Case 2:12-md-02311-SFC-RSW ECF No. 2114-11, PageID.38390 Filed 02/17/21 Page 1 of 6
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`EXHIBIT H
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`Case 2:12-md-02311-SFC-RSW ECF No. 2114-11, PageID.38391 Filed 02/17/21 Page 2 of 6
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`January 28, 2021
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`Adam J. Zapala
`Cotchett Pitre & McCarthy LLP
`840 Malcolm Road, Suite 200
`Burlingame, CA 94010
`AZapala@cpmlegal.com
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`Via Electronic Mail
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`William Reiss
`Robins Kaplan LLP
`399 Park Avenue, Suite 3600
`New York, NY 10022
`wreiss@robinskaplan.com
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`Marc M. Seltzer
`Susman Godfrey L.L.P.
`1901 Avenue of the Stars, Suite 950
`Los Angeles, CA 90067
`MSeltzer@SusmanGodfrey.com
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`I write regarding your apparent instruction to the Claims Administrator in the End-Payor
`Actions in the above-referenced multi-district litigation that supplemental data submitted by
`Financial Recovery Services, LLC d/b/a Financial Recovery Strategies (“FRS”) on behalf of its
`automobile insurance company clients (the “Insurers”) after the claim-filing deadline will not be
`processed. That instruction is improper. FRS notified you (“Class Counsel”) and the Claims
`Administrator in March 2020 that it intended to supplement timely filed claim forms after the
`claim-filing deadline, and received no response. As a fiduciary to the members of the End-Payor
`settlement classes in this litigation, including the Insurers, your failure to speak at that time
`prevents you now from challenging as untimely FRS’s supplementation of its clients’ timely
`filed proofs of claim. If you persist in your timeliness objections to FRS’s supplementation, you
`risk legal liability for any resulting losses to FRS or the Insurers.
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`As you know, we maintain that Insurers made indemnification payments to insureds (the
`“Total Loss Insureds”) for the value of their eligible vehicles that were deemed a total loss
`(“Total Loss Vehicles”), that those payments included compensation for the overcharges that
`their insureds incurred at the time of purchase due to the alleged antitrust conspiracy, and that, by
`virtue of those payments, Insurers are subrogees that stand in the shoes of Total Loss Insureds,
`many of whom are members of the settlement classes. If we are correct about that—and we
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`Re:
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`In re Automotive Parts Antitrust Litigation, Master File No. 12-md-02311
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`Dear Messrs. Reiss, Seltzer, and Zapala:
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`Case 2:12-md-02311-SFC-RSW ECF No. 2114-11, PageID.38392 Filed 02/17/21 Page 3 of 6
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`William Reiss, Marc M. Seltzer & Adam J. Zapala
`January 28, 2021
`Page 2
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`understand that you disagree with our subrogation analysis—Insurers are entitled to recover from
`the End-Payor settlements the antitrust losses that were originally suffered by Total Loss
`Insureds and later paid by the Insurers. If the Insurers are subrogees, Class Counsel owes them a
`fiduciary duty in connection with their claims. Moreover, several of the Insurers who are
`seeking recovery for Total Loss Vehicles are also settlement class members because they directly
`owned or leased eligible vehicles (the “Fleet Vehicles”); there can be no dispute that you owe
`these Insurers a fiduciary obligation even if they are not subrogees. Your actions vis-à-vis the
`Insurers appear to be in breach of your duties. If you do not immediately direct that Insurers’
`supplemental vehicle data is processed when submitted and considered timely, FRS will seek
`appropriate relief.
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`I.
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`Class Counsel Acquiesced to FRS’s Proposal to Supplement Proofs of Claim
`After the Claim Deadline
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`As you know, the Insurers retained FRS to manage their proofs of claim to recover from
`the End-Payor settlements. FRS has filed several timely proofs of claim on behalf of the
`Insurers, which included claims for both Fleet Vehicles and Total Loss Vehicles.
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`By letter dated March 9, 2020, FRS notified you and the Claims Administrator why it
`was not filing vehicle information for Total Loss Vehicles at that time and that, should the Court
`grant FRS’s request to recognize the Insurers as subrogees entitled to recover from the End-
`Payor Settlements for Total Loss Vehicles, FRS would further supplement the claims. With the
`then-current March 16, 2020, claim deadline rapidly approaching, FRS asked that if there were
`“any objection to the foregoing, please advise FRS immediately so that we may advise the Court
`as soon as possible.” ECF No. 2060-10 at 4. Neither you nor the Claims Administrator ever
`responded to that communication.
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`Instead, only after the claim-filing deadline did you inform FRS and the Insurers that
`vehicle data submitted after the claim-filing deadline would not be processed, and that
`“placeholder” claims would be categorically rejected. In opposition to FRS’s motion to
`intervene, you asserted—incorrectly and without support—that you previously “flatly rejected”
`the use of timely filed “placeholder” claims followed by supplemental vehicle data. See Reply
`Decl. of Jeffrey N. Leibell ¶¶ 3-7, ECF No. 2073-1 (disputing these assertions). On January 4,
`2021, the Claims Administrator notified FRS by email that it was “no longer accepting new data
`for the settlements,” and that “any new data will be considered untimely.” Then, by letter dated
`January 12, 2021, you stated that “the Claims Administrator has been instructed”—presumably
`by you—“to deny both late-filed claims and claims filed with a place-holder.” That same day,
`your colleagues, Chanler Langham and Jenna Farleigh, stated in a telephone conversation with
`my colleagues Matt Huppert and Daniel Severson that the Claims Administrator would not
`process any timely filed “placeholder” claim forms or process supplemental vehicle information
`associated with such claims.
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`Case 2:12-md-02311-SFC-RSW ECF No. 2114-11, PageID.38393 Filed 02/17/21 Page 4 of 6
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`William Reiss, Marc M. Seltzer & Adam J. Zapala
`January 28, 2021
`Page 3
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`II.
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`You Are Estopped from Refusing FRS’s Supplementation of the Insurers’
`Proofs of Claim and Will Be Liable If You Succeed, on the Basis of Timeliness,
`in Preventing the Insurers from Recovering
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`Your failure to disclose, in response to FRS’s inquiry, how you planned to treat
`“placeholder” claims was improper and will impose significant harm on FRS and the Insurers
`unless you process the Insurers’ vehicle data, instead of insisting that such data is untimely. We
`understand that you disagree as a legal matter as to whether the Insurers have a valid subrogation
`interest in the End-Payor settlement funds, and FRS has endeavored to resolve that legal dispute,
`which was fully briefed to the district court more than one year ago. But it is inappropriate—
`and, we believe, a violation of your duties as class counsel—to attempt to avoid that threshold
`issue by seeking to bar the supplementation of timely filed claims.
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`“[C]lass representatives and, especially, class counsel” have “‘fiduciary obligation[s]’”
`of loyalty and care “to protect the interests of the persons most affected by the litigation—
`namely, the class.” In re Dry Max Pampers Litig., 724 F.3d 713, 718 (6th Cir. 2013). “Those
`duties, famously described by Judge Cardozo as demanding ‘[n]ot honesty alone, but the
`punctilio of an honor the most sensitive,’” Acad. Imaging LLC v. Soterion Corp., 352 F. App’x
`59, 62 (6th Cir. 2009) (citation omitted), extend to subrogated insurers. See Commercial Union
`Ins. Co. v. Medical Protective Co., 393 N.W. 2d 479, 486 (Mich. 1986) (subrogated insurer “can
`claim damages for injuries resulting from [defendant’s]” breach of duties of good faith and as
`fiduciary); Allianz Underwriters Ins. Co. v. Landmark Ins. Co., 787 N.Y.S.2d 15, 17-18 (App.
`Div. 1st Dep’t 2004) (subrogated insurer can assert breach of fiduciary claim against insured’s
`law firm); see Fidelity Nat’l Title Ins. Co. of New York v. Intercounty Nat’l Title Ins. Co., 2002
`WL 1466806, at *7 (N.D. Ill. July 8, 2002) (holding subrogee’s claim for breach of fiduciary
`duty survives summary judgment).
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`One in “a fiduciary or other similar relation of trust and confidence” to another has a duty
`to disclose “matters [that] he has reason to know will be regarded by the other as important in
`determining his course of action in the transaction in hand.” Restatement (Second) of Torts
`§ 551 & cmt. c (2020). Here, FRS made clear to you and to the Claims Administrator months
`before the eventual claim-filing deadline that it was submitting Insurers’ claims to you in a
`manner that it understood would preserve Insurers’ ability to recover from the End-Payor
`settlements. Accordingly, Class Counsel and the Claims Administrator, as fiduciaries, had a
`duty to disclose to FRS (which was acting on Insurers’ behalf) that they would decline to process
`data submitted after the claim-filing deadline and/or that they would categorically recommend
`rejection of all “placeholder” claims. As discussed above, they did nothing of the kind.
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`Your failure to speak in these circumstances has two consequences. First, you are
`equitably estopped from refusing to accept Insurers’ supplemental data on the basis of timeliness
`or from recommending non-payment of Insurers’ claims on that basis. Your silence induced
`FRS and the Insurers to believe that they could supplement “placeholder” claims after the claim-
`filing deadline, in light of the still-pending dispute regarding the validity of Insurers’ subrogation
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`Case 2:12-md-02311-SFC-RSW ECF No. 2114-11, PageID.38394 Filed 02/17/21 Page 5 of 6
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`William Reiss, Marc M. Seltzer & Adam J. Zapala
`January 28, 2021
`Page 4
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`interest. FRS justifiably relied on that belief by deferring submission of data for “placeholder”
`claims, and your categorical refusal now to process “placeholder” claims or data associated with
`them obviously stands to prejudice FRS and the Insurers. See Van v. Zahorik, 597 N.W.2d 15,
`22 (Mich. 1999) (setting out elements of equitable estoppel). If you persist in your refusal to
`accept supplemental data for the Insurers’ “placeholder” claims on the basis that they are
`untimely, we will seek to preclude you from doing so.
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`Second, you risk financial liability for any losses Insurers suffer because of your
`inequitable conduct. Where a fiduciary fails to disclose information he “has reason to know will
`be regarded by the other as important in determining his course of action,” he “is subject to the
`same liability to the other as though he had represented the nonexistence of the matter that he has
`failed to disclose.” Restatement (Second) of Torts § 551 & cmt. c. Accordingly, your silence in
`these circumstances makes you liable as though you had represented affirmatively to FRS that it
`could supplement “placeholder” claims after the claim-filing deadline, and that implied
`representation was false and misleading in light of your current contrary position. See, e.g.,
`MacDonald v. Thomas M. Cooley Law School, 724 F.3d 654, 665 (6th Cir. 2013) (silent fraud
`lies where plaintiff’s inquiry gives rise to legal duty to disclose); Connelly v. Balkwill, 174 F.
`Supp. 49, 56 (N.D. Oh. 1959) (“Where the parties sustain a fiduciary or quasi fiduciary
`relationship towards each other the duty to make full disclosure is imperative.”), aff’d, 279 F.2d
`685 (6th Cir. 1960) (internal quotation marks omitted); Titan Ins. Co. v. Hyten, 817 N.W.2d 562,
`569 (Mich. 2012) (“[W]hen there is a legal or equitable duty of disclosure, a fraud arising from
`the suppression of the truth is as prejudicial as that which springs from the assertion of a
`falsehood . . . .”) (internal quotation marks omitted); see also Dahingo v. Royal Caribbean
`Cruises, Ltd., 312 F. Supp. 2d 440, 448 (S.D.N.Y. 2004) (claims administrator “could not, in
`good faith, remain inert” in the face of timely but incomplete claim forms). To whatever extent
`your implied misrepresentations cause FRS or the Insurers harm, you bear the risk of liability for
`that harm.
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`As noted, we understand you disagree that FRS and the Insurers stand in the shoes of
`settlement class members. Nevertheless, we do not think it is in anyone’s best interest, including
`that of the other class members, for you to attempt to obstruct class members’ efforts to obtain
`recovery that is legally warranted. The better and more efficient course would be for you to
`instruct the Claims Administrator to process the Insurers’ supplemental vehicle data when it is
`submitted. We remain willing to discuss with you in good faith the most efficient way to process
`and compensate Insurers’ claims, but if you persist in your current efforts to impede FRS and the
`Insurers from recovering, we intend to pursue all available avenues of relief.
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`Case 2:12-md-02311-SFC-RSW ECF No. 2114-11, PageID.38395 Filed 02/17/21 Page 6 of 6
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`William Reiss, Marc M. Seltzer & Adam J. Zapala
`January 28, 2021
`Page 5
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`Please do not hesitate to contact me if you would like to discuss these matters further.
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`Sincerely,
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`Aaron M. Panner
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