IN THE UNITED STATES COURT OF APPEALS FOR THE …circ9-datastore.s3.amazonaws.com/datastore/uploads/enbanc/15-56014... · fours.” Disregarding Hanlon, the majority erroneously extends

Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

IN THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

__________________________________________________

IN RE: HYUNDAI AND KIA FUEL ECONOMY LITIGATION

__________________________________________________

Kaylene P. Brady, et al. and Nicole Marie Hunter, et al. Plaintiffs-Appellees,

Kehlie R. Espinosa; et al.,

Plaintiffs-Appellees,

Hyundai Motor America, Inc.; et al. Defendants-Appellees.

v.

Caitlin Ahearn; Andrew York; et al. Objectors-Appellants.

__________________________________________________

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA

THE HONORABLE GEORGE H. WU CASE NO. 2:13-ml-02424-GW-FFM

__________________________________________________

PETITION FOR REHEARING EN BANC

STEVE W. BERMAN HAGENS BERMAN SOBOL SHAPIRO LLP 1918 Eighth Avenue, Suite 3300 Seattle, WA 98101 (206) 623-7292

ROBERT B. CAREY HAGENS BERMAN SOBOL SHAPIRO LLP 11 West Jefferson Street, Suite 1000 Phoenix, AZ 85003 (602) 840-5900

Attorneys for the Appellee Class and Plaintiffs-Appellees Brady and Hunter

Case: 15-56014, 03/08/2018, ID: 10791758, DktEntry: 102-1, Page 1 of 28

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TABLE OF CONTENTS Page

INTRODUCTION AND RULE 35(B) STATEMENT ........................................... 1

ISSUES PRESENTED ............................................................................................. 3

STATEMENT OF THE CASE ................................................................................ 3

REASONS FOR GRANTING THE PETITION ..................................................... 6

I. Requiring multi-state consumer law analysis in the settlement context is contrary to Supreme Court precedent relieving lower courts of an unnecessary manageability inquiry. .......................................... 6

A. A single, factual question fundamental to the litigation and held in common among class members can satisfy predominance. ..................................................................................... 6

B. Manageability concerns cannot defeat such predominance in the settlement context—and whether to try a nationwide class using the law of a single state, multi-state groupings, or the laws of fifty states is a matter of manageability. ...................... 7

C. Absent class members benefit fairly from nationwide settlements of consumer protection law claims, even where state-law variations might have required different litigation strategies. ............................................................................. 9

II. Vacating the certification of a settlement class for failure to determine whether differences in state law defeat predominance conflicts with precedent from this Circuit. .................................................. 12

III. Vacating the certification of a settlement class for failure to determine whether differences in state law defeat predominance also conflicts with precedent from the Third Circuit. ................................. 15

IV. Compelled multi-state consumer-law analysis increases the expense and uncertainty of global settlements and thereby reduces their likelihood, contrary to public policy. ..................................... 17


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CONCLUSION ...................................................................................................... 18


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TABLE OF AUTHORITIES

Page(s)

Cases

Amchem Prods. v. Windsor, 521 U.S. 591 (1997) ............................................. 1, 2, 3, 6, 7, 8, 9, 10, 13, 16, 18

In re Bridgestone/Firestone Inc., 288 F.3d 1012 (7th Cir. 2002) ............................................................................ 16

Carriuolo v. Gen. Motors Co., 823 F.3d 977 (11th Cir. 2016) ............................................................................ 11

Castano v. The American Tobacco Co., 84 F.3d 734 (5th Cir. 1996) ................................................................................ 16

Edenborough v ADT, LLC, No. 16-cv-02233-JST, 2018 WL 1036998 (N.D. Cal. Feb. 5, 2018) ..................................................................................... 17

Eisen v. Carlisle and Jacquelin, 417 U.S. 156 (1974) .............................................................................................. 9

Feitler v. The Animation Celection, Inc., 13 P.3d 1044 (Or. Ct. App. 2000) ....................................................................... 11

Franklin v. Kaypro Corp., 884 F.2d 1222 (9th Cir. 1989) ............................................................................ 17

Hanlon v Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) ................................... 1, 2, 3, 5, 11, 12, 13, 14, 18

Hanlon v. Chrysler Corp., No. C95-2010, 1995 WL 18241629 (N.D. Cal. June 16, 1995) ................................................................................... 13

Hartless v. Clorox Co., 273 F.R.D. 630 (S.D. Cal. 2011) ........................................................................ 18


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In re Hyundai & Kia Fuel Econ. Litig., 881 F.3d 679 (9th Cir. 2018) .......................................................... 5, 6, 12, 16, 18

J.P. Morgan & Co. v. Super. Ct., 6 Cal. Rptr. 3d 214 (Cal. Ct. App. 2003) ............................................................ 14

Johnson v. Gen. Mills, Inc., No. SACV1000061-CJC, 2013 WL 12248151 (C.D. Cal. Mar. 6, 2013) ..................................................................................... 18

Klay v. Humana, 382 F.3d 1241 (11th Cir. 2004) ............................................................................ 7

Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012) .............................................................. 2, 11, 14, 15

Miller v. Ghirardelli Chocolate Co., No. C-12-04936 LB, 2014 WL 4978433 (N.D. Cal. Oct. 2, 2014) ...................................................................................... 18

Officers for Justice v. Civil Serv. Comm’n of City & Cnty. of San Francisco, 688 F.2d 615 (9th Cir. 1982) .............................................................................. 17

In re Online DVD-Rental Antitrust Litig., 779 F.3d 934 (9th Cir. 2015) .............................................................................. 10

Pilgrim v. Universal Health Card, LLC, 660 F.3d 943 (6th Cir. 2011) .............................................................................. 16

Ragsdale v. Turnock, 941 F.2d 501 (7th Cir. 1991) .............................................................................. 10

Strawn v. Farmers Ins. Co., 258 P.3d 1199 (Or. 2011) ................................................................................... 11

Sullivan v. DB Investments, Inc., 667 F.3d 273 (3d Cir. 2011) .......................................................1, 2, 3, 15, 16, 18

In re Tobacco II Cases, 207 P.3d 20 (Cal. 2009) ...................................................................................... 10


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In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Prac. & Prod. Liab. Litig, 8:10-ml-02151-JVS, 2013 WL 3224585 (C.D. Cal. June 17, 2013) ................................................................................... 12

Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016) .......................................................................................... 6

Van Bronkhorst v. Safeco Corp., 529 F.2d 943 (9th Cir. 1976) .............................................................................. 17

Vaquero v. Ashley Furniture Industries, Inc., 824 F.3d 1150 (9th Cir. 2016) ............................................................................ 11

In re Warfarin Sodium Antitrust Litig., 391 F.3d 516 (3d Cir. 2004) ......................................................................... 15, 16

Other Authorities

Fed. R. App. P. 35 ...................................................................................................... 1

Fed. R. Civ. P. 23 ............................................................................................. 6, 7, 13


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INTRODUCTION AND RULE 35(B) STATEMENT

The panel majority’s decision vacates certification of a nationwide class and

remands for the district court to determine whether differences among state

consumer protection laws—in the settlement context—predominate over common

factual questions regarding the conduct of the defendants in misrepresenting the fuel

economy ratings of their vehicles. This conflicts with Supreme Court and circuit

precedent: Amchem Prods. v. Windsor, 521 U.S. 591 (1997), and Hanlon v Chrysler

Corp., 150 F.3d 1011 (9th Cir. 1998). En banc review is necessary to secure and

maintain uniformity of the Court’s decisions under FRAP 35(a)(1) & (b)(1)(A). And

the proceeding involves a question of exceptional importance under FRAP 35(a)(2)

& (b)(1)(B), because the panel decision conflicts with the Third Circuit’s en banc

decision in Sullivan v. DB Investments, Inc., 667 F.3d 273, 297 (3d Cir. 2011).

In Amchem the Supreme Court directed that a “district court need not inquire

whether the case, if tried, would present intractable management problems, for the

proposal is that there be no trial.” So Amchem forfends the district court from having

to unnecessarily delve into whether application of the consumer protection laws of

fifty states would create a predominance of individual issues. And this ultimately

benefits all class members. See section I.

Moreover, this Court, in an opinion penned by Chief Judge Thomas, affirmed

certification in Hanlon because the “idiosyncratic differences between state


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consumer protection laws” do not defeat predominance for a nationwide settlement

class. As Judge Nguyen, in dissent here, put it: “The problem created by the majority

can easily be avoided by simply adhering to our own precedent, which is on all

fours.” Disregarding Hanlon, the majority erroneously extends Mazza beyond its

logical limitation to litigation classes. See section II.

Further, the Third Circuit has addressed this very issue en banc in Sullivan,

holding that “variations in the rights and remedies available to injured class members

under the various laws of the fifty states do not defeat commonality and

predominance” for a settlement class. So Sullivan stands starkly at odds with the

majority’s decision. And this circuit split creates an issue of exceptional importance,

because the likelihood of a global settlement getting approved should not turn on

where the JPML sends an MDL. See section III.

Finally, the new ground staked out by the panel increases the expense and

uncertainty of nationwide settlements, which reduces their likelihood, contrary to

public policy. Contravening Amchem and Hanlon, the majority announced a new

rule for certifying nationwide settlement classes that will create disruptive and

pointless burdens for both litigants and district judges. Instead, manageability

concerns should be mooted by settlement, which “eases crowded court dockets and

results in savings to the litigants and the judicial system.” See section IV.

For all these reason, consideration by the full Court is necessary.


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ISSUES PRESENTED

1. Amchem relieves the lower courts of an unnecessary manageability

inquiry in the settlement context. Does the majority contravene Amchem by

requiring the district court to engage in multi-state consumer-law analysis for settled

claims, even when the district court found predominant common facts justifying

certification regardless of which state laws applied?

2. According to the Ninth Circuit in Hanlon, “idiosyncratic differences

between state consumer protection laws” do not defeat predominance as to a

nationwide settlement class of consumers alleging the deceptive advertising of their

vehicles. Does the majority decision fail to adhere to Hanlon by vacating

certification of the nationwide settlement class in order for the district court to

determine whether differences in state law predominate?

3. According to an en banc panel of the Third Circuit in Sullivan,

“variations in the rights and remedies available to injured class members under the

various laws of the fifty states do not defeat commonality and predominance” for a

nationwide settlement class. Does the majority’s decision conflict with Sullivan?

STATEMENT OF THE CASE

In early 2012, the Espinosa complaint was filed on behalf of a nationwide

class, alleging that defendants Hyundai and Kia falsely advertised the in-use fuel


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economy of their vehicles.1 After an EPA investigation found that defendants had

overstated their fuel economy ratings, defendants revised them and offered

consumers a lifetime reimbursement program (LRP) to compensate for the extra cost

of gas.2 Over 50 additional class suits, including the Hunter and Brady cases, were

then filed across the country, alleging violation of warranty and other consumer

protection laws.3 The JPML created an MDL and sent it to Judge Wu.4

The plaintiffs in Espinosa, Hunter, and Brady then signed a global settlement.5

At their election, class members could remain or enroll in the LRP. Or they could

choose one the following: (1) a lump sum benefit based on the lifetime cost of

additional fuel to a typical driver, with average awards ranging from $353 to $667;

(2) a dealer service credit worth 150% of the lump-sum payment amount; or (3) a

rebate on a new Hyundai or Kia vehicle worth 200% of the lump-sum payment.6

There was no limit on the amount to be distributed to claimants under any option.7

The settlement also resulted in a multi-year extension of the deadline to enroll in the

1 Scott Excerpts of Record, No. 15-56064, Dkt. 10, Vol. 9 ER 1977-78. 2 Appellants’ Joint Excerpts of Record, Dkt. 15, ER 19, 21. 3 Id. at ER 21-23, 149, 157-58. 4 Scott 9 ER 1888-91. 5 Joint ER 24-25. 6 Id. at ER 162-63; No. 13-md-2424, Dkts. 342-2 at 2, 342-5 at 2, 444 at 7. 7 Scott 4 ER 764-68.


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LRP.8 The settlement ultimately added over $97 million in value to the

compensation provided by the existing LRP, based on actual claims.9

In late 2013, the plaintiffs moved for certification of a nationwide settlement

class.10 After four hearings, the district court granted the motion based on, inter alia,

the predominance of common factual questions across the nationwide settlement

class under Hanlon.11 The district court also approved the settlement as fair,

reasonable, and adequate as to all class members.12

Following appeal by objectors, a panel of this Court vacated the district

court’s decision and remanded for consideration of the effect of multi-state

consumer-protection laws on predominance.13 The dissent would have affirmed

based on, inter alia, the predominance of common factual questions under Hanlon.14

Plaintiffs now seek rehearing en banc.15

8 Correspondence to Court, No. 15-56014, Dkt. 73 at 2-3 (Feb. 13, 2017). 9 Id. 10 Scott 9 ER 1860. 11 Joint ER 159; Appellees’ Supp. Excerpts of Record, Dkt. 37, Vol. 1 SER 9. 12 Joint ER 32-38. 13 In re Hyundai & Kia Fuel Econ. Litig., 881 F.3d 679, 707 (9th Cir. 2018).

Internal citations and quotations omitted and emphasis added unless otherwise indicated.

14 Id. at 708, 719. 15 More fully set forth facts can be found in the panel decision and defendants’

petition.


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REASONS FOR GRANTING THE PETITION

I. Requiring multi-state consumer law analysis in the settlement context is contrary to Supreme Court precedent relieving lower courts of an unnecessary manageability inquiry.

A. A single, factual question fundamental to the litigation and held in common among class members can satisfy predominance.

As the Supreme Court recently stated in Tyson Foods, Inc. v. Bouaphakeo,

when “one or more of the central issues in the action are common to the class and

can be said to predominate, the action may be considered proper under Rule

23(b)(3).”16 So, as the dissent points out, even a single common issue will do.17

Here, the district court found multiple factual questions to predominate above

all else: (1) “whether the fuel economy statements were in fact accurate”; and (2)

“whether defendants knew that their fuel economy statements were false or

misleading.”18 And the fuel economy statements were “uniformly made” via the

“Monroney stickers and nationwide advertising.”19 Such key factual issues provide

“sufficient unity so that absent members can fairly be bound.”20 Thus,

“[p]redominance is a test readily met in certain cases alleging consumer [] fraud.”21

16 136 S. Ct. 1036, 1045 (2016). 17 In re Hyundai & Kia Fuel Econ. Litig., 881 F.3d at 708. 18 Joint ER 159. 19 Id. 20 Amchem, 521 U.S. at 621. 21 Id. at 625.


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B. Manageability concerns cannot defeat such predominance in the settlement context—and whether to try a nationwide class using the law of a single state, multi-state groupings, or the laws of fifty states is a matter of manageability.

“Settlement is relevant to a class certification,” according to our highest

court.22 “Confronted with a request for settlement-only class certification,” Amchem

directs that a “district court need not inquire whether the case, if tried, would present

intractable management problems, for the proposal is that there be no trial.”23 Thus,

in determining whether to certify a nationwide settlement class, a district court need

not determine whether the law of a single state will apply or whether the law of

multiple states will apply to subclasses, because these are matters of manageability:

a. Materially different state laws can be grouped for litigation.24 But

requiring a detailed analysis of claims similar at their core—though subject to ever

evolving, and often conflicting, caselaw at their margins—is wasteful make-work

for litigants and lower courts when a case will not be tried.25 For example, there is

22 Id. at 619; see also Fed. R. Civ. P. 23(b)(3)(D) (matters pertinent to

predominance inquiry include “the likely difficulties in managing a class action”). 23 Id. at 620. It was only with respect to the pre-settlement proposed nationwide

litigation class that the district court found application of the laws of fifty states would cause individual questions of law to predominate. See Appellees’ 3 SER 382, 395-96.

24 E.g., Klay v. Humana, 382 F.3d 1241, 1262 (11th Cir. 2004), abrogated in part on other grounds (collecting cases re state law groupings for litigation).

25 In the context of a litigation class, it is of course critical to the manageability analysis.


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considerable debate at present in the district courts regarding whether pure omissions

are actionable under California consumer protection laws absent a safety concern.

This single aspect of California law is subject to at least eight pending appeals before

this Court26 and a request for certification to the California Supreme Court.27

Amchem does not require litigants and lower courts to determine this or any other

rule on a fifty-state basis for a nationwide case that will never be tried. The whole

point of settlement is to avoid uncertainty in the law, including that attendant multi-

state law analysis, and put the litigation effort to a halt. Clinging to hypothetical

manageability concerns defeats the benefits of settlement, contrary to Amchem.

b. As an alternative to grouping, settling parties could instead seek

certification of fifty separate state-law classes (with a lump sum to be distributed

across all claimants). This would generate extra paperwork from the litigants and

possibly require joinder of additional class representatives for whom service

payments would be sought. More critically, it would compound the work of the

lower courts in approving nationwide settlements. But it would mean that variation

in state law could not defeat predominance: each one of the fifty state classes would

have the law of only a single state applied. And any manageability concern with

26 9th Cir. Case Nos. 16-15794, 16-15444, 16-15789, 16-55041, 16-55280, 16-

55212, 16-55211, 16-53845. 27 E.g., 9th Cir. Case No. 16-55041, Dkt. 38.


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having fifty state classes is moot under Amchem. With the outcome of this exercise

assured, its purpose is found wanting. But the fact that it would solve the majority’s

predominance concern reveals that it rests on manageability, contrary to Amchem.

C. Absent class members benefit fairly from nationwide settlements of consumer protection law claims, even where state law variations might have required different litigation strategies.

The concern for absent class members animating the reluctance to forego

manageability concerns is misplaced. If nationwide settlement classes cannot be

certified, then absent class members recover nothing as “economic reality dictates”

that such suits “proceed as a class action or not at all.”28 If the nationwide settlement

class can be certified, but only after undertaking multi-state consumer-law analysis,

then the risk, burden, and uncertainty of global settlement increases, making them

less likely. Again, absent class members lose out.

Moreover, the idea that absent class members are hurt by some without claims

(or weaker claims) potentially being included in the class is mistaken, given practical

realities. Here, there was no limit on the compensation that could have been claimed

by class members.29 So additional absent class members could have made claims

without prejudicing the rights of others to do so.30 As “class-action practice has

28 Eisen v. Carlisle and Jacquelin, 417 U.S. 156, 161 (1974). 29 Scott 4 ER 764-68. 30 Thus, contrary to the majority’s holding, the inclusion of used car purchasers

who were not exposed to advertising, even assumed true, is harmless error. In


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become ever more adventuresome as a means of coping with claims too numerous

to secure their just, speedy, and inexpensive determination one by one,” such

settlements ensure “the efficient use of court resources and the conservation of funds

to compensate claimants who do not line up early in a litigation queue.”31

Even in fund-sharing settlements, which this is not, claimants often end up

with more than their actual share of the settlement fund due to the limited number of

class members actually making claims.32 Absent class members are certainly not

hurt in these circumstances either. As Judge Posner has noted, “[t]o object to a

settlement on the ground that you shouldn’t have done as well in the settlement as

you did identifies you as an ideological litigant.”33

Now some objectors here claim they should recover more, but courts do not

countenance objections that the settlement could have been better by providing

different or additional relief—unless it arises to a conflict among class members. As

this Court has stated: “Of course it is possible, as many of the objectors’ affidavits

addition, there is no requirement in Tobacco II that absent class members establish reliance (only exposure). Indeed, Tobacco II was considered a major victory for consumers precisely because it required only named plaintiffs to establish reliance. See In re Tobacco II Cases, 207 P.3d 20, 38 (Cal. 2009).

31 Amchem, 521 U.S. at 617-18. 32 In re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 944-45 (9th Cir.

2015). 33 Ragsdale v. Turnock, 941 F.2d 501, 506 (7th Cir. 1991).


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imply, that the settlement could have been better. But this possibility does not mean

the settlement presented was not fair, reasonable or adequate.”34

Indeed, differences at the margins of the consumer protection laws, even if

material enough to require application of each state’s law under Mazza for a

litigation class,35 do not translate into materially different settlement compensation.

For example, a few states require a showing of reliance,36 while most do not.37 But

even states that require reliance may permit an inference rather than direct proof.38

So while issues of reliance may need to be litigated differently, the settlement value

is similar. Likewise, some states may require knowledge by the defendant, while

others do not. Again, these issues may require different litigation strategies, but

where there is evidence of the defendant’s knowledge, as here,39 the settlement

values are on par.

34 Hanlon, 150 F.3d at 1027. 35 Mazza v. Am. Honda Motor Co., 666 F.3d 581, 591 (9th Cir. 2012)

(identifying three material variations among consumer protection laws: reliance, scienter, and remedies). Variation in damages amount, as opposed to type of injury, is insufficient on its own to defeat class certification. E.g., Vaquero v. Ashley Furniture Industries, Inc., 824 F.3d 1150, 1155 (9th Cir. 2016).

36 E.g., Feitler v. The Animation Celection, Inc., 13 P.3d 1044, 1047 (Or. Ct. App. 2000).

37 E.g., Carriuolo v. Gen. Motors Co., 823 F.3d 977, 984 (11th Cir. 2016) (Florida law).

38 E.g., Strawn v. Farmers Ins. Co., 258 P.3d 1199, 1213 (Or. 2011). 39 Scott 9 ER 1842-43.


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All this is not to say that significant valuation differences are never accounted

for as part of a nationwide settlement. For example, in In re Toyota Motor Corp.

Unintended Acceleration Marketing, Sales Prac. & Prod. Liab. Litig, some states

permitted recovery of diminished value without manifestation of the unintended

acceleration defect, while other states required manifestation of the defect, and in

still others it was unclear whether manifestation was required.40 So the $2 billion

nationwide settlement accounted for these significant differences in law affecting

case valuation among states.41 But there are no such differences here. Instead, all

absent class members stand to benefit fairly from this settlement.

II. Vacating the certification of a settlement class for failure to determine whether differences in state law defeat predominance conflicts with precedent from this Circuit.

The majority’s decision to vacate the district court’s certification of a

nationwide settlement class for an assessment of whether variations in state

consumer protection laws, including warranty laws, preclude a finding of

predominance entirely contradicts Hanlon. Indeed, the dissenting judge below

describes Hanlon as precedent “on all fours.”42

40 No 8:10-ml-02151-JVS, 2013 WL 3224585, *3 (C.D. Cal. June 17, 2013). 41 Id. 42 In re Hyundai & Kia Fuel Econ. Litig., 881 F.3d at 713.


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In Hanlon, this Court affirmed the certification of a nationwide settlement

class asserting the same claims as here.43 In so doing, the Court held that the

nationwide class of minivan owners did “not present an allocation dilemma.”44

Absent class members were “not divided into conflicting discrete categories, such

as those with present health problems and those who may develop symptoms in the

future.”45 Instead, each absent class member had “the same problem: an allegedly

defective rear latchgate which requires repair or commensurate compensation.”46

Likewise here: each absent class member was subjected to defendants’ same

misrepresentations regarding their fuel economy ratings, which reduced the value of

the vehicles and resulted in consumers paying more than expected for gas.

Hanlon then held that this “common nucleus of facts and potential legal

remedies” that “dominates” the litigation satisfied the predominance inquiry under

rule 23(b)(3).47 And this Court, with Chief Judge Thomas writing for the panel, held

that “the idiosyncratic differences between state consumer protection laws are not

43 The claims included, as here, negligent misrepresentation, fraud, breach of

warranty, and violation of unfair and deceptive trade practices acts. See Hanlon v. Chrysler Corp., No. C95-2010, 1995 WL 18241629 (N.D. Cal. June 16, 1995).

44 Hanlon, 150 F.3d at 1021. 45 Id. (discussing Amchem). 46 Id. 47 Id. at 1022.


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sufficiently substantive to predominate over shared claims.”48 Rather, “the proposed

class action is paradigmatic.”49

In Hanlon, this Court made plain that “local variants of a generally

homogenous collection of causes” do not defeat predominance for a settlement

class.50 Put another way, “although some class members may possess slightly

differing remedies based on state statute or common law,” the claims “are not

sufficiently anomalous to deny class certification.”51 Instead, the same conduct of

defendants caused the same type of injury to all class members, as here. And, under

Hanlon, this is sufficient to cohere a nationwide settlement class.

48 Id. at 1022-23. 49 Id. at 1023. 50 Id. at 1022. The Court also stated that class counsel should be prepared to

demonstrate the commonality of substantive law applicable to all class members, id., but this was unnecessary here because settling plaintiffs’ claims were also at issue in Hanlon. Conversely, and assuming choice of law were a relevant inquiry for a settlement class rather than a moot manageability concern, it was objectors’ burden to show (1) material conflicts of law, (2) true conflicts of interests among jurisdictions under the circumstances of the particular case, and (3) impairment of such interests. Yet objectors did nothing more than recite Mazza—even as to the warranty claims, which were not even at issue in Mazza. This is plainly inadequate and addressed further in defendants’ petition. See, e.g., J.P. Morgan & Co. v. Super. Ct., 6 Cal. Rptr. 3d 314, 225 (Cal. Ct. App. 2003) (a separate conflict-of-law inquiry must be made with respect to each claim).

51 Hanlon, 150 F.3d at 1022. The Court also explained that “even if the named representatives did not include a broad cross-section of claimants, the prospects for irreparable conflict of interest are minimal in this case because of the relatively small differences in damages and potential remedies.” Id. at 1021.


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III. Vacating the certification of a settlement class for failure to determine whether differences in state law defeat predominance also conflicts with precedent from the Third Circuit.

In Sullivan, the Third Circuit en banc held that “variations in the rights and

remedies available to injured class members under the various laws of the fifty states

do not defeat commonality and predominance.”52 Instead, “concerns regarding

variations in state law largely dissipate when a court is considering the certification

of a settlement.”53

The en banc panel relied on Third Circuit precedent in In re Warfarin Sodium

Antitrust Litig., a case arising out the defendant drug manufacturers’ alleged

dissemination of misleading information about a competitor’s product.54 The

objectors argued that class certification was inappropriate due to differences in state

consumer fraud statutes’ eligibility for treble or punitive damages.55 But the Third

Circuit affirmed the district court’s ruling that class members “shared predominantly

common issues as to the conduct of the defendants despite possessing claims arising

under differing state laws.”56

52 667 F.3d at 301. 53 Id. at 297. See also Mazza, 666 F.3d at 590 n.2 (distinguishing another case

where “Honda settled with plaintiffs … without addressing whether the application of California law to a nationwide class is appropriate”).

54 391 F.3d 516 (3d Cir. 2004). 55 Sullivan, 667 F.3d at 298, citing Warfarin, 391 F.3d at 529-31. 56 Id. at 298-99, citing Warfarin, 391 F.3d at 530.


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Relying on Amchem, both Sullivan and Warfarin explain that “in the

settlement context, variations in state antitrust, consumer protection, and unjust

enrichment laws did not present the types of insuperable obstacles that could render

class litigation unmanageable.”57 Instead, a proposed settlement “obviates the

difficulties inherent in proving the elements of varied claims at trial or in instructing

a jury on varied state laws, and ‘the different is key.’”58 Thus, “state law variations

are largely irrelevant to certification of a settlement class.”59

In short, the majority’s decision conflicts with en banc precedent from the

Third Circuit. And this is an issue of exceptional importance because the ease of

settling a nationwide class should not turn on the vagaries of where the JPML places

an MDL proceeding.

57 Id. at 303; Warfarin, 391 F.3d at 529. 58 Id. at 304, quoting Warfarin, 391 F.3d at 529. 59 Id. And the Third Circuit distinguished cases refusing to certify nationwide

classes in the litigation context. Id. at 303 n.27, citing In re Bridgestone/Firestone Inc., 288 F.3d 1012 (7th Cir. 2002).

Cases the majority relies on here can be distinguished in the same manner. See In re Hyundai & Kia Fuel Econ. Litig., 881 F.3d at 702, citing Pilgrim v. Universal Health Card, LLC, 660 F.3d 943, 947 (6th Cir. 2011); Castano v. The American Tobacco Co., 84 F.3d 734 (5th Cir. 1996).


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IV. Compelled multi-state consumer-law analysis increases the expense and uncertainty of global settlements and thereby reduces their likelihood, contrary to public policy.

A settlement is “the preferred means of dispute resolution.”60 “[T]he policy

of federal courts is to promote settlement before trial,” because it “eases crowded

court dockets and results in savings to the litigants and the judicial system.”61

Indeed, “there is an overriding public interest in settling and quieting litigation” and

this is “particularly true in class action suits.”62

Requiring the parties to engage in detailed choice-of-law and/or multi-state

consumer-law analysis as a prerequisite to certification of a nationwide settlement

class increases both the burden on the district courts and the expense and uncertainty

of nationwide settlements—and makes such settlements less likely. This is

unfortunate given the judicial economy of classwide resolutions.

The majority’s decision also delays valuable recovery to thousands of

consumers. And it delays recovery in many other cases that now must address this

sea-change in approach to nationwide settlement classes—and wrestle with the

conflicts created.63 Hanlon has been followed many times over the past twenty years

60 Officers for Justice v. Civil Serv. Comm’n of City & Cnty. of San Francisco,

688 F.2d 615, 625 (9th Cir. 1982). 61 Franklin v. Kaypro Corp., 884 F.2d 1222, 1225 (9th Cir. 1989). 62 Van Bronkhorst v. Safeco Corp., 529 F.2d 943, 950 (9th Cir. 1976). 63 See, e.g., Edenborough v ADT, LLC, No. 16-cv-02233-JST, 2018 WL

1036998 (N.D. Cal. Feb. 5, 2018) (requesting further briefing regarding the effect


- 18 -

by district courts in this Circuit in certifying nationwide settlement classes.64 So In

re Hyundai & Kia Fuel Econ. Litig. presents a significant departure from precedent

for all the judges and practitioners who have relied on Hanlon as the law for the last

two decades.

CONCLUSION

Plaintiffs respectfully request that the Court grant their petition for rehearing

en banc to avert a conflict with Amchem, Hanlon, and Sullivan.

of In re Hyundai & Kia Fuel Econ. Litig. on certification of the proposed nationwide settlement class).

64 See, e.g., Hartless v. Clorox Co., 273 F.R.D. 630, 638-39 (S.D. Cal. 2011); Johnson v. Gen. Mills, Inc., No. SACV1000061-CJC, 2013 WL 12248151, at *4 (C.D. Cal. Mar. 6, 2013); see also Miller v. Ghirardelli Chocolate Co., No. C-12-04936 LB, 2014 WL 4978433, at *3 (N.D. Cal. Oct. 2, 2014) (citing Sullivan and Amchem for the proposition that “state law variations are largely irrelevant to certification of a settlement class”).


- 19 -

DATED: March 8, 2018 HAGENS BERMAN SOBOL SHAPIRO LLP

By /s/ Steve W. Berman STEVE W. BERMAN 1918 Eighth Avenue, Suite 3300 Seattle, WA 98101 (206) 623-7292 [email protected] ROBERT B. CAREY 11 West Jefferson Street, Suite 1000 Phoenix, AZ 85003 (602) 840-5900 [email protected] ELAINE T. BYSZEWSKI 301 N. Lake Avenue, Suite 920 Pasadena, CA 91101 (213) 330-7150 [email protected] Attorneys for Plaintiffs-Appellees Brady and Hunter and the Class

DATED: March 8, 2018 MCCUNE WRIGHT LLP

By /s/ Richard D. McCune RICHARD D. MCCUNE 2068 Orange Tree Lane, Suite 216 Redlands, CA 92374 (909) 557-1250 Attorneys for Plaintiffs-Appellees Levoff and Ganim and the Class


- 20 -

ATTESTATION REGARDING SIGNATURES

Pursuant to Circuit Rule 25-5(e), I attest that all other signatories listed, and

on whose behalf the filing is submitted, concur in the filing’s content.

/s/ Steve W. Berman Steve W. Berman


1

CERTIFICATE OF COMPLIANCE 1. This brief complies with the type-volume limitation of 9th Circuit Rules 35-4

and 40-1: Contains 4,185 words (petitions and answers must not exceed 4,200 words), and

is prepared in a format, type face, and type style that complies with Fed. R. App. P. 32(a)(4)-(6), or

Is in compliance with Fed. R. App. P. 32(a)(4)-(6) and does not exceed 15

pages. 2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5)

and the type style requirements of Fed. R. App. P. 32(a)(6) because: This brief has been prepared in a proportionally spaced typeface using

Microsoft Word 2016 and Times New Roman 14 point font, or This brief has been prepared in a monospaced typeface using

_______________________ with __________________________________.

Date: March 8, 2018

/s/ Steve W. Berman Attorneys for Plaintiffs-Appellees

and the Class


I hereby certify that I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF system on (date) . I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the appellate CM/ECF system.

CERTIFICATE OF SERVICE When All Case Participants are Registered for the Appellate CM/ECF System

I hereby certify that I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF system on (date) . Participants in the case who are registered CM/ECF users will be served by the appellate CM/ECF system. I further certify that some of the participants in the case are not registered CM/ECF users. I have mailed the foregoing document by First-Class Mail, postage prepaid, or have dispatched it to a third party commercial carrier for delivery within 3 calendar days to the following non-CM/ECF participants:

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CERTIFICATE OF SERVICE When Not All Case Participants are Registered for the Appellate CM/ECF System

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NOTE: To secure your input, you should print the filled-in form to PDF (File > Print > PDF Printer/Creator).

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Lee A. Cirsch J. Thomas Henretta The Lanier Law Firm Henretta Law Offices 10866 Wilshire Boulevard, Suite 400 159 S. Main Street, Suite 400 Los Angeles, CA 90024 Akron, OH 44308

15-56014; 15-56025; 15-56059; 15-56061; 15-56064; 15-56067

Mar 8, 2018

s/ Steve W. Berman


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

IN THE

FOR THE NINTH CIRCUIT


PANEL OPINION FILED : JANUARY 23, 2018

MAJORITY OPINION AUTHOR : IKUTA, J.

CONCURRING : KLEINFELD, J.

DISSENTING : NGUYEN, J.

DEFENDANTS-APPELLEES’ PETITION FOR REHEARING EN BANC

DOMMOND E. LONNIE

BRIAN H. NEWMAN

JAMES S. AZADIAN*

DYKEMA GOSSETT LLC

333 S. Grand Avenue, Suite 2100

Los Angeles, California 90071

(213) 487-1800

Attorneys for Defendant-Appellee

Kia Motors America, Inc.

SHON MORGAN*

QUINN EMANUEL URQUHART &

SULLIVAN, LLP

865 South Figueroa Street, 10th Floor


(213) 443-3000

Attorneys for Defendant-Appellee

Hyundai Motor America


i

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure,

defendant-appellee Hyundai Motor America hereby certifies that the following

parent corporation and publicly held corporation owns 10% or more of its stock:

Hyundai Motor Company

Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure,

defendant-appellee Kia Motors America, Inc. hereby certifies that the following

parent corporation and publicly held corporations own 10% or more of its stock:

Kia Motors Corporation


ii

TABLE OF CONTENTS

Page

INTRODUCTION AND RULE 35(b) STATEMENT .............................................. 1

BACKGROUND ....................................................................................................... 3

A. Espinosa Action, MDL Formation, and Announcement of a

Settlement .............................................................................................. 3

B. Settlement Proceedings in the District Court ........................................ 4

C. The Panel Decision ................................................................................ 5

ARGUMENT ............................................................................................................. 6

I. THE PANEL MAJORITY DECISION DIRECTLY CONFLICTS

WITH ESTABLISHED NINTH CIRCUIT PRECEDENT ............................ 6

A. Differences in State Laws Do Not Defeat Predominance ..................... 6

B. The Objectors—not the Settling Plaintiffs or the District

Court—Had the Burden to Demonstrate Materially Different

State Laws ............................................................................................. 9

II. THE PANEL MAJORITY’S DECISION CREATES A SPLIT WITH

THE THIRD AND SEVENTH CIRCUITS .................................................. 12

III. THE CASE PRESENTS ISSUES OF EXCEPTIONAL

IMPORTANCE ............................................................................................. 15

CONCLUSION ........................................................................................................ 17


iii


Page

Cases

In re Am. Int’l Grp., Inc. Sec. Litig.,

689 F.3d 229 (2d Cir. 2012) .................................................................................15

Amchem Prods., Inc. v. Windsor,

521 U.S. 591 (1997) .............................................................................. 1, 4, 11, 14

Andren v. Alere,

2017 WL 6509550 (S.D. Cal., Dec. 20, 2017) ....................................................12

Cox v. Clarus Mktg. Grp., LLC,

291 F.R.D. 473 (S.D. Cal. 2013) .........................................................................12

Edenborough v. ADT, LLC,

No. 16-cv-02233-JST (N.D. Cal., Feb. 5, 2018) .................................................15

Ellsworth v. U.S. Bank, N.A.,

No. C 12-02506 LB, 2014 WL 2734953

(N.D. Cal. June 13, 2014) ...................................................................................... 9

Forcellati v. Hyland’s, Inc.,

876 F. Supp. 2d 1155 (C.D. Cal. 2012) ...............................................................12

Hanlon v. Chrysler Corp.,

150 F.3d 1011 (9th Cir. 1998) ............................................ 1, 6, 7, 8, 9, 12, 13, 16

Johnson v. Lucent Techs.,

653 F.3d 1000 (9th Cir. 2011) .............................................................................10

Keilholtz v. Lennox Hearth Prod. Inc.,

268 F.R.D. 330 (N.D. Cal. 2010) ........................................................................... 9

Longest v. Green Tree Servicing LLC,

308 F.R.D. 310 (C.D. Cal. 2015) ........................................................................... 9

Mazza v. Am. Honda Motor Co.,

666 F.3d 581 (9th Cir. 2012) ........................................................................ 11, 12

In re Mex. Money Transfer Litig.,

267 F.3d 743 (7th Cir. 2001) ...............................................................................14

In re NVIDIA GPU Litig.,

539 F. App’x 822 (9th Cir. 2013) (non-precedntial) ............................................. 8


iv

Pokorny v. Quixtar, Inc.,

601 F.3d 987 (9th Cir. 2010) ...............................................................................10

Pollard v. Frost,

Case No. 17-1818 (8th Cir., Jan. 24, 2018) .........................................................15

In re Sony Vaio Computer Notebook Trackpad Litig.,

No. AJB09CV2109AJBMDD,

2013 WL 12116137 (S.D. Cal., Sept. 25, 2013) .................................................... 9

Sullivan v. DB Investments, Inc.,

667 F.3d 273 (3d Cir. 2011) .................................................................... 12, 13, 15

In re Target Corp. Customer Data Sec. Breach Litig.,

Nos. 15-3912 (8th Cir., Feb. 8, 2018) ..................................................................15

United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc.,

971 F.2d 244 (9th Cir. 1992) ...............................................................................16

United States v. Wilson,

631 F.2d 118 (9th Cir. 1980) ................................................................................. 7

Washington Mut. Bank, FA v. Superior Court,

24 Cal. 4th 906 (Cal. 2001) ..................................................................................10

Zinser v. Accufix Research Inst., Inc.,

253 F.3d 1180 (9th Cir.) ......................................................................................10

Rules

Fed. R. App. P. 201(c)(2) ........................................................................................... 7

Fed. R. Civ. P. 23(b)(1)(A) ......................................................................................16

Fed. R. Civ. P. 23(b) ................................................................................................11

Fed. R. Civ. P. 23(b)(3) ........................................................................... 1, 4, 6, 7, 16


1

INTRODUCTION AND RULE 35(b) STATEMENT

Of the thousands of nationwide settlement classes certified by district courts,

no Court of Appeals appears to have decertified one on the grounds that

differences among state laws defeated predominance under Federal Rule of Civil

Procedure 23(b)(3). Until now. The panel majority’s decision—In re Hyundai

and Kia Fuel Economy Litigation, 881 F.3d 679 (9th Cir., Jan. 23, 2018) (Ikuta, J.,

joined by Kleinfeld, J.)—warrants en banc review because it contravenes Hanlon

v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) and other binding decisions of

this Court that approved multi-state consumer class action settlements despite

arguable differences among state laws. The decision also directly clashes with all

decisions of other circuits applying the predominance requirement to nationwide

settlement classes. In decertifying the settlement class here, the panel majority

ignored the Supreme Court’s paramount instruction that “[s]ettlement is relevant to

a class certification,” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 619 (1997),

and imposed an unnecessarily burdensome procedural requirement on district

courts that has no basis in Rule 23(b)(3). As Judge Nguyen noted in dissent, the

panel majority decision dealt a “major blow” to class action litigation and was

“[c]ontrary to [this Court’s] case law and that of our sister circuits.” Appx. at 61.1

1 Citations to “Appx.” refer to the Appendix to this petition.


2

This result is particularly anomalous because the settlement embodied a

paragon of both substantive fairness (offering many class members 115% of

potential actual damages, among other remedies) and procedural due process

(multiple fairness hearings; appointment of liaison counsel to represent non-

settling parties, who overwhelmingly supported the settlement; and extensive fact-

finding by the district court, including reasoned consideration of the limited choice

of law issues raised below).

The panel majority’s decision instantly generated controversy and

uncertainty. The legal press noted it threatens to “hobble” nationwide class

settlements.2 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. 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. For these

reasons, and because class action law has an overriding need for national

2 Alison Frankel, “Did the 9th Circuit just hobble nationwide class-action

settlements?” (Feb. 2, 2018), 40 No. 08 Westlaw Journal Asbestos 07.


3

uniformity, this case compels en banc consideration before the panel majority’s

proposed transformation of the substance and procedure of federal class action law

becomes final and breaks rank with every federal court to have approved (or

reviewed approval of) a settled national class action.

BACKGROUND

A. Espinosa Action, MDL Formation, and Announcement of a

Settlement

This litigation began as a nationwide false advertising class action before the

district court (Wu, J.), Espinosa v. Hyundai Motor America, No. 12-cv-00800

(C.D. Cal.), challenging Hyundai’s marketing of certain vehicles as achieving 40

MPG fuel economy. Ahearn ER at 21. Before any class certification ruling,3

Hyundai and Kia voluntarily revised their fuel economy ratings for certain vehicles

and offered customers a comprehensive Lifetime Reimbursement Program

3 In a tentative opinion never adopted in Espinosa, the district court

observed that differences among state laws would defeat predominance of a

litigation class. SER at 395-96. But the Espinosa plaintiffs did not challenge the

accuracy of the fuel efficiency ratings. Instead, that action was premised upon

HMA’s media campaign, in contrast to the various MDL cases (including this

one), where the primary allegation that federally-mandated “Monroney” stickers

contained false fuel efficiency ratings. Ahearn ER at 23 n. 9. Consequently, in

assessing predominance for purposes of the eventual settlement in this case, the

district court considered a different overall mix of factual and legal issues—one

embodying greater commonalities—than when initially (and only tentatively)

analyzing predominance in that earlier and distinct context in Espinosa.


4

designed to compensate not only for all increased fuel costs during ownership, but

also to provide a 15% inconvenience premium. Id. at 20-21, 24-25.

Plaintiffs across the country filed 52 additional actions that were transferred

into an MDL and joined with Espinosa. Shortly thereafter, a settlement in

principle was announced that expanded the settlement options available to class

members. Id. at 25.

B. Settlement Proceedings in the District Court

The district court initiated a comprehensive, eight-month confirmatory

discovery process. Ahearn at 23-24; SER at 230-31. The district court also

appointed Liaison Counsel to represent the interests of the non-settling plaintiffs.

Ahearn ER at 23 & n.11; SER at 149-58, 166-69, 173-75.

In connection with preliminary approval, the district court held four hearings

to consider objector concerns about the fairness of the settlement, sufficiency of

class notice, and propriety of certification, including analysis of whether the

predominance requirement was met.4 Ahearn at 26; see generally, e.g., Dist. Ct.

Dkt. Nos. 281, 301, 552, 560. In a detailed predominance analysis, the district

court found no “serious differences between the laws of the various states” would

4 Before certifying a class under Rule 23(b)(3), a district court must find

“that the questions of law or fact common to class members predominate over any

questions affecting only individual members.” This “inquiry tests whether

proposed classes are sufficiently cohesive to warrant adjudication by

representation.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997).


5

“preclude . . . that common issues would predominate.” Dist. Ct. Dkt. No. 267 at

11. The district court explained that the accuracy of fuel economy estimates and

the manufacturers’ knowledge of any inaccuracy were common classwide. Id.

Because those issues were “the primary issues in proving all of [the class

members’] causes of action,” any variations in state law did not defeat

predominance. Id. at 11-12.

In a later hearing, the district court considered and rejected certain

plaintiffs’ contention that Virginia law was more favorable to the class.

Dist. Ct. Dkt. No. 290 at 3. The district court noted first that the statute of

limitations likely barred most Virginia class members’ claims and, in any

event, those class members’ ability to meet the higher burden of proof to

recover Virginia’s higher damages award was “highly speculative.” Id.; see

also Dist. Ct. Dkt. No. 317 at 5 (Virginia consumers also protected by opt-

out rights).

By final approval, the settlement garnered broad support, with no objection

from non-settling plaintiffs in 42 of the MDL class actions. SER at 202-206.

C. The Panel Decision

In an opinion by Judge Ikuta and joined by Judge Kleinfeld, the panel

majority vacated certification of the settlement class. The panel majority

concluded the district court failed to conduct a “rigorous” predominance analysis


6

under Rule 23(b)(3) to “determine whether variations in state consumer protection

laws, or individual factual questions regarding exposure to the misleading

statements, precluded certification.” Appx. at 60. The panel majority

acknowledged the objectors bore the burden to show the laws of other states

materially differed in ways that would defeat predominance. Id. at 30-31.

Nevertheless, the panel majority held that the district court failed to address

adequately whether variations in state laws would defeat predominance. Id. at 52.

Judge Nguyen issued a justifiably strong dissent. In her view, the district

court acted within its broad discretion in certifying a nationwide class and the

panel majority’s decision improperly—and in conflict with decisions of this Court

and those of other Circuits—shifted the burden of assessing possible conflicts of

law from the objectors to the district court. Id. at 61-64. The dissent noted that the

objectors failed to meet their burden in establishing that foreign law would apply to

class members’ claims. Id. at 64-68.

ARGUMENT

I. THE PANEL MAJORITY DECISION DIRECTLY CONFLICTS

WITH ESTABLISHED NINTH CIRCUIT PRECEDENT

A. Differences in State Laws Do Not Defeat Predominance

The dissent correctly observes that the panel majority decision squarely

conflicts with published decisions of this Court. Hanlon v. Chrysler Corp., 150

F.3d 1011 (9th Cir. 1998) controls this case. There, several state actions asserted


7

claims of product liability, breach of express and implied warranties, and

automobile lemon law violations. Id. at 1017-18, 1022. While a contested class

certification motion was pending, the parties negotiated a proposed nationwide

class settlement that the district court approved. Id. at 1018.

As here, objectors to the Hanlon settlement argued that “diverse state laws”

offered some class members enhanced remedies, including treble and punitive

damages, as well as buyback options under state lemon laws, and that such

variances should have been considered in the Rule 23(b)(3) predominance analysis.

See Appx. (Brief for Appellants in Hanlon v. Chrysler Corp., No. 96-15043 (9th

Cir. 1998), ECF No. 29) at 116-17, 122-23, 127-31, 143-44).5 Just like the

objectors here, the objectors urged that class counsel, not the objectors, bore the

burden of undertaking the choice of law analysis, and argued that class counsel

failed to do so. Id. at 127-28. The district court approved the Hanlon settlement

without any discussion of differing laws or the effect on predominance. Id. at 121-

123.

On review, this Court easily affirmed the nationwide settlement class despite

these variations in state laws, reasoning that “to the extent distinct remedies exist,

5 This Court may take judicial notice the Hanlon brief provided in the

Appendix at 91-172 because it is part of this Court’s “own record[] in other cases.”

United States v. Wilson, 631 F.2d 118, 119 (9th Cir. 1980); FRAP 201(c)(2);

accord Fed. R. App. P. 201(c)(2).


8

they are local variants of a generally homogenous collection of causes which

include products liability, breaches of express and implied warranties, and ‘lemon

laws.’ . . . Thus, the idiosyncratic differences between state consumer protection

laws are not sufficiently substantive to predominate over the shared claims.”

Hanlon, 150 F.3d at 1022-23.6

The panel majority’s analysis cannot be reconciled with this Court’s

decision in Hanlon given that the district court in Hanlon did not even address

variances in state law, or explain how predominance was nonetheless satisfied. By

contrast, here the district court specifically assessed the differing-laws issue

multiple times throughout the approval process, and concluded none of the

differences were “serious . . . so as to preclude the conclusion that common issues

would predominate” for settlement purposes. Dist. Ct. Dkt. 267 at 11; see also

Dist. Ct. Dkt. 290 at 3.7 Despite this case’s striking similarities to Hanlon, the

6 This Court has consistently applied the same rule, even in its unpublished

dispositions of national class action settlements. See, e.g., In re NVIDIA GPU

Litig., 539 F. App’x 822, 825 (9th Cir. 2013) (non-precedential) (certification of

nationwide class where common question of fact “applicable to all class members .

. . is the core of the case.”).

7 The majority’s decision did not address the district court’s express

assessment of choice of law as it might affect predominance. Dist. Ct. Dkt. No.

290. Nor did the panel majority’s decision discuss the separate occasions on which

the district court specifically considered whether Virginia law in particular may

provide consumers with more favorable remedies. Dist. Ct. Dkt. No. 317 at 5; Dkt.


9

panel majority did not mention Hanlon’s predominance holding, nor did it attempt

to distinguish it.8

The panel majority’s substantial deviation from long-settled Ninth Circuit

law, if left undisturbed, will be particularly disruptive because district courts in this

Circuit have consistently relied on Hanlon to certify national and multistate class

actions for the past 20 years.9

B. The Objectors—not the Settling Plaintiffs or the District Court—

Had the Burden to Demonstrate Materially Different State Laws

The panel majority’s decision faults the district court for not considering

laws never raised by the objectors. This inappropriately shifts to district courts the

burden “to extensively canvass every state’s laws and determine that none other

than California’s apply.” Appx. at 64. As the dissent correctly noted, the

No. 502 at 9-10 (noting court rejected arguments regarding favorability of Virginia

law).

8 The panel majority also ignored this Court’s abuse of discretion standard

in favor of one closer to de novo. See Linney v. Cellular Alaska P’ship, 151 F.3d

1234, 1238 (9th Cir. 1998) (class settlement approval reversible only upon a

“strong showing” decision “was a clear abuse of discretion”).

9 See, e.g., Keilholtz v. Lennox Hearth Prod. Inc., 268 F.R.D. 330, 341–42

(N.D. Cal. 2010) (certifying nationwide class despite state law differences);

Ellsworth v. U.S. Bank, N.A., No. C 12-02506 LB, 2014 WL 2734953, at *21-*22,

*25 (N.D. Cal. June 13, 2014) (variations among state laws do not defeat

predominance in fraud and contract class); Longest v. Green Tree Servicing LLC,

308 F.R.D. 310, 328 (C.D. Cal. 2015) (state law variations do not defeat

predominance); In re Sony Vaio Computer Notebook Trackpad Litig., No.

AJB09CV2109AJBMDD, 2013 WL 12116137, at *14, *18-*20 (S.D. Cal., Sept.

25, 2013) (same).


10

majority’s burden reassignment constituted a “departure from [this Circuit’s]

nationwide class action jurisprudence” that will create significant negative

consequences. Id. at 63. Until the panel majority’s decision, this Court made it

clear that the proponent of applying non-forum law “bears the burden of

identifying the conflict between that state’s law and [the forum state]’s law on the

issue.” Pokorny v. Quixtar, Inc., 601 F.3d 987, 995 (9th Cir. 2010) (citing

Washington Mut. Bank, FA v. Superior Court, 24 Cal. 4th 906, 914, (Cal. 2001)

(foreign law proponent “shoulder[s] the burden of demonstrating that foreign law,

rather than California law, should apply to class claims.”)). Yet, here, where the

district court considered and rejected the only argument made for applying a

different state’s law (Virginia’s), the panel majority held “that a class cannot be

certified unless a district court sua sponte raises and refutes arguments on the

objectors’ behalf in support of foreign law.” Appx. at 68. That has never been the

law in this circuit (or in any other). Rather, if the “parties do not address choice-

of-law issues, courts in California presumptively apply California law.” Johnson

v. Lucent Techs., 653 F.3d 1000, 1008 (9th Cir. 2011).

No case on which the panel majority relied requires a district court to

independently survey every state’s laws, and argue against use of the forum’s law.

See Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1187-88 (9th Cir. 2001)

(denying class certification because plaintiff failed to carry burden to demonstrate


11

foreign jurisdiction’s interests outweighed California’s interest in applying its own

law). Beyond conflicting with this Circuit’s rule that the proponent of non-

California law must bear the burden to demonstrate such law applies, the panel

majority decision would require the trial court judge to hypothesize every state’s

interest in having its law applied over that of California, and weigh the relative

strength of each interest. Such a requirement is impractical, unworkable, and finds

no support in the language or the history of Rule 23(b).

The panel majority’s reliance on Amchem is particularly unwarranted. The

class in Amchem encompassed individuals “exposed to different asbestos-

containing products, for different amounts of time, in different ways, and over

different periods,” rendering some class members sick while others suffered “no

physical injury.” 521 U.S. at 609, 624. The Amchem class members had

conflicting interests. As the dissent in this case points out, “Amchem did not

address, much less conduct, a choice-of-law analysis. The fundamental problem in

Amchem was the factual differences between class members that created a conflict

between potential claimants. And that conflict would have existed even if all the

state laws at issue were identical.” Appx. at 75.

Nor does Mazza v. Am. Honda Motor Co., 666 F.3d 581, 586 (9th Cir.

2012), on which the panel majority’s decision heavily relies, or any other decision

of this Court, require that the district court perform an exhaustive choice of law


12

analysis for all 50 states before certifying a settlement class after it has considered

and rejected finding that predominance is precluded by the specific laws raised by

the objectors. See Cox v. Clarus Mktg. Grp., LLC, 291 F.R.D. 473, 480 (S.D. Cal.

2013) (relying on Mazza and Hanlon to certify nationwide class action for

settlement because “neither the Defendants nor any objectors have informed the

Court as to whether the applicable state laws contain material differences”); see

also Andren v. Alere, 2017 WL 6509550, at *17 (S.D. Cal., Dec. 20, 2017)

(quoting Forcellati v. Hyland's, Inc., 876 F. Supp. 2d 1155, 1160 (C.D. Cal. 2012))

(requiring defendants to identify material differences in state law to prevent class

certification for litigation).

II. THE PANEL MAJORITY’S DECISION CREATES A SPLIT WITH

THE THIRD AND SEVENTH CIRCUITS

This appeal would have been decided differently in the Third and Seventh

Circuits, which treat differences in state law as generally immaterial in the context

of a settlement class and thus insufficient to defeat predominance.

The panel majority’s decision creates a conspicuous conflict with the en

banc Third Circuit’s holding in Sullivan v. DB Investments, Inc., 667 F.3d 273,

301–02 (3d Cir. 2011), that “[v]ariations in the rights and remedies available to

injured class members under the various laws of the fifty states [do] not defeat

commonality and predominance” (quotations omitted) (second alteration in

original). Sullivan involved consolidated class actions alleging violations of state


13

and federal antitrust, consumer protection, and unjust enrichment laws, as well as

unfair business practices and false advertising under common law and relevant

state statutes. Id. at 287. Like Hanlon, and unlike the panel majority’s decision

here, Sullivan recognized the relevance of the settlement class context. “From our

case law,” the en banc court explained, “we can distill at least three guideposts that

direct the predominance inquiry: first, that commonality is informed by the

defendant’s conduct as to all class members and any resulting injuries common to

all class members; second, that variations in state law do not necessarily defeat

predominance; and third, that concerns regarding variations in state law largely

dissipate when a court is considering the certification of a settlement class.” Id. at

297. Building on a long line of its published circuit precedent, the en banc court

went on to declare that, “where a defendant’s singular conduct gives rise to one

cause of action in one state, while providing for a different cause of action in

another jurisdiction, the courts may group both claims in a single class action.” Id.

at 302. Finally, the Third Circuit noted that variations in state law impact

primarily the “manageability” of a class action, which is not at issue for a

settlement class, and therefore reasoned that “while we are cognizant of our

responsibility to protect absentees by blocking unwarranted or overbroad class

definitions, state law variations are largely irrelevant to certification of a settlement

class.” Id. at 304 (internal citations and quotations omitted).


14

Similarly, in a decision that cannot be reconciled with the panel majority’s

reasoning here, the Seventh Circuit held that state law variations did not defeat

predominance for a settlement class, and that class representatives are not required

to investigate and/or deploy every potential state-law theory. In re Mex. Money

Transfer Litig., 267 F.3d 743, 747 (7th Cir. 2001). The Seventh Circuit noted that

“nationwide classes are certified routinely even though every state has its own”

laws. Id. As Judge Easterbrook explained for the court, the parties had “asked for

certification of a class for settlement only, a step that the Supreme Court approved

in Amchem . . . Given the settlement, no one need draw fine lines among state-law

theories of relief.” Id. at 746-47 (internal citations omitted). “Instead of requiring

the plaintiffs to conduct what may be a snipe hunt, district judges should do what

the court did here: invite objectors to identify an available state-law theory that the

representatives should have raised, and that if presented would have either

increased the recovery or demonstrated the inappropriateness of class treatment.”

Id. at 747. In contrast to the panel majority here, the Seventh Circuit correctly

recognizes that neither the district judge nor the class representatives shoulder the

load to investigate every issue that could defeat predominance–that burden is, and

should be, borne by the objectors.

Independently, the majority’s holding that including used car owners in the

settlement defeats predominance conflicts with decisions of the Second Circuit and


15

Third Circuit holding that, in the settlement context, differences in class members’

ability to prove reliance does not defeat predominance. See Sullivan, 667 F.3d at

302-03 (when assessing settlement class “the concern for manageability that is a

central tenet in the certification of a litigation class is removed from that

equation”); In re Am. Int’l Grp., Inc. Sec. Litig., 689 F.3d 229, 241 (2d Cir. 2012)

(“[W]ith a settlement class, the manageability concerns posed by numerous

individual questions of reliance disappear.”). Here, the majority failed to

recognize manageability is a component of predominance.

III. THE CASE PRESENTS ISSUES OF EXCEPTIONAL IMPORTANCE

The panel majority decision already portends profound impact on class

litigation nationwide, threatening to undermine carefully crafted settlement

agreements. For example, invoking the panel majority’s decision, the state of

Massachusetts immediately urged the Eighth Circuit to undo a class settlement

involving defective rifle triggers. Appx. at 169-70, Pollard v. Frost, Case No. 17-

1818 (8th Cir., Jan. 24, 2018); see also id. at 175-77, In re Target Corp. Customer

Data Sec. Breach Litig., Nos. 15-3912, 16-1203, 16-1408 (8th Cir., Feb. 8, 2018)

(objector-appellant citing panel majority’s decision to object to nationwide

settlement); see also id. at 172-73, Edenborough v. ADT, LLC, No. 16-cv-02233-


16

JST (N.D. Cal., Feb. 5, 2018) (ordering briefing due to panel majority decision

following fairness hearing for approval of class action settlement).10

The systemic costs imposed by the speculative, hypothetical inquiries the

panel majority decision requires will significantly distort class-action litigation and

settlements going forward. Unable to rely on the clear rule of Hanlon, litigants and

their counsel, faced with the task of trying to reconcile it with the panel majority

decision, may decide to forgo nationwide class settlements. This means that

sometimes parties will devote resources to pursuing settlement on a subclass basis

where doing so serves none of the purposes for Rule 23(b)(3). In other cases,

confusion caused by the panel majority’s decision might prompt pursuit of class

litigation on a state-by-state basis, resulting in multiple suits that tax both federal

and state court systems. Such an inefficient incentive risks “inconsistent or

varying adjudications with respect to [various] class members that would establish

incompatible standards of conduct for the party opposing the class,” and will not

“fairly and efficiently adjudicat[e]” legitimate claims held by plaintiffs residing in

multiple jurisdictions. Fed. R. Civ. P. 23(b)(1)(A), (b)(3).

10 Judicial notice is appropriate because these filings are “proceedings in

other [federal] courts.” United States ex rel. Robinson Rancheria Citizens Council

v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992).


17

Class action litigation resembling this case is commonplace throughout the

nation, and the panel majority decision will have broad, negative effects on the

way class action litigation is conducted—to the extent that it does not render

nationwide class treatment unfeasible altogether.

Whatever one thinks of the class device, the voluntary, fair and efficient

resolution of such actions through nationwide settlements benefits all stakeholders:

class members, defendants, as well as state and federal judicial systems. The panel

majority’s decision severely jeopardizes these salutary outcomes.

CONCLUSION

For these reasons, defendants-appellees respectfully request their petition be

granted.

DATED: March 8, 2018 Respectfully submitted,

QUINN EMANUEL URQUHART &

SULLIVAN, LLP

By /s/ Shon Morgan

SHON MORGAN

865 South Figueroa Street, 10th Floor


(213) 443-3000

Attorneys for Defendant-Appellee Hyundai

Motor America


18

DATED: March 8, 2018 DYKEMA GOSSETT PLLC

By /s/ James Azadian

JAMES AZADIAN

333 S. Grand Avenue, Suite 2100


(213) 487-1800

Attorneys for Defendant-Appellee Kia

Motors America, Inc.


ATTESTATION REGARDING SIGNATURES

Pursuant to Circuit Rule 25-5(f), I attest that all other signatories listed, and

on whose behalf the filing is submitted, concur in the filing’s content.

/s/ Shon Morgan

Shon Morgan


CERTIFICATE OF COMPLIANCE

Pursuant to Fed. R. App. P. 32, the foregoing DEFENDANTS-

APPELLEES’ PETITION FOR REHEARING EN BANC complies with the type-

volume limitation because the document is proportionately spaced using Times

New Roman 14-point typeface and contains 3,884 words of text. Defendants-

Appellees used Microsoft Word 2013 to prepare this document.

Dated: March 8, 2018

/s/ Shon Morgan

Shon Morgan


CERTIFICATE OF SERVICE

I, Shon Morgan, hereby certify that on March 18, 2018, I electronically filed

the foregoing DEFENDANTS-APPELLEES’ PETITION FOR REHEARING EN

BANC with the Clerk of the Court for the United States Court of Appeals for the

Ninth Circuit by using the appellate CM/ECF system.

I certify that all participants are registered CM/ECF users and that service will

be accomplished by the appellate CM/ECF system.

Dated: March 8, 2018

/s/ Shon Morgan

Shon Morgan


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

IN THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT


PANEL OPINION FILED: JANUARY 23, 2018 MAJORITY OPINION AUTHOR: IJUTA, J.

CONCURRING: KLEINFELD, J. DISSENTING: NGUYEN, J.

OBJECTOR-APPELLANT DANA ROLAND’S RESPONSE TO APPELLEES’ PETITION FOR REHEARING EN BANC

/s/ Dennis D. Gibson Dennis D. Gibson Gibson Law Firm Texas State Bar Number: 07861300 4925 Greenville Avenue, Suite 200 Telephone: (214) 292-6627 Email: [email protected] Attorney for Objector-Appellant Dana Roland

Case: 15-56014, 03/28/2018, ID: 10815736, DktEntry: 128, Page 1 of 21

Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

- i-

TABLE OF CONTENTS

Contents Page INTRODUCTION ..................................................................................................... 1 I. THE PANEL MAJORITY’S OPINION IS CONSISTENT WITH THE

PRECEDENT OF THIS COURT AND THE SUPREME COURT ............. 2

A. The District Court Previously Found That State Law Variance And Reliance Precluded A Predominance Finding For A Nationwide Class ............. 2 B. Mazza Shows That Assessing Variations In State Law Is An Essential Element Of The Predominance Inquiry ............................................................... 3 C. Amchem v. Windsor Governs This Case ........................................................ 4 D. Hanlon Supports The Panel Majority Opinion In This Case And Shows That The Predominance Inquiry Is Undiluted In The Settlement Context ......... 6

II. THE THIRD CIRCUIT IS AN OUTLIER ON THE SUBJECT OF CLASS

CERTIFICATION FOR BOTH LITIGATION AND SETTLEMENT CLASSES ............................................................................................................ 8

III. CHOICE OF LAW ISSUES WERE BRIEFED BY HYUNDAI AND THE

VARIATIONS IN STATE LAWS WERE FOUND BY THE DISTRICT COURT TO BE MATERIAL ...........................................................................11

IV. THE PANEL MAJORITY WAS CORRECT TO FIND THAT THE

DISTRICT COURT ABUSED ITS DISCRETION IN CERTIFYING A SETTLEMENT CLASS THAT INCLUDED USED CAR OWNERS ............15

CONCLUSION ........................................................................................................15


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

-i-

TABLE OF AUTHORITIES Cases

Amchem Prods. Inc. v. Windsor, 521 U.S. 591 (1997) ........................................1, 5

Briseno v. ConAgra Foods, Inc., 844 F.3d 1121 ....................................................... 9

Castano v. American Tobacco Co., 84 F.3d 734 ...................................................14

Cook v. Clarus Group, LLC, 291 F.R.D. 473 (S.D. Cal. 2013) ............................15

Ellis v. Costco Wholesale Corp., 657 F.3d 970 (9th Cir. 2011).............................14

Gariety v. Grant Thornton, LLP, 368 F.3d 356, 370 (4th Cir. 2004) ....................14

Grayson v. 7-Eleven, Inc., 2011 U.S. Dist. LEXIS 62211 (S.D. Cal. 2011) ........14

Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) ....................................1, 7

In re Grand Theft Auto Video Game Consumer Litigation, 251 F.R.D. 139

(S.D.N.Y. 2008) ...................................................................................................... 8

In re Mex. Money Transfer Litig., 267 F.3d 743 (7th Cir. 2001) ...................................12

Johnson v. Lucent Techs., Inc., 653 F.3d 1000 (9th Cir. 2011) ................................16

Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012) ...................... 2, 3, 4

Ortiz v. Fibreboard Corp., 527 U.S. 815, (1999) ...................................................... 5

Spence v. Glock, 227 F.3d, 308, 313 (5th Cir. 2000) .............................................15

Sullivan v. DB Invs., Inc., 667 F.3d 273 (3rd Cir. 2011) ......................................11

Valley Drug Co. v. Genera Pharms., Inc., 350 F.3d 1181 (11th Cir. 2003) .....8, 14


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page ii

Vernon Gries v. Standard Ready Mix Concrete, L.L.C., 2009 WL 427281 (N.D.

Iowa 2009) .............................................................................................................. 9

Wash. Mut. Bank, FA v. Superior Court, 24 Cal. 4th 906 (2001) ............................13


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 1

INTRODUCTION The panel majority’s opinion in this case is entirely consistent with the

applicable precedent of this Court and the Supreme Court. The panel majority’s

finding that class certification was not warranted because the district court failed

to conduct a rigorous analysis on the Rule 23 prerequisites on the mistaken

assumption that the predominance requirement for certification was lessened in

the settlement context is consistent with this Court’s decision in Hanlon v.

Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) and follows the Supreme Court’s

landmark decision on the standards for settlement class certification: Amchem

Prods. Inc. v. Windsor, 521 U.S. 591 (1997). Further, the panel majority opinion

is completely correct that the record did not support the presumption that used

car owners were exposed to and relied upon misleading advertising and, thus, the

district court had an obligation to define the relevant class in such a way as to

include only members who were exposed to allegedly materially misleading

advertising. The panel majority’s opinion on this aspect of the case is consistent

with this Court’s precedent in Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th

Cir. 2012). The Petitions for Rehearing En Banc should be denied.


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

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I. THE PANEL MAJORITY’S OPINION IS CONSISTENT WITH THE PRECEDENT OF THIS COURT AND THE SUPREME COURT

A. The District Court Previously Found That State Law Variance And Reliance Precluded A Predominance Finding For A Nationwide Class

The district court made a Tentative Ruling on Motion for Class

Certification in one of the consolidated cases for this settlement: Espinosa,

et.al. v. Hyundai Motor Am., case no. CV-12-800- GW (FFM) (Supplemental

Excerpts of Record p. 382-396).

Here are relevant excerpts from the district court's ruling:

Plaintiffs do not present any argument as to whether individualized proof of reliance is required as concerns the three fraud-based common law claims. Therefore, the Court would presume that individualized proof of reliance and causation is required before Plaintiffs could prevail as to those claims; predominance is thus not met as to the common law claims. (SER 391)

Defendant has submitted an "Appendix of Variations in State Laws" (Docket No. 58-1) that unquestionably demonstrates that there are material differences as between the various states' laws that would "make a difference in this litigation." See Mazza, 666 F.3d at 590-91 (considering scienter requirements, reliance requirements and remedies to be material differences in consumer protection laws, just as Defendant demonstrates here). (SER 395)

All in all, the Court would find that certification of a nationwide class where California law is applied to out-of-state consumers is foreclosed by the Ninth Circuit's decision in Mazza, a case virtually on all fours with the instant matter. Obviously, were the laws of the other various states applied to out-of-state purchasers, class certification would be precluded because common questions of law and fact could no longer


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 3

predominate. Therefore, the Court would only consider granting certification to a class including solely California consumers. (SER 396)

The Court would certify, if any class at all, Elantra and Sonata classes that (1) are limited to California consumers only, (2) defined so as to include only consumers who viewed one of the challenged advertisements or marketing materials, (3) assert only UCL, FAL. and CLRA claims. The Court would DENY certification as to the three common law claims due to individualized reliance issues. (SER396)

In the above ruling, manageability was not discussed, nor was it given as a

reason for rejecting a nationwide class. The district court reviewed and analyzed

an Appendix of Variation in State Laws that had been provided by Hyundai. The

District Court was fully aware of the differences in state law and found that

Espinosa was “virtually on all fours” with this Court’s decision in Mazza v. Am.

Honda Motor Co., 666 F3d 581 (9th Cir. 2012).

B. Mazza Shows That Assessing Variations In State Law Is An Essential Element Of The Predominance Inquiry

The Petitioners argue that the class certification issues in this case are

relevant primarily to manageability, and therefore have little or no bearing on the

issue of predominance for a settlement class. That is incorrect.

In Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012), this court held:

Because the law of multiple jurisdictions applies here to any nationwide class of purchasers or lessees of Acuras, including a CMBS system, variance in state law overwhelm common issues and preclude predominance for a single nationwide


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 4

class. Id. at 596

Manageability is not discussed in Mazza and manageability is not given as

a reason why the variance in state law precluded predominance for a nationwide

class in Mazza.

For common issues of fact, Mazza did not question whether misleading

advertisements existed or whether Honda knew of the defect. Instead, Mazza

found that common issues of fact did not predominate where an individualized

case must be made for each member showing reliance. Id. at 596. Mazza noted

that California law does not allow a consumer who was never exposed to a false

or misleading advertising campaign to recover damages under California law. Id.

No management issues were discussed or given as any reason for the finding that

there was not a predominance of common fact issues in Mazza.

C. Amchem v. Windsor Governs This Case

The Petitioners contend that the panel majority’s reliance on the

Supreme Court’s landmark case on settlement class certification Amchem

Prods. Inc. v. Windsor, 521 U.S. 591, 620 (1997) is unwarranted. That

argument is meritless. The principles for settlement class certification set forth

in Amchem directly apply to this case and clearly show that the panel

majority’s decision in this case was correct.


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 5

In Amchem, the Supreme Court made clear that those specifications of

Rule 23 which are designed to protect absentees by blocking unwarranted or

overbroad class definitions, of which predominance is certainly one, demand

undiluted, even heightened attention in the settlement context. Id. at 620. See

also Ortiz v. Fibreboard Corp., 527 U.S. 815, 858 (1999) ("the determination

whether proposed classes are sufficiently cohesive to warrant adjudication must

focus on questions that preexist settlement"). The Amchem opinion singled out

the predominance requirement of 23(b)(3) as an “inquiry that trains on the

legal or actual questions that qualify each member’s case as a genuine

controversy, questions that pre-exist any settlement.” Id. at 622-623. The

Supreme Court expressly provided that the predominance requirement is at a

minimum, the same for a settlement class as it is for a litigation class. The

Supreme Court expressly emphasized that the safeguards provided by the Rule

23(a) and (b) class-qualifying criteria are not impractical impediments checks

shorn of utility in the settlement class context. Id. at 621.

The Supreme Court noted that if a fairness hearing permitted class

designation despite the impossibility of litigation, both class counsel and court

would be disarmed. Class counsel confined to settlement negotiations could not

use the threat of litigation for a better offer. Id. at 621. The panel majority was

correct to point out that is exactly what happened in this case.


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 6

In Amchem, the Supreme Court noted that, given the number of

"uncommon questions" as to exposure level and injury, "any overarching

dispute about the health consequences of asbestos exposure cannot satisfy the

Rule 23(b)(3) predominance" standard. 521 U.S. at 624. And it then stated that

differences in state law, compound these disparities. 521 U.S. at 624. The

Supreme Court in Amchem identified state law differences as a relevant

consideration. And the reason for that conclusion is obvious: a question

cannot even be common, let alone predominate, if its resolution is not

relevant to the legal claims of all of the members of the class. Determining

the relevant legal standards, and what facts are relevant under those

standards, is therefore an essential first step in assessing predominance. By

completely ignoring the differences in state law in this case which had been

briefed and which the district court had found to be material, the panel majority

correctly found that the court below abused its discretion.

D. Hanlon Supports The Panel Majority Opinion In This Case And Shows That The Predominance Inquiry Is Undiluted In The Settlement Context

In Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) this Court

found that while state law remedies varied in that case, there was a homogenous

collection of causes including products liability, breaches of express warranties

and "lemon laws". Id. at 1022. Of significance, reliance was not an issue in

Hanlon. In Hanlon, this Court noted that a court must pay "undiluted, even


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 7

heightened, attention to class certification requirements in a settlement context."

Id. at 1019; This Court also noted that the predominance analysis must rest on

"legal or factual questions that qualify each member's case as a genuine

controversy, questions that pre-exist any settlement." Id. Hanlon did not engage

in a relaxed predominance analysis for a settlement class. It did not use the

rationale of no management issues as a reason to certify that settlement class.

There was no consideration of manageability in the predominance section of the

opinion. Instead, this Court found that a common nucleus of facts and potential

legal remedies "dominates this litigation." Id. at 1022. A fair reading of Hanlon

demonstrates that this Court would have affirmed the certification of Hanlon as a

litigation class. The predominance analysis in Hanlon contrasts sharply with the

certification of a settlement class in this case, particularly in light of the

district court's analysis of certification in Espinosa.

Under the Petitioner’s suggested approach, where a settlement class is

involved, a district court does not have to perform a rigorous analysis as to whether

the Rule 23 criteria have been met. That position was expressly rejected in

Hanlon. This Court is certainly not alone in rejecting that approach.

In Valley Drug Co. v. Geneva Pharmaceuticals, 350 F.3d 1181 (11th Cir.

2003), the court noted that even if class certification is not contested, "a court

nevertheless has the responsibility of conducting its own inquiry as to whether the


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 8

requirements of Rule 23 have been satisfied in a particular case. Id. at 1188; see

also In re Grand Theft Auto Video Game Consumer Litigation, 251 F.R.D. 139,

(S.D.N.Y. 2008), settlement does not relieve the court of its duty to perform a

robust analysis of the plaintiffs' predominance showing.); Vernon Gries v.

Standard Ready Mix Concrete, L.L.C., 2009 WL 427281, *3 (N.D. Iowa 2009) (the

"rigorous analysis" required of a district court in order to determine whether all of

the prerequisites of Rule 23 are satisfied remains true in the context of a proposed

settlement class.)

II. THE THIRD CIRCUIT IS AN OUTLIER ON THE SUBJECT OF CLASS CERTIFICATION FOR BOTH LITIGATION AND SETTLEMENT CLASSES

Last year, this Court refused to follow the Third Circuit’s requirement that a

class proponent, in addition to satisfying Rule 23, must also demonstrate an

administratively feasible way to determine who is in the class. Briseno v. ConAgra

Foods, Inc., 844 F.3d 1121, 1124-1125 (9th Cir. 2017).

This Court noted that the Third Circuit required putative class

representatives to demonstrate “administrative feasibility” as a prerequisite to class

certification. Id. at 1126. (internal citations omitted). This Court declined to

follow the Third Circuit and adopt an administrative feasibility requirement. Id. at

1133.


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 9

In reaching this decision, this Court noted that Supreme Court precedent

counsels in favor of hewing closely to the text of Rule 23. This Court cited

Amchem, noting that the Supreme Court considered whether a settlement-only

class could be certified without satisfying the requirements of Rule 23. In

holding that it could not, the Court underscored that the Federal Rules of

Civil Procedure result from "an extensive deliberative process involving

... a Rules Advisory Committee, public commenters, the Judicial

Conference, [the Supreme] Court, [and] Congress." Id. at 620. The Court

warned that "[t]he text of a rule thus proposed and reviewed limits judicial

inventiveness" and admonished that "[c]ourts are not free to amend a rule

outside the process Congress ordered." Id. This Court opined that the lesson

of Amchem Products is plain: "Federal courts lack authority to substitute for

Rule 23's certification criteria a standard never adopted." Id. at 622.

Mindful of the Supreme Court's guidance, this Court declined to interpose an

additional hurdle into the class certification process not included in the enacted

Rule. ConAgra petitioned this Court for an En Banc hearing, providing that

the opinion was in conflict with the Third Circuit. This Court denied the

Petition.

Likewise, this Court should not follow the Third Circuit’s opinion on

settlement class certification, which squarely conflicts with the precedent of


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 10

this Circuit and the Supreme Court. In Sullivan v. DB Invs., Inc., 667 F.3d 273

(3rd Cir. 2011), the Third Circuit provided that variations in the rights and

remedies under the various laws of the fifty states do not defeat commonality

and predominance. Id. at 301. Sullivan cited published decisions involving

both litigation classes and settlement classes in support of this statement and

did not limit it to settlement classes. Compare that language to this Court’s

decision in Mazza.

The Third Circuit then went on to discuss certification of a settlement

class. It provided that consideration of varying laws in the context of

predominance should be primarily focused on manageability. Id. at 303. The

Third Circuit opined that the objectors seemed to conflate the predominance

analysis for certification of a settlement class with that required for

certification of a litigation class. Id. The Third Circuit concluded with state

law variations are largely irrelevant to certification of a settlement class. Id.

Judge Jordan, joined by Judge Smith, dissented. They criticized the

majority for concluding that in certifying a class action, it makes no

difference whether the class is defined to include members who lack any

claim at all. Id. at 340 The dissent noted that "[b]y treating the dictates of

state law as irrelevant, to be passed over in the name of 'global peace, the

Majority has endorsed the fabrication of substantive rights where none before


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Page 11

existed." Id. In light of these concerns, the dissent concluded, "[t]his is, in

short, a bad day for Rule 23, for federalism, and for those who thought the

Rules Enabling Act was a restraint on judicial legislating." Id. at 340-41.

The Third Circuit’s opinion in Sullivan is in direct conflict with Amchem

and Hanlon’s language that the test for predominance is at least the same, if

not heightened, with a settlement class. The panel majority’s opinion in this

case is consistent with Amchem, Hanlon and Mazza. The Third Circuit’s

opinion is contrary to this Court’s precedent and that of the Supreme Court.

The Seventh Circuit’s opinion in In re Mex. Money Transfer Litig., 267 F.3d 743

(7th Cir. 2001), while acknowledging that certification will sometimes be inappropriate

when recovery depends on law that varies materially from state to state, affirmed

certification where the class representatives confined their theories to federal law and

aspects of state law that are uniform. Id. at 747. That is far different than this case,

particularly in light of the district court’s certification analysis in Espinosa.

III. CHOICE OF LAW ISSUES WERE BRIEFED BY HYUNDAI AND THE VARIATIONS IN STATE LAWS WERE FOUND BY THE DISTRICT COURT TO BE MATERIAL

The Petitioners provide that the objectors failed to meet their choice of law

burden. The Petitioners rely upon the California Supreme Court’s decision in

Wash. Mut. Bank, FA v. Superior Court, 24 Cal. 4th 906 (2001) for the proposition

that California law applies unless a party litigant timely invokes the law of a


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

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foreign state in which case it is the foreign law proponent who must shoulder the

burden of demonstrating that foreign law, rather than California law, should apply

to class claims. Id. at 919. In this case, a party litigant, Hyundai, had demonstrated

to the district court’s satisfaction that foreign law should apply.

Petitioners leave out some important parts of the Washington Mutual

opinion. First, the class proponent has the initial burden to show that the state of

California has a significant contact or significant aggregation of contacts to the

claims asserted by each member of the plaintiff class in order to ensure that the

choice of California law is not arbitrary or unfair. Id. at 921. That did not occur in

this case.

Next, the panel majority noted that for the Virginia plaintiffs, those members

had purchased their cars with a Virginia choice of law provision. (P. 45)

Washington Mutual provides that if the proponent of the clause demonstrates that

the chosen state has a substantial relationship to the parties or their transaction, or

that a reasonable basis otherwise exists for the choice of law, the parties choice

will be enforced unless the other side can establish that the chosen law is contrary

to a fundamental policy of California and that California has a materially greater

interest in the determination of the particular issue. Id. at 917. Here, there are

Virginia class members who bought cars in Virginia. That is a substantial


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Page 13

relationship to the parties and the transaction. The Petitioners did not even attempt

to meet their burden set forth in Washington Mutual.

The California Supreme Court goes on to provide, that in a multi-state class

action, that a class action proponent must credibly demonstrate, through a thorough

analysis of the applicable state law, that state law variations will not swamp

common issues and defeat predominance. Id. at 926. That is consistent with the

case law of the other circuits as shown below:

The burden of proof to establish the propriety of class certification rests

with the advocate of the class. Ellis v. Costco Wholesale Corp., 657 F.3d 970,

979-980 (9th Cir. 2011); Valley Drug Co. v. Genera Pharms., Inc., 350 F.3d

1181, 1187 (11th Cir. 2003). In a class action governed by the laws of multiple

states, variations in state law may swamp any common issues and defeat

predominance. Grayson v. 7-Eleven, Inc., 2011 U.S. Dist. LEXIS 62211 *20

(S.D. Cal. 2011), citing Castano v. American Tobacco Co., 84 F.3d 734, 741 (5th

Cir. 1996). The class proponent has the burden of showing that common

questions of law predominate, and the proponent cannot meet this burden when

the various laws have not been identified and compared. Gariety v. Grant

Thornton, LLP, 368 F.3d 356, 370 (4th Cir. 2004). The party seeking certification

of a nationwide class must therefore provide an extensive analysis of state law

variation. Spence v. Glock, 227 F.3d, 308, 313 (5th Cir. 2000) The district court


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 14

must then “consider how those variations affect predominance.” Castano, 84

F.3d at 740. Failure to engage in an analysis of state law variation is an abuse of

discretion. Castano, 84 F.3d at 741-44 (concluding that court abused its

discretion in certifying class where plaintiffs had failed to properly address

variations in state law such that conclusion of predominance was based on

speculation); and Spence at 227 F.3d 316 (concluding that court abused its

discretion in certifying class where plaintiffs had failed to carry their burden of

providing an extensive analysis of applicable law).

The requirements set forth in the cases cited by Petitioners were met in this

case. In Cook v. Clarus Group, LLC, 291 F.R.D. 473 (S.D. Cal. 2013) cited by

Petitioners to show that Objectors did not meet their burden, the Court provided

that “neither the Defendants nor any objectors have informed the Court as to

whether the applicable state laws contain material differences with respect to this

litigation.” Id. at 480. In this case, Hyundai had fully briefed the differences in

state law and the district court had already found the differences to be material.

This is not a situation as that presented in Johnson v. Lucent Techs., Inc., 653 F.3d

1000, 1008 (9th Cir. 2011), where the parties did not address choice of law issues.

The choice of law issues had been addressed, and the district court had found that

California law could not apply to this entire nationwide class.


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 15

IV. THE PANEL MAJORITY WAS CORRECT TO FIND THAT THE DISTRICT COURT ABUSED ITS DISRECTION IN CERTIFYING A SETTLEMENT CLASS THAT INCLUDED USED CAR OWNERS

The panel majority was correct in finding that the district court abused its

discretion in certifying a settlement class that includes used car owners without

analyzing whether those class members were exposed to, and therefore could have

relied on Hyundai’s and Kia’s statements. There is no support in the record to support

the district court’s finding that misrepresentations were uniformly made to all

consumers of cars included in this settlement other than 2011-12 Hyundai Elantras and

Sonatas by nationwide advertising.

Whether a used car purchaser even viewed, let alone relied upon, one of the

advertisements or marketing materials is an individualized question.

CONCLUSION

For these reasons, objector-appellant, Dana Roland, respectfully requests that the

Petitions for Rehearing En Banc be denied.


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 16

Dated: March 28, 2018 Respectfully submitted,

/s/ Dennis D. Gibson Dennis D. Gibson Gibson Law Firm Texas State Bar Number: 07861300 4925 Greenville Avenue, Suite 200 Telephone: (214) 292-6627 Email: [email protected]

Attorney for Appellant Dana Roland

CERTIFICATE OF COMPLIANCE Pursuant to Fed. R. App. P. 32, the foregoing Objector-Appellant Dana

Roland’s Response to Appellee’s Petition for Rehearing En Banc complies with

the type-volume limitation because the response does not exceed 15 pages and

document is proportionately spaced using Times New Roman 14-point typeface

and contains 3,459 words of text. Objector-Appellant used Microsoft Word 2013

to prepare this document.

Dated: March 28, 2018 /s/ Dennis D. Gibson Dennis D. Gibson


Nos. 15-56014, 15-56025, 15-56059, 15-56061, 15-56064, 15-56067

Page 17


I, Dennis Gibson, hereby certify that on March 28, 2018, I electronically

filed the foregoing Objector-Appellant Dana Roland’s Response to Appellee’s

Petition for Rehearing En Banc with the Clerk of the United States Court for the

United States Court of Appeals for the Ninth Circuit by using the appellate

CM/ECF system.

I certify that all participants are registered CM/ECF users and that

service will be accomplished by the appellate CM/ECF system.

/s/ Dennis D. Gibson Dennis D. Gibson


Docket Nos. 15-56014 (L), 15-56025, 15-56059, 15-56061, 15-56064 and 15-56067

In the

United States Court of Appeals for the

Ninth Circuit

IN RE: HYUNDAI & KIA FUEL ECONOMY LITIGATION,

KEHLIE R. ESPINOSA, et al., Plaintiffs-Appellees,

GREG DIRENZO, Petitioner-Appellee,

HYUNDAI MOTOR AMERICA, et al., Defendants-Appellees,

v.

LINDA RUTH SCOTT, Objector-Appellant.

_______________________________________ Appeal from a Decision of the United States District Court for the Central District of California,

Case No. 2:13-ml-02424-GW-FFM ∙ Honorable George H. Wu

RESPONSE BRIEF OF APPELLANT LINDA SCOTT TO PETITIONS FOR REHEARING EN BANC

JAMES B. FEINMAN, ESQ. JAMES B. FEINMAN & ASSOCIATES 1003 Church Street Lynchburg, Virginia 24504 (434) 846-7603 Telephone (434) 846-0158 Facsimile

Attorney for Objector-Appellant, Linda Ruth Scott

COUNSEL PRESS ∙ (213) 680-2300

PRINTED ON RECYCLED PAPER


i

TABLE OF CONTENTS

TABLE OF CONTENTS ............................................................................................ i TABLE OF AUTHORITIES .................................................................................... ii THE PANEL MAJORITY OPINION ENFORCES AMCHEM, RATHER THAN VIOLATE AMCHEM ................................................................... 1 THE RULING OF THE PANEL MAJORITY DOES NOT CONTRADICT HANLON ......................................................................................... 7 THE RULING OF THE PANEL MAJORITY DOES NOT CONFLICT WITH RULINGS OF THE THIRD CIRCUIT OR THE SEVENTH CIRCUIT ...................................................................................... 12 CONCLUSION ........................................................................................................ 16 CERTIFICATE OF COMPLIANCE ....................................................................... 18 CERTIFICATE OF SERVICE ................................................................................ 19


ii


CASES Allstate Ins. Co. v. Hague,

449 U.S. 302, 101 S. Ct. 633, 66 L. Ed. 2d 521 (1982) ............................ 6, 14 Amchem Prods. v. Windsor,

521 U.S. 591 (1997)..................................................................... 1, 7-9, 11, 17 Hanlon v. Chrysler Corp.,

150 F.3d 1011 (1998) ................................................................................ 7-14 Holmes v. LG Marion Corp.,

258 VA. 473, 478 (1999) ................................................................................. 3 Home Ins. Co. v. Dick,

281 U.S. 397 (1930)................................................................................... 6, 14 In re Joint Eastern and Southern Dist. Asbestos Litigation,

982 F.2d 721 (1992) ........................................................................................ 9 In re Mexico Money Transfer,

267 F.3d 743 (7th Cir. 2001) ................................................................... 15-16 Mazza v. American Honda Motor Co.,

666 F.3d 581, 591 (2012) ................................................................ 4-5, 10, 16 McCann v. Foster Wheeler, LLC,

48 Cal. 4th 68, 91, 105 Cal. Rptr.3d 378, 225 P.3d 516 (Cal. 2010) .............. 4 Phillips Petroleum v. Shutts,

472 U.S. 797, 818-819, 105 S.Ct. 2965, 2978 (1985) ............................... 6, 14 Sullivan v. D.B. Investments, Inc.,

667 F.3d 273 (3rd Cir. 2011) ............................................................. 12-13, 15


iii

STATUTES AND RULES Cal. Civ. Code §1780(a) ............................................................................................ 3 Cal. Civ. Code §3294(a) ............................................................................................ 3 FRCP 23 ............................................................................................................... 7, 17 FRCP 23(a) .......................................................................................................... 2, 15 FRCP 23(b)(3) ................................................................................... 2, 5-6, 11-12, 15 FRCP 23(b)(3)(D) ............................................................................................ 1-2, 11 FRCP 23(c) ................................................................................................................ 1 FRCP 23(d) ................................................................................................................ 1 VA. Code §59.1-204 .................................................................................................. 3 VA. Code §59.1-204(A) ............................................................................................ 3 OTHER AUTHORITIES McLaughlin on Class Actions: Law and Practice, §4:45, p. 1091-1092,

Tenth Ed. Vol. I (2013) ................................................................................... 8


1

RESPONSE BRIEF OF APPELLANT LINDA SCOTT

TO PETITIONS FOR REHEARING EN BANC

Now comes Linda Scott, Appellant, and for her response to the Petitions for

Rehearing En Banc states as follows:

THE PANEL MAJORITY OPINION ENFORCES AMCHEM, RATHER THAN VIOLATE AMCHEM

Class counsel assert the Panel Majority Ruling violates the ruling in Amchem

Prods. v. Windsor, 521 U.S. 591 (1997). To the contrary, the Panel Majority

Ruling enforces Amchem.

In Amchem, the Court expressly declared “We granted review to decide the

role settlement may play, under existing Rule 23, in determining the propriety of

class certification.” 521 U.S. 619. Clearly focused on the issue, the Court held:

“Confronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, see Fed.Rule Civ.Proc. 23(b)(3)(D), for the proposal is that there be no trial. But other specifications of the Rule—those designed to protect absentees by blocking unwarranted or overbroad class definitions—demand undiluted, even heightened, attention in the settlement context. Such attention is of vital importance, for a court asked to certify a settlement class will lack the opportunity, present when a case is litigated, to adjust the class, informed by the proceedings as they unfold. See, Rule 23(c),(d).” 521 U.S. 620.


2

Here, it is the requirements of FRCP 23(b)(3) which are the focus of the

dispute in this case. Rule 23(b)(3) provides:

(b). Types of Class Actions. A class action may be maintained if Rule 23(a) is satisfied and if: (3). The Court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include:

(A) The class members’ interests in individually controlling the

prosecution or defense of separate actions;

(B) The extent and nature of any litigation concerning the controversy already begun by or against class members;

(C) The desirability or undesirability of concentrating the

litigation of the claims in the particular forum; and (D) The likely difficulties in managing a class action.”

The Supreme Court held a District Court “confronted with a request for

settlement-only class certification” can dispose only with analyzing the

requirements of FRCP 23(b)(3)(D). The other specifications of the Rule clearly

call for analysis of the applicable State law for every member of the potential class.

A District Court cannot determine if any questions of law or fact “predominate

over any questions affecting only individual members”, unless the District Court

does its best to consider all the questions of law and fact that may arise in the case.


3

How else can one determine if any questions of law “predominate” other than by

comparing them to other questions of law?

Similarly, for a District Court to determine whether “a class action is

superior to other available methods for fairly and efficiently adjudicating the

controversy”, there must be consideration of the different elements of proof and

remedies available to members of the potential class from different States. For

example, as the Panel Majority found:

“The Virginia Consumer Protection Act provides a minimum of $500 in statutory damages who suffer damage as a result of violation of the Act, see VA. Code §59.1-204(A) while California’s Consumer Legal Remedies Act sets no statutory minimum damages for individuals who suffer violations of the act, see, Cal. Civ. Code §1780(a). This statutory minimum of $500 is superior to the average maximum lump sum benefit of $353 that Hyundai class members are entitled to under the settlement. In addition, under the Virginia Consumer Protection Act, the trier of fact can award treble damages within its discretion if it finds that the violation was ‘willful’, see VA. Code §59.1-204; Holmes v. LG Marion Corp., 258 VA. 473, 478 (1999), whereas, under California’s Legal Remedies Act, the trier of fact can only award punitive damages if it finds ‘clear and convincing evidence’ of oppression, fraud, or malice.’ Cal. Civ. Code §3294(a).” See, Footnote 19 at p. 45 of the Panel Opinion.

The District Court, in determining whether a proposed nationwide settlement

is superior to other available methods for fairly and efficiently adjudicating the

controversy, must consider the relevant bargaining positions of the proposed

members of the nationwide class from each State. This is necessary for fairness to

members of the proposed nationwide class from different States, and it is essential


4

for Federalism: “It is a principle of Federalism that ‘each State may make its own

reasoned judgment about what conduct is permitted or prescribed within its

borders.” Mazza v. American Honda Motor Co., 666 F.3d 581, 591 (2012)…

“As the California Supreme Court recently re-iterated, each State has an interest

in setting the appropriate level of liability for companies conducting business

within its territory.” Id. at 592 (citing McCann v. Foster Wheeler, LLC, 48 Cal. 4th

68, 91, 105 Cal. Rptr.3d 378, 225 P.3d 516 (Cal. 2010). As this Court noted in

Mazza, calibrating the amount of liability each State will impose to protect

consumers and to encourage commercial enterprise “requires balancing the

competing interests.” Id. This balancing “… is a decision properly to be made by

the legislatures and courts of each state… to assure individuals and commercial

entities operating within its territory that applicable limitations on liability set

forth in the jurisdiction’s law will be available to those individuals and businesses

in the event they are faced with litigation in the future.” Id. at 592-593. (Quoting

McCann, 48 Cal. 4th at 97-98, 105 Cal. Rptr.3d 378, 225 P.3d 516.)

The Virginians were likely to recover treble damages not allowed under

California law as Hyundai’s violations were willful, as shown by the assertions of

the United States described at Footnote 7 at p. 34 of Panel Opinion: “According to

the EPA, the improper procedures included selecting results from test runs that

were aided by a tailwind, selecting only favorable results from test runs rather


5

than averaging a broader set of results, restricting testing times to periods when

the temperature allowed vehicles to coast farther and faster, and preparing vehicle

times to improve the test results.” The claim of Virginians made in a class which

they can actually litigate will yield more compensation, provide more deterrent,

and enforce the law of Virginia.

The District Court indicated it would only certify a litigation class of

California consumers applying California law. (SER 396). Shorn of the ability to

litigate, class counsel proposed a nationwide settlement class. An alternative to

resolving this case through the proposed nationwide settlement is to resolve the

case through single-State classes either for trial or settlement. Rule 23(b)(3)

requires the District Court to consider “other available methods for fairly and

efficiently adjudicating the controversy.” As held in Mazza “The district court did

not adequately recognize that each foreign state has an interest in applying its law

to transactions within its borders and that, if California law were applied to the

entire class, foreign states would be impaired in their ability to calibrate liability

to foster commerce.” Mazza at p. 593. The individual Virginia consumers are

entitled to enforce the law of Virginia and to recover the benefits allowed

thereunder. The same is true for consumers from other States. “The district court

made a further error by failing to acknowledge, as it had in its tentative ruling,

that Hyundai and the Gentry plaintiffs submitted evidence that the laws in various


6

states were materially different than those in California, and that these variations

prevented the court from applying only California law.”

The Class Counsel and Hyundai cannot dismiss and condone the errors of

the District Court with the self-serving characterization that a consideration of the

applicable laws of the 50 States involved in the nationwide settlement constitutes

only “manageability” concerns. The language of Rule 23(b)(3) requires

consideration of the laws of the involved States. Otherwise, there can be no

consideration of whether certain questions of law or fact predominate over

individual questions. Without considering the laws of the 50 States, there can be no

consideration of whether a nationwide settlement class “is superior to other

available methods for fairly and effectively adjudicating the controversy.”

Equally, if not more importantly, there is no case holding that the principles

of the Due Process and Full Faith and Credit clauses are inapplicable to a proposed

nationwide class action settlement. These principles apply to all cases when there

are potential or real conflicts between the law of different States. As held in

Phillips Petroleum v. Shutts, 472 U.S. 797, 823, “…the Constitutional limitations

[under the Due Process and Full Faith and Credit Clause] laid down in cases such

as Allstate and Home Ins. Co. v. Dick, supra, must be respected even in a

nationwide class action.” 472 U.S. 823, 105 S.Ct. 2980.


7

The Class Counsel involved here may prefer to resolve everything for

everybody under California law, but FRCP 23, our Constitution, and the principles

embodied therein require otherwise.

THE RULING OF THE PANEL MAJORITY DOES NOT CONTRADICT HANLON

Both Class Counsel and counsel for Hyundai assert the ruling of the Panel

Majority contradicts Hanlon v. Chrysler Corp., 150 F.3d 1011 (1998). This is

incorrect. As shown below, the difference in the outcome here and the outcome in

Hanlon is based on the difference in the records of the two cases, not on any

difference in the law applied in both cases.

In regard to certification of class actions for settlement purposes only, the

Hanlon Court made it clear that “although there is nothing inherently wrong with

this practice, we must pay ‘undiluted, even heightened attention’ to class

certification requirements in a settlement context.” Hanlon at p. 1109. (Quoting

Amchem Prods. v. Windsor, 521 U.S. 591 (1997)). Here, the Panel Majority cite,

rely upon, and apply the same principles of Amchem. See, Panel Ruling at p. 32.

Both Hanlon and the case at bar used this portion of Amchem as the foundation of

their “undiluted, even heightened attention” to all requirements for class

certification, other than trial manageability issues.

The facts in the records of the two cases is what determined the difference in

outcome here versus the outcome in Hanlon. In Hanlon, the named representative


8

parties “comprise persons from every state, representing all models of Chrysler

minivans.” Hanlon, p. 1020. In the case at bar “there were 29 Named Plaintiffs

from 18 different States who owned 17 out of 30 class vehicles.” (ER 78). None of

the named representative plaintiffs were from Virginia. Commentators observed—

well before this case arose—that the Hanlon Court “drew comfort from the

uniformity in relief sought, and the absence of ‘structural conflict of interest based

on variations in state law, for the named representatives include[d] individuals

from each State, and the differences in State remedies [were] not sufficiently

substantial so as to warrant the creation of subclasses’. Hanlon at p. 1021. Hanlon

“thus teaches that the certification of adequate representatives corresponding to

discrete groups of claimants within the class effectively provides the same

protection afforded by subclasses.” See, McLaughlin on Class Actions: Law and

Practice, §4:45, p. 1091-1092, Tenth Ed. Vol. I (2013).

Unlike Hanlon, structural conflict of interest exists here. There are named

Plaintiffs from different States, none from Virginia, who seek to evaluate, settle,

and dismiss all of the 19,000 claims of Virginians. As the Supreme Court recited in

Amchem:

“[W]here differences among members of a class are such that subclasses must be established, we know of no authority that permits a court to approve a settlement without creating subclasses on the basis of consents by members of a unitary class, some of whom happen to be members of the distinct subgroups. The class representatives may well have thought that


9

the Settlement serves the aggregate interests of the entire class, but the adversity among subgroups requires that the members of each subgroup cannot be bound to a settlement except by consents given by those who understand that their role is to represent solely the members of their respective subgroups. In re Joint Eastern and Southern Dist. Asbestos Litigation, 982 F.2d 721, 742-743 (1992), modified on reh’g sub nom. In re Findley, 993 F.2d 7 (1993).” See, Amchem, 521 U.S. 627, 117 S.Ct. 2251.

The Panel Majority’s Opinion emphasized Amchem’s warning about class

action settlements reached “without benefit of adversarial investigation.”:

“If anything, this case highlights the reasons underlying Amchem’s warning that district courts must give “undiluted, even heightened, attention in the settlement context,” Amchem, 521 U.S. at 620, to scrutinize proposed settlement classes. Because the district court made clear that it would be unlikely to certify the same class for litigation purposes, the class representatives were well aware that they would be unlikely to succeed in any efforts to certify a nationwide litigation class. Thus, by “permitting class designation despite the impossibility of litigation, both class counsel and court [were] disarmed.” Id. at 621. Hyundai and Kia knew that there was little risk that they would face a nationwide litigation class action if they did not reach a settlement agreement. Accordingly, “[c]lass counsel confined to settlement negotiations could not use the threat of litigation to press for a better offer, and the court [faced] a bargain proffered for its approval without benefit of adversarial investigation.” Id. (citation omitted).” See, Panel Opinion p. 51.

Here, the Panel Majority noted the lack of adversarial investigations but in

Hanlon the Court emphasized the extent of adversarial litigation conducted before

a settlement was reached:

“Class counsel prosecuted several state class actions in strategic states prior to the filing of the federal consolidated action. They conducted the initial factual investigation, even prior to learning of the NHTSA investigation. They consulted and retained automotive


10

and engineering experts to assess the design specifications, blueprints, and other Chrysler documentation relating to the minivans. They assessed the failure mode commonly experienced and corroborated that the reported failures were due to defective latch design. They reviewed Chrysler’s history of advertising the minivan as a ‘safe family vehicle’ in order to assess any implied or express warranties and possible misrepresentation claims. They engaged in the traditional discovery of products liability litigation, including document request and production, interrogatories, and the taking of depositions. They fought Chrysler’s requests for protective orders, successfully resisted Chrysler’s attempts to remove the various actions to federal court, and its attempt to transfer all of the cases to an MDL proceeding. Plaintiffs’ counsel spoke and conferred regularly to coordinate their litigation strategy and to apply as much pressure as possible to Chrysler.” Hanlon at pp. 1021-1022.

The record in the present case “unquestionably” established that variations

in State laws would “make a difference” in the claim of each member of the

proposed class. The District Court reviewed the “Appendix of Variations in State

Laws” (Docket #58-1) submitted by Hyundai and expressly found that these

variations:

“unquestionably demonstrates that there are material differences as between the various states’ laws that would ‘make a difference in this litigation.’ See, Mazza, 666 F.3d at 590-91 (considering scienter requirements, reliance requirements and remedies to be material differences in consumer protection laws, just as Defendant demonstrates here.)....Obviously, were the laws of the other various states applied to out-of-state purchasers, class certification would be precluded because common questions of law and fact would no longer predominate. Therefore, the Court would only consider


11

granting certification to a class including solely California consumers.” See, SER 395-396. (Emphasis added.)

It is important to note that the District Court’s findings quoted above were

made when considering the predominance requirement of FRCP 23(b)(3) and not

when ruling on trial manageability issues under FRCP 23(b)(3)(D). Other than

trial manageability issues under FRCP 23(b)(3)(D), all “other specifications of the

Rule…. demand undiluted, even heightened, attention in the settlement context.”

Amchem Products v. Windsor, 521 U.S. 591, 620, 117 S.Ct. 2231, 2248, 138

L.Ed.2d 689 (1997).

The record in Hanlon was completely different than the case at bar. After

careful review, the Hanlon Court found the “differences between state consumer

protection laws are not sufficiently substantive to predominate over shared claims.

Indeed, at the November 30, 1995 fairness hearing, the objectors acknowledged

that independent of any variations in state law, there were still sufficient common

issues to warrant a [nationwide] class action.” (Emphasis added.) Hanlon at p.

1023.

Here, the Gentry objectors repeatedly asserted California’s choice of law

rules require Virginia law to govern Virginia claims, allowing for Virginia

consumers to recover the benefits thereof. (ER 1703-1708; 1051-1054). Similarly,

Hyundai demonstrated the lack of predominance for nationwide class certification

in its 34-page “Appendix of Variations in State Laws.” See, Further Excerpts of


12

Record pp. 1-36. The record in Hanlon was different “The objections centered

around one primary issue: the adequacy and fairness of the settlement in light of

Chrysler’s prior agreement with NHTSA to replace all of the defective latches.”

Hanlon at p. 1019. The record in Hanlon was completely different from the record

here. The record in Hanlon justified the result in that case. The record in In Re

Hyundai justifies the result in this case. The law applied in both cases is the same.

THE RULING OF THE PANEL MAJORITY DOES NOT CONFLICT WITH RULINGS OF THE THIRD

CIRCUIT OR THE SEVENTH CIRCUIT

Both Class Counsel and Hyundai assert the ruling of the Panel Majority

conflicts with Sullivan v. D.B. Investments, Inc., 667 F.3d 273 (3rd Cir. 2011). This

is incorrect. The focus of Sullivan, an antitrust case, was completely different than

In Re Hyundai. In Sullivan a settlement class was proposed consisting of all Direct

Purchasers and Indirect Purchasers of diamonds produced and distributed by

DeBeers S.A., the undisputed dominant participant in the world-wide wholesale

diamond market. The proposed settlement paid both Direct Purchasers and Indirect

Purchasers and settled all possible anti-trust and consumer protection claims. The

objectors asserted that the law of about 25 States did not allow anti-trust claims to

be made by Indirect Purchasers. Because of these differences in State anti-trust

laws, the objectors contended that the predominance requirement of Rule 23(b)(3)

was not met because approximately half of the Indirect Purchasers had no claim at


13

all. The objectors argued there could be no common issues for the class to

predominate over those affecting only individual class members when about half of

the Indirect Purchasers had no claim at all.

The Third Circuit, en banc, found that including all Indirect Purchasers in

the class did not defeat predominance because (a) DeBeers wanted to make sure it

was buying peace, and (b) there was no evidence DeBeers would pay the same

amount if the Indirect Purchasers without claims were excluded.

The factual and legal circumstances in Sullivan are distinct and inapposite to

the factual and legal circumstances in In Re Hyundai. Supreme Court and Ninth

Circuit precedent requires the District Court to apply California’s choice of law

rules to determine if California law could apply to all plaintiffs in the nationwide

class, or whether the District Court had to apply the law of each State, and if so,

whether variations in State law defeated predominance. Both Hyundai and the

Gentry Plaintiffs submitted evidence that the laws in the various States are

materially different than the law of California, and that these variations prevented

the District Court from certifying a nationwide class for trial, or for settlement. The

record in Sullivan did not have this.

Both the Class Counsel and Hyundai cite language in Sullivan to the effect

of “variations in State law largely dissipate when a court is considering the

certification of a settlement class”, Hanlon at 297, or “State law variations are


14

largely irrelevant to certification of a settlement class” Hanlon at 304. These

sweeping statements, made in the context of that case, run directly counter to the

express holding of the Supreme Court in Phillips Petroleum v. Shutts, 472 U.S.

797, 818-819, 105 S.Ct. 2965, 2978 (1985) which held a State may “assume

jurisdiction over the claims of plaintiffs where principal contacts are with other

States” but “The issue of personal jurisdiction over plaintiffs in a class action is

entirely distinct from the question of the constitutional limitations on choice-of-

law; the latter calculus is not altered by the fact that it may be more difficult or

more burdensome to comply with the constitutional limitations because of the large

number of transactions which the State proposes to adjudicate and which have

little connection with the forum”. 472 U.S. 821, 105 S.Ct. 2979. “…we reaffirm

our observation in Allstate that in many situations a state court may be free to

apply one of several choices-of-law. But the Constitutional limitations laid down in

cases such as Allstate and Home Ins. Co. v. Dick, supra, must be respected even in

a nationwide class action.” 472 U.S. 823, 105 S.Ct. 2980. This ruling applies to

Federal courts sitting in diversity as much as it applies to State courts.

Constitutional limitations on choice of law are not based on trial

manageability. These limitations are based on the Due Process and the Full Faith

and Credit clauses of the Constitution. The Constitution is not abandoned because

it “may be more difficult or more burdensome to comply with the Constitutional


15

limitations because of the large number of transactions which [a court] proposes

to adjudicate and which have little connection to the forum.” The Constitution

“must be respected even in a nationwide class action.” To the extent, if any,

Sullivan disposes of Constitutional limitations in considering the law applicable to

each member of a proposed class, then In Re Hyundai will just have to conflict

with Sullivan.

Similarly, there is no conflict with In Re Mexico Money Transfer, 267 F.3d

743 (7th Cir. 2001). The Seventh Circuit ruling actually supports the Panel

Majority. The Court there held “Sometimes class treatment will be inappropriate

even if all of [the requirements of Rule 23(a) and 23(b)(3) are met] when recovery

depends on law that varies materially from State to State.” 267 F.3d 746-747.

In Mexico Money Transfer the class representatives relied “principally on

Federal substantive law” following “the pattern of antitrust and securities

litigation, where nationwide classes are certified routinely even though every State

has its own antitrust or security law, and even though these State laws may differ

in ways that could prevent class treatment if they supplied the principal theories of

recovery.” 267 F.3d 747. (Emphasis added.) In the case at bar there is no Federal

substantive law applicable to all members of the class. Here there are only State

laws supplying the theories of recovery which “unquestionably” differ in material


16

ways preventing the certification of one nationwide class. For trial or for settlement

In Re Hyundai does not conflict with Mexico Money Transfer.

CONCLUSION

The Gentry plaintiffs have waged this litigation for one reason—they and

Virginia have “an interest in ‘being able to assure individuals and commercial

entities operating within its territory that applicable limitations on liability set

forth in the jurisdiction’s law will be available to those individuals and business in

the event they are faced with litigation in the future.” Mazza v. American Honda

Motor Co., 666 F.3d 581, 592-593 (2012).

The Gentry plaintiffs from Virginia believe holding Hyundai accountable

under the law of Virginia provides the best compensation for what Hyundai has

done, and is the best deterrent to stop them and others from engaging in the same

or similar misconduct in Virginia in the future. Other States and plaintiffs

therefrom are free to choose differently, as is their right, but their choices as to

liability and compensation cannot be imposed on Virginians, nor can Virginia law

be imposed on them.

Contrary to the assertions of Class Counsel and Hyundai, the proper

certification of classes and subclasses required by the law will result in more

compensation for consumers, and less work for our Courts and counsel. When

Defendants are actually held accountable under the law of each State, the members


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of the discrete subclasses will recover more compensation. Defendants will gain an

actual fear of our civil justice system deterring them from the massive misconduct

we see in cases like the one at bar and in the Volkswagen “Clean Diesel” litigation.

In Amchem the Supreme Court endorsed and quoted the Second Circuit:

“…adversity among subgroups requires that the members of each subgroup cannot

be bound to a settlement except by consents given by those who understand that

their role is to represent solely the members of their respective subgroups.” 521

U.S. 627. Here, the material differences between California law and Virginia law,

as well as the other States, “unquestionably demonstrates that…the various State

laws would make a difference in this litigation.” (SER 395) Any class certification,

whether it be for trial or settlement, must reflect this fact. Otherwise, the

Virginians would be bound to a settlement by consents given by those who have

different claims and interests from their own. This is the danger of “unwarranted

or overbroad class definitions” prohibited by Amchem and FRCP 23. The District

Court below committed legal error exactly as the Panel Majority described, and the

Petitions for Rehearing En Banc should be denied.

Dated: March 28, 2018 Respectfully submitted, JAMES B. FEINMAN & ASSOCIATES By: /s/ James B. Feinman James B. Feinman Attorney for Appellant Linda Ruth Scott


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CERTIFICATE OF COMPLIANCE

1. Pursuant to Fed. R. App. P. 32(a) and Fed. Circ. R. 40-1(a), the

undersigned hereby certifies that the attached brief is proportionally spaced, has

a typeface of 14 points or more, and contains 4,175 words, exclusive of the

exempted portions of the brief.

2. The brief has been prepared in proportionally-spaced typeface using

Microsoft Word 2007 in 14-point Times New Roman font. As permitted by Fed. R.

App. 32(a)(7)(C), the undersigned has relied upon the word-count feature of this

word-processing system in preparing this certificate.

Dated: March 28, 2018 /s/ James B. Feinman

James B. Feinman JAMES B. FEINMAN & ASSOCIATES 1003 Church Street Lynchburg, Virginia 24504 [email protected] Attorney for Appellant Linda Ruth Scott


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I hereby certify that on March 28, 2018, I electronically filed the foregoing

with the Clerk of the Court for the United States Court of Appeals for the Ninth

Circuit by using the appellate CM/ECF system.

Participants in the case who are registered CM/ECF users will be served by

the appellate CM/ECF system.

s/ Stephen Moore Stephen Moore Senior Appellate Paralegal COUNSEL PRESS, INC.


Documents

IN THE UNITED STATES COURT OF APPEALS FOR THE …circ9-datastore.s3.amazonaws.com/datastore/uploads/enbanc/15-56014... · fours.” Disregarding Hanlon, the majority erroneously extends