Hyundai settlement parties petition for en banc rehearing

Parties to a $210 million settlement vacated by a split opinion from the 9th U.S. Circuit Court of Appeals that many feared would pose as a significant precedential roadblock to future nationwide class settlements have petitioned the court for a rehearing.

Attorneys for Kia Motors America Inc., Hyundai Motor America and a plaintiff class that settled with the auto manufacturers over allegedly misleading statements about vehicle gas emissions told the court that Judge Sandra S. Ikuta's majority decision was contrary to U.S. Supreme Court and circuit precedent and would be a roadblock for future attempts to settle nationwide class actions.

"Allowed to stand, the decision will not only sow confusion but obstruct fair and efficient resolution of class actions through this nation's most active class action circuit," wrote attorneys from Dykema Gossett LLC and Quinn Emanuel Urquhart & Sullivan LLP, which represent Kia and Hyundai respectively.

"[T]he new ground staked out by the panel increases the expense and uncertainty of nationwide settlements, which reduces their likelihood, contrary to public policy," wrote Hagens Berman Sobol Shapiro LLP lawyers who represent the plaintiffs.

Ikuta's January opinion, joined by Judge Andrew J. Kleinfeld, held that U.S. District Judge George H. Wu violated Federal Rule 23 of Civil Procedure by not properly considering whether conflicting state laws concerning the plaintiffs' claims were common among the class. In re: Hyundai and Kia Fuel Econ. Litig., 2018 DJDAR 767.

Evidence does not support the conclusion that purchasers of different makes and models addressed in the litigation were necessarily motivated to buy the cars they did because of emissions claims made by Kia and Hyundai, Ikuta wrote.

9th Circuit Judge Jacqueline H. Nguyen dissented from the lengthy opinion, saying Rule 23's requirements had been met, and that the majority's decision created a circuit split.

"The majority relies on arguments never raised by the objectors, contravenes precedent, and disregards reasonable factual findings made by the district court after years of extensive litigation," she wrote.

Lawyers who filed the en banc petitions on Thursday agreed, citing the 3rd and 7th circuits in Sullivan v. DB Investments, Inc., 667 F.3d 273, 301-02 (3d Cir. 2011) and In re: Mex. Money Transfer Litig., 267 F.3d 743, 747 (7th Cir. 2001), which both held that variations in state laws did not necessarily defeat predominance requirements in class actions.

The tandem petitions also said Ikuta's decision contravened precedent established Hanlon v. Chrysler Corp., 150 F3d 1011 (9th Cir. 1998). The circuit decision affirmed a nationwide class settlement over state law variations.

Settlement lawyers also argued the opinion was contrary to U.S. Supreme Court precedent established in Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 619 (1997), which they said held that judges presiding over settlements do not need to consider variation in law from all 50 states to grant approval.

An order issued by the court Friday gave objectors three weeks to respond to the en banc petitions, at which point the court's active judges will vote on whether to rehear the case.

Kia is represented by Dykema lawyers Dommond E. Lonnie, Brian H. Newman and James S. Azadian. Hyundai is represented by Quinn Emanuel partner Shon Morgan. Steve W. Berman and Robert B. Carey of Hagens Berman represent the plaintiffs.

James B. Feinman of James B. Feinman & Associates in Lynchburg, Virginia and Edward W. Cochran of Shaker Heights, Ohio represented objectors before the 9th Circuit. Neither responded to requests for comment.