Hanlon v. Chrysler Corporation

150 F.3d 1011 (9th Cir. 1998)


Chrysler (D) was discovered to have a defective latch on its minivans. The lawsuits began to pour in. Eventually, all of the state class actions were consolidated in one large national class action (the Hanlon class) in federal court in the Northern District of California under Judge Legge on June 16, 1995. Three days after filing the case, the parties submitted a settlement agreement to the court for approval. The district court held a preliminary hearing on the settlement agreement on August 18, 1994, and issued an Order granting preliminary approval of the settlement and certifying the nationwide class of Minivan owners for settlement purposes only. All personal injury and death cases are excluded from this settlement. The Court-approved notice of the proposed settlement was mailed directly to over 3.3 million Minivan owners. The order granting preliminary approval of the settlement set an objection and opt-out date of October 20, 1995, and all activity on the state actions ceased. A few weeks after the Hanlon action was filed, Robert Kempton, a resident of Georgia and Chrysler minivan owner, filed a similar class action in a Georgia state court. Kempton sought to represent himself and all Georgia residents and entities who purchased or leased a Chrysler minivan in the relevant product years. In direct contravention of the federal district court's August 18 order, Kempton filed a motion to certify the Georgia class on October 17, 1995. Kempton specifically stated that his goal was either to opt out all Georgia residents from the Hanlon action or object on their behalf. The Hanlon plaintiffs and Chrysler filed a motion to enjoin Kempton from proceeding, and the California district court issued such an order on October 19, 1995. Kempton expressly ignored the injunction and proceeded with the Georgia class certification, arguing that he had opted out of the Hanlon class and therefore was not subject to that court's jurisdiction or bound by its orders. The Georgia state judge entered an order conditionally granting Kempton's motion and certifying the class. The California court conducted two fairness hearings on the adequacy of the settlement in November 1995. The court entered a final order of settlement and award of attorney’s fees. In early 1996, Chrysler acknowledged that approximately one million class members never received the notice of settlement and opportunity to opt-out of the settlement class because it had inadvertently failed to include them in the initial mailing. As a result, Chrysler moved to set aside the final order of settlement and reopen the proceedings to allow additional notice to these class members. The court agreed and granted Chrysler's Rule 60(b) Motion to Partially Reopen the Judgment on February 23, 1996. A third and final fairness hearing was held on April 29, 1996. At the close of that hearing, the court issued a new order that was substantially similar to the November 30 order. The objectors timely appealed to this court.