9th Circuit sits en banc to settle its own conflicting rulings on class settlements

PASADENA -- The 9th U.S. Circuit Court of Appeals sat en banc Thursday to consider how district courts should certify class settlements, contemplating the implications that choice of law analysis has on broad national class actions.

What appears to be conflicting case law within the circuit came up numerous times during the hour-long argument.

"How do you reconcile Hanlon and Mazza?" Judge Milan D. Smith Jr. asked an attorney representing the plaintiff class of car purchasers.

"I think that's what a lot of us are struggling with," Smith continued. "We got two precedents, one that seems to deal with settlements, one that seems to deal with litigation class, but there's a lot of conflict between those two."

The appeal, now under submission, involves a challenge to a national settlement between plaintiffs who sued Kia and Hyundai motor companies for alleged misleading claims about their cars' fuel standards. In re Hyundai and Kia Fuel Econ. Litig., 2018 DJDAR 767 (9th Cir., Jan. 23, 2018).

In 2015, the litigants announced a $210 million settlement.

U.S. District Judge George H. Wu in Los Angeles gave his approval for the nationwide class, but in January, a three-judge panel of the 9th Circuit reversed the decision, when objectors from Virginia appealed the decision.

Judge Sandra Segal Ikuta authored the majority opinion, which was joined by Senior Judge Andrew J. Kleinfeld, ruling Wu erred by failing to do a choice of law analysis.

Ikuta pointed to, among other things, a 2012 9th Circuit opinion that reversed a nationwide class certification in litigation against Honda in articulating her ruling. Mazza v. Am. Honda Motor Co., 666 F.3d 581, 590 (9th Cir. 2012).

She said Federal Rule of Civil Procedure 23(b)(3)'s predominance inquiry weighed more heavily than Rule 23(a)'s commonality test, which was fatal to Wu's analysis.

But Judge Jacqueline Ngyuen dissented, pointing to older circuit precedents that approved of nationwide class certification in the settlement phase. Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998).

In January, when the three-judge panel decision was released, plaintiffs-side and corporate defense attorneys feared the new precedent could significantly hamper the ability of litigants to settle national class actions.

By July, the 9th Circuit announced it would review the decision sitting en banc.

"The settlement delivered an additional, at least, $97 million to the class and that was an outstanding result in terms of compensation," Steve W. Berman, the managing partner of Hagens Berman Sobol Shapiro LLP who represents plaintiffs, told the en banc panel Thursday.

But that argument highlighted a problem objectors to the settlement have raised, their attorney said.

"They want this court to forget all the requirements and all the protections of class certification and go straight to, 'Is the settlement fair?'" James B. Feinman, counsel to the objectors, told the court. He represents a number of objectors from Virginia who argue their home state laws provide causes of action that can result in more financially beneficial damages for the same claims alleged in the class action.

Their case was consolidated into the current litigation through the multi-district litigation process.

Smith was not alone in expressing concern about the difference between the Mazza and Hanlon case law within the circuit. Several other judges questioned the attorneys on the apparently conflicting authority.

But sitting as a full court, the 9th Circuit in the current appeal has the ability to reverse prior three-judge panel rulings. "Hanlon is a 9th Circuit opinion, Mazza is a 9th Circuit opinion. We're sitting en banc," Judge Marsha S. Berzon said at one point. "It might be more productive to discuss ... what's right."