Hyundai and Kia Motors Class Actions—Products Liability—Negligence, Absolute Nuisance, and Qualified Nuisance

Hyundai Motors and Kia Motors America will compensate owners' theft-related vehicle losses.

Case Summary

Kia and Hyundai thefts skyrocketed because a viral TikTok video in the summer of 2022 showed people how to steal the cars with just a USB cable and screwdriver. And while the manufacturers made a software update available to owners, there was not a mandatory recall of any make and model related to this issue. Also, the update was only effective when the vehicle alarm is armed.

The law firm Hagens Berman brought a national class-action lawsuit on behalf of the owners of affected vehicles in August 2022, and reached a proposed settlement in May of 2023 that covered roughly 8 million vehicles and is valued at more than $200 million. 

Since May 2023, the companies worked with law enforcement agencies to provide more than 26,000 steering wheel locks to 77 law enforcement agencies in 12 states.

The class action was enjoined by Governmental Entities and Insurers and sought relief for those impacted by Hyundai and Kia’s failure to install an immobilizer, a common antitheft device in modern cars which prevents most vehicles from being started unless a code is transmitted from the vehicle’s smart key.

The Honorable James V. Selna of the U.S. District Court for the Central District of California preliminarily approved the settlement on Oct. 31, 2023, resolving claims in a class-action lawsuit against Hyundai and Kia that was filed in 2022. 

Motion for Dismissal
Hyundai and Kia had hoped for a quick dismissal of the litigation hundreds of insurers brought forth after a spree of vehicle thefts. Instead, U.S. District Judge James Selna in Santa Ana, California, rejected the automakers' argument for dismissal and ruled Hyundai and Kia must face the insurers' lawsuits.

Grounds for Dismissal

Defendants’ Vehicles Comply with Federal Law and NHTSA Has Found No Safety Defect Requiring a Recall

The National Highway Traffic Safety Administration NHTSA rejected a request by 18 state Attorneys General to recall the Hyundai and Kia vehicles in question, reiterating that federal regulations do not require cars to be equipped with engine immobilizers. Governmental Entities (GE) Plaintiffs’ claims would not only impose a rigid immobilizer duty that federal law rejects but would also undermine the design flexibility that NHTSA’s standard purposefully seeks to promote. Federal law preempts such interferences with federal regulatory objectives.

Social Media Incites an Unprecedented Craze of Thefts

The GE Plaintiffs allege that the theft epidemic underlying their claims began in Milwaukee in late 2020, when the “Kia Boyz” started posting “‘how-to’ videos” on social media platforms—some of which did not even exist when many of the Hyundai and Kia vehicles targeted were manufactured.

Policing and Prosecutorial Policies Contributed to the Craze.

The GE Plaintiffs’ CGEC further acknowledges that the GE Plaintiffs’ own policing and prosecutorial policies contributed to the craze of thefts since late 2020. The sources the GE Plaintiffs rely upon for their allegations explain that many GE Plaintiffs failed to thoroughly investigate car thefts or to arrest or prosecute perpetrators. Compare CGEC pp. 36, 37 (although overall car thefts more than doubled from approximately 4,500 to 10,500 from 2020 to 2021, arrests for these crimes increased only increased from 745 to 1,061).

The lawsuits in question aim to recoup more than $1 billion that insurers say they owe Hyundai and Kia drivers whose vehicles were damaged or stolen during a theft spree inspired by social media. The insurers argue that the lack of anti-theft devices in the 14.3 million vehicles made between 2011 and 2022 dramatically increased the likelihood of vehicle theft.

What Affected Hyundai and Kia Owners Can Expect per Hagens Berman News Release

Attorneys made several important changes to the settlement agreement with Hyundai and Kia to address feedback the court provided in August 2023, including:

• Reimbursement for out-of-pocket losses that aligns with vehicle value. Under the amended settlement agreement, class members who experienced vehicle theft will be eligible for reimbursement up to 60% of the Black Book value of their vehicle, including licensing fees, sales tax paid, registration fees and other expenses. Class members who experienced vehicle damage and/or stolen personal property due to an attempted theft will be reimbursed up to 33% of the Black Book value of their vehicle or $3,375 per claim, whichever is greater.

• Additional expert testimony on class member compensation. According to plaintiffs’ economic expert cited in the settlement agreement, “most insured class members are likely to receive near full compensation for their qualifying events, even based upon risk-adjusted payment amounts.”

• Additional expert testimony on the software upgrade. In a filing supporting preliminary approval, defendants told the court, “The Software Upgrade fixes the problem by activating an ignition kill system when the alarm is triggered and when the alarm is armed,” citing analysis from a mechanical engineer experienced in conducting automotive tests and vehicle investigations. Experts performed more than 100 tests on vehicles equipped with the software upgrade. Analysis of four reports of theft in vehicles equipped with the software upgrade found that they were the result of the doors being left unlocked, a feature of the software upgrade being turned off or the vehicle being started with a key or towed away, respectively.

Hagens and Berman notes that damages would include “total loss of vehicles up to $6,125, damage to vehicle and personal property up to $3,375, insurance-related expenses and other related expenses including car rental, taxi costs, ride share costs or public transit payments not otherwise covered by insurance.” Consumers should contact Hyundai at 800-633-5151 and Kia at 800-333-4542 for information.

Case Information 

Case No.: 8:22-ml-03052-JVS-KES

Court Info: UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

411 West 4th Street, Santa Ana, CA 92701-4516

Plaintiff: Consumers, Governmental Entities (cities) and Insurers

Defendant: Kia America & Hyundai Motors

Date Filed: August 18, 2022

Case type: Products Liability—Negligence, Absolute Nuisance, and Qualified Nuisance

Plaintiff's Case

The lawsuit alleged Kia and Hyundai knew of the public safety concerns from the spike in thefts of their vehicles and neither company took meaningful steps to address the problem. The suit alleges products liability—Negligence, absolute nuisance and qualified nuisance. Cities that enjoined the suit include Seattle, St. Louis, Missouri, Cleveland, Ohio; San Diego, California; Milwaukee, Wisconsin; Columbus, Ohio and Baltimore.

Negligence
At all times relevant to this litigation, Defendants knew or, in the exercise of reasonable care, should have known of the hazards and dangers of foregoing installation of engine immobilizers in the susceptible vehicles and specifically, the increased risk of vehicle theft and public harm.

Absolute Nuisance
Nature and elements of public nuisance in general Under Ohio law, an absolute public nuisance involves conduct that is inherently injurious and is essentially a strict liability cause of action. Nationally, stolen Kias and Hyundais have been involved in crashes and multiple crimes, including murder, robberies and assaults. For example, a 15-year-old Syracuse boy died Nov. 30 when a stolen Kia he was driving crashed into a wall while it was being pursued by Syracuse police and in September, two teenagers in a stolen Hyundai were fatally shot by an Onondaga County New York deputy when they tried to flee.

Qualified Nuisance
The public nuisance is a qualified public nuisance because Defendants negligently engaged in conduct or omissions which endanger or injure the health, safety, or comfort of the public.

Plaintiff Prays Judgment for...
Entering an Order that Defendants are jointly and severally liable; requiring Defendants to abate the public nuisance described herein and to deter and/or prevent the resumption of such nuisance, and enjoining Defendants from engaging in further actions causing or contributing to the public nuisance as described. Awarding equitable relief to fund automobile theft prevention; actual and compensatory damages; reasonable attorneys’ fees and costs of suit; pre-judgment and post-judgment interest; and such other and further relief as the Court deems just and proper.

The Law

Products Liability—Sales

For a products liability case, under either a negligence or breach of warranty theory, the plaintiff must establish three elements: (1) the product contained a defect which rendered it unreasonably dangerous for ordinary or foreseeable use; (2) the defect existed when it left the defendant's hands; and (3) the defect actually caused the plaintiff's injury.

Walker v. All. Outdoor Grp., Inc., 567 F. Supp. 3d 723 (E.D. Va. 2021) case in which a buyer of treestand used for hunting brought action against seller alleging products liability and breach of express and implied warranty claims against it. Seller moved for summary judgment. The District Court, Henry E. Hudson, Senior District Judge, held that the genuine issue of material fact as to whether industry standards concerning treestands were reasonably safe and whether the buyer acted reasonably precluded summary judgment. 

Products Liability—Negligence

Industry custom and usage is not always conclusive of due care in a products liability action but may be when there is no evidence to show that custom and usage was not reasonably safe.

Chiulli v. Am. Honda Motor Co., No. 22-CV-06225-MMC, 2023 WL 5763053 (N.D. Cal. Sept. 6, 2023), a case that held that under California law, a “design defect” exists when product is built in accordance with its intended specifications but the design itself is inherently defective.

Strict liability, as defined (a) concept applied by the courts in product liability cases in which a seller is liable for any and all defective or hazardous products which unduly threaten a consumer's personal safety.” Under this theory the manufacturer would be liable not just for his own acts, but for the acts done by any user of the product.

• strict liability for design defect,
• strict liability for negligent design and manufacture, and
• negligent marketing and distribution theories 

Another definition regarding strict products liability is that any person engaged in the business of manufacturing or selling products for use or consumption is strictly liable in tort for personal injuries, death, or property damage sustained by a foreseeable user or consumer, or even a mere bystander, when such injury or damage results from a defective and dangerous condition of the product. 

In order for a strict liability standard to be valid the injuries resulting from a defective condition in the product are that 

1. the product reached plaintiff without substantial change in its condition. 
2. the product was used in the manner intended; and 
3. the plaintiff was injured as a result of a defect in the product, of which the plaintiff was not aware, making the product unsafe for its intended use.

Products Liability—Manufacturing defect

The elements of a negligence cause of action in a product liability case are (1) the manufacturer was under a legal duty to design and manufacture a product reasonably safe for use, (2) the manufacturer breached that duty, (3) the plaintiff suffered an injury that is legally caused by the manufacturer's breach, and (4) the plaintiff suffered damages.

Nuisance
An absolute public nuisance involves conduct that is inherently injurious and is essentially a strict liability cause of action. The public nuisance is a qualified public nuisance because Defendants negligently engaged in conduct or omissions which endanger or injure the health, safety, or comfort of the public. Below are some key points established by precedents in U.S. district courts regarding product liability nuisance claims.

• The defendant's conduct substantially contributed to public nuisance even where there are independent or concurrent causes in fact; if defendant's conduct operated concurrently with other forces to produce harm, it is substantial factor, so long as injury, or its full extent, would not have occurred but for that conduct. 
• California law has never imposed requirement that there be some form of injury to land or property in order to establish nuisance claim. 
• Although finding of causation required for public nuisance claim may not be based on mere speculation or conjecture, such finding may be predicated on reasonable inferences drawn from circumstantial evidence; direct proof of each link in chain of causation is not required.
• Plaintiff may rely exclusively on circumstantial evidence to prove that defendant must have known that their conduct substantially contributed to public nuisance.

 City & County. of San Francisco v. Purdue Pharma L.P., 620 F. Supp. 3d 936 (N.D. Cal. 2022) in a case where a municipality brought action alleging that retail pharmacy chain created public nuisance by dispensing opioid prescriptions without performing adequate due diligence, Charles R. Breyer, Senior District Judge, held that Purdue was liable for substantially contributing to public nuisance—ongoing opioid epidemic—in municipality.

15 U.S.C. § 2301 et seq. (Magnuson-Moss Warranty Act, hereinafter “the Act”), permits a consumer who is damaged by the failure of a supplier, warrantor or service contractor to comply with any obligation under the Act, or under a written warranty, implied warranty, or service contract to bring a civil action for damages.

Failure to meet the safety standard established by Federal Motor Vehicle Safety Standards FMVSS 114, S5.1.1(a) and (b).

Opinions about these Lawsuits
Legal organizations that are very critical of this litigation include The American Tort Reform Association (ATRA) that stated in a report released December 5th, "Rather than hold thieves responsible for their criminal actions, St. Louis Mayor Tishaura Jones blames the auto manufacturers for contributing to a significant rise in vehicle thefts in St. Louis. Among other claims, the city alleges that the companies created a public nuisance because stolen cars represent a public safety hazard, contribute to violence, and divert St. Louis law enforcement of resources as they respond to property destruction and dangerous driving of stolen cars around the city."