Sometimes settlement with a putative class of nationwide consumers is the best option for resolution. However, since the initial ruling of the Ninth Circuit in In re Hyundai & Kia Fuel Econ. Litig., the mechanism to go about doing so has been in flux. On June 6, 2019, the full en banc Ninth Circuit finally answered class action practitioners’ questions and affirmed the district court’s June 2015 final settlement approval order and certification of a nationwide class of consumers. The decision unravels the prior ruling of a divided three-judge panel of the Ninth Circuit, which previously vacated the class settlement of the case on the basis that the district court failed to conduct a rigorous predominance analysis under Rule 23(b)(3) to determine whether variations in state laws precluded certification of a nationwide settlement class.
The question of whether Rule 23’s criteria could be applied differently in a litigation context versus a settlement context lay at the crux of the debate. Again, the Ninth Circuit added guidance consistent with Amchem Prods., Inc. v. Windsor, and the now more explicit revised language of Rule 23. Issues of trial management need not be a concern of litigation classes; however heightened scrutiny must be given to class definitions and fairness. Here, the analysis by the en banc court focused on only two of Rule 23’s criteria, predominance and adequacy.
Ultimately, the Ninth Circuit held the district court did not abuse its discretion in finding that common issues outside of the fact of settlement itself predominated. Trial management issues, including the implications of state law variations, that would preclude a finding of predominance for purposes of certification of a nationwide litigation class, need not be addressed for a settlement class. However, for a class certified for litigation purposes, state law variations still matter and may create trial management issues weighing against a predominance finding. The Ninth Circuit further clarified that, subject to constitutional limitations and the forum state’s choice-of-law rules, a court adjudicating a multistate class action is free to apply the substantive law of a single state to the entire class. California courts apply California law absent timely objection by a party and demonstration that another forum’s law should apply. No objector made such a demonstration in this case.
The Ninth Circuit’s opinion should, however, continue to raise concerns with companies trying to defeat certification in the consumer protection context. The Court repeated “that predominance is ‘readily met’ in cases involving consumer fraud” and cautioned that “[w]hen misrepresentations are made as part of a nationwide, concerted marketing effort, it makes no difference to the predominance analysis whether consumers encounter them in different guises.”
The Ninth Circuit also addressed other ancillary issues related to the adequacy of class counsel and settlement approval, including notice, claims forms, and attorney’s fees.