On The Case

Even tort reformers can’t abide 9th Circuit’s notorious Hyundai ruling

(Reuters) - The American Tort Reform Association is no fan of class actions, which it describes on its website as “meritless cases in which thousands, or millions, of plaintiffs with unique injuries and grievances are granted class status, often without the knowledge of class members.” I suspect it will not surprise you to hear that an association comprised of oft-sued corporations, which is perhaps best known for its annual Judicial Hellholes report on plaintiffs-friendly jurisdictions, avers that class actions mostly exist to shower plaintiffs lawyers with millions of dollars at the expense of unwitting class members who may never even realize their claims have been traded away for mere pennies.

Here’s what may surprise you, in light of ATRA’s well-document conviction that class action litigation is rife with abuse: On Monday, ATRA teamed up with the Association of Global Automakers in an amicus brief asking the 9th U.S. Circuit Court of Appeals to reconsider en banc a panel decision that will make it much tougher for defendants to settle nationwide class actions. Yes, that’s right: The panel’s ruling in In re Hyundai and Kia Fuel Economy Litigation is so problematic that has pushed the granddaddy of tort reform groups into arguing in favor of nationwide class action settlements.

The 2-1 Hyundai decision, as I’ve explained, struck down a $200 million nationwide settlement of claims that the car makers misrepresented the fuel efficiency of their vehicles, holding that the trial judge failed adequately to analyze differences in state consumer laws. Almost instantly, class action lawyers began fretting about the ruling’s impact on pending nationwide settlements and insisting the panel analysis put the 9th Circuit at odds with the 3rd Circuit’s en banc 2011 decision in Sullivan v. DB Investments.

Earlier this month, defendants Hyundai and Kia and class counsel from Hagens Berman Sobol Shapiro filed petitions for en banc review, arguing that the panel’s decision departs from the 9th Circuit’s own 1998 precedent in Hanlon v. Chrysler and from the U.S. Supreme Court’s reasoning in 1997’s Amchem v. Windsor.

Hyundai’s lawyers at Quinn Emanuel Urquhart & Sullivan and Kia counsel at Dykema Gossett emphasized the burden the decision creates for trial courts and defendants. “In addition to establishing inter- and intra-circuit conflicts, the ruling imposes a new and unworkable requirement on district courts to review sua sponte the laws of all 50 states before certifying any nationwide settlement class involving state-law claims,” the petition said. “Allowed to stand, the decision will not only sow confusion but obstruct fair and efficient resolution of class actions throughout this nation’s most active class action circuit. Defendants that seek good-faith resolutions of expansive class actions — meritorious or dubious — should not bear a further tax for procedural formalism that fails to make the settlement more fair.”

That’s also the theme of the ATRA and global automakers’ amicus brief, filed by Shook, Hardy & Bacon. The brief highlights the distinction between class actions in which defendants want to settle and those in which defendants are battling class certification. Courts shouldn’t certify classes in nationwide cases headed for trial, the brief said, because litigating claims under the laws of different states is not feasible. But variations in state consumer laws are not important in the settlement context, the brief argued, as long as the proposed deal is fair to class members.

I asked ATRA lawyer Cary Silverman of Shook Hardy if there’s any incongruity between ATRA’s ideological suspicion of class actions and its support of nationwide class action settlements. He said no. “ATRA’s position, as it is in other contexts, is that it’s opposed to needless, costly litigation,” Silverman said. The group calls out class action abuses when it sees them, Silverman said, but regarded the Hyundai settlement as a just resolution. “ATRA wants to assure we don’t create a situation where parties are unable to fully, fairly and efficiently resolve consumer disputes,” he said.

ATRA was the only member of the business lobby to weigh in as the 9th Circuit weighs en banc rehearing of Hyundai. Other groups it frequently allies with in amicus filings, such as the U.S. Chamber of Commerce and the National Association of Manufacturers, didn’t submit Hyundai amicus briefs.

Lieff Cabraser Heimann & Bernstein filed an amicus brief for Public Justice, the National Association of Consumer Advocates, the National Consumer Law Center and the Impact Fund, which, of course, want the en banc 9th Circuit to overturn the panel’s ruling.

The objecting class members who succeeded in squelching the Hyundai settlement have until March 30 to file a brief opposing en banc review.