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9th Circ. Sets High Bar For Nationwide Class Settlements

January 25, 2018

Law360
By Linda Chiem

Multistate consumer class action settlements will have to clear a higher bar before scoring approval, experts say, after the Ninth Circuit ruled that a California judge didn’t thoroughly consider varying state consumer protection laws before certifying a nationwide settlement class of consumers accusing Hyundai and Kia of overstating their cars’ fuel efficiency.

Described as “a major blow to multistate class actions” by the panel’s dissenting judge, Tuesday’s ruling vacating a Northern California district court’s 2015 final settlement approval in consolidated litigation against Hyundai Motor America Inc. and its affiliate Kia Motors Inc. faulted the lower court for failing to scrutinize a settlement class to the same degree as a litigation class.

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“The underlying concern of the majority is that a settlement should not become a means by which persons who live in states that provide substantially better relief than the forum state are denied the opportunity to seek that relief,” said Peter Breslauer, a partner with Montgomery McCracken Walker & Rhoads LLP.

By shifting that burden, the majority created a circuit split with its sister circuits for bringing nationwide class actions under the Class Action Fairness Act and invoking Rule 23(b)(3), experts say, creating new hurdles for large-scale class action settlements going forward.

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