[co-author: Kathryn Kafka*]
Reversing itself in a 7-4 en banc decision, the Ninth Circuit reinstated a $210 million settlement in multidistrict class action litigation over the advertised fuel efficiency of Hyundai and Kia vehicles, making approval of nationwide class action settlements easier. In re Hyundai and Kia Fuel Economy Litigation, 2019 U.S. App. LEXIS 17047 at *5 (9th Cir. 2019). In its decision, the Ninth Circuit applied a lower standard to Rule 23(b)(3) predominance analysis in the settlement context—as opposed to a contested class certification motion—for issues of choice-of-law and reliance under state consumer protection statutes. Judge Ikuta argues in dissent that this may not be consistent with controlling Supreme Court precedent, Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997).
The en banc opinion reverses the earlier ruling of a three-judge panel holding that courts must engage in the same “rigorous predominance analysis” in both settlement and litigation contexts. In re Hyundai and Kia Fuel Econ. Litig., 881 F.3d 679, 693 (9th Cir. 2018) rv’d 2019 U.S. App. LEXIS 17047 (9th Cir. 2019). The three-judge panel had vacated certification of a nationwide settlement class, relying heavily on Amchem, which held that district courts must give “heightened attention in the settlement context” to the definition of the class or subclass. The panel held that the district court erred by certifying a class without engaging in a detailed choice-of-law analysis under the laws of multiple states to determine the predominance of a common question of law. In re Hyundai and Kia Fuel Econ. Litig., 881 F.3d 679, 703 (9th Cir. 2018). The panel also held that that the district court erred by not requiring individualized evidence of reliance to establish that each class member was actually exposed to the advertisements at issue. Id. at 704.
Distinguishing Amchem, the en banc panel affirmed Central District of California Judge George H. Wu’s 2015 final settlement approval order, disagreeing with the earlier panel decision in two key respects.
First, the en banc panel applied a lower threshold for proof of class exposure sufficient to establish reliance on allegedly misleading advertising in the settlement context. As part of predominance analysis, a class can only be certified if the relevant class is limited to members who were exposed to, and relied on, such advertising. Mazza v. American Honda Motor Co., 666 F.3d 581, 596 (9th Cir. 2012). The en...
