A federal appeals court has agreed to review a decision en banc that has alarmed class action lawyers on both sides for potentially threatening the viability of nationwide settlements.
In an order on Friday, the U.S. Court of Appeals for the Ninth Circuit granted en banc review of In re Hyundai and Kia Fuel Economy Litigation, a move that gained support not only from lawyers on both sides but numerous amici, including the American Tort Reform Association, Public Justice and the Impact Fund. The Ninth Circuit said it would review its Jan. 23 2-1 decision, which imposed what many lawyers considered a strict set of requirements for class action settlement approval. Two objectors had opposed a rehearing.
In a separate ruling, the Ninth Circuit set oral arguments for the week of Sept. 24 in Pasadena, California.
Steve Berman of Seattle’s Hagens Berman Sobol Shapiro, who petitioned for en banc review on behalf of the plaintiffs, said he was “quite pleased and looking forward to oral argument. We need to fix the issues this decision has created.”
Hyundai Motor America Inc., represented by Shon Morgan of Quinn Emanuel Urquhart & Sullivan in Los Angeles, said in a statement: “Hyundai continues to support the nationwide class action settlement that three years ago provided our customers with a choice in how they were made whole for Hyundai’s 2012 fuel economy ratings restatement. We are pleased that the Ninth Circuit has agreed to convene a re-hearing on the fairness of the proposed settlement.”
Kia Motors America Inc.’s lawyer, James Azadian of Dechert in Los Angeles, declined to comment.
In the original decision, the Ninth Circuit reversed certification of a nationwide class action settlement involving consumers who had sued Hyundai and Kia over misstatements about the fuel standards of their vehicles. The majority found that the district judge had failed to conduct an analysis over whether consumer laws in several states were so different from one another as to defeat the common claims of class members.
That analysis is enshrouded in Federal Rule 23 of Civil Procedure, which allows class actions if a judge “finds that the questions of law or fact common to class members predominate over any questions affecting only individual members.” The so-called predominance analysis is common in class certification arguments but, according to some lawyers, much less so at the settlement stage, when everyone wants to resolve the litigation.
The ruling was anticipated to upend or change nationwide settlements, with judges and objectors the most likely to raise the issue.
In fact, several federal judges, including those outside California, have cited In re Hyundai in their orders reviewing class action settlements or certification, but few have vacated those approvals based on the decision.
The decision has appeared in several high-profile cases, such as the $14.7 billion emissions settlement with Volkswagen, the $1.5 billion settlement with Syngenta, the $115 million data breach settlement with Anthem and a controversial settlement involving allegedly defective Remington rifles. Neither the Ninth Circuit in the Volkswagen case, nor the U.S. Court of Appeals for the Eighth Circuit in Remington, made much mention of the ruling in their decisions to affirm approval of the settlements. In the Syngenta settlement, U.S. District Judge John Lungstrum in Kansas and, in the Anthem settlement, U.S. District Judge Lucy Koh in the Northern District of California found no reason for In re Hyundai to upend approvals of those settlements.
Ted Frank of the Center for Class Action Fairness at the Competitive Enterprise Institute in Washington, D.C., is representing an objector who cited the decision in an appeal of antitrust settlements over lithium ion batteries before the Ninth Circuit. He said that reversal of the decision might affect his case, but it depends on the scope of the en banc’s ruling. If the en banc panel adopts the view of dissenting Judge Jacqueline Nguyen, who wrote that the majority’s opinion “deals a major blow” to nationwide class actions, it might not matter.
“The dissent said you don’t need to look at this unless it’s raised in the district court and we always raise it in the district court,” he said. “If, instead, they say a settlement is a settlement, and it’s a compromise, and you can pretend all these state law differences don’t matter, that’s bad. But it would also be wrong. We’ll just ask the Supreme Court to correct that down the road.”