In January, 2018, two judges of a three judge panel of the Ninth Circuit issued a decision that caused major shockwaves in the class action world (the opinion can be found here). The Ninth Circuit panel reversed class certification of a national settlement class in litigation alleging Hyundai and Kia made misleading statements about the fuel economy of some of their cars. In other words, the plaintiffs and the defendants had agreed to what they believed was a fair settlement, and the Ninth Circuit unwound it.

Reversal of a settlement class is not, by itself, especially newsworthy, but the reason for the reversal here was. The majority held that variations in state law defeated the “predominance” requirement of Federal Rule of Civil Procedure 23(b)(3). As recognized by the dissenting judge, this ruling could seriously undermine the ability of either plaintiffs or defendants to settle large-scale class action litigation. It also runs counter to the holdings of basically every other circuit court to have considered the question.

The gravity of this ruling-and the quagmires it is likely to cause-has led to a somewhat unusual situation: On March 8, 2018, both the plaintiffs and the defendants in the Hyundai/Kia Fuel Economy Litigation asked the full Ninth Circuit to reconsider the holding. This process, known as a Petition for Rehearing En Banc, has a relatively low rate of success, at least statistically. But, this case likely has a better than average chance of getting the attention of the full court, and hopefully a new opinion more in line with other circuits and not so damaging to the class action process.

Although the machinations of deciding a Petition for Rehearing En Banc are arcane and complicated, generally speaking, any active circuit court judge may call for a vote on whether the case should be heard en banc. The timing of the decision is also complicated and depends on a number of factors, but realistically, we can probably expect an answer within a month or two. If a majority of the active judges vote in favor of en banc review, as we hope they will, the original opinion will be withdrawn and the case reheard.

By: Jeremy K. Robinson

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