Hyundai, Kia still under legal pressure after settling lawsuit over car thefts

Hyundai and Kia may have agreed to a $200 million settlement with consumers in a national class-action lawsuit, but they still face a rigorous climb up a mountain of legal challenges.

Reaching the settlement that litigants welcomed last week is only one step for the automakers. They are still defendants in numerous lawsuits brought by entities seeking damages they claim resulted from Hyundai and Kia's decision not to include engine immobilizers as standard equipment on 9 million of their older vehicles on the road.

The legal tangle was sparked by a wave of car thefts last year after a TikTok video demonstrated how to hot-wire Hyundai and Kia vehicles that lack an anti-theft device. To diffuse the situation, Hyundai and Kia have offered owners of 8.3 million of the vehicles software updates that will enhance their alarms. They also have been working to get steering wheel locks to owners whose vehicles are ineligible for the upgrade.

In addition to the consumer class action that settled, they are still being sued by 68 insurance companies, a handful of city governments and a subset of consumers in California, alleging the manufacturers sidestepped an important federal safety standard and allowed their vehicles to be easily targeted by amateur thieves.

The rule, known as FMVSS 114, mandates that a vehicle's starting system include a way to prevent activation of the engine and steering or forward mobility of the vehicle when the key is removed.

Though the intent of the rule when it was put in place more than 50 years ago was to deter casual car thieves, such as the ones who have been hot-wiring Hyundai and Kia vehicles, there is no specific directive that an immobilizer must be used.

As the rule was tweaked over the years to maintain relevance in modern times, automakers argued the language should not be narrowed to include any one technology because of the nature of fast-changing technology.

As such, Hyundai and Kia did not include the technology in millions of their vehicles, spanning the 2011-22 model years.

Immobilizer technology has been included widely as standard equipment since 2015.

The insurance companies suing the manufacturers include Liberty Mutual, Nationwide and American Family. They estimate that Hyundai and Kia's decision not to include immobilizers has already cost the insurers $190 million. The group estimates that the entire U.S. insurance industry could wind up paying out as much as $600 million in claims.

The municipalities, including San Diego, Calif.; St. Louis, Mo.; and Rochester, N.Y., say the Hyundai and Kia thefts and related crimes have consumed law enforcement and other emergency resources and have impeded public safety.

California Attorney General Rob Bonta, along with 17 other state attorneys general, are putting pressure on NHTSA to issue a recall of the affected vehicles.

Sean Kane, founder and president of Safety Research and Strategies, a think tank and advocate for motor vehicle safety, filed a petition to NHTSA last month to compel the safety agency to reexamine the rule "in the wake of a continuing surge of Hyundai/Kia automobile thefts."

The letter points out that the whole reason for putting FMVSS 114 in place was repeated affirmation by the agency itself that "auto theft is a threat to safety."

Kane told Automotive News that the rule's intent is "directly tied" to what is happening with the Hyundai and Kia vehicle theft craze but that the lack of specificity gives NHTSA an "upper hand."

"The fact that they gave [Hyundai and Kia] a pass on the recall is really troubling," Kane said. "How is this not an unreasonable risk of motor vehicle safety, given the scope and magnitude of it?"

Kane said NHTSA is required by law to respond to within 120 days.

Fatalities and injuries

NHTSA has acknowledged that the Hyundai and Kia thefts have resulted in 14 crashes and eight deaths, but it's likely there are many more.

According to the Safety Research & Strategies petition, "In March and April alone, the news media reported another 24 such crashes, resulting in four more deaths (including a six-month-old boy), 28 injuries, nine of which were said to be serious injuries, and one house fire, in addition to structure damage and other vehicle damage, including two police cruisers, caused by drivers of stolen Hyundai/Kia vehicles."

Two of the fatalities were teenage boys in Buffalo, N.Y., who died after joyriding in a stolen Kia.

MLG Attorneys at Law of Costa Mesa, Calif., the firm representing clients in the multidistrict class action that just reached the proposed settlement, is representing the boys' mothers in a wrongful death lawsuit against the automaker that also claims immobilizers could have helped deter them from stealing the cars.

MLG also is representing a 25-year-old woman in Portland, Ore., Morgan Kornfeind, who was struck by a man in a stolen Kia driving the wrong way on an interstate while he was fleeing the police.

These are just two in a handful of wrongful death and injury lawsuits the automakers will have to answer to, according to Randy Shrewsberry, MLG's chief strategy officer, noting that the firm is just handling the two.

MLG is also representing a subset of over 100 consumers in California who are seeking damages from Hyundai and Kia separate from the $145 million of the recent $200 million settlement that was earmarked for affected owners in the class action.

Shrewsberry told Automotive News that his case is just beginning to work its way through the courts and that its plaintiffs are asking for varying amounts based on individual claims of their particular loss.

The payouts in the settled class action will be distributed equally, Shrewsberry said, likely based on categories of owners.

According to a release issued by the Hagens Berman law firm in Seattle, one of the lead firms on the class action, owners whose cars were stolen and not recovered could be entitled to as much as $6,125, while owners with car or property damage could receive $3,375.

Nothing will be confirmed until a judge reviews the settlement in July, according to court documents.

But Shrewsberry said it's still not enough, and nothing has yet been done to resolve the ongoing car theft that is still happening "daily."

"We still believe that a recall needs to be issued from NHTSA, if Kia or Hyundai aren't willing to do it themselves," he said. "And we are still pushing for congressional hearings, to have an understanding of why it is that we're here nearly a year later, and none of this is resolved."