U.S. appeals court preserves $210M Hyundai-Kia fuel economy class settlement

Some owners of 2011-13 models had objected to 'sweetheart deal'

A U.S. appeals court restored a $210 million nationwide class-action settlement for hundreds of thousands of owners of Hyundai Motor Co and Kia Motors Corp vehicles whose fuel economy estimates were inflated.

By an 8-3 vote on Thursday, in a case closely watched by class-action lawyers, the 9th U.S. Circuit Court of Appeals in Pasadena, California, said vehicle owners had enough in common to let them settle as a group.

It also rejected arguments by owners opposed to the settlement that the claims process was too burdensome, and that lawyers for the class had colluded with the automakers to extract a "sweetheart deal" that undervalued their claims.

The case began after the U.S. Environmental Protection Agency found flaws in Hyundai's and Kia's testing procedures, prompting the automakers to lower fuel efficiency estimates for about 900,000 vehicles from the 2011, 2012 and 2013 model years.

Lawyers for objecting drivers had no immediate comment. Hyundai said it was grateful for the decision. Kia and its lawyers did not immediately respond to requests for comment.

The decision by Circuit Judge Jacqueline Nguyen upheld a settlement approved in June 2015 by U.S. District Judge George Wu in Los Angeles.

Wu "made careful findings, which the objectors here largely do not challenge, and which more than support the judgment," Nguyen wrote.

The decision reversed a divided three-judge 9th Circuit panel's January 2018 rejection of the settlement and decertification of the class action.

That panel said Wu failed to assess whether differences in state laws prevented certification of a nationwide class.

It also said used car owners should have been excluded because it was unclear whether they had relied on the South Korean automakers' fuel economy claims.

Lawyers had said it would become much harder to obtain nationwide settlements if the panel ruling stood.

Nguyen had dissented from the panel ruling. Circuit Judge Sandra Ikuta, who wrote it, dissented on Thursday.

Ikuta accused the majority of failing to determine what law should apply to the nationwide class or how the settlement, and thus attorneys' fees, should be valued.

"The majority's failure to correct these errors may be beneficial for the class action bar, but it detracts from compliance with Supreme Court precedent," Ikuta wrote.

The 9th Circuit covers nine western U.S. states, Guam and the Northern Mariana Islands.

"We're really pleased that drivers are finally going to get what they're owed," Richard McCune, a lawyer for the driver class, said in an interview.

The case is In re Hyundai and Kia Fuel Economy Litigation, 9th U.S. Circuit Court of Appeals, Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067.

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