Case 2:12-md-02311-SFC-RSW ECF No. 2126, PageID.39100 Filed 03/10/21 Page 1 of 11
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
`IN RE: AUTOMOTIVE PARTS
` Master File No. 12-md-02311
`ANTITRUST LITIGATION
`
`
`
`
`Hon. Sean F. Cox
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`Mag. Judge R. Steven Whalen
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`THIS DOCUMENT RELATES TO:
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`
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`ALL END-PAYOR ACTIONS
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`FINANCIAL RECOVERY SERVICES, LLC’S REPLY IN SUPPORT OF
`MOTION TO COMPEL ACCEPTANCE AND PROCESSING OF DATA
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`FRS seeks to preserve the ability for FRS and Insurers to recover as
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`subrogees from the End-Payor Settlements, should this Court or the Court of
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`Appeals rule that they have subrogation rights. The parties dispute the validity of
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`those rights. Class Counsel, through their words and conduct, led FRS to believe
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`that it could defer submission of data regarding hundreds of thousands of vehicles
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`until the legal dispute about their subrogation rights was resolved.
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`After the deadline for filing claim forms expired, Class Counsel reversed
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`course. In January 2021, they took the position, for the first time, that the vehicle
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`data FRS wants to submit in support of Insurers’ timely filed claims will not even
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`be processed, thus functionally rejecting them.
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`In denying FRS intervention, and contrary to Class Counsel’s assertion
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
`IN RE: AUTOMOTIVE PARTS
` Master File No. 12-md-02311
`ANTITRUST LITIGATION
`
`
`
`
`Hon. Sean F. Cox
`
`Mag. Judge R. Steven Whalen
`
`
`THIS DOCUMENT RELATES TO:
`
`
`
`ALL END-PAYOR ACTIONS
`
`
`
`
`
`FINANCIAL RECOVERY SERVICES, LLC’S REPLY IN SUPPORT OF
`MOTION TO COMPEL ACCEPTANCE AND PROCESSING OF DATA
`
`FRS seeks to preserve the ability for FRS and Insurers to recover as
`
`subrogees from the End-Payor Settlements, should this Court or the Court of
`
`Appeals rule that they have subrogation rights. The parties dispute the validity of
`
`those rights. Class Counsel, through their words and conduct, led FRS to believe
`
`that it could defer submission of data regarding hundreds of thousands of vehicles
`
`until the legal dispute about their subrogation rights was resolved.
`
`After the deadline for filing claim forms expired, Class Counsel reversed
`
`course. In January 2021, they took the position, for the first time, that the vehicle
`
`data FRS wants to submit in support of Insurers’ timely filed claims will not even
`
`be processed, thus functionally rejecting them.
`
`In denying FRS intervention, and contrary to Class Counsel’s assertion
`
`
`
`Case 2:12-md-02311-SFC-RSW ECF No. 2126, PageID.39101 Filed 03/10/21 Page 2 of 11
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`(at 21), the Court did not decide whether FRS and Insurers could recover as
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`subrogees or whether, in support of timely filed claims, vehicle information
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`submitted after the claim filing deadline would be considered timely. See ECF No.
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`2101. Neither Class Counsel nor the Claims Administrator have the authority to
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`reject claims or to decline to process vehicle information from claimants.
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`FRS and Insurers have spent significant time and resources locating
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`information about Total Loss Vehicles as to which FRS and the Insurers are
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`entitled to recover in the End-Payor Settlements. However, that data is
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`voluminous and much of it is available only from third-party sources, including
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`salvage companies and a commercial vendor, making it burdensome and costly to
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`obtain. See Ex. 1 ¶¶ 9-12. FRS asks this Court to rule, before FRS incurs all of the
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`significant cost of obtaining such data, that the Claims Administrator must actually
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`process and evaluate that data as timely, as Class Counsel led FRS to believe they
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`would. FRS asks to be treated the same as all other claimants that did not submit
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`complete vehicle information by the deadline, and the same as Class Counsel and
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`the Claims Administrator have treated placeholder claims in several other class
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`actions. Id. ¶ 4 & App. FRS can submit all data within 90 days, and processing
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`that data would not delay the claims administration process. Id. ¶¶ 15-22.
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`Class Counsel cannot seriously dispute that they owe absent class members a
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`fiduciary duty. Nor do they dispute the basic principles of equitable estoppel or the
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`2
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`Case 2:12-md-02311-SFC-RSW ECF No. 2126, PageID.39102 Filed 03/10/21 Page 3 of 11
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`circumstances in which it applies. Instead, Class Counsel claim (at 22) that
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`estoppel “is not warranted” because they timely rejected FRS’s proposal and that
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`FRS and Insurers are not class members. Both assertions are wrong.
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`Class Counsel never gave FRS reasonable notice, prior to the claim-filing
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`deadline, that they could not defer submission of vehicle information pending
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`clarification of their subrogation rights. FRS and Insurers reasonably relied to their
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`detriment on Class Counsel and the Claims Administrator’s silence. And FRS and
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`Insurers are class members. Several Insurers undisputedly are class members
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`because they purchased or leased Fleet Vehicles. And FRS and all Insurers also
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`are settlement class members because they stand in the shoes of indemnified
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`insured class members to recover overcharges on Total Loss Vehicles. Class
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`Counsel have made clear that they think FRS and Insurers should be treated
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`differently from all other class members, but that position cannot be reconciled
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`with Class Counsel’s fiduciary duties. The rest of Class Counsel’s arguments are
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`misdirection, designed to distract from their own failures and from FRS’s
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`reasonable request to preserve its and Insurers’ rights.
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`I.
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`Class Counsel Did Not Give FRS Notice to Protect the Insurers’ Rights
`Class Counsel’s opposition hinges on its repeated, but incorrect, assertion
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`(at 7, 23) that they “flatly rejected,” in January 2019, FRS’s proposal to defer
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`submission of vehicle data pending a decision on the subrogation issue. They cite
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`3
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`Case 2:12-md-02311-SFC-RSW ECF No. 2126, PageID.39103 Filed 03/10/21 Page 4 of 11
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`two declarations they say support their assertion, but neither does. The first, a
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`declaration FRS submitted in support of its motion to intervene, makes clear that
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`FRS never discussed in January 2019 supplementing claim forms after the claim-
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`filing deadline. ECF No. 2060-2; see also ECF No. 2073-1 ¶¶ 6-7, PageID.38085-
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`86 (“FRS did not raise the issue of post-deadline supplementation until March 9,
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`2020.”). They also point to a new declaration from Chanler Langham (ECF No.
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`2120-2 ¶ 5, PageID.38504), an attorney at Susman Godfrey who did not attend the
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`January 2019 phone call during which Class Counsel supposedly “rejected” FRS’s
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`proposal. Mr. Langham has no personal knowledge of that phone call and,
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`contrary to his sworn statement, could not “testify competently” about it. Id. ¶ 2,
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`PageID.38504. His statements about the call are speculation, hearsay, or both.
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`Class Counsel never submitted any sworn statements from the two Class Counsel
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`who did speak to FRS in January 2019—“Marc Seltzer and William V. Reiss”—
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`although they had three opportunities to do so. ECF No. 2060-2 ¶ 5,
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`PageID.37727; see Ex. 1 ¶¶ 25-27; Ex. 2 ¶ 5. That omission speaks volumes about
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`the lack of basis for Class Counsel’s position.
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`As discussed in FRS’s opening brief (at 5), the January 2019 call supports
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`FRS’s position, not Class Counsel’s. During that call, FRS and Class Counsel put
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`forth different proposals about the sequencing of (1) a legal ruling on the
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`subrogation issue, and (2) submission of vehicle information. ECF No. 2060-2 ¶ 6,
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`4
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`Case 2:12-md-02311-SFC-RSW ECF No. 2126, PageID.39104 Filed 03/10/21 Page 5 of 11
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`PageID.37727-37728. Ultimately, though, the parties agreed in November 2019 to
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`seek a ruling before FRS would need to submit vehicle information, thus adopting
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`FRS’s proposal from January 2019, not Class Counsel’s. Id. ¶ 7, PageID.37728;
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`ECF No. 2114-2 ¶¶ 11, 15, PageID.38342, 38346-47. So, however one
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`characterizes Class Counsel’s alternative suggestion in January 2019—to “file
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`claims, [and] wait for them to be rejected,” ECF No. 2060-2 ¶ 6, PageID.37727—it
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`is clear that Class Counsel backed away from that position in November 2019.
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`Class Counsel also point to an email they sent FRS counsel on June 15,
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`2020, just three days before the claim-filing deadline. ECF No. 2120-3,
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`PageID.38516. That email also does not save Class Counsel from being estopped.
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`The email does not state that Class Counsel would not process supplemental
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`vehicle data. And to the extent that Class Counsel intended to convey that they
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`would recommend denying FRS and Insurers’ claims on the basis that they were
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`“placeholders,” it was far too late for FRS to proceed any other way. Estoppel
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`occurs when another’s conduct leads one to a reasonably held belief on which they
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`“justifiably rel[y] and act[]” to their detriment. Van v. Zahorik, 597 N.W.2d 15, 22
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`(Mich. 1999).1 By June 15, 2020, more than three months after FRS had asked
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`1 Class Counsel rely (at 22) on an unpublished case applying Kentucky state
`law regarding estoppel. Kentucky has no connection to this dispute, and so its law
`does not apply. Moreover, the court there concluded that “any delay on the part of
`[defendant] could not have affected” plaintiff’s actions. Acuity Ins. Co. v. Higdon’s
`Sheet Metal & Supply Co., 2007 WL 1034986, at *6 (W.D. Ky. Apr. 3, 2007). Here,
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`5
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`Case 2:12-md-02311-SFC-RSW ECF No. 2126, PageID.39105 Filed 03/10/21 Page 6 of 11
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`Class Counsel to raise any objections to deferring vehicle data, FRS already had
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`relied on Class Counsel’s silence to its detriment. And at that late date, FRS had
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`no practical ability to avoid it. In these circumstances, equitable estoppel applies.
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`See, e.g., Thurston v. Roanoke City Sch. Bd., 26 F. Supp. 2d 882, 887-88 (W.D.
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`Va. 1998) (employee estopped who submitted resignation letter, then withdrew it
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`at the “last minute,” leaving school board “a scant eight days” to avoid prejudice).
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`II. Class Counsel Owe Fiduciary Duties to FRS and Insurers
`In an attempt to avoid their breach of fiduciary duties,2 Class Counsel also
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`assert (at 14 n.2, 15, 25-26) that FRS and Insurers are not class members and
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`(incredibly) that FRS does not argue otherwise. FRS established in its opening
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`brief (at 3-4) that FRS and Insurers are class members because they either
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`(1) purchased or leased qualifying vehicles, or (2) stand in the shoes of
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`indemnified insured class members who did.3 Class Counsel offer nothing to the
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`by contrast, had Class Counsel promptly stated an objection to FRS’s March 9, 2020
`proposal to defer submission of vehicle information, FRS could have acted to protect
`its and the Insurers’ rights.
`2 Class Counsel do not seriously dispute that they owe a fiduciary duty to
`Insurers that bought Fleet Vehicles or to FRS and Insurers if they are subrogated.
`Class Counsel misread Medical & Chiropractic Clinic, Inc. v. Oppenheim, 981
`F.3d 983, 990 (11th Cir. 2020), which held that class counsel owed no “heightened
`fiduciary duty” to class representatives, but “owed fiduciary duties to the class as a
`whole,” consistent with Sixth Circuit law. See, e.g., In re Dry Max Pampers Litig.,
`724 F.3d 713, 718 (6th Cir. 2013).
`3 By assignment from an Insurer (Selective), FRS holds a subrogation interest
`concerning Total Loss Vehicles and is thus a class member. ECF 2064-3.
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`6
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`Case 2:12-md-02311-SFC-RSW ECF No. 2126, PageID.39106 Filed 03/10/21 Page 7 of 11
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`contrary, other than to repeat their disagreement that FRS and Insurers have
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`subrogation rights.
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`III. Class Counsel’s Other Arguments Lack Merit
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`Class Counsel also offer a hodge-podge of arguments designed to distract
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`from their acquiescence to FRS’s proposal to submit supplemental vehicle data.
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`Each of those arguments fails.
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`First, Class Counsel criticize FRS’s claim forms, including the serious and
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`unsupported accusation that they are “fraudulent.” As shown in FRS’s opening
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`brief (at 5-7), however, Class Counsel acquiesced in FRS’s proposal to submit
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`claim forms without vehicle information or with placeholder information that
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`never purported to be the basis for recovery. There is nothing “fraudulent” about
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`FRS proceeding in reliance on that proposal. See Ex. 1 ¶¶ 25-27; Ex 2 ¶ 5. Class
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`Counsel understood that FRS was submitting “placeholder” claim forms, which
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`they and the Claims Administrator have processed and permitted many other times.
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`Ex. 1 ¶ 4 & App. They do not claim FRS’s submissions misled them.
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`Second, Class Counsel argue (at 21) that the requirement of “a timely and
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`valid Claim Form,” means that, in order for a claim form to be processed, it must
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`contain information Class Counsel deem sufficient. But that interpretation is
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`inconsistent with the deficiency notice process that Class Counsel and the Claims
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`Administrator say will be conducted. See ECF No. 2120-1 ¶ 9, PageID.38482-
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`7
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`Case 2:12-md-02311-SFC-RSW ECF No. 2126, PageID.39107 Filed 03/10/21 Page 8 of 11
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`38483. If the Claims Administrator could reject, as not “valid,” any claim form
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`that, as of the claim-filing deadline, lacked sufficient information, there would be
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`no need to permit those with “some deficiency in the[ir] information or
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`documentation” to “submit additional information to correct the deficiency,” as
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`Class Counsel has said they will. ECF No. 2120-2 ¶ 17, PageID.38509. Contrary
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`to Class Counsel’s contention, FRS and Insurers do not seek to submit data “in
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`perpetuity.” See Ex. 1 ¶ 22. Rather, they ask to have the same opportunity as other
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`claimants to cure deficiencies in their claim forms by a date certain. Id. ¶¶ 20, 22.
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`There is no basis for treating “placeholder” claims differently from other claims.
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`Third, Class Counsel argue that, because FRS appealed the Court’s order
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`denying intervention, this Court lacks jurisdiction to decide FRS’s motion.4 But
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`post-deadline submission of vehicle data was not addressed in that order and
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`therefore is not part of FRS’s current appeal. FRS moved to intervene “solely” to
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`seek a “determination of the discrete legal issue concerning the Insurers’
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`subrogation rights.” ECF No. 2060 at 3, PageID.37707. The Court did not address
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`that issue or FRS’s request, contingent on “resolution of the subrogation issue,” to
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`“supplement [FRS’s and Insurers’] claims.” Id. at 18, PageID.37719.
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`4 They also argue (at 13-14) that only parties to this action can file motions,
`but that is wrong. Federal Rule of Civil Procedure 23(c)(2)(B)(iv) permits class
`members, without intervening, to “enter an appearance through an attorney[.]” That
`provision would be meaningless unless that attorney could participate in proceedings
`before the Court, including by pursuing relief on the class member’s behalf.
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`8
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`Case 2:12-md-02311-SFC-RSW ECF No. 2126, PageID.39108 Filed 03/10/21 Page 9 of 11
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`Finally, Class Counsel repeat their unsupported claim that processing
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`Insurers’ vehicle data would delay settlement distribution. First, none of the
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`processes or procedures Mr. Pinkerton described is necessary. Ex. 1 ¶¶ 15, 22.
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`Even now, the claims administration process appears to be in an early phase, as the
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`Claims Administrator still has not sent out deficiency notices, and, therefore, has
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`yet to process all of the additional vehicle information from claimants trying to
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`cure deficiencies. See id. ¶¶ 17-19.5 There is thus no basis in the record to
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`conclude that adding Insurers’ vehicle information to that mix would slow down
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`the Claims Administrator’s gradual process any further. The contentions by Mr.
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`Pinkerton on this topic are unfounded.
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`CONCLUSION
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`The Court should grant FRS’s Motion to Compel.
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`Dated: March 10, 2021
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`Respectfully submitted,
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` /s/ Laura S. Faussié
`Laura S. Faussié (P48933)
`FRASER TREBILCOCK DAVIS & DUNLAP, P.C.
`One Woodward Avenue, Suite 1550
`Detroit, MI 48226
`(313) 237-7300
`lfaussie@fraserlawfirm.com
`
`
`
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`5 Class Counsel’s claim (at 13) that FRS made “misleading solicitations,” is
`also baseless. See Ex. 1 ¶¶ 13-14; Ex. J.
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`9
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`Case 2:12-md-02311-SFC-RSW ECF No. 2126, PageID.39109 Filed 03/10/21 Page 10 of 11
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`
`
`Jonathan T. Walton, Jr. (P32969)
`Michael P. Donnelly (P45221)
`FRASER TREBILCOCK
` DAVIS & DUNLAP, P.C.
`One Woodward Avenue, Suite 1550
`Detroit, MI 48226
`(313) 237-7300
`jwalton@fraserlawfirm.com
`mdonnelly@fraserlawfirm.com
`
`Aaron M. Panner
`Matthew R. Huppert
`Daniel S. Severson
`KELLOGG, HANSEN, TODD,
` FIGEL & FREDERICK, P.L.L.C.
`1615 M Street, N.W., Suite 400
`Washington, D.C. 20036
`(202) 326-7900
`apanner@kellogghansen.com
`mhuppert@kellogghansen.com
`dseverson@kellogghansen.com
`
`Counsel for Financial Recovery
`Services, LLC
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`10
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`Case 2:12-md-02311-SFC-RSW ECF No. 2126, PageID.39110 Filed 03/10/21 Page 11 of 11
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`CERTIFICATE OF SERVICE
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`
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`I hereby certify that, on March 10, 2021, I electronically filed the foregoing
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`document with the Clerk of the Court using the ECF system, which will send
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`notification of such filing to counsel of record.
`
`
`
` /s/ Laura S. Faussié
`Laura S. Faussié
`
`
`
`
`
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