In a recent 8-3 en banc decision, the Ninth Circuit affirmed the district court’s approval of an estimated $210 million class action settlement in In re Hyundai and Kia Fuel Economy Litigation.[1] The Hyundai decision is significant because it reversed an earlier, controversial decision by a three-judge panel of the Ninth Circuit, which rejected the nationwide settlement because the district court failed to “rigorously analyze potential differences in state consumer protection laws” before certifying the class for settlement.[2] The Ninth Circuit’s en banc decision offers some clarity for both plaintiffs and defendants attempting to settle class action litigation in the Ninth Circuit, especially those involving proposed nationwide classes.
The Hyundai decision arose from multidistrict litigation in which plaintiffs from across the United States asserted state law claims based upon the allegedly false advertised fuel efficiency of the defendants’ automobiles.[3] Although the district court tentatively denied plaintiffs’ initial efforts to certify a class, defendants and most plaintiffs eventually agreed to a nationwide class settlement.[4] The relief to be provided to class members was substantial; the district court estimated the value of the relief at $210 million.[5] Following preliminary approval of the class settlement, numerous class members (the “Objectors”) filed objections, arguing, among other things, that material differences in the applicable states’ laws defeated the predominance requirement of Rule 23(b)(3) and precluded certification.[6] Over the objections, the district court certified the nationwide class for settlement purposes and entered final approval of the settlement.[7] The Objectors appealed to the Ninth Circuit.
The Earlier Panel Decision
In January 2018, a three-judge panel of the Ninth Circuit reversed the certification of the nationwide settlement class, based primarily on the district court’s failure to “rigorously analyze potential differences in state consumer protection laws.”[8] The three-judge panel held that conducting such an analysis was necessary to assess whether common questions predominated over individual ones, a requirement that “preexists any settlement.”[9] The three-judge panel also rejected the “mistaken assumption that the standard for certification [i]s lessened in the settlement context” and admonished district courts that they “must give ‘undiluted, even heightened, attention in the settlement context.’”[10] The three-judge panel’s decision created some level of uncertainty as to the standards governing certification of settlement classes, including whether a nationwide, multi-state-law class could ever be certified for settlement purposes in the Ninth Circuit. In July 2018, the majority of the Ninth Circuit voted to vacate the three-judge panel decision and rehear the case en banc.[11]
The Recent En Banc Decision
On June 6, 2019, the Ninth Circuit, sitting en banc, reversed course and affirmed the certification and approval of the nationwide settlement class. The Ninth Circuit began by holding that “[t]he criteria for class certification are applied differently in litigation classes and settlement classes,” including that “[trial] manageability is not a concern in certifying a settlement class where, by definition, there will be no trial.”[12] Accordingly, when assessing predominance for “a settlement only class, ‘a district court need not inquire whether the case, if tried, would present intractable management problems.’”[13] Manageability, in other words, remains crucial to assessing certification in the litigation context, but is less important in assessing a settlement class.[14] Indeed, the Hyundai court recognized that a “class that is certifiable for settlement may not be certifiable for litigation if the settlement obviates the need to litigate individualized issues that would make a trial unmanageable.”[15]
Applying these principles, the Ninth Circuit affirmed the district court’s decision that common issues predominated and Rule 23(b)(3) was satisfied.[16] As a means to side step the application of multiple states’ laws, the Hyundai court held that “[s]ubject to...
