Products Liability Law Daily Wrap Up, SETTLEMENT AGREEMENTS—MOTOR VEHICLES—9th Cir.: Hyundai-Kia’s theft-defect settlement upheld over objectors’ challenges to adequacy and equity, (Jan 13, 2026)

By Pankhuri Bhatnagar, B.A. LL.B.

A district court did not abuse its discretion in approving the settlement as it considered all the factors outlined in Fed. R. Civ. P. 23(e)(2) and gave reasoned responses to all objections.

In consolidated appeals arising from a nationwide consumer class action brought against four automakers over vehicles that were allegedly prone to thefts due to design defects, the U.S. Court of Appeals for the Ninth Circuit affirmed final approval of a pre-certification settlement. The appellate court found that the settlement was fair and adequate as it reasonably discounted relief in light of the consumers’ novel and untested liability theories, permissibly tied compensation to actual harm suffered, and properly rejected objections that were unsupported by evidence, forfeited, or beyond the objectors’ standing (In re Hyundai & Kia Theft Litigation, Nos. 24-7080 and 24-7185 (9th Cir. Jan. 8, 2026)).

Background. Consumers brought a class action alleging that millions of vehicles manufactured and sold by Hyundai Motor Company, Hyundai Motor America, Kia Corporation, and Kia America were defectively designed in a manner that allowed thieves to quickly steal them. The parties reached a nationwide settlement providing a non-reversionary common fund of up to $145 million, with a guaranteed minimum of $80 million, to compensate class members for losses arising from thefts and attempted thefts, including rental cars, rideshares, and up to the value of a total vehicle loss, subject to reasonable caps reflecting litigation risk. The settlement also provided forward-looking relief: a free antitheft software upgrade for eligible vehicles, warranted for the life of each vehicle; uncapped reimbursement for steering-wheel locks; and, for vehicles ineligible for the software upgrade, up to $300 in cash reimbursement for equivalent anti-theft systems. The district court granted final approval. Two objectors appealed, raising distinct challenges to the adequacy and equity of the settlement.

Settlement adequacy. The first objector argued that the settlement amount was too low given the perceived strength of the class plaintiffs’ case. The Ninth Circuit rejected this challenge, reiterating that courts assess “the settlement taken as a whole, rather than the individual component parts.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). Because “the very essence of a settlement is compromise,” it is “not to be judged against a hypothetical or speculative measure of what might have been achieved by the negotiators.” Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615, 624–25 (9th Cir. 1982). The panel emphasized that the district court expressly considered each factor outlined in Fed. R. Civ. P. 23(e)(2), gave reasoned responses to all non-frivolous objections, and correctly applied a litigation discount due to the novel and untested aspects of the consumers’ liability theories. Unsupported objections fail where the record contains no evidence contradicting the district court’s findings. In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 568 (9th Cir. 2019) (en banc).

Standing and forfeiture. The same objector also advanced additional theories, including unjust enrichment based on alleged overpayment for defective vehicles. The court held that these arguments were forfeited because they were not raised before the district court. Further, the objector did not have standing to raise an argument since he did not allege a personal injury tied to the challenged aspect of the settlement. Objectors “must seek relief for an injury that affects him in a ‘personal and individual way’” to have standing. Hollingsworth v. Perry, 570 U.S. 693, 705 (2013). Since he did not claim to have incurred a covered loss that was reimbursed by his insurer, he lacked standing to challenge the settlement on the ground that it failed to compensate class members whose losses have already been compensated by insurers.

Equitable treatment. A second objector argued that the settlement treated class members inequitably by favoring those who experienced a qualifying theft or theft attempt. She claimed that the non-theft subclass received “close to nothing” and that the settlement provided them no value beyond the remedies the automakers were already offering outside this litigation. The Ninth Circuit disagreed, noting that all class members received meaningful relief addressing the alleged defect. Most vehicles were eligible for a free, lifetime-warranted software upgrade whose effectiveness was confirmed by independent testing. Eligible class members could also obtain reimbursement for lost income, childcare expenses incurred to obtain the upgrade, and replacement key fobs—benefits not previously offered outside the litigation. Vehicles ineligible for the software upgrade could receive up to $300 for alternative anti-theft systems. Rule 23 does not prohibit tying settlement relief to actual harm, and it was equitable to provide greater compensation to those who suffered theft-related losses than to those who did not.

Insurance premiums. The second objector also challenged the settlement for failing to compensate class members for alleged increases in auto-insurance premiums. The court upheld the district court’s finding that the evidentiary record did not reliably establish a causal connection between the alleged design defect and premium increases. The district court identified methodological flaws in the objector’s expert report and credited the manufacturers’ evidence showing that insurance premiums rose comparably across the broader vehicle market. Because premiums reflect numerous variables, the district court acted within its discretion in concluding that the record did not support class-wide premium damages.

Diminution. The objector further argued that the settlement inadequately compensated class members for diminished resale value. Although the district court ordered supplemental briefing, no evidence was submitted showing that class vehicles declined in value due to the alleged defect. Class counsel reported that resale values for many models had in fact increased, and third-party data showed that other vehicles depreciated more than the class vehicles during the relevant period. On this record, the district court properly concluded that diminution-in-value damages were too speculative to award on a class-wide basis.

Discovery. Finally, the objector contended that settlement approval was premature due to insufficient discovery and analysis. The Ninth Circuit disagreed, noting that the district court’s review spanned 15 months, multiple hearings, and several rounds of briefing. Formal discovery is not required before parties can “make an informed decision about settlement.” Linney v. Cellular Alaska P’ship, 151 F.3d 1234, 1239 (9th Cir. 1998). Accordingly, the district court’s process satisfied Rule 23(e) and the settlement was approved in full.

The cases are Nos. 24-7080 and 24-7185.

Judge: Per curiam.

Attorneys: Roland Tellis (Baron & Budd, PC) for Plaintiffs' Consumer Class. Donald K. Birner, pro se. Kara M. Mundy (Vorys, Sater, Seymour & Pease, LLP) for Ruth Rubin. Chelsea Sincox (Quinn Emanuel Urquhart & Sullivan, LLP) for Hyundai Motor Co. and Kia Corp.

Companies: Hyundai Motor Co.; Kia Corp.

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