Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-md-02672/USCOURTS-cand-3_15-md-02672-150/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 15:2301 Magnuson-Moss Warranty Act

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United States District Court 

Northern District of Californi

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UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

IN RE: VOLKSWAGEN “CLEAN DIESEL” 

MARKETING, SALES PRACTICES, AND 

PRODUCTS LIABILITY LITIGATION 

_____________________________________/ 

This Order Relates To: 

Dkt. Nos. 2872, 2935 

______________________________________/ 

MDL No. 2672 CRB (JSC) 

ORDER GRANTING CITY 

CHEVROLET’S MOTION TO 

ENFORCE THE SETTLEMENT 

AGREEMENT AND DENYING 

MISSION BAY’S MOTION TO 

INTERVENE 

 This MDL consists of various actions brought by consumers, dealers, securities plaintiffs, 

and government agencies against Volkswagen based on its use of a defeat device—software 

designed to cheat emissions tests and deceive federal and state regulators—in nearly 600,000 

Volkswagen-, Porsche-, and Audi-branded turbocharged direct injection (TDI) diesel engine 

vehicles sold in the United States. As related to lawsuits brought by Volkswagen franchise 

dealers, the Court granted final approval of the Volkswagen Branded Franchise Dealer Class 

Action Settlement and Release (“Settlement”) on January 23, 2017. (See Dkt. Nos. 1970, 2802, 

2807.) The Settlement provides certain benefits to the Franchise Dealer Class consisting of “all 

authorized Volkswagen dealers in the United States who, on September 18, 2015, operated a 

Volkswagen branded dealership pursuant to a valid Volkswagen Dealer Agreement.” (Dkt. No. 

1970 ¶ 2.4.) 

Now before the Court are (1) Class Member City Chevrolet’s (“City Chevrolet”) motion to 

enforce the Settlement (Dkt. No. 2872), and (2) non-Class Member Mission Bay Motors, Inc.’s 

(“Mission Bay”) motion to intervene to object to and oppose City Chevrolet’s motion to enforce 

(Dkt. No. 2935). At issue is whether City Chevrolet or Mission Bay (which purchased the City 

Volkswagen dealership from City Chevrolet pursuant to an Asset Purchase Agreement on or about 

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August 1, 2016) is entitled to the monetary payments from Volkswagen under the Franchise 

Dealer Settlement. Having considered the parties’ written submissions, the Court concludes that 

oral argument is unnecessary, see Civ. L.R. 7-1(b), and GRANTS City Chevrolet’s motion to 

enforce the Settlement and DENIES Mission Bay’s motion to intervene. 

BACKGROUND 

I. Franchise Dealer Settlement 

On September 30, 2016, Lead Plaintiff J. Bertolet, Inc. dba J. Bertolet Volkswagen, 

through Class Counsel Hagens Berman and Bass Sox Mercer, filed a Volkswagen-Branded 

Franchise Dealer Amended and Consolidated Class Action Complaint against Volkswagen and 

Bosch for claims under the Automobile Dealers’ Day in Court Act, 15 U.S.C. § 1221 et seq., and 

the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(C)-(D). (See Dkt. No. 

1969.) On that same day, Plaintiff filed a proposed Settlement seeking to resolve all claims of the 

Franchise Dealer Class against Volkswagen. (See Dkt. No. 1970.) The Settlement defines the 

Franchise Dealer Class as “all authorized Volkswagen dealers in the United States who, on 

September 18, 2015, operated a Volkswagen branded dealership pursuant to a valid Volkswagen 

Dealer Agreement.” (Id. ¶ 2.4.) The Court preliminarily approved the Settlement on October 18, 

2016. (See Dkt. No. 2077.) 

As part of the final approval process, Mission Bay filed an objection with the Court as to 

the definition of the Franchise Dealer Class. In particular, Mission Bay, which purchased the City 

Volkswagen dealership from City Chevrolet on or about August 1, 2016, objected to the 

requirement that Class Members have operated a Volkswagen branded dealership on September 

18, 2015, i.e., before Mission Bay became a Volkswagen franchise dealer. (See Dkt. No. 2278.) 

The Court granted final approval of the Settlement on January 23, 2017. (See Dkt. No. 2807.) In 

its final approval order, the Court concluded that Mission Bay (dba City Volkswagen) was not a 

Class Member and therefore declined to consider Mission Bay’s objection to the Class definition. 

(See id. at 22 (“Thus, City VW is not a Class Member, and the Court need not consider its 

objection.”) (citation omitted).) 

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II. Dispute Over Settlement Payments 

Under the Settlement, Class Members must sign an Individual Release in order to receive 

monetary payments from Volkswagen. In particular, the Settlement provides that Volkswagen 

shall pay to Class Members “(a) the Initial Payment within 30 days of the later of: (1) the Opt-Out 

Deadline; or (2) the date their signed release is obtained, and (b) the 18 equal Monthly Installment 

Payments starting within 30 days after the Initial Payment is made.” (Dkt. No. 1970 ¶ 4.1.5.) City 

Chevrolet provided a signed and effective Individual Release to Volkswagen on January 27, 2017. 

(See Dkt. No. 2872-1 ¶ 2.) Thus, according to City Chevrolet, Volkswagen should have paid the 

Initial Payment to it on or before February 27, 2017. (See Dkt. No. 2872 at 5-6.) 

Volkswagen, however, has delayed making the Initial Payment and any subsequent 

Monthly Installment Payments in light of a state court action in the County of San Diego brought 

by Mission Bay against City Chevrolet and Volkswagen. In that case, Mission Bay asserts claims 

for fraud and breach of contract arising from its Asset Purchase Agreement with City Chevrolet. 

(Dkt. No. 2933 at 2-3 & n.3.) As Mission Bay puts it, “Pursuant to its Agreement with City 

Chevrolet, Mission Bay Motors is the express contractual assignee of City Chevrolet with respect 

to any and all proceeds, benefits, or other income of any nature whatsoever paid by Volkswagen 

on or after August 1, 2016. The scope and breadth of this express assignment absolutely extends 

to the Franchise Dealer class action settlement proceeds.” (Id. at 3.) Volkswagen seeks to delay 

making payments under the Settlement until the state court has resolved whether Mission Bay or 

City Chevrolet is entitled to such payments. 

City Chevrolet now moves to enforce the Settlement against Volkswagen to start receiving 

payments, while Mission Bay moves to intervene in order to object to City Chevrolet’s receipt of 

payments. (See Dkt. Nos. 2872, 2935.) 

DISCUSSION 

I. Mission Bay’s Motion to Intervene 

Federal Rule of Civil Procedure 24 provides for intervention in two different ways: 

intervention as of right under Rule 24(a) or permissive intervention under Rule 24(b)(1). Mission 

Bay moves only for permissive intervention pursuant to Rule 24(b)(1)(B). (See Dkt. No. 2935.) 

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Under Rule 24(b)(1)(B), a court “may permit anyone to intervene who: . . . (B) has a claim 

or defense that shares with the main action a common question of law or fact.” Fed. R. Civ. P. 

24(b)(1)(B). “An applicant who seeks permissive intervention must prove that it meets three 

threshold requirements: (1) it shares a common question of law or fact with the main action; (2) its 

motion is timely; and (3) the court has an independent basis for jurisdiction over the applicant’s 

claims.” Donnelly v. Glickman, 159 F.3d 405, 412 (9th Cir. 1998) (citation omitted). “The 

proposed intervenor bears the burden to demonstrate that it has satisfied the requirements for 

intervention.” Moore v. Verizon Commc’ns Inc., No. C 09-1823 SBA, 2013 WL 450365, at *16 

(N.D. Cal. Feb. 5, 2013) (citation omitted). “Even if an applicant satisfies those threshold 

requirements, the district court has discretion to deny permissive intervention.[ ]In exercising its 

discretion, the district court must consider whether intervention will unduly delay the main action 

or will unfairly prejudice the existing parties.” Donnelly, 159 F.3d at 412 (citations omitted). 

The Court concludes that Mission Bay has not satisfied the first permissive intervention 

requirement and therefore does not reach the other two requirements. Mission Bay argues that the 

first requirement is met because “[b]oth parties [Mission Bay and City Chevrolet] claim an 

entitlement to the same Franchise Dealer class action settlement proceeds; City Chevrolet as 

putative class member, and Mission Bay Motors as assignee of putative class member.” (Dkt. No. 

2935 at 6.) Further, Mission Bay contends, “[t]he claims asserted by Mission Bay Motors in 

opposition to the pending City Chevrolet motion are directly relevant to the merits of the claims of 

the plaintiff class, and therefore the approved class action settlement.” (Id. at 6-7.) 

Mission Bay’s arguments are unpersuasive because City Chevrolet’s rights set forth in the 

Franchise Dealer Settlement are separate and independent from any rights Mission Bay and City 

Chevrolet may have under their Asset Purchase Agreement (to which Volkswagen is not even a 

party). As Mission Bay acknowledges, and as the Court has already found, Mission Bay is not a 

Franchise Dealer Class Member. (See Dkt. No. 2807 at 22.) Mission Bay thus is not a party to the 

Franchise Dealer Settlement and has no rights or other entitlements under the Settlement. To the 

contrary, any recovery that Mission Bay may be entitled to would arise from the Asset Purchase 

Agreement and would come directly from City Chevrolet—not Volkswagen. Furthermore, despite 

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Mission Bay’s assertion to the contrary, it is unclear how the dispute as to the scope of the Asset 

Purchase Agreement is in any way “relevant to the merits of the claims of the plaintiff class.” 

(Dkt. No. 2935 at 7.) Indeed, the parties to the MDL entered into, and the Court approved, the 

Franchise Dealer Settlement without having ever considered the Asset Purchase Agreement. 

In short, there is no common question of law or fact between Mission Bay’s Asset 

Purchase Agreement contract dispute and City Chevrolet’s motion to enforce the Settlement here 

in the MDL. Accordingly, permissive intervention is not warranted and the Court DENIES 

Mission Bay’s motion. 

II. City Chevrolet’s Motion to Enforce the Settlement Agreement 

City Chevrolet provided its Individual Release to Volkswagen on January 27, 2017 and 

thus was entitled to start receiving payments on or before February 27, 2017. (See Dkt. No. 1970 

¶ 4.1.5.) Volkswagen does not dispute that City Chevrolet has complied with the terms of the 

Settlement. Instead, concerned about potential double liability from both City Chevrolet and 

Mission Bay, Volkswagen is currently withholding any settlement payments and asks the Court to 

“(a) reject Mission Bay’s argument that it is entitled to the Individual Dealer Settlement Payment 

under the terms or ‘spirit’ of the Franchise Dealer Settlement; (b) reserve for the state court the 

question of whether City Chevrolet assigned that payment to Mission Bay under the APA; and (c) 

enter an Order deferring VWGoA’s payment to either dealership until after the state court decides 

which entity is entitled to the settlement payment, which VWGoA would facilitate by filing an 

interpleader complaint in the California state court.” (Dkt. No. 2941 at 3.) 

As for (a), the Court reaffirms its earlier finding that Mission Bay is not a Class Member 

and thus not a party to the Franchise Dealer Settlement; Mission Bay therefore is not entitled to 

any benefits pursuant to the Settlement, under its express terms or otherwise. Regarding (b), all 

parties and the Court are in agreement that the California state court should decide the contract 

dispute relating to the Asset Purchase Agreement. (See, e.g., id.; Dkt. No. 2933 at 5 (“The 

assignment rights now claimed to be unconditionally held by Mission Bay Motors can and should 

only be fully adjudicated in the pending state court action.”).) 

Under (c), however, the Court declines to defer Volkswagen’s obligations to make 

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settlement payments to City Chevrolet, as neither Volkswagen nor Mission Bay has presented a 

legal basis to do so.1 While the parties have made arguments relating to state interpleader 

proceedings, the Court notes that, based on the record before it, there is no indication that 

Volkswagen has filed an interpleader complaint in California state court. Moreover, the Court is 

not persuaded that interpleader proceedings would even be appropriate because there is no risk 

that Volkswagen would be subject to double liability under the Settlement. See Cal. Civ. Proc. 

Code § 386(b) (“Any person, firm, corporation, association or other entity against whom double or 

multiple claims are made, or may be made, by two or more persons which are such that they may 

give rise to double or multiple liability, may bring an action against the claimants to compel them 

to interplead and litigate their several claims.”) (emphasis added). As City Chevrolet correctly 

states, “Mission Bay Motors does not have a claim to the Settlement Payment pursuant to the 

Settlement Agreement. It has a potential claim against City Chevrolet under the Asset Purchase 

Agreement. City Chevrolet has the claim against VW under the Settlement Agreement.” (Dkt. 

No. 2872 at 10; see also id. at 9 (“Here, if VWGoA distributes the Settlement Payment to City 

Chevrolet, Mission Bay Motors has no cause of action against VWGoA because it had no contract 

with VWgoA, is not a class member, and has no lien rights that would attach to the Settlement 

Payment.”).) To the extent Mission Bay believes it is entitled to recover any funds from City 

Chevrolet pursuant to the Asset Purchase Agreement, it may attempt to do so through its pending 

state court action.2 

In sum, City Chevrolet has complied with the terms of the Settlement and Volkswagen is 

obligated to begin making payments to City Chevrolet. Mission Bay’s state court action relating 

to the Asset Purchase Agreement provides no basis to delay Volkswagen making such payments. 

Therefore, City Chevrolet’s motion to enforce the Settlement is GRANTED. 

 

1

 While the Court has denied Mission Bay’s motion to intervene, the Court nevertheless considers 

Mission Bay’s response to City Chevrolet’s motion to enforce for the sake of completeness. 

2

 Similarly, if Mission Bay believes its City Volkswagen dealership has been harmed by the public 

disclosure of Volkswagen’s use of the defeat device, it may bring a suit against Volkswagen for 

any such harm, as it is not a party to the Settlement and therefore is not bound by the judgement 

and release of claims. Notably, any such suit would not subject Volkswagen to double liability 

under the Settlement because Mission Bay would be seeking damages apart from the Settlement. 

Case 3:15-md-02672-CRB Document 3003 Filed 03/06/17 Page 6 of 7
United States District Court 

Northern District of Californi

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