Caitlin Ahearn v. Hyundai Motor America
881 F.3d 679
| 9th Cir. | 2018Background
- EPA found in 2012 that Hyundai and Kia used improper fuel-efficiency test procedures for many 2011–2013 models, prompting corrected MPG estimates and a voluntary Lifetime Reimbursement Program (LRP) covering ~900,000 vehicles.
- Multiple putative nationwide class actions were filed and centralized as MDL No. 2424 in the Central District of California; parties negotiated a nationwide settlement offering lump-sum payments, dealer/service credits, or continuation of the LRP.
- The district court certified a nationwide settlement class under Federal Rule of Civil Procedure 23(b)(3) without applying California choice-of-law rules or resolving material differences among state consumer-protection laws; it preliminarily and finally approved the settlement and awarded roughly $9 million in attorneys’ fees using an enhanced lodestar.
- Objectors (including plaintiffs from a Virginia action) challenged certification, settlement fairness, and fees, arguing variations in state law and individualized reliance issues (especially for used-car owners) defeated predominance.
- The Ninth Circuit majority vacated class certification and remanded, holding the district court abused its discretion by failing to perform the required choice-of-law and rigorous Rule 23(b)(3) predominance inquiry for a nationwide settlement class; it also instructed on principles for fee review on remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court had to apply California choice-of-law rules before certifying a nationwide settlement class | Plaintiffs (settling parties) argued certification may proceed for settlement purposes and detailed choice-of-law need not be resolved pre-certification | Objectors (and Hyundai/Kia earlier) argued California choice-of-law rules require analysis; material state-law variations may govern out-of-state claims and defeat predominance | Vacated certification: court must apply forum choice-of-law rules and determine whether multiple states’ laws apply and if variations defeat predominance before certifying a nationwide settlement class |
| Whether variations in state consumer-protection laws defeated predominance under Rule 23(b)(3) | Plaintiffs argued common questions (accuracy of MPG statements, defendants’ knowledge) predominated and varying remedies are manageable or minor | Objectors argued material differences (elements, remedies, statutes of limitation) among states swamp common issues and preclude class treatment | Held: district court erred by not analyzing material state-law variations; plaintiffs bear burden to show variations will not defeat predominance; remand required |
| Whether classwide reliance may be presumed for used-car owners and others | Plaintiffs relied on Monroney stickers and nationwide advertising to presume classwide exposure/reliance | Objectors argued used-car purchasers are less likely exposed (Monroney stickers not required for used sales) creating individualized reliance issues | Held: court cannot presume exposure for used-car owners without record evidence of pervasive advertising reaching them; inclusion of used-car owners required narrower class definition or individualized proof |
| Whether district court adequately justified attorneys’ fees (lodestar + multipliers) | Plaintiffs/counsel argued lodestar with multipliers appropriate given complexity, risk, and settlement value; court need not re-evaluate when fees paid separately | Objectors argued court failed to compute actual settlement value vs. claimed value, improperly applied multipliers without sufficient justification, and ignored possible attribution of LRP payments to EPA action rather than counsel’s efforts | Held: remand guidance—district court must independently ensure fee reasonableness, cross-check percentage-of-recovery (25% benchmark) and lodestar, justify any multiplier, and base fees on an accurate settlement-value assessment |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (class plaintiff must demonstrate Rule 23 requirements, including commonality)
- Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (plaintiff bears burden to show admissible proof supporting predominance)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (heightened scrutiny for settlement-only classes; factual/state-law differences can defeat predominance)
- Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) (fairness hearings do not substitute for Rule 23 certification rigor)
- Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012) (applying California governmental interest test; multi-state law variations can preclude nationwide certification)
- Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) (consumer nationwide settlement class may satisfy predominance where common course of conduct and common issues drive resolution)
- In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935 (9th Cir. 2011) (district court must independently ensure fee reasonableness and guard against signs of collusion)