Friday, June 7, 2019
Majority of En Banc Panel Says District Court Properly Certified a Class in Multidistrict Litigation Based on Car-Makers’ Exaggeration of Fuel Efficiency; $9 Million Attorney Fee Award Affirmed
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals, sitting en banc, yesterday affirmed the District Court’s approval of a $210 million settlement of a nationwide class action against Hyundai Motor Co. and Kia Motors Corp. based on their inflated estimates of their vehicles’ fuel economy.
Circuit Judge Jacqueline Nguyen wrote for herself and seven colleagues. Two judges joined in the dissent by Circuit Judge Sandra S. Ikuta and one judge partially agreed with her.
A contrary decision was rendered Jan. 21 by a three-judge panel. In that opinion, Ikuta wrote for the majority and Nguyen dissented.
The settlement, approved by District Court Judge George Wu of the Central District of California on June 11, 2015, ended litigation in 56 consolidated cases. Under the terms, nearly $9 million is allocated for attorney fees and costs.
Commonality Requirement Met
Those objecting to the settlement argued that Wu erred in certifying the class for settlement purposes because there was not a predominance of common factual or legal issues. Nguyen wrote:
“[H]ere, class members were exposed to uniform fuel-economy misrepresentations and suffered identical injuries within only a small range of damages. Further…, no material conflicts existed among class members.”
It was argued that purchasers of used cars manufactured by the defendants might not have seen the representations as to fuel efficiency. The judge responded that the “argument ignores the district court’s finding that the alleged misrepresentations were made ‘uniformly’—not only on the Moronery stickers, but also in ‘nationwide advertising.’ ”
She explained in a footnote: “Monroney sticker is ‘the label placed on new automobiles with the manufacturer’s suggested retail price and other consumer information’…, including information about the vehicle’s fuel efficiency.”
Those stickers are required only for new cars.
Used Car Purchasers
The jurist went on to say:
“When misrepresentations are made as part of a nationwide, concerted marketing effort, it makes no difference to the predominance analysis whether consumers encounter them in different guises….Whether or not Hyundai’s and Kia’s advertising was substantial enough to support an inference of reliance…, the potential individual questions of reliance for used-car purchasers do not predominate in the context of this proposed settlement class.”
“That some individualized issues might need to be addressed does not in and of itself defeat predominance….Indeed, this sort of individual question would only apply to a subset of the class (used-car purchasers) and would primarily implicate trial management issues, which we do not consider when conducting a predominance analysis for a settlement class.”
State Law Variances
In the multidistrict litigation (“MDL”) before Wu, cases that were consolidated came from districts in various states across the nation. Objectors argued that Wu, in certifying a class, failed to take into account variances in state laws.
“Subject to constitutional limitations and the forum state’s choice-of-law rules, a court adjudicating a multistate class action is free to apply the substantive law of a single state to the entire class,” Nguyen wrote, adding:
“Here, no party argued that California’s choice-of-law rules should not apply to this class settlement arising from an MDL in a California court.”
The judge rejected the contention that the attorney fees were exorbitant.
“Over the course of several years, the district court performed an admirable job of managing this complex litigation. After the settlement was announced, the district court held multiple status conferences and requested several rounds of briefing to ensure that all of the litigants’ concerns were heard and addressed. It made careful findings, which the objectors here largely do not challenge, and which more than support the judgment.”
In her dissent, Ikuta said that Wu certified a class “without determining what law applied to the plaintiffs’ claims” and “then awarded attorneys’ fees without determining the value of the benefit the class derived from the settlement.”
“Here, the district court failed to make a reasonable effort to determine the value of the settlement, instead relying on a speculative estimate provided by the settling parties during the preliminary approval process, which valued the proposed settlement at $210,000,000. When relying on this unsupported figure, the district court noted that it expected ‘an update from the Settling Plaintiffs and defendants as to the amount of settlement funds which class members have in fact claimed.’ But the district court never got this update, nor did it take any other steps to determine the benefits provided by the settlement.”
Conflict in Footnotes
Nguyen declared in a footnote that the court did receive an update, saying that “on June 11, 2015, defense counsel confirmed…that the calculations did not differ ‘in a material way’ from the numbers discussed in the court’s tentative order.” Ikuta responded, in a footnote, that Nguyen’s assertion is “unsupported by the record” and that there was merely an “ambiguous colloquy.”
Wu’s participation in the colloquy, she maintained, “does not constitute a reasonable judicial effort to determine the value of the settlement.”
“Our court, like many others, leans toward approving class certifications and class settlements, which benefit both defendants (who are relieved of significant liability in a single stroke) and class counsel (who are amply rewarded for their efforts).”
She said that “despite any such judicial inclinations,” there must be adherence to the mandate by the U.S. Supreme Court in the 1997 case of Amchem Products, Inc. v. Windsor “that courts must be rigorous in ensuring” that the prerequisites for class certification are met.
The case is In re Hyundai and Kia Fuel Economy Litigation, 15-56014.
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