is
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`not a sale as a matter of law. PageID.39510-39516. At no time during the pendency of
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`its leases is EFM engaged in efforts to sell its vehicles. By contrast, when dealers
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`purchase vehicles, those vehicles are immediately put in inventory and held out to the
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`public for resale as quickly as possible.
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`That EFM sells its vehicles at the expiration of its leases—leases that, on average,
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`last more than 3 years—is ancillary; EFM’s vehicle purchases would not happen but for
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`the anticipated lease in the interim. Decl. of Emma K. Burton attached as Exhibit A
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`(“Burton Decl.”) ¶ 7. If, as EPPs now contend, EFM’s subsequent sale of a vehicle after
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.39996 Filed 05/09/22 Page 8 of 13
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`owning it for several years somehow converts its original purchase into one for the
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`purpose of “resale,” individuals who purchase a vehicle and subsequently sell it after a
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`period of years, perhaps to Carvana or via Craigslist, would also be excluded from the
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`class. The fallacy of EPPs’ position here is clear, and clearly untenable.
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`B.
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`Clear, unambiguous terms of the settlements prohibit EPPs’
`reliance on extrinsic evidence of intent.
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`EPPs understood, as early as their 2019 response, that (1) FMCs purchase
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`vehicles for purposes of leasing them out under long-term leases, and (2) that FMCs
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`would file claims to the End-Payor settlements as class members. Now, EPPs seek to
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`rewrite history, contending that “entities who purchase vehicles for the purpose of
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`immediately re-leasing them were never intended to be included in the settlement class”
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`despite the clear and unambiguous settlement language to the contrary. PageID.39866.
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`Not only is the class definition clear, but every End-Payor settlement contains
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`an integration clause, prohibiting outside evidence of intent where terms are clear and
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`providing that the settlement:
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`[C]onstitutes the entire, complete and integrated agreement among End-
`Payor Plaintiffs and [Defendant] . . . and supersedes all prior and
`contemporaneous undertakings,
`communications,
`representations,
`understandings, negotiations, and discussions, either oral or written,
`between End-Payor Plaintiffs and [Defendant]. E.g., 16-cv-03703
`PageID.3842.
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`Even without an integration clause, Michigan law is clear that where the
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`settlement—a contract—contains language that is “clear and unambiguous,” courts
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`must look only to the “four corners of the relevant contracts” and “[t]he words used in
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.39997 Filed 05/09/22 Page 9 of 13
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`the contract are the best evidence [of] the parties’ intent.” Rubber Parts, 997 F.3d at 685;
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`Kyocera Corp. v. Hemlock Semiconductor, LLC, 313 Mich. App. 437, 446 (2015). There is no
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`language in the settlement agreements, plans of allocation, or class notice excluding
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`lessors and EPPs cannot now suggest that the Court look beyond the clear settlement
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`language to exclude valid members of the End-Payor class.
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`C. Contrary to EPPs’ suggestion, FMCs are not part of the Dealer
`class and not eligible to recover from the Dealer settlements.
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`Unable to exclude FMCs from the End-Payor settlements under the clear
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`language, EPPs next try to contend that FMCs are instead Dealer class members and
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`“could recover for claims in the Auto Dealer cases.” PageID.39869, 39880. However,
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`FMCs are very clearly not part of the Dealer class.
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`The Dealer settlements define Dealers as “an entity or person authorized to engage
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`in the business of selling and/or leasing Vehicles at retail in the United States,” meaning
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`“authorized” by the OEM vehicle manufacturers. 13-cv-02702 PageID.4494 (emphasis
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`added). FMCs such as EFM are not in the business of, nor are they authorized by OEMs
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`to, sell or lease new vehicles at retail, and they do not have the Dealership State
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`License/Registration Numbers or OEM Dealer IDs required for valid Dealer claimants.
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`Burton Decl. ¶ 4. Consequently, the Dealer class claims administrator confirmed that
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`entities that lease vehicles as part of a fleet management business are not Dealer class
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`members and not eligible to recover from the Dealer settlements. Ex. 2 to Burton Decl.
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`EPPs’ misleading assertions aside, EFM did not—and could not—recover for its
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.39998 Filed 05/09/22 Page 10 of 13
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`claimed vehicles in the Dealer settlements. EFM, and all FMCs, squarely belong to the
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`End-Payor class.
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`D.
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`FMCs’ position in the distribution chain is irrelevant to their
`inclusion in the end-payor settlement class, but even so, FMCs still
`have standing as end-payors.
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`In an effort to defend their Stipulation and its end run around recovery in Illinois
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`Brick non-repealer states, EPPs concede the very point they spend the majority of their
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`Response arguing—that a class member’s place in the distribution chain is irrelevant if
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`they meet the definition of the settlement class itself:
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`Whether Plaintiffs can maintain their direct-purchaser lawsuit under the
`ownership-or-control exception of Illinois Brick is a question of antitrust
`standing. It is not a question that bears on our interpretation of the
`settlement agreements.
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`Rubber Parts, 997 F.3d 677 at 683 (emphasis added). EFM, as an indirect purchaser of
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`new vehicles not for resale, meets the clear settlement class definition, and the analysis
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`necessarily stops there.2 The analysis also renders moot EPPs’ contention that FMCs
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`must be excluded from the class because of duplicate valid claims to the same vehicle,
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`yet that result is precisely the predicable consequence of including both purchasers and
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`lessees in the class definition proposed by the parties and approved by the Court.
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`2 Even supposing EFM’s position in the distribution chain was relevant, which it is not, EFM is still
`an end payor. EPPs would have the Court redefine “not for resale” as excluding all but the “ultimate
`end user” and thereby excluding EFM as not an end payor. But the lone case cited by EPPs for this
`proposition does not stand for it. In referencing the “ultimate end user, or the retail level
`consumer,” the court recognized the “overall goal of the [Magnuson Moss Warranty] Act” and not
`the definition of “not for resale.” See Request Foods, Inc. v. Am. Roland Food Corp., No. 1-11-CV-128,
`2012 WL 13018611, at *2 (W.D. Mich. Sept. 12, 2012). In fact, the party in that case conceded that
`the product would be resold, so the definition of “resale” was not even at issue. Id.
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.39999 Filed 05/09/22 Page 11 of 13
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`II. The Stipulation clearly applies to all FMCs and negotiates away the
`rights of all valid claimants.
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`The Stipulation could not be clearer in its application to all FMCs. In the
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`Stipulation’s first paragraph, the specific term “FMC Claimants” is used to reference
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`the four named FMCs who negotiated the Stipulation. Two paragraphs later, the
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`Stipulation defines “FMCs” as fleet management companies generally. When EPPs
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`state in Stipulation Paragraph J that they “intend to apply the guidelines and procedures
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`set forth below to all claims that have been submitted by or on behalf of any FMC or
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`customer of an FMC” (emphasis added), they clearly plan to apply the Stipulation’s
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`terms to all FMCs, not just the four “FMC Claimants.” EFM has every right to
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`challenge, as its recovery in this settlement is directly impacted by the Stipulation.
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`Moreover, for the reasons articulated in EFM’s Memorandum, the Stipulation
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`impacts not just all FMCs but all valid claimants—privately negotiating away portions
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`of the settlement fund without providing notice and in violation of the Plans of
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`Allocation. The Stipulation, to use EPPs’ own language, raises “fundamental questions
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`about fairness of notice to end-payor purchasers.” PageID.39864.
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`May 9, 2022
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`Respectfully submitted,
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`
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`By: /s/ Lawrence J. Lines III
`Lawrence J. Lines III
`Crowell & Moring LLP
`3454 Shakespeare Dr.
`Troy, MI 48084
`Telephone: (949) 798-1389
`Email: jlines@crowell.com
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.40000 Filed 05/09/22 Page 12 of 13
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`Deborah E. Arbabi
`Daniel A. Sasse
`Crowell & Moring LLP
`3 Park Plaza, 20th Floor
`Irvine, CA 92614-8505
`Telephone: (949) 263-8400
`Email: darbabi@crowell.com
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` dsasse@crowell.com
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`Emma K. Burton
`Ann L. Rives
`Crowell & Moring LLP
`1001 Pennsylvania Avenue, NW
`Washington, DC 20004
`Telephone: (202) 624-2500
`Email: eburton@crowell.com
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` arives@crowell.com
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`Counsel for Enterprise Fleet Management, Inc.
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`Case 2:12-md-02311-SFC-RSW ECF No. 2207, PageID.40001 Filed 05/09/22 Page 13 of 13
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`CERTIFICATE OF SERVICE
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`I hereby certify that on May 9, 2022, a copy of the foregoing was filed
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`electronically using the Court’s ECF system, which will send notification to each
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`attorney of record by electronic means. Parties may access this filing through the
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`Court’s system.
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`Dated: May 9, 2022
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`By: /s/ Lawrence J. Lines III
`Lawrence J. Lines III
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