Consumer advocates, defense attorneys, tort reformists, and trial judges are all eagerly awaiting a decision by the Ninth Circuit which all hope will clarify the process for certifying a nationwide settlement class in the Ninth Circuit. Specifically, an en banc Ninth Circuit panel will decide whether “variations in state law can defeat” predominance in class action litigation. 

By way of background, ‘predominance’ is required to certify a putative class under Rule 23 of the Federal Rules of Civil Procedure (“Fed. R. Civ. P. 23”). A plaintiff must demonstrate: “that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3).

Uncertainty arose in the Ninth Circuit after automakers were sued in connection with statements about their fuel efficiency estimates for certain vehicles.  Individuals who owned or leased these models brought various consumer protection lawsuits. These were ultimately consolidated into a multidistrict litigation. A California federal district court certified a nationwide settlement class in 2013, and the district court preliminarily approved a $210 million settlement in 2015.  Objectors to the settlement challenged the certification order, and they took issue with the district court’s “failure” to employ a choice of law analysis. The Ninth Circuit was persuaded and vacated the certification order on these grounds.

The Ninth Circuit’s reversal imposed a new standard that split from existing authority. A nationwide settlement class could now only be approved “after a rigorous analysis to ensure that the prerequisites of Rule 23 have been met.” Particularly, courts need to consider the “impact of potentially varying state laws” on consumer protection because these differences “may swamp any common issues and defeat predominance.” For example, one of the defendant’s briefing in this case included a thirty-four page chart of the “numerous differences in the burden of proof, liability, damages, statutes of limitations, and attorneys’ fees awards under different state consumer protection laws and common law fraud actions.”

Briefing for en banc reconsideration ensued because this “heightened” predominance analysis departed from well-settled precedent. The Ninth Circuit ultimately granted the petition.  An eleven-judge panel heard oral argument in September 2018. Legal practitioners and journalists expect this important en banc Ninth Circuit opinion will soon be issued in 2019.

Many agree the current framework now “increases the expense and uncertainty of nationwide settlements.” Proponents of reversal argue this current framework creates more burdens for trial judges and will delay the resolution of cases. Others maintain the Ninth Circuit panel got it right and the process to settle nationwide class actions should change. Further guidance from the court is also apropos given some of the recent December 2018 amendments to Fed. R. Civ. P. 23, which outline new factors for courts to consider when approving class settlements.

The case is In re: Hyundai and Kia Fuel Economy Litigation