The U.S. Court of Appeals for the Ninth Circuit has upheld a nationwide settlement in a case involving allegations that automakers Hyundai and Kia misrepresented the fuel economy standards of some vehicles, resulting in economic harm to car buyers.
After several years of class action litigation, settling parties in multiple actions agreed to a settlement that provided four options for compensation: a lump sum payment for the approximate additional fuel cost; a dealer service debit card worth 150% of the lump sum payment; a new car purchase certificate worth 200% of the lump sum; or enrollment in a reimbursement program that would provide recurring payments over the class member’s period of ownership.
Various objectors appealed the district court’s final approval of the settlement, arguing that the proposed classes were not sufficiently similar to survive a predominance inquiry under Rule 23. A divided three-judge panel of the Ninth Circuit vacated the class certification, holding that the district court abused its discretion by failing to analyze variations in state law. But a majority of the nonrecused active judges in the Ninth Circuit voted to rehear the case en banc. In its opinion, the court limited its review to whether the district court correctly selected and applied the criteria for class certification, and held that the trial court did not abuse its discretion in finding that common issues predominated. In addition, the panel rejected challenges to the fairness of the settlement.
In doing so, the court agreed with arguments set forth in an amici brief filed by Public Policy Group Partners Phil Goldberg and Cary Silverman with Of Counsel Christopher Appel, on behalf of the Association of Global Automakers and the American Tort Reform Association.
The amici brief explained that the differences in state consumer protection laws should lead to the denial of class certification for litigation purposes, but that settlement classes are different. With settlement classes, the key factor is the overall fairness to all parties. The Ninth Circuit noted that “the criteria for class certification are applied differently in litigation and settlement classes,” and that the primary concern in certifying a litigation class is manageability at trial, which is not at issue in a settlement class. The court stated that for a settlement class, the primary concern is the risk of collusion among the parties that will result in a failure to protect absent class members, but that there were no signs of collusion in this case and that the proposed settlement was fair.
The case is In re: Hyundai and Kia Fuel Economy Litig., Case No. 15-56014 (9th Cir.).