U.S. appeals court to reconsider Hyundai-Kia gas mileage settlement

(Reuters) - A U.S. appeals court will reconsider its decision to throw out a $210 million nationwide class-action settlement for owners of Hyundai Motor Co (005380.KS) and Kia Motors Corp (000270.KS) vehicles whose fuel economy was inflated.

FILE PHOTO: A car dealer stands in front of the logo of Hyundai Motor at its dealership in Seoul, South Korea, April 25, 2016. REUTERS/Kim Hong-Ji/File Photo

The 9th U.S. Circuit Court of Appeals in San Francisco on Friday said a Jan. 23 decision by a three-judge panel to decertify the 2013 settlement was no longer precedent, and an 11-judge panel will review the matter.

No explanation was given, and no timetable was set for the so-called “en banc” rehearing.

Hyundai said in a statement that it “continues to support the nationwide class action settlement” and is pleased there will be a rehearing. Kia said in a separate statement that it “appreciated the opportunity” to have the case reheard.

The settlement came after the U.S. Environmental Protection Agency found flaws in Hyundai’s and Kia’s testing procedures, and the automakers lowered their fuel efficiency estimates for about 900,000 vehicles in the 2011, 2012 and 2013 model years.

In the January decision, a 2-1 majority said a lower court judge failed to assess whether differences in state laws prevented certification of a nationwide class, and therefore approval of the settlement.

It also said owners of used cars should not have been part of the settlement because it was unclear whether they relied on the automakers’ fuel efficiency claims.

The $210 million figure represented the estimated lump sum payout available to the proposed class members, the court said. Some objectors said the accord undervalued their claims.

In dissent, Circuit Judge Jacqueline Nguyen said the majority ignored legal precedents, and wrongly dealt a “major blow to multistate class actions” by requiring class-action lawyers or judges to survey the laws of all 50 states before certifying nationwide classes in cases with state law claims.

Hyundai and Kia lawyers said in court papers requesting a rehearing that requiring such “procedural formalism” would sow confusion and “obstruct fair and efficient resolution of class actions through this nation’s most active class action circuit.”

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

It was where Toyota Motor Corp (7203.T) in 2013 completed a $1.1 billion class-action settlement of claims that its vehicles accelerated without warning.

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

Reporting by Jonathan Stempel in New York; Editing by Marguerita Choy

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