In a closely watched case, the Ninth Circuit issued an 8-3 en banc decision reinstating a $210 million multidistrict class action settlement involving the fuel efficiency of Hyundai and Kia vehicles on June 6, 2019.
Through its decision, the Court overturned a previous panel decision from January 2018 that held that courts must weigh individual state consumer protection laws before certifying nationwide class action settlements. The earlier panel decision – ruling that variations in state laws could potentially defeat certification in a settlement class – caused much concern by both the defense and plaintiffs’ bars. Defendants often see value in a class settlement if it can result in nationwide peace. Plaintiffs counsel similarly viewed a state-by-state class settlement approach as less likely to result in successful settlements.
The en banc decision held that variations in state law did not defeat predominance. The Court went further to state: “Subject to constitutional limitations and the forum state’s choice-of-law rules, a court adjudicating a multistate class action is free to apply the substantive law of a single state to the entire class.”
The en banc Court’s ruling drew a sharp distinction between classes certified for settlement purposes and class certifications in adversarial situations. Because of the posture of class certification in settlement context, the Court held that issues that would cause substantial practical problems in having appropriate adjudication in class trial were irrelevant in the settlement context, because there would be no trial to be complicated by those factors. Therefore, though the en banc decision effectively limited the relevance of state law variations for classes certified as a part of the settlement, the decision does not provide a green light to certifying a class in the adversarial context where the ultimate impact of state law variations complications on a trial remain critical.
The case began after the Environmental Protection Agency found problems with Hyundai’s and Kia’s fuel efficiency testing procedures, prompting a correction in fuel efficiency estimates for vehicle model years 2011 through 2013. The ruling affirms a final settlement approval order and certification of a nationwide class of consumers by U.S. District Court Judge George H. Wu from June 2015.
The Court also rejected arguments from objectors claiming that the process was too burdensome and that lawyers for the class had improperly accepted a “sweetheart deal” that was not beneficial to the class. “Over the course of several years, the district court performed an admirable job of managing this complex litigation. After the settlement was announced, the district court held multiple status conferences and requested several rounds of briefing to ensure that all of the litigants’ concerns were heard and addressed. It made careful findings, which the objectors here largely do not challenge, and which more than support the judgment.”