En Banc 9th Circuit Holds Class Action Certification Is Different For Settlement Classes

Author:Mr Michael Stortz, Ashley Vinson Crawford, Neal R. Marder, Rex S. Heinke, Ali R. Rabbani, Geoffrey J. Derrick, Markos C. Generales and Hyongsoon Kim
Profession:Akin Gump Strauss Hauer & Feld LLP

En banc 9th Circuit affirmed a $210 million settlement in multidistrict litigation against Hyundai and Kia relating to their alleged misrepresentations about the fuel efficiency of their vehicles, reversing the decision of a split 9th Circuit panel vacating the class settlement because of potential variations in state laws. The court held that variations in state laws did not necessarily defeat predominance for class settlement purposes. The court held that the predominance analysis for class certification is different for settlement and trial; its holding reaffirms that nationwide classes can be approved for settlement purposes, even where the same class could not be certified for litigation purposes, due to variations in state law. Background

Fifty-six actions were brought against Hyundai and Kia arising from alleged misstatements regarding the fuel efficiency of their vehicles in advertisements and car window stickers. The actions were consolidated in the Central District of California.

The district court preliminarily certified a settlement class and approved the settlement agreement, holding that a choice-of-law analysis was not warranted in the settlement context because these issues could be addressed as part of the final fairness hearing under Rule 23(e). The district court gave final approval to the $210 million class settlement after holding a fairness hearing, and did not address choice-of-law issues in its final order approving the settlement. Many objectors promptly appealed to the 9th Circuit, asserting challenges to the settlement in light of differences in state law and adequacy of the class representatives and their counsel.

A split 9th Circuit panel vacated the district court's final settlement approval order. It held that under Mazza v. American Honda Motor Co., 666 F.3d 581 (9th Cir. 2012), before the district court could approve a class action settlement, the court was required to decide whether common questions predominate by applying California's choice-of-law rules to determine whether California law applied to the claims of all plaintiffs or whether the court had to apply the different consumer protection laws of each state.

En Banc Ninth Circuit Opinion

In an 8-3 decision, the 9th Circuit en banc reinstated the district court's approval of the $210 million settlement.

The 9th Circuit explained that the predominance of common questions criterion for class certification is applied differently to settlement...

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