Ninth Circuit’s “Choice of Law Analysis"

Since almost all certified class actions settle, a Circuit Court of Appeals decision affecting the viability of such settlements is certain to receive a lot of attention from class action practitioners. This is particularly true when the decision is issued by the high-profile Ninth Circuit, which covers the West Coast. Its recent opinion, In re Hyundai and Kia Fuel Econ. Litig., 881 F.3d 679 (9th Cir. 2018)(“Hyundai”), is definitely one of those attention-getting decisions.

The plaintiffs in Hyundai alleged the defendant auto manufacturers overstated certain mileage per gallon information. A nationwide settlement was approved by the California Central District Court over the protests of a group of objectors who argued that differences in various state laws should preclude certification and settlement. The district court acknowledged that an “extensive choice of law analysis” would be required if the case went to trial, but rejected the idea that such an analysis was warranted in the settlement context.

The objectors appealed and the Ninth Circuit reversed, concluding that the district court erred by not engaging in a choice of law analysis, i.e., the Ninth Circuit concluded that the district court should have considered the “potential differences in state consumer protection laws.” Although noting that Rule 23 of the Federal Rules of Civil Procedure requires a fairness finding, the appellate court also stated that a district court “may not justify its decision to certify a settlement class on the ground that proposed settlement is fair to all putative class members.”

The Ninth Circuit held that “[t]he district court’s reasoning that the settlement context relieved it of its obligation to...