and Submitted En Banc September 27, 2018 Pasadena, California
from the United States District Court for the Central
District of California D.C. No. 2:13-ml-02424- GW-FFM George
H. Wu, District Judge, Presiding.
B. Feinman (argued), James B. Feinman & Associates,
Lynchburg, Virginia, for Appellants James Ben Feinman, John
Gentry, Linda Ruth Scott, Danielle Kay Gilleland, Joseph
Bowe, Michael Desouto.
W. Cochran (argued), Streetsboro, Ohio; Edward W. Cochran,
Shaker Heights, Ohio; John J. Pentz, Sudbury, Massachusetts;
for Appellants Caitlin Ahearn and Andrew York.
A. Miller, Steve A. Miller P.C., Denver, Colorado, for
Appellant Antonio Sberna. Matthew Kurilich, Tustin,
California, for Appellant Peri Fetsch. Dennis D. Gibson,
Gibson Law Firm, Dallas, Texas, for Appellant Dana Roland.
S. Kusel (argued), Basking Ridge; Richard D. McCune,
McCuneWright LLP, Redlands, California; for Appellees Kehlie
R. Espinosa, Lilian E. Levoff, Thomas Ganim, and Daniel
Benjamin W. Jeffers, Dommond E. Lonnie, James S. Azadian, and
Brian H. Newman, Dykema Gossett LLC, Los Angeles, California,
for Appellees Kia Motors America Inc. and Kia Motors Corp.
Morgan (argued) and Joseph R. Ashby, Quinn Emanuel Urquhart
& Sullivan LLP, Los Angeles, California; Karin Kramer,
Quinn Emanuel Urquhart & Sullivan LLP, San Francisco,
California; Dean Hansell, Hogan Lovells LLP, Los Angeles,
California; for Appellees Hyundai Motor America and Hyundai
B. Carey and John M. DeStefano, Hagens Berman Sobol Shapiro
LLP, Phoenix, Arizona, for Appellees Kaylene P. Brady and
Nicole Marie Hunter.
Christopher E. Appel, Philip S. Goldberg, and Cary Silverman,
Shook Hardy & Bacon LLP, Washington, D.C., for Amici
Curiae Association of Global Automakers and American Tort
Katherine I. McBride, Jason L. Lichtman, and Jonathan D.
Selbin, Lieff Cabraser Heimann & Bernstein LLP, New York,
New York; Elizabeth J. Cabraser, Roger N. Heller, and Michael
W. Sobol, Lieff Cabraser Heimann & Bernstein LLP, San
Francisco, California; for Amici Curiae Public Justice,
National Association of Consumer Advocates, National Consumer
Law Center, and The Impact Fund.
H. Wu and Glenn Danas, Capstone Law APC, Los Angeles,
California; Mark S. Greenstone and Jonathan M. Rotter, Glancy
Prongay & Murray LLP, Los Angeles, California; for Amici
Curiae Hon. Stephen G. Larson (Ret.) and Professor David
Before: Sidney R. Thomas, Chief Judge; and Andrew J.
Kleinfeld, William A. Fletcher, Marsha S. Berzon, Johnnie B.
Rawlinson, Jay S. Bybee, Milan D. Smith, Jr., Sandra S.
Ikuta, Morgan Christen, Jacqueline H. Nguyen, and Andrew D.
Hurwitz, Circuit Judges.
Action / Attorneys' Fees
banc court affirmed the district court's orders and
judgment certifying a nationwide settlement class, approving
a settlement, and awarding attorneys' fees in a
multidistrict litigation brought against Hyundai Motor
America and Kia Motors America regarding alleged
misrepresentations about their vehicles' fuel economy.
challenged the certification order and fee awards on various
grounds, and the en banc court found none of them persuasive.
the objectors' challenge to the district court's
findings regarding the predominance of common factual or
legal issues under Fed.R.Civ.P. 23(b)(3), the en banc court
held that the district court did not abuse its discretion in
finding that common issues predominated. Specifically, the en
banc court held that: the inclusion of used car purchasers in
the class did not defeat predominance; variations in state
law did not defeat predominance; objectors failed to meet
their burden of showing that California law did not apply;
and application of California law satisfied due process.
banc court rejected the objectors' challenges to the
adequacy of class counsel.
the objectors' challenges to the settlement approval, the
en banc court held that: the notice to class members provided
sufficient information; the claim forms were not overly
burdensome; and there was no evidence of collusion between
class counsel and the automakers. The en banc court held that
the district court properly exercised its discretion in
calculating the fee award using the lodestar method.
banc court held that the district court did not abuse its
discretion in denying fees to objector's counsel James
Feinman because he did not meaningfully contribute to the
Ikuta dissented because she would hold that the district
court certified a multistate class action under Fed.R.Civ.P.
23 without determining what law applied to the
plaintiffs' claims, in violation of Rule 23 and Supreme
Court precedent, Amchem Prods., Inc. v. Windsor, 521
U.S. 591 (1997). Judge Ikuta also stated that the majority
erred in upholding the district court's award of
attorneys' fees, because the district court failed to
determine the value of the benefit the class derived from the
NGUYEN, Circuit Judge.
review five consolidated appeals from the district
court's orders and judgment certifying a nationwide
settlement class, approving a settlement, and awarding
attorney's fees in a multidistrict litigation brought
against defendants Hyundai Motor America and Kia Motors
America (the "automakers") regarding alleged
misrepresentations about their vehicles' fuel economy.
After extensive litigation, the lead plaintiffs' counsel
("class counsel") and the automakers (collectively,
the "settling parties") negotiated a settlement
that the district court approved following eight months of
confirmatory discovery. Objectors challenged the
certification order and fee awards on various grounds.
Finding none of them persuasive, we affirm.
Factual and Procedural Background
January 6, 2012, class counsel McCuneWright, LLP filed the
first of the putative nationwide class actions, Espinosa
v. Hyundai Motor America, No. 12-cv-800 (C.D. Cal.). The
Espinosa plaintiffs brought claims against Hyundai
under California consumer protection statutes and theories of
common law fraud and negligent misrepresentation. They
alleged that Hyundai misled consumers throughout the United
States by advertising inflated fuel economy standards for the
Hyundai Elantra and Sonata vehicle model years 2011-12 based
on inaccurate estimates that Hyundai provided to the
Environmental Protection Agency ("EPA"). After
several motions to dismiss, amendments to the complaint, and
class discovery, including document production, depositions,
and expert reports, the Espinosa plaintiffs moved to
certify a nationwide litigation class of purchasers of
Hyundai Elantra and Sonata vehicles.
November and December 2012, the district court held hearings
on the contested class certification motion in
Espinosa. Although the court issued a tentative
ruling declining to certify a nationwide litigation class in
light of potentially "material differences" among
state laws, it requested supplemental briefing and "did
not make a final ruling."
November 2, 2012, less than four weeks before the
Espinosa class certification hearing, the automakers
issued a press release announcing downward adjustments to the
EPA fuel economy estimates for certain of their 2011 through
2013 model year vehicles. Partially in response to an EPA
investigation, the automakers created a Lifetime
Reimbursement Program ("Reimbursement Program") to
compensate owners and lessees of these vehicles for the
higher fuel costs associated with the revised fuel economy
automakers' announcement sparked a surge of litigation.
At the time, Espinosa and one other putative class
action were the only cases pending against the automakers
regarding misrepresentations and omissions in their
fuel-economy disclosures and advertisements. After the
announcement, several similar lawsuits were filed in state
and federal courts around the country, including two,
Hunter v. Hyundai Motor America, No. 12-cv-1909
(C.D. Cal. filed Nov. 2, 2012), and Brady v. Hyundai
Motor America, No. 12-cv-1930 (C.D. Cal. filed Nov. 6,
2012), brought by class co-counsel Hagens Berman Sobol
Shapiro, LLP, and three in Virginia brought by attorney James
B. Feinman. The federal cases were consolidated into a single
multidistrict litigation ("MDL") in the Central
District of California before the Honorable George H. Wu.
See 28 U.S.C. § 1407.
Hyundai and the plaintiffs in Espinosa,
Brady, and Hunter attended multiple
mediation sessions with a mediator whom the district court
found to be "respected and experienced." On
February 14, 2013, the parties announced a proposed
nationwide settlement for Hyundai vehicles affected by the
fuel economy restatement. Kia joined this
settlement-in-principle shortly thereafter.
district court appointed liaison counsel to act on behalf of
the plaintiffs not participating in the Espinosa,
Brady, and Hunter cases (the
"non-settling plaintiffs") and to participate in
confirmatory discovery so that the non-settling plaintiffs
could objectively evaluate the terms of the settlement.
Confirmatory discovery lasted eight months and produced 300,
000 pages of documents and under-oath interviews of the
automakers' employees, including Hyundai's CEO.
Liaison counsel filed status reports with updates on the
progress of confirmatory discovery and the non-settling
plaintiffs' positions, and the court held several status
conferences to discuss issues that arose.
December 23, 2013, the settling parties sought preliminary
approval of the nationwide class settlement and moved to
certify a settlement class. The district court ordered
multiple rounds of briefing concerning the fairness of the
settlement, sufficiency of the class notice, the claims
process, class certification, choice of law, and other
issues. At four hearings held between December 2013 and
August 2014, the parties addressed concerns raised by the
court sua sponte as well as by objectors and other
non-settling plaintiffs. In response to these concerns, the
settling parties twice revised the settlement agreement and
issuing several detailed written rulings, the district court
granted preliminary approval of the settlement and certified
the class for settlement purposes on August 29, 2014. The
court appointed Hagens Berman and McCuneWright as settlement
class counsel. In September and October 2014, the district
court held four additional hearings, at which it requested
that the parties make additional changes to the settlement
notices and website, such as adding information about the
Reimbursement Program, and rewording the notices to make them
easier to understand.
amended settlement provided for class members to be notified
of the settlement in four ways: (1) a short form notice by
mail; (2) an email notification; (3) settlement websites with
the long form notice; and (4) flyers provided by dealers. The
settlement defined the class as all current and former owners
and lessees who bought or leased certain defined vehicles on
or before November 2, 2012-the date that Defendants announced
they were revising the EPA fuel economy estimates of certain
Hyundai and Kia vehicles.
members could receive compensation for relinquishing any
claims they might have by choosing one of four options:
1. a lump sum payment via a debit card, determined
by vehicle type and model year, with the cash value
approximating the additional fuel cost over a 4.75-year
period associated with the revised fuel economy estimates;
2. a dealer service debit card worth 150% of the
value of their lump sum payment for use at Hyundai or Kia
3. a new car purchase certificate worth 200% of
their lump sum payment for use in the purchase of a new
Hyundai or Kia vehicle by a class member or their immediate
4. enrollment in the Reimbursement Program, which
was extended as a result of the settlement from December 31,
2013, to July 6, 2015.
had before the settlement, the Reimbursement Program provided
recurring payments over the entire period of ownership based
on the updated fuel economy estimates, the number of miles
driven, and the price of gas in each geographic region, plus
a 15% bonus for the inconvenience. Class members already
participating in the Reimbursement Program could continue to
participate and, in addition, receive a $100 or $50 lump sum
payment depending on whether their vehicles were owned or
class notice websites, which the district court tested,
offered an online calculator for class members to estimate
the benefit that they would receive through the Reimbursement
Program as compared with the lump sum payment options. Class
members could submit their claims online where the form would
pre-populate with the class members' information after
they entered their vehicle identification number and the
unique identification number contained in their class
end of March 2015, with more than three months to go before
the July 6, 2015, claims deadline, the automakers reported to
the district court that the total compensation they had paid
or expected to pay to the class members, based on the claims
submitted, was more than $140 million. The Reimbursement
Program accounted for more than $97 million of this
compensation. By May 31, 2015, more than a month before the
claims deadline, the participation rate had grown to 23.0%,
reflecting 200, 013 claims. And when the court included class
members' participation in the Reimbursement Program in
the analysis, the participation rate jumped to 64.5%.
2014, one month before the settlement received preliminary
approval, class counsel began negotiating with the automakers
over a fee award, assisted by the same experienced mediator
who had helped them reach the settlement agreement. In
October 2014, they reached an agreement, pursuant to which
class counsel moved for an award of fees.
district court expressed concern with the request by
McCuneWright for a 3.0 lodestar multiplier. On June 1, 2015,
after supplemental briefing and an additional hearing, the
court awarded McCuneWright $2, 850, 000 in attorney's
fees and $93, 550.02 in costs based on a reduced multiplier
of 1.5521. On August 5, 2015, the court awarded Hagens
Berman, class counsel in Hunter and Brady,
$2, 700, 000 in attorney's fees based on a lodestar
multiplier of 1.22, and $250, 000 in costs. In addition, the
court awarded fees and costs to 26 other firms that reflected
lodestar reductions of 27 to 80 percent, including an award
of $1, 257, 000 in fees and $66, 000 in costs to liaison
counsel Girard Gibbs LLP. The court declined to award fees to
Feinman for his representation of the objecting plaintiffs in
the three Virginia cases, finding that he "did not
meaningfully contribute to the class settlement" and
that his "mostly meritless" objections "did
not serve to increase the settlement amount or otherwise
benefit the class members."
11, 2015, after more than three years of litigation,
including eight months of confirmatory discovery, the court
issued a 19-page order granting final approval of the class
settlement. Various objectors appealed the district
court's orders certifying the class, approving the
settlement, and awarding attorney's fees. A divided
three-judge panel of this court vacated the class
certification decision and remanded, holding that by failing
to analyze the variations in state law, the district court
abused its discretion in certifying the settlement class.
See In re Hyundai & Kia Fuel Econ. Litig., 881
F.3d 679 (9th Cir. 2018). A majority of the nonrecused active
judges on our court voted to rehear the case en banc.
Jurisdiction and Standards of Review
district court had jurisdiction under 28 U.S.C. §
1332(a) and (d). We have jurisdiction under 28 U.S.C. §
light of the "strong judicial policy that favors
settlements, particularly where complex class action
litigation is concerned," Allen v. Bedolla, 787
F.3d 1218, 1223 (9th Cir. 2015) (quoting In re Syncor
ERISA Litig., 516 F.3d 1095, 1101 (9th Cir. 2008)), we
perform an "extremely limited" review of a district
court's approval of a class settlement, In re
Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 940
(9th Cir. 2011) (quoting In re Mego Fin. Corp. Sec.
Litig., 213 F.3d 454, 458 (9th Cir. 2000)). Parties
seeking to overturn the settlement approval must make a
"strong showing" that the district court clearly
abused its discretion. Linney v. Cellular Alaska
P'ship, 151 F.3d 1234, 1238 (9th Cir. 1998) (quoting
Class Plaintiffs v. Seattle, 955 F.2d 1268, 1276
(9th Cir. 1992)). As long as the district court applied the
correct legal standard to findings that are not clearly
erroneous, we will affirm. Bluetooth Headset, 654
F.3d at 940.
review for abuse of discretion the district court's
decision to certify a class for settlement purposes, limiting
our review "to whether the district court correctly
selected and applied Rule 23's criteria." Parra
v. Bashas', Inc., 536 F.3d 975, 977 (9th Cir. 2008).
Likewise, we review for abuse of discretion the district
court's award of attorney's fees and costs to class
counsel as well as its method of calculating the fees. In
re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 942
(9th Cir. 2015). The factual findings underlying these
decisions are reviewed for clear error. See Torres v.
Mercer Canyons Inc., 835 F.3d 1125, 1132 (9th Cir. 2016)
(certification); Bluetooth Headset, 654 F.3d at 940
certifying a class, the district court must assure itself
that the proposed class action satisfies four prerequisites:
(1) the class is so numerous that joinder of all members is
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately
protect the interests of the class.
Fed. R. Civ. P. 23(a). In addition to meeting the numerosity,
commonality, typicality, and adequacy prerequisites, the
class action must fall within one of the three types
specified in Rule 23(b). Here, the district court certified
the class under Rule 23(b)(3), which requires that
"questions of law or fact common to class members"
must "predominate over any questions affecting only
individual members," and the class action must be
"superior to other available methods for fairly and
efficiently adjudicating the controversy." Fed.R.Civ.P.
23(b)(3). The district court's Rule 23(a) and (b)
analysis must be "rigorous." Comcast Corp. v.
Behrend, 569 U.S. 27, 33 (2013) (quoting Wal-Mart
Stores, Inc. v. Dukes, 564 U.S. 338, 351 (2011)).
criteria for class certification are applied differently in
litigation classes and settlement classes. In deciding
whether to certify a litigation class, a district court must
be concerned with manageability at trial. However, such
manageability is not a concern in certifying a settlement
class where, by definition, there will be no trial. On the
other hand, in deciding whether to certify a settlement
class, a district court must give heightened attention to the
definition of the class or subclasses. Amchem Prods.,
Inc. v. Windsor, 521 U.S. 591, 620 (1997). The Supreme
Court specifically addressed the difference between
litigation and settlement classes in Amchem. The
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.
addressed concerns about definitions of settlement classes
and fairness of proposed settlements in Hanlon v.
Chrysler Corp., 150 F.3d 1011, 1021 (9th Cir. 1998):
District courts must be skeptical of some settlement
agreements put before them because they are presented with a
"bargain proffered for . . . approval without benefit of
an adversarial investigation." [Amchem, 521
U.S. at 621].
These concerns warrant special attention when the record
suggests that settlement is driven by fees; that is, when
counsel receive a disproportionate distribution of the
settlement, or when the class receives no monetary
distribution but class counsel are amply rewarded.
case before us, however, we need not analyze all of those
criteria, for objectors challenge only the district
court's findings regarding the predominance of common
factual or legal issues under Rule 23(b)(3) and adequacy of