WBK Industry News - Litigation Developments

9th Circuit Affirms Approval of Nationwide Class Action Settlement Against Large Automakers

The Ninth Circuit, sitting en banc, recently affirmed the district court’s certification of a nationwide settlement class, approval of a $210 million settlement, and award of attorneys’ fees in a multidistrict class action suit brought over fuel economy promises made by two major automakers.  The en banc decision reverses a Ninth Circuit panel’s earlier decision to reject the settlement, finding that the district court had failed to “rigorously analyze potential differences in state consumer protection laws” before certifying the settlement class. 

A number of class action cases were filed nationwide following the initiation of a U.S. Environmental Protection Agency investigation into complaints that two large automakers had overstated the fuel efficiency of their vehicles.  These cases were consolidated before a federal judge in the Central District of California.  In the interim, the automakers and a large number of class members entered mediation and shortly thereafter announced a proposed nationwide settlement for owners of vehicles affected by the fuel economy statements.  The district court judge granted preliminary approval of the settlement and certified the class for settlement purposes. The district court found that “[w]hether the fuel economy statements were in fact inaccurate;” and “whether [the automakers] knew that their fuel economy statements were false or misleading” were undisputed common questions that predominated over individualized issues.  The decision was appealed, and a three-judge panel vacated the district court’s decision, holding that in order to certify settlement classes, Federal Rule of Civil Procedure 23(b)(3)’s predominance inquiry requires a choice-of-law analysis and proof of class wide deception—just as is required for certification of a litigation class.

In an 8-3 decision, the en banc court ruled that, with regard to the certification of the settlement class, “the district court did not abuse its discretion in finding that common issues predominated.”  The court found that Rule 23(b)(3) predominance factors must be considered in light of the reason for which certification is sought—litigation or settlement.  Specifically, the court held that: “the inclusion of used car purchasers in the class did not defeat predominance; variations in state law did not defeat predominance; objectors failed to meet their burden of showing that California law did not apply; and application of California law satisfied due process.”  The court rejected the objectors’ argument that the district court was required to address variations in state law affecting claims by used car purchasers.  Instead, the en banc court stated that “the prospect of having to apply the separate laws of dozens of jurisdictions present[s] a significant issue for trial manageability, weighing against a predominance finding,” but that in settlement cases like this one, “the district court need not consider trial manageability issues.”  Cases involving nationwide settlement classes may be: (1) settled on a nationwide basis, rather than through a series of state-by-state class actions; and (2) certified under a standard that addresses issues related to settlement rather than trial manageability issues.

With regard to the settlement approval, the court held that “the notice to class members provided sufficient information; the claim forms were not overly burdensome; and there was no evidence of collusion between class counsel and the automakers,” and that the district court had properly exercised its discretion in calculating the attorneys’ fee award. 

Finally, the en banc court held that the district court had not abused its discretion by denying attorneys’ fees to objector’s counsel—who challenged the certification order and fee awards on various grounds ultimately found unpersuasive by the court.  The court found that objectors’ counsel had not contributed to the class settlement in any meaningful way.