SAN FRANCISCO -- The Ninth Circuit Court of Appeal has ruled a trial court abused discretion in a class action certification for a foreign car manufacturer. 

Judge Sandra Ikuta and Judge Andrew Kleinfeld concurred, and Judge Jacqueline H. Nguyen dissented in the Class Action Fairness Act (CAFA) determination that a trial court abused its discretion in a suit between Hyundai and Kia v. and Fuel Economy for misstatements by the defendants regarding the fuel efficiency of their vehicles in a Jan. 23 opinion.  

According to objectors, the districts court consolidating the case into class action would impair the fair and adequate approval of the settlement and as well as attorney fees, specifically related to the Rule 23 predominance, which should have been based on changing state laws. Based on Mazza v. Am. Honda Motor Co. 2012, the panel held the district court did in fact commit an error.

“In rejecting objections that the proposed attorneys’ fees awards were excessive and not in proportion to the benefit conferred on class, the district court noted that the attorneys’ fees did not impact class recovery because they were awarded separately, and so the issue of collusion did not arise,” Ikuta wrote in the opinion. Further, the court stated that the fees were in most cases less than the amount requested by counsel.”

Before analyzing the case that the district court can still certify as a class on remand, Ikuta clarified attorney fees awards in the district court’s class action authority that was handed over based on the controversy exceeding $5 million and which was comprised of at least 100 plaintiffs who were not all from the same state.

Citing Wal-Mart Stores Inc. v. Dukes 2011, the judge noted class action is an omission to the common rule that a hearing is conducted on behalf of the individual named parties exclusively. She stated that Rule 23 predominance inquiry, based Amchem Prods., Inc. v. Windsor 1997, is far more challenging than Rule 23’s commonality prerequisite.

Referring back to Mazda, “the class action proponent must establish that the forum state’s substantive law may be constitutionally applied to the claims of a nationwide class,” Ikuta wrote, adding, “As with any other requirement of Rule 23, plaintiffs seeking class certification bear the burden of demonstrating through evidentiary proof that the laws of the affected states do not vary in material ways that preclude a finding that common legal issues predominate.”

She noted that although Mazza did not address the predominance question, “its vacatur of the district court’s class certification order established that plaintiffs had failed to show that common questions would predominate over individual issues,” according to the opinion.

Ikuta then turned to the Environmental Protection Agency (EPA) Clean Air Act and how the EPA concluded Hyundai and Kia lower their fuel efficiency estimates for the manufacturers specific models and offer the voluntary lifetime reimbursement program (LRP) to compensate affected vehicle owners and lessees for the extra fuel costs they had suffered or would incur due to overstated fuel efficiency approximations.

She said in the agreement class members participating in the LRP could choose to forego any of the settlement options and simply remain in the preexisting LRP while offering class members not registered a deadline to do so. Used car owners were involved in the class, but only allowed half the what new car owners would receive. In 2014, class certification was granted regardless of any address to state law variations.

“Because the district court erred in certifying a settlement class, we must vacate the class certification. This does not mean that the court is foreclosed from certifying a class (or subclasses) on remand,” Ikuta wrote in the opinion. “We make no ruling on this issue, and merely note that Mazza determined that no such class was possible in a closely analogous case.”

But before the case moved forward, Nguyen noted why in decertifying there was the chance no one would recover any damages.

“Settlement at least allows damages for some members of the class where damages might otherwisebe unobtainable for any member of the class,” Nguyen wrote in the opinion. “Because the district court committed no error.”

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