In re Hyundai and Kia Fuel Economy Litigation

Class action settlement approval

9th U.S. Circuit Court of Appeals

Judge Jacqueline H. Nguyen

Appellees' attorneys: Quinn Emanuel Urquhart & Sullivan LLP, Shon Morgan, Joseph R. Ashby, Karin A. Kramer; Dykema Gossett LLP, James S. Azadian, Dommond E. Lonnie, Brian H. Newman; Hagens Berman Sobol Shapiro LLP, Robert B. Carey, John M. DeStefano, Steve W. Berman; McCune Wright Arevalo, Richard D. McCune; Elaine S. Kusel

Objector/appellants' attorneys: James B. Feinman & Associates, James B. Feinman; George W. Cochran; Edward W. Cochran; John J. Pentz

To save a $200 million nationwide class action settlement over carmakers' allegedly overstated fuel economy claims, lawyers for Hyundai and Kia had to persuade the 9th U.S. Circuit Court of Appeals to reconsider en banc an unfavorable panel decision over the standard for certifying such deals.

James S. Azadian of Dykema Gossett PLLC, representing Kia, and Shon Morgan of Quinn Emanuel Urquhart & Sullivan LLP, representing Hyundai, were arguing against a 2-1 panel ruling that threw out the settlement and criticized the trial court for not analyzing the consumer protection laws of several states before giving the settlement the green light. In effect, the panel held that settlement classes must be held to the same standards as litigation classes in such cases.

James S. Azadian

Azadian said the panel opinion would have required lawyers and the courts to conduct an all-50-states analysis of consumers' claims, making it practically impossible to settle nationwide class actions.

The en banc court voted 8-3 to reverse the panel's opinion and affirm the settlement. It held that there is no requirement, absent sufficient showing from an objector, that the trial court must analyze variances of state laws at the settlement stage.

The district court did not abuse its discretion in finding that common issues predominated, because class members misled by uniform fuel economy misrepresentations suffered identical injuries, 9th Circuit Judge Jacqueline Nguyen wrote for the en banc panel majority. In re Hyundai and Kia Fuel Economy Litigation, 2019 DJDAR 4888 (9th Cir. en banc opinion, filed June 6, 2019).

"What ultimately persuaded the en banc panel was our argument about practicality," Azadian said. "In settlements there is no question of liability. It's out of the equation. No one is pointing the finger. Once the court understood that really fundamental fact about settlements, they could see it doesn't matter at all whether there is a distinction among the states' liability laws. We were losing the forest for the trees. A myopic view of a single leaf led to the throwing out of a $200 million settlement."

Added Morgan: "The en banc panel was trying to get things back to normal. There were trial courts throughout the country sidelining pending class settlements and the plaintiff and defense bars alike joined together in a public outcry over the panel opinion. The en banc decision meant the settlement was final. It was a long-delayed process for the class, but the funds are flowing now."

-- John Roemer