Ninth Circuit Rules That Varying State Laws Do Not Defeat Predominance Requirement In Class Action Settlement Context

Seyfarth Synopsis: Satisfying Rule 23(b)(3)'s predominance requirement is undoubtedly a challenge when it comes to a nationwide class. Among the many issues that arise is the extent to which varying state laws can impact whether questions of law or fact common to class members predominate over any questions affecting only individual members. In In Re Hyundai & Kia Fuel Econ. Litig., No. 15-56014, 2019 WL 2376831 (9th Cir. June 6, 2019), after an en banc rehearing, the Ninth Circuit ruled that a district court did not abuse its discretion by failing to address varying state laws when granting class certification for settlement purposes. Drawing a distinction between class certification for litigation purposes and class certification for settlement purposes, the Ninth Circuit held that the variations in state law across the nationwide class did not defeat predominance.

In many respects, this decision - which rescinds the panel's previous and controversial ruling that courts must address varying state consumer laws when certifying a settlement class - restores the standard for approval of class action settlements to what it has historically been in federal courts. Employers facing nationwide class claims in the Ninth Circuit now have an easier path to settlement, as it is less likely that varying state law will be an obstacle to satisfying predominance.

Background

In Re Hyundai arises out of an EPA investigation into Hyundai and Kia's representations regarding the fuel efficiency of certain car models. After the EPA began its investigation, a number of plaintiffs filed a class action in California state court, seeking to represent a nationwide class of car purchasers who were allegedly misled by defendants' fuel efficiency marketing.

Follow-on class action lawsuits were filed across the country and the MDL panel consolidated the cases in the Central District of California. Eventually, the parties informed the district court that they had reached a class settlement on a nationwide basis.

After winding through the approval process, the district court granted final approval of the nationwide class settlement, but did so over objections to the settlement. The objectors appealed, and a divided Ninth Circuit panel reversed, holding that by failing to analyze the variations in state law, the district court abused its discretion in certifying the settlement class. The Ninth Circuit voted to rehear the case en banc.

The Decision

The key issue on appeal...