U.S. Ninth Circuit Vacates Nationwide Settlement Class Based on Variations in State Law

In What's New in Class Action Law?, What's New in the Courts by gravierhouseLeave a Comment

A nationwide class action settlement arising out of misstatements by Hyundai and Kia regarding fuel efficiency was vacated by the U.S. Ninth Circuit Court of Appeals on the basis that the District Court was required to apply a choice-of-law analysis and consider whether variations in State Law destroyed predominance under Rule 23(b)(3) – noting, with respect to remand, that the Court had previously determined that “no such class was possible in a closely analogous case.”

While I generally refrain from editorial comment, and simply summarize or quote the Court’s opinion, this decision is a perfect illustration of the way in which Amchem has, in my view, been misinterpreted and misapplied.  Yes, the Supreme Court said in Amchem that courts should give “undiluted, even heightened, attention in the settlement context” – but with regard to the “other specifications of the Rule — those designed to protect absentees by blocking unwarranted or overbroad class definitions,” which, in my mind, are primarily the Rule 23(a) prerequisites, like commonality and typicality, and, in particular, adequacy of representation, (i.e. the primary issue with the Amchem settlement).  While, to be sure, the Rule 23(b) factors were also a problem for the Supreme Court in that unprecedentedly “sprawling” case – which included claims by tens of thousands, perhaps millions, of class members, with different medical and smoking histories, against different defendants, who manufactured different asbestos-containing products, to which the classmembers may have been exposed, for different amounts of time, in different ways, over different periods, and were now suffering from widely varying levels and types of symptoms (if any) and diseases – the Supreme Court expressly stated that where “confronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, for the proposal is that there be no trial.” Amchem Products v. Windsor, 521 U.S. 591, 620 (1997).  The Supreme Court, to be sure, noted that differences in State Law “compounded” the factual disparities, but this did not appear to be a central concern of the Court in that case.  To the extent that Amchem might have been intended by the majority to effectively preclude a multi-state class settlement, then, for the reasons stated in my Letter to the Rules Committee dated September 29, 2014, I respectfully disagree.

 

See In re Hyundai and Kia Fuel Economy Litigation, No.15-56014, 2018 WL 505343 (9th Cir. Jan. 23, 2018).

 

 

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