In a case that has been ongoing since 2001, the New Jersey Supreme Court has agreed to hear an appeal by South Korean automaker Kia Motors of a $6.3 million class action award, plus counsel fees and costs, to more than 8,000 plaintiffs.
The litigation concerns the braking system of the Kia Sephia, discontinued in 2003.
The court on Dec. 6 granted Kia’s petition for certification in the matter and agreed to determine only the issue of damages, specifically the propriety of a jury’s decision a decade ago to award each member of the class $750.
The petition came after a three-judge Appellate Division panel, in a July published decision, reversed a Union County trial judge’s order. The judge in 2008 overturned the jury’s verdict, and the award of $681,850 in counsel fees and costs, and decertified the class.
“We hope the court will affirm the jury’s verdict,” said plaintiffs attorney Michael Donovan of the Donovan Litigation Group in Bala Cynwyd, Pennsylvania.
Kia’s attorney, Roberto Rivera-Soto, a former state Supreme Court justice now with the Cherry Hill office of Ballard Spahr, didn’t return a call seeking comment on the court’s decision to take up the case.
The case has had a tortuous history, repeatedly moving from the trial courts to the Appellate Division.
The plaintiffs charged that the Kia Sephia’s braking system didn’t adequately dissipate heat, causing pads and rotors to wear down at 10,000-mile intervals. In Kia’s own tests, the heat of the braking system was measured at 950 degrees, the plaintiffs alleged. Kia’s warranty didn’t cover brake components.
The plaintiffs were those who purchased the Sephia between 1997 and 2000—about 8,450 in number. Each stands to receive about $750 from the jury award, representing the estimated cost of repairing the brakes.
A jury in 2008 found that the automobile manufacturer breached its express and implied warranty to purchasers of the cars, and violated the terms of the 1975 Magnuson-Moss Warranty Act, which governs warranties on consumer products and allows prevailing plaintiffs to recover reasonable costs of suit, including attorney fees. That was a victory for the plaintiffs, but the jury also held that Kia did not violate New Jersey’s Consumer Fraud Act, and that there were no diminished values to the cars due to the faulty brakes.
The Union County verdict followed a $5.6 million verdict in a suit against Kia in Pennsylvania in 2005. A 47-state settlement that same year provided only $60,000 for the class, but exempted Florida, Pennsylvania and New Jersey.
According to court documents, following the Union County 2008 verdict, a judge, finding that individual issues predominated the case, later that year issued a judgment notwithstanding the verdict, decertified the class, and ordered a new trial on the repair damages. A motion to recertify the class was granted, and the jury’s finding of no diminution in value was reversed, in 2011, but the Appellate Division overturned that ruling the next year. A special master appointed on remand in 2013 found that only a fraction of the plaintiffs proved damages. The special master recommended damages of about $46,000. Then, in 2015, plaintiffs lawyers sought more than $6 million in fees and $481,850 in costs, though only $200,000 in fees were awarded, plus the costs sought.
The case again returned to the Appellate Division, which earlier this year issued a decision that reached back to 2008 and reversed the granting of judgment notwithstanding the verdict. Judge Ellen Koblitz, joined by Judges Thomas Manahan and Karen Suter, said a trial court would have to reach a new determination on counsel fees, as well as prejudgment interest. “The trial judge’s concern that the jury award would provide a windfall to class members who did not actually spend $750 in additional repair costs was inconsistent with principles of contract damages, and resulted in an unjust windfall to defendant, which produced no evidence to defeat [the] estimated damages,” Koblitz wrote for the appeals court.
But rather than a remand, the case is headed to the Supreme Court, thanks to the Dec. 6 order granting Kia’s petition for certification. The order sets due dates for supplemental briefing for February and March 2019.