Hyundai Defeats Auto Dealer’s Appeal Over Sonata Recall Remedies

Hyundai Motor America Inc. defeated a suit over its alleged failure to sufficiently compensate recalled Sonata owners because there is no private right to enforce a recall remedy under federal law, the Eleventh Circuit said.

The remedies Hyundai offered Black Stone Auto Export Inc. clearly fell within the scope of the National Traffic and Motor Vehicle Safety Act, the U.S. Court of Appeals for the Eleventh Circuit said in an unpublished opinion.

In September 2015, Hyundai recalled certain 2011 and 2012 Sonatas due to an engine defect. The car maker initially offered to repair the cars, but then announced it would pay car owners an amount equal to the Kelley Blue Book value of a car in good condition.

Black Stone, a used-car dealer, began buying used Sonatas covered by the recall, sending them to Hyundai for repair, then reselling them. It later received payment for 37 recalled Sonatas, though Hyundai refused to pay for an additional seven cars due to noncompliance with technical requirements.

The dealership sued Hyundai for breach of contract. A federal trial court dismissed the case.

The Eleventh Circuit affirmed.

Under federal law, a car maker must correct a manufacturing defect by repairing the car, replacing the car with an identical vehicle or its reasonable equivalent, or refunding the purchase price minus a reasonable amount for depreciation.

There is a “strong inference” that Congress didn’t intend to create a private cause of action to enforce these provisions, the court said. There’s no language indicating such an intent, the law provides for “an extensive array” of administrative remedies, the law specifically authorizes the attorney general to bring a civil enforcement suit, and there’s a provision allowing dealers or distributors to enforce the law in certain circumstances, the court said.

Hyundai’s remedies fell within those allowed by the law, the court said. Its later decision to pay for the cars instead of repairing them didn’t create a contract outside the law’s scope, it said in an unsigned Dec. 23 opinion.

Judges Elizabeth L. Branch, Robert J. Luck, and J.L. Edmondson issued the opinion.

SK Law Group represents Black Stone. Bowman & Brooke LLP represents Hyundai.

The case is Black Stone Auto Export, Inc. v. Hyundai Motor Am., 11th Cir., No. 21-11491, unpublished 12/23/21.