How Bad Could Hyundai's Problems Be?


Ambulance chasing lawyers always overestimate what they can get for plaintiffs. That is much of the reason they have clients at all. These clients expect to win fantastic sums, but courts usually find the extent of their injuries unsupported.

Nevertheless, new claims against Hyundai and Kia show that the two auto manufacturers cannot suppose that the only substantial hurt to them from overclaiming mileage reports is one of reputation and modest compensation to people who own the cars in question. Kia and Hyundai overstated mileage claims by about 2 mpg on a total of 900,000 autos sold. Each company will pay customers for gas based on the mpg estimates they gave these buyers and those actually reported by the EPA. Most predictions about the financial hit the two firms will take are in the low millions of dollars.

Law firm Hagens Berman says that total damages from consumer suits will reach nearly $775 million. The basis of this figure assumes that the owners affected may lose a large part of the resale value of their cars because these cars will be less fuel-efficient that originally advertised.

Another foundation for the Hagens Berman claim comes from a class action filed by its attorneys in U.S. District Court for the District of Central California. The firm says:

The suit contends that Hyundai violated California's Unfair Competition Law; its false advertising law, and its Consumer Legal Remedies Act. The suit also claims that Hyundai committed a breach of express warranty and committed fraud and negligent misrepresentation under California Common Law, among other violations

Hagens Berman describes its expertise this way:

Our main focus is to represent plaintiffs in securities, investment fraud, product liability, tort, antitrust, consumer fraud, employment, environmental, intellectual property and ERISA cases. In doing so, our firm has become particularly skilled at managing multi-state and nationwide class actions through an organized, coordinated approach that implements an efficient and aggressive prosecutorial strategy in order to place maximum pressure on the defendant.

All in all, those expertise are fairly limited. More staid elements of the legal profession may find the goal of the firm's practices repugnant. But the does not negate the fact that Hyundai and Kia face a wall of lawsuits that claim their plans to help customers who bought the 900,000 vehicles are not fair and reasonable.

Hyundai and Kia could be forced by courts to increase their compensation. The figure for that probably will not reach $775 million. However, as each new claim is brought against the car makers, their costs rise. And so does the extent of the reputation damage as the incident stays in the public's eyes.

Douglas A. McIntyre

Filed under: 24/7 Wall St. Wire, Autos, Law Tagged: featured