December 2018: Fourth Circuit Appellate Victory in Consumer Lawsuit over Elantra Fuel-Economy Estimates
Quinn Emanuel represented Hyundai Motor America, Inc. and Virginia-based Hyundai dealerships in three consolidated putative class and mass actions under Virginia consumer-protection statutes, successfully obtaining affirmance of an order dismissing claims in all three cases.
The consolidated actions arise from facts relating to the U.S. Environmental Protection Agency’s imposition of civil fines against Hyundai for asserted Clean Air Act violations involving the method Hyundai used to calculate fuel economy estimates for 2011-2013 Elantra models. In addition to paying the fines, Hyundai revised its estimates for those model years by press release on November 2, 2012. Over 50 consumer class actions were commenced against Hyundai in relation to the company’s advertising of the pre-revision mileage estimates. Those actions were consolidated in a multi-district litigation (MDL), which remains pending and in which a class was certified consisting of consumers who purchased the affected models before the November 2012 revision. The three actions here were initially part of the MDL, but were remanded to the Western District of Virginia because they involve claims of consumers (1) who opted out of the national class or (2) who purchased vehicles after the November 2012 revision.
The plaintiffs in the remanded cases allege that Hyundai and Hyundai dealers’ fuel-economy advertisements violated Virginia’s Lemon Law, Consumer Protection Act, and false advertising statute. The district court had dismissed all but one claim based on pleading deficiencies, and in the alternative based on preemption principles and failure to exhaust procedural prerequisites to suit. The district court dismissed all but one claim in one case and dismissed the two other cases in full. Noting that the complaints features only vague allegations and that plaintiff’s counsel had foregone several opportunities to amend their complaints to provide specific allegations of the individual plaintiffs’ basis to claim liability and injury, the Court declined to grant leave to amend the complaints to attempt to cure these deficiencies.
On appeal, a panel of the Fourth Circuit dismissed one of the three appeals—in the case brought by opt-outs of the national class—for lack of appellate jurisdiction. The district court had permitted a single claim, concerning the warranted accuracy of the vehicle’s on-board mileage calculator, to survive dismissal, meaning that the order of dismissal of other claims was not a “final decision” subject to federal appellate jurisdiction. The appeals court rejected an argument that it should exercise jurisdiction anyway to correct the district court’s purported ruling on claims of the national class, explaining that the district court had expressly limited its decision to claims of plaintiffs who had opted out of the class and so were remanded.
As to the remaining two cases, the appeals court affirmed dismissal based on the district court’s ruling that the complaints failed to satisfy Rule 8 pleading requirements as set forth in Twombly and Iqbal. In its appellate briefs, plaintiffs made no defense of their pleading, despite the district court’s clear ruling that pleading failures were an independent basis for its dismissal. The appeals court held that plaintiffs thus waived any challenge to the decision, and the court “decline[d] to invent an argument in support of Appellants’ complaints.” The panel further held that the district court permissibly declined to grant leave to amend the pleadings. It rejected plaintiffs’ argument that the district court was categorically barred from denying leave to amend prior to a “definitive ruling” on the initial complaint. And the district court permissibly exercised its discretion to deny leave in this case, the appeals court held, because the district court had repeatedly granted leave and invited plaintiffs to amend their complaints, but plaintiffs did not do that. “Faced with such resolute adherence to deficient complaints,” it held the district court was “well within its discretion” in denying leave to amend.