Appeals Court To Reconsider Rejection Of Settlement Against Hyundai, Kia

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Appeals Court To Reconsider Rejection Of Settlement Against Hyundai, Kia


July 27, 2018

A federal appeals court in San Francisco agreed Friday to reconsider its decision to reject a settlement in a fuel economy suit against Hyundai and Kia by 900,000 customers, a ruling that would have made it harder for consumers and businesses to reach nationwide settlements in all class-action lawsuits.

Class-action suits are filed on behalf of consumers, employees or other individuals with a complaint against a business or government agency. A judge can grant them class-action status after finding that the complaints are basically the same and the plaintiffs are too numerous to hear their cases individually. Suits from different states can be consolidated in a single class action.

The suit against Hyundai and Kia alleged that the companies had overstated gas mileage for many of their models from 2011 to 2013. The U.S. Environmental Protection Agency found that the companies had misled customers and imposed a $100 million penalty in 2014, along with about $200 million that the automakers had agreed to reimburse their customers.

The suit sought further reimbursements and was tentatively settled for an amount estimated at $159 million or $210 million by judges in the appeals court case. A federal judge in Los Angeles approved the nationwide agreement, relying mainly on California consumer law, but was overruled in March by a panel of the Ninth U.S. Circuit Court of Appeals.

In a 2-1 ruling, the panel said judges considering nationwide settlements must first examine the laws of the states where the plaintiffs bought the product or claimed to have been harmed. If those laws differ, the court said, the case may not be sufficiently uniform to proceed as a class action.

The judge “must consider the impact of potentially varying state laws, because in a multistate class action, variations in state law may swamp any common issues,” Judge Sandra Ikuta said in the majority opinion, joined by Judge Andrew Kleinfeld.

Dissenting Judge Jacqueline Nguyen called the ruling “a major blow to multistate class actions.” Both the auto companies and their customers asked the court to reconsider, and on Friday the court said a majority of its judges had voted to set the ruling aside and hold a new hearing before an 11-judge panel in September.

Harvey Rosenfield, an attorney and founder of the group Consumer Watchdog who took part in the suit, said his organization had considered the settlement inadequate but was even more critical of the panel’s ruling.

“The decision would create a system in which it would be difficult to have national class actions,” Rosenfield said. “You’d have to resolve it state by state, and it would be very inefficient, much more expensive and chaotic, and would lead to different results.”

Bob Egelko is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @BobEgelko


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