Disparate state laws prevent class action against Hyundai in faulty power steering case

By Elizabeth Alt | Apr 20, 2018

LOS ANGELES - The United States District Court for the Central District of California dismissed the majority of claims brought by Oregon residents who alleged that Hyundai Motor Co. knowingly put defective power steering in its vehicles. 

The reasoning behind the dismissal, however, has nothing to do with Hyundai. The case was rejected due to the plaintiffs' desire to certify their lawsuit as a nationwide class-action. Noting the precedent set by the California courts, Justice David O. Carter dismissed the lawsuit due to the material differences in California and Oregon laws.

On April 10, the court dismissed the claims brought under California’s Unfair Competition Law, False Claims Act, and Consumer Legal Remedies Act, but denied dismissing the plaintiffs’ claims under Oregon’s Unlawful Trade Practices Act (UTPA), which allege Hyundai fraudulently concealed the malfunction in its power steering.

Two Oregon residents sued Hyundai in June in the California courts on behalf of themselves and a nationwide class of individuals for an alleged defect that caused the power steering in Hyundai vehicles to stop working, making the steering wheel lock or become difficult to turn. 

The plaintiffs' claimed that Hyundai knew of the defect as the company recalled certain year models of the Hyundai Sonata and Elantra. Houston Vinci and Jaehan Ku both claimed they experienced driving problems because of the steering defect and said they wouldn’t have purchased the vehicles had they known of the defect.

Hyundai filed a motion to dismiss the claims in October. Pointing to decisions in lawsuits against Honda and Mazda, Hyundai argued that the plaintiffs are governed by “choice of law” since they purchased their vehicles in Oregon and are governed by the laws of that state. Hyundai stated that the plaintiffs cannot “pursue a nationwide class” and motioned for the plaintiffs’ claims to be dismissed, along with claims of implied warranty and a breach of express warranty. 

Hyundai’s motion to dismiss stated the plaintiffs failed to allege either a particular purpose or that the vehicles were unfit to sell, and stated the plaintiffs did not allege a breach of express warranty.

Carter noted that California’s warranty, consumer protection and other laws are different than other states, as Hyundai referred to in its motion, quoting a U.S. District Court of Appeals for the Ninth Circuit ruling that “decertified a nationwide class due to variances between California consumer protection laws and those of other states.”

Carter said that “each of the other 49 states has an interest in applying its own laws to the vehicle purchases within their borders," and refers to the Ninth Circuit ruling that said “each foreign state has an interest in applying its law to transactions within its border and ... if California law were applied .. foreign states would be impaired in their ability to calibrate liability to foster commerce.”

Dismissing the claims brought as a nationwide class, Carter said, “Plaintiffs’ nationwide claims are not warranted, and each plaintiff’s individual claims must be governed by the laws of their home state.”

“Until plaintiffs indicate which states’ laws support their claim, the court cannot assess whether the claim has been adequately pleaded... . If plaintiffs re-plead these claims, they must identify which state or states’ laws they rely upon," Carter noted. 

The court dismissed without prejudice the claims for breach of warranty, breach of express warranty, breach of implied warranty, fraudulent concealment and unjust enrichment; and notified the plaintiffs they have until April 30 to amend their complaint.

U.S. District Court Central District of California case No. SA CV 17-099

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