Kia, Hyundai $200 Million Car Theft Settlement Rejected by Judge

Kia, Hyundai, and drivers who allege the lack of security features makes some 9 million cars unusually prone to theft must rework a class settlement valued at $200 million.

The proposal, which includes a $145 million fund and a software upgrade meant to address the security deficiencies was rejected Wednesday by Judge James V. Selna of the US District Court for the Central District of California.

Drivers alleged certain 2011–2022 Kia and Hyundai models don’t have an engine immobilizer—an electronic security device that makes it harder to start a vehicle without the appropriate key. Social media posts that demonstrate how to break in and steal the cars fueled a rash of thefts, the drivers said in consumer deception suits that were combined in multidistrict litigation overseen by Selna.

The deal could be worth more than $200 million, depending on how many consumers participate, according to drivers’ attorneys.

There is no evidence that attorneys colluded among themselves to the detriment of the class, the court said.

But Selna expressed concerns about the settlement’s value.

The maximum reimbursement amounts for a total loss and a partial loss are capped at $6,125 and $3,375, respectively.

This doesn’t consider that a car manufactured in 2022 will be worth far more than one manufactured in 2011, the court said. It directed the plaintiffs and the automakers to fashion a reimbursement matrix that aligns with each vehicle’s estimated value.

Government entities and insurance companies have filed separate suits in the litigation. Their claims are proceeding on their own respective litigation tracks and aren’t part of the consumer settlement. Selna previously sought their views on the proposed deal and his order pointed to the municipalities’ concerns about the effectiveness of the software upgrade, which was introduced earlier this year.

New York City; Columbus, Ohio; and other municipalities said they’ve had to devote significant police and other public resources to combat the wave of auto thefts and related crime. The update hasn’t markedly reduced theft rates, they said.

Selna said that based on comments made at the preliminary approval hearing, he’s likely to require an evidentiary proceeding to get additional information about the technology used in the upgrade.

The judge also asked the drivers and automakers to consider expanding the claim payment methods beyond checks and debit cards to allow electronic payments.

Selna rejected a part of the deal that gives $10 million back to the automakers if claims don’t reach $50 million. It would be fairer to class members to provide increased payments, he said.

The drivers were given 21 days to file an amended motion for preliminary approval.

Hagens Berman Sobol Shapiro LLP; Baron & Budd PC; FeganScott LLC; and Humphrey, Farrington & McClain PC represent the plaintiffs. Jenner & Block LLP and Quinn Emanuel Urquhart & Sullivan LLP represent Kia America Inc. and Hyundai Motor America.

The case is In re: Kia Hyundai Vehicle Theft Litig., C.D. Cal., No. 8:22-ml-03052, 8/16/23.