Kia and Hyundai are facing lawsuits from several hundred insurance companies seeking to recover over $1 billion in claims paid to drivers whose cars were allegedly easy to steal or vandalize.
The insurers raised viable consumer protection, breach-of-warranty, negligence, and fraud claims against US units
Certain 2011–2022 Kia and Hyundai models have no engine immobilizer—an electronic security device that makes it harder to start a vehicle without the appropriate key, the insurers said. Social media posts demonstrating how to break in and steal the cars fueled a rash of thefts, the carriers said. At issue are more than 14 million thief-friendly cars, the insurers said.
Federal anti-theft regulations that allow automakers a choice of security features don’t preempt the claims, Judge James V. Selna said. The insurers adequately allege that Kia and Hyundai failed to equip the cars with any anti-theft feature, the court said.
The court also said the insurers raised viable subrogation claims, rejecting the automakers’ argument that the carriers had to offer specific facts for each individual policyholder.
Nor are the claims restricted by the economic loss rule, which allows recovery under tort law only when a product defect causes damage to other property—that is, something other than the allegedly flawed product.
The insurers adequately alleged that the automakers’ failure to include an anti-theft device can cause personal injury and damage to property other than the vehicles, the court said.
And traditional concerns of fairness and equity don’t weigh against the insurers, the court said.
Even though the insurers received premiums, the automakers allegedly failed to include any anti-theft device as required under federal regulations, the court said. “Thus, the level of fault is almost entirely on the Defendants, as they decided
whether the Vehicles included an anti-theft device,” it said.
The court dismissed parent companies Kia Corp. and Hyundai Motor Co. for now, saying it lacks general personal jurisdiction over them. But the insurers may amend their complaint to include allegations supporting the exercise of specific personal jurisdiction over the South Korean corporations, Selna said.
The litigation also includes two other sets of lawsuits—one by municipalities seeking to recoup public safety expenses and other costs associated with the rash of vehicle thefts, and one by consumers who allege they suffered financial harm when their cars were stolen or vandalized. Selna recently gave tentative approval to a settlement in the consumer suits.
Cozen O’Connor PC and others represent the insurers. Jenner & Block LLP represents the automakers
The case is In re Kia/Hyundai Vehicle Theft Litig., C.D. Cal., No. 8:22-ML-03052-JVS, 11/15/23.