On January 23, 2018, a divided panel of the Ninth Circuit issued an opinion indicating that variations in state consumer protection laws could preclude certification of a Rule 23(b)(3) settlement class. The opinion presents potentially devastating consequences for nationwide consumer class action settlements, which were routinely approved prior to this decision despite variations in state consumer protection statutes.
Due to the harmful implications of the Hyundai decision, the Impact Fund joined together with Public Justice, P.C., the National Association of Consumer Advocates, and the National Consumer Law Center to file an amicus curiae brief urging the Ninth Circuit to rehear the appeal en banc. In the brief, amici argued that the panel decision removed the focus from defendants’ uniform bad conduct, unnecessarily overruled prior precedent in Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998), and created a circuit split with the Third and Seventh Circuits.
In the underlying case, plaintiffs brought suit against defendant auto manufacturers for their admitted errors in testing their vehicles’ miles per gallon performance, resulting in misleading statements about an important feature of the products that plaintiffs and class members had paid money to purchase or lease. After approximately a year of litigation, the parties reached an agreement providing plaintiffs and the class with a settlement valued at $159 million. The district court, having overseen the litigation, certified the class and approved the settlement.
A divided Ninth Circuit panel then reversed the district court’s settlement approval because the district court “fail[ed] to make a final ruling as to whether the material
variations in state law defeated predominance under Rule 23(b)(3).” As explained in the amicus brief, that decision was an unwarranted departure from well-established precedent that differences between state consumer protection laws do not defeat predominance of common questions as to the defendant’s uniform misconduct. This precedent has facilitated nationwide class action settlements both within the Ninth Circuit and sister circuits for years. As the Impact Fund and their fellow amici explained, “Litigation is costly and time-consuming for plaintiffs, defendants, and the court system alike,” which has led to a “strong judicial policy” in favor of settlements. Contravening this policy, the divided majority panel “added requirements and shifted burdens” that would unfortunately operate to prevent settlement of nationwide claims.
Amici are deeply concerned about the panel majority decision, as class action litigation creates accountability for companies and institutions that cheat or harm large numbers of people. Through this brief, the Impact Fund and amici urge the Ninth Circuit to stick to established precedent and avoid the harms to consumer plaintiff and other classes that would result if the decision were left to stand.