Judge green-lights Honda, Kia theft settlement
A group of insurance subrogation plaintiffs are continuing to pursue separate claims against Hyundai Motor America and Kia America Inc.
A federal judge said he planned to preliminarily approve an estimated $200 million class action settlement to resolve defects in Hyundai and Kia vehicles that make them susceptible to theft.
U.S. District Judge James Selna, of the Central District of California, had initially rejected the settlement, citing concerns about the compensation to class members and the proposed software upgrade to fix the vehicles. But after lawyers made changes to the deal, the judge said he would approve the amended agreement at a brief Monday hearing in Santa Ana, California.
A final approval hearing is set for July 15.
Despite the revisions, there could be objections to the settlement going forward. Elliott Feldman, co-chair of Cozen O’Connor’s subrogation and recovery department, appeared on Monday for a group of insurance subrogation plaintiffs who are continuing to pursue separate claims against Hyundai Motor America and Kia America Inc. He said that while his clients don’t oppose the settlement, “we are very concerned about the efficacy of the software upgrades.”
Selna acknowledged those concerns, which he said could be raised by objectors. “We’ll take it up in that fashion,” he said. “This isn’t the time to take that up.”
Co-lead plaintiffs counsel Steve Berman, of Seattle’s Hagens Berman Sobol Shapiro, did not respond to a request for comment.
Shon Morgan, of Quinn Emanuel Urquhart & Sullivan in Los Angeles who represents Hyundai and Kia, declined to comment.
‘Ongoing public safety crisis’
The settlement, reached in May, involves about 9 million Hyundai and Kia vehicles, model years 2011 to 2022, which lack an “engine immobilizer,” commonly used in today’s vehicles to prevent thefts. The immobilizer technology prevents cars from being started without communication from a computer chip in the vehicle’s key fob.
In the past few years viral videos on TikTok and YouTube began circulating that showed how to steal Kia and Hyundai vehicles using a USB cord. About 80 lawsuits alleged that Kia and Hyundai failed to install immobilizers, leading a group of Milwaukee teenagers calling themselves Kia Boyz to start a trend on social media of stealing the cars, many of which were recovered at other locations and usually damaged.
The settlement includes a common fund of between $80 million and $145 million for out-of-pocket losses. Initially, that included a maximum of $6,125 for a class member’s totaled vehicle, $3,375 for damages to a car, and other costs, such as car rentals and public transportation. Class members also would get software upgrades or, if that’s not possible, $300 in reimbursement for installing a glass breakage alarm or purchasing a steering wheel lock.
But Selna, rejecting the settlement on Aug. 16, raised concerns about how lawyers had calculated the payments and whether the software fix actually worked. Days earlier, attorneys general from the District of Columbia and five states, including New York and Pennsylvania, wrote a letter raising concerns that the settlement didn’t “adequately respond to the ongoing public safety crisis” caused by the thefts.
The attorneys general said that, although Hyundai and Kia began advertising the software fix months ago, there was no slowdown in thefts. “In fact,” the letter said, “Hyundai and Kia vehicles continue to be stolen at drastically higher rates than before thefts surged.” They pushed instead for a voluntary recall of the vehicles to install the immobilizer technology.
Excluded from the settlement are government entities, such as Seattle and Columbus, Ohio, which have brought their own public nuisance cases, and a class action filed by the insurance companies, which could reach $600 million.
In a tentative order on Monday, Selna noted that the settlement, which originally only provided payment to class members via check or reimbursement debit card, now included digital options such as PayPal, Venmo and prepaid Mastercard.
That was at his suggestion.
“In particular,” he wrote, “the court was ‘concerned about the possibility of checks being lost in the mail, as well as the one-year time limitation on the debit card option.’”