Class Members Object to Hyundai, Kia Mileage Class Action Settlement

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Last week, objections to the proposed settlement in the consolidated class action lawsuits accusing Hyundai Motor America and Kia Motors America of overstating the fuel efficiency of their vehicles was filed by Class Members.

The multidistrict litigation stems from the class action lawsuits that were filed after Hyundai and Kia both announced in November of 2012 that they would begin restating the mileage estimates for several vehicle models because they had deviated from U.S. Environmental Protection Agency fuel economy testing protocols when producing previous estimates. Hyundai and Kia claimed that the inaccurate numbers were because of “honest procedural errors” at a lone testing facility.

The Hyundai vehicles included in the class action settlement are the Accent, Elantra, Veloster, Veloster Turbo, Sonata Hybrid, Azera, Genesis, Tucson and Santa Fe Sport. The Kia vehicles affected include the Rio, Sportage, Sorento, Soul and Optima hybrid.

In December of 2013, Hyundai and Kia announced a proposed class action settlement totaling $400 million. In August of last year, a California judge preliminarily approved the settlement noting concerns with the way notice to the Class would proceed. Under the terms of the settlement, Hyundai agreed to establish a Lifetime Reimbursement Program that offers benefits to consumers who purchased certain 2011, 2012 and 2013 Hyundai vehicles; however, the plaintiffs have alleged that this reimbursement program is inadequate.

Last week, several Class Members filed objections to the deal. The protesters object to the proposed attorneys’ fees and that no notice will be provided to Class Members about how fuel reimbursements and lump sum payments will be calculated.

Currently, the terms of the settlement provide Class Members, current owners and lessees of affected Hyundai and Kia vehicles, with a set payment ranging from $140 to $590 for Hyundai vehicles and $50 to $1,420 for Kias, in the form of a prepaid debit card, a dealership services credit or a rebate on a newly purchased car. Additionally, Class Members who owner or lease one of four Hyundai models, the Elantra, Sonata Hybrid, Accent and Veloster, qualify for an additional $50 to $100 payment.

The objectors point out that the attorneys’ fees are a disproportionate amount of the settlement and are suspicious because they will be paid upfront. Additionally, point out the objectors, any fees not awarded will revert back to the companies, not the Class.

“Class counsel have liquidated the case’s value almost entirely for their own benefit,” argue the objectors, “and have structured the settlement so that amounts earmarked for their fees may not be redirected to the class instead.”

“The class would be far better off with a straight $12 million cash settlement where class counsel received a 25 percent fee of $3 million, and the remaining $9 million were split pro rata among all claimants,” they continued, “in addition to the existing lifetime reimbursement program.”

“At a minimum,” said another objector, “the notice should detail, step-by-step, how both the lump sum payment and the fuel reimbursement payments are calculated for each vehicle. … The notice is woefully incomplete when it comes to the most important information for class members — how the settlement payments are calculated,” the objector continued. The objector also pointed out that the prepaid debit cards expire after a year amounting to a “defacto ‘reverter’ clause, which allow defendants to keep unused settlement funds.”

The settlement Class is represented by Elaine T. Byszewski, Robert B. Carey and Steve W. Berman of Hagens Berman Sobol Shapiro LLP and Richard D. McCune of McCuneWright LLP.

The Hyundai, Kia Fuel Efficiency MDL is Hyundai and Kia Fuel Economy Litigation, Case No. 2:13-ml-02424, in the U.S. District Court for the Central District of California.