9th Circuit revives insurers' claims against Hyundai, Kia over vehicle thefts

The 9th U.S. Circuit Court of Appeals on Monday revived claims against the Korean manufacturers of Hyundai and Kia vehicles brought by about 200 insurance companies seeking to recover losses from a nationwide surge in car thefts.

A three-judge panel reversed U.S. District Judge James V. Selna of the Central District of California, ruling that Hyundai Motor Co. and Kia Corp. have sufficient contacts with California to potentially be subject to personal jurisdiction in multidistrict litigation over vehicles allegedly made unusually easy to steal.

The insurers contend certain Hyundai and Kia vehicles from model years 2011 through 2022 were defectively designed because they lacked engine immobilizers, anti-theft devices that prevent vehicles from starting without an authorized key.

The vulnerability became widely known beginning in 2020, when teenagers in Milwaukee calling themselves the "Kia Boyz" posted videos on social media showing how some vehicles could be stolen in seconds using a screwdriver and USB cable. Thefts subsequently surged nationwide.

The insurers, acting as subrogees of policyholders whose vehicles were stolen or damaged in attempted thefts, are seeking reimbursement for claims they paid and related expenses.

The litigation has already produced substantial settlements involving other claims stemming from the same alleged defect. A private consumer class action settled in 2024 for $145 million, in addition to repair costs.

In December, Kia and Hyundai also agreed to pay $9 million to settle claims brought by 35 states, including California, that the companies failed to install industry-standard anti-theft technology in millions of vehicles. Half of that settlement went toward restitution for affected owners and half toward states' investigative costs. The companies did not admit further liability.

As part of the multistate settlement, the automakers also agreed to install immobilizers going forward and provide current owners and lessees with free ignition cylinder protectors. The settlement released claims brought by the states but did not release private claims, including those asserted by insurers in the litigation now before the 9th Circuit.

Circuit Judge Eric D. Miller, writing for a unanimous panel, said allegations that the Korean manufacturers shipped thousands of vehicles through California ports and specifically designed vehicles for the U.S. market were enough at the pleading stage to establish the necessary connection with California.

"By placing the vehicles on ships bound for California ports, the Korean entities purposefully availed themselves of the forum and purposefully aimed their goods at California," Miller wrote.

The insurers alleged Hyundai Motor Co. initiated more than 7,500 shipments of vehicles and parts through California ports, while Kia initiated more than 5,000. More than 70% of the manufacturers' U.S.-bound vehicles traveled through California ports, according to the opinion.

Hyundai and Kia argued their American subsidiaries purchased the vehicles in Korea and assumed title and risk of loss there, leaving the Korean companies without sufficient California contacts. But the panel said the Korean companies were identified as shippers on bills of lading and did not deny controlling where the vehicles were sent.

"This is not a case in which a manufacturer sold goods to a distributor who then decided independently where to ship them," Miller wrote.

The panel also pointed to allegations that the manufacturers designed standard U.S.-market vehicles without immobilizers while installing the technology in comparable vehicles sold in Canada and other countries.

Although designing vehicles for the entire U.S. market would not alone establish jurisdiction in California, Miller wrote, that conduct combined with the manufacturers' extensive shipments through California demonstrated they had deliberately exploited the California market.

The panel also concluded the insurers adequately alleged their injuries arose from the manufacturers' California contacts because many of the allegedly defective vehicles were shipped through the state before being sold there.

The ruling does not definitively establish that the Korean companies must remain in the case. The panel sent the case back to Selna to determine whether exercising jurisdiction would be reasonable, the third element of the test for specific personal jurisdiction. Selna had not reached that question, and the parties did not brief it on appeal.

Judges Kim McLane Wardlaw and Marsha S. Berzon joined Miller.

Adam M. Romney of Grotefeld Hoffmann LLP in Sherman Oaks argued the case for the insurance companies. He declined to comment.

Andrianna Kastanek of Jenner & Block LLP in Chicago argued for Hyundai Motor Co. and Kia Corp. She could not be reached immediately for comment.

The case is In re: Kia Hyundai Vehicle Theft Marketing, Sales Practices, and Products Liability Litigation: Insurance Subrogation Appeal, 24-5219.