Roughly 200 insurers cleared a jurisdictional hurdle in their bid to recover theft-related subrogation losses directly from Kia and Hyundai's South Korean parent companies.
The US Court of Appeals for the Ninth Circuit on September 14 reversed a district court's dismissal of the subrogation claims against Hyundai Motor Company and Kia Corporation for lack of personal jurisdiction. The court held the insurers plausibly alleged specific jurisdiction in California, where the multidistrict litigation over vehicle thefts is consolidated, though it sent one remaining element of the jurisdictional test back for further proceedings.
The insurer class paid claims to policyholders whose Hyundai and Kia vehicles - certain models from 2011 to 2022 - were stolen or damaged in thefts or attempted thefts. The vehicles allegedly lacked engine immobilizers, anti-theft devices that prevent a car from starting without an authorized key. A method for bypassing the ignition system using a screwdriver and USB cable went viral on social media in 2020, and thefts of the affected models surged nationwide.
The Korean parent companies had argued they sat outside the reach of US courts. Their American subsidiaries - Hyundai Motor America and Kia America - imported the vehicles under "free on board origin" terms, meaning title and risk passed to the subsidiaries at the point of shipment in Korea. The subsidiaries handled all import logistics and distribution independently, the manufacturers said.
The Ninth Circuit was not persuaded. Shipping records showed the Korean entities were listed as shippers of record on bills of lading, with more than 70% of Hyundai's US-bound shipments and roughly 77% of Kia's routed through California ports. Their declarations did not deny they controlled where the vehicles were shipped. The court held these were deliberate contacts with California, not a passive placement of goods into the stream of commerce.
The court also pointed to a design decision: the manufacturers sold US-market vehicles without engine immobilizers while equipping the same models with the technology as standard in Canada and elsewhere. That design choice, combined with the volume of shipments through California, showed the Korean entities purposefully directed their conduct toward the forum state.
One question remains open. The court remanded for the district court to determine whether exercising jurisdiction would be reasonable - the third element of the specific jurisdiction test. The burden now falls on the manufacturers to show it would not be.
For insurers in the subrogation track of the Kia-Hyundai theft MDL, the reversal keeps open the prospect of pursuing the Korean parent companies directly. No determination has been made on the merits.
