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Hyundai to Fix Stalling|SUVs to Settle Lawsuit

OAKLAND, Calif. (CN) — Hyundai has agreed to fix cars for 10 years and offer rebates toward buying or leasing replacement cars to settle claims that it deceived buyers about a stalling defect in one of its SUVs.

U.S. District Judge Claudia Wilken on Tuesday preliminarily approved the settlement and certified the settlement class of which named plaintiffs Julia Reniger and Greg Battaglia accused the automaker in 2014 of failing to tell buyers that its 2010-2012 Hyundai Santa Fe SUVs stall and even completely lose power.

The stalling endangers pedestrians because drivers can't brake or steer once the car shuts off, the plaintiffs said in their class action. Hyundai has denied that the Santa Fe is defective, that the stalling risks driver and pedestrian safety, or that it broke the law by not telling consumers about the problems, according to the plaintiffs' settlement motion.

Despite granting preliminary approval, Wilken expressed concerns about certifying a settlement class that could sue under the laws of several states. Hyundai attorney Eric Kizirian waylaid those concerns, however, noting that several similar class actions have recently been certified on a nationwide basis.

"I'm not sure there would be an entitlement to more under the laws of various states," Kizirian added. "I don't know what more Hyundai could give in this instance."

Under the terms of the settlement, Hyundai will reimburse more than 77,000 class members up to the maximum for the money they've spent fixing their cars, and fix those cars for free for 10 years after they were put on the market. The fix entails a software update to the vehicles' electronic throttle control.

"That has a significant value," Kizirian said.

Plaintiffs' counsel Mark Greenstone indicated to the court that the settlement is fair.

Hyundai's service campaign to fix the defect has reduced the number of stalling complaints from about 70 per month nationwide when the campaign was launched in April 2015 to a little less than one per month, Kizirian told the court. That indicates that the defect has been resolved, he said.

Hyundai will also give class members who experienced a stall rebates ranging between $250 and $1,000 toward buying or leasing certain new Hyundai vehicles. If class members experience another stall after Hyundai fixes the defect, the automaker will provide them with an enhanced rebate of between $500 and $2,000.

However, Hyundai can contest enhanced rebate claims if it finds that the second stall occurred because the software update wasn't installed correctly.

"Would you characterize this as a coupon settlement?" Wilken asked on hearing about the rebate.

In a "coupon settlement," defendants give coupons to class members. In the past, class members were often induced into buying additional products to redeem the coupons — essentially rewarding defendants for their wrongdoing — and any settlement cash was gobbled up by attorneys' fees. As a result, coupon settlements came to be regarded as a payday for class counsel that bilked class members.

In response, Congress passed the Class Action Fairness Act in 2005 requiring in-depth review of coupon settlements and allowing more class actions to be heard in Federal Court. The law also required that the U.S. attorney general and the attorneys general of states where class members reside be given the opportunity to review proposed settlements and to intervene if they deem them to be unfair.

Kizirian assured the court that this is not a coupon settlement. "The campaign was made available for the life of the cars," he said. "The reason we're asking for a rebate certificate is for people who still want to get rid of their cars."

Plaintiffs' counsel is applying for $745,000 in attorneys' fees and expenses. In preliminarily certifying the settlement, Wilken signaled that the requested attorney's fees are reasonable.

Kizirian is with Lewis Brisbois Bisgaard & Smith in Los Angeles. Greenstone is with Glancy Prongay & Murray, also in Los Angeles.


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