Milwaukee Hopes To Be Bellwether In Kia/Hyundai Suit

Alderwoman Milele A. Coggs (left), City Attorney Tearman Spencer (center) and deputy city attorney Robin A. Pederson (right) address reports on the steps of the Milwaukee Federal Courthouse. Photo by Jeramey Jannene.

Milwaukee could be placed front and center in a lawsuit ultimately involving dozens of cities against automakers Kia and Hyundai for their frequently stolen vehicles. It’s a position that city officials hope would increase the size of a future settlement by potentially several million dollars.

City Attorney Tearman Spencer, in a press conference Wednesday morning, said the city hopes to be used as a bellwether in a multi-jurisdictional lawsuit based out of the federal court in the Central District of California. Rather than each city involved trying its own case, the City of Milwaukee would be used as one of a handful of test cases for the combined lawsuits.

“We would be in a great position when it comes time for settlement. Milwaukee would be placed in a position where it would be viewed a little higher than the others,” said Spencer.

Seattle-based law firm Keller Rohrback will represent the city. It filed a lawsuit on behalf of the City of Seattle in late January and added the City of Madison as a plaintiff earlier this month.

“Our firm has indicated that they’re going to do their best to see that we become a bellwether city, ” said deputy city attorney Robin A. Pederson. He said it would be “months at least” before that decision is made.

Spencer said he expected the city’s case to be filed today. The City Attorney held the press conference on the steps of the Milwaukee Federal Courthouse, 517 E. Wisconsin Ave., but said he hopes to e-file the case after formalizing an agreement with the law firm.

“Unfortunately, we didn’t get in the forefront of being the first to file,” said Spencer. The City Attorney said he brought the recommendation to hire the Seattle firm in December, after analyzing several others. Council members spent several meetings in closed session discussing strategy options before authorizing a lawsuit Tuesday.

“We could have had this thing filed in January at the latest,” said Spencer. “I don’t want to get into the particular problems or why we had to wait until this point.” Several sources familiar with the discussions confirmed that the city was considering different strategies, including joining the larger case or pursuing a stand-alone lawsuit with a different firm.

Keller Rohrback has previously delivered for the city. It was the co-lead counsel in the four December 2022 settlements reached with electronic cigarette company JUUL Labs. The $1.2 billion agreement, with several plaintiffs, involved the city receiving $2.5 million.

The Kia-Hyundai lawsuit is expected to take several months at minimum to play out. “The damage didn’t occur overnight and the settlement won’t occur overnight either,” said Spencer.

The theft surge first began appearing in local crime stats in the fall of 2020, and by 2021 there were a record 10,487 thefts reported. In 2022, it became a national issue. Thieves, often children in Milwaukee, exploit a series of vulnerabilities in the vehicles to easily steal them. Spencer called the city “ground zero.” Mayor Cavalier Johnson, on Monday, said he usually likes it when the city is a leader, but not in this case. He called the companies’ response to date a “slap in the face.”

Many Kia and Hyundai vehicles manufactured in the past decade lack an immobilizer (key fob) that prevents the starting of the vehicle. The vulnerability is compounded by the fact that the vehicles have an ignition that can be started by breaking the steering column and using a USB cable to gain the torque to turn a metal piece. More than two-thirds of all vehicles stolen in Milwaukee in 2021 were made by Kia or Hyundai. The vulnerability is present in many Kias made between 2011 and 2021 and Hyundais between 2015 and 2021.

Kia and Hyundai first provided the city free steering wheel locks, but victims regularly post photos on social media of cut locks. In 2022, the companies began offering a hardware fix that costs several hundred dollars and only prevents the vehicle from being driven away, not from being broken into. In February, Hyundai announced a phased rollout of a free software fix to many of its vehicles that promises to largely stop the issue, but Kia did not offer a date for its offering.

The City of Milwaukee is pursuing not just an end to the theft epidemic, but recovery of costs the city has incurred.

“It is my hope that not only do we curb the thefts, but that the City of Milwaukee recovers some of the damages for police, fire, [Department of Public Works], for any of the costs we have had to incur for the negligence of Kia and Hyundai,” said Alderwoman Milele A. Coggs. The alderwoman and her colleague Khalif Rainey have worked to bring public attention to the issue since 2021 and she noted that the city has written letters to the companies attempting to get the company to help address “the defect” in their vehicles. She praised her colleagues for unanimously agreeing to authorize the lawsuit.

Spencer said the city was using an outside law firm for its expertise and experience. “This is a very expensive, very costly matter, well up in the millions to try to prosecute,” said the City Attorney. “The city will not incur any costs as we move forward.” The firm would be paid as part of a settlement.

The city’s lawsuit does not cover any costs for those who have had their vehicles stolen or damaged. “The consumer actions are a whole total different matter,” said Spencer. A separate, privately-filed class-action lawsuit is expected to cover those individuals. It is expected to be combined with the municipal lawsuits.

The City of Milwaukee suit will be first filed in the Eastern District of Wisconsin, then consolidated with the other suits. Spencer, at the press conference, declined to discuss in detail the legal strategy, though the forthcoming complaint is expected to lay out the city’s claims. The initial claim, filed for the City of Seattle, notes Kia and Hyundai’s failure to adopt immobilizers alongside other automakers as a cost-driven decision. The companies installed the immobilizer in vehicles for other countries and in some of their U.S. vehicles. The Seattle complaint alleges the companies continued to fail to act when remedies were available, compounding the public safety costs to cities as the problem spread nationwide.

“Hyundai and Kia’s decision to put cost savings and profits over public safety has had significant consequences for the City of Seattle and its residents, as it has in other cities. The failure of Defendants to install a common-sense anti-theft technology, notwithstanding decades of academic literature and research supporting the deterrent effects of such technology, has caused a substantial spike in Hyundai and Kia vehicle theft and related crime sprees, reckless driving, and public harm,” says the complaint.

A group of 23 attorneys general, led by Wisconsin AG Josh Kaul, sent a letter Monday to Kia and Hyundai asking the companies to address the theft issue. The letter is a potential precursor to a lawsuit. “This is not an accident. It isn’t just bad luck that Kias and Hyundais have been stolen,” said Kaul, who also accused the companies of dragging their feet.

Keller Rohrback previously sued Kia and Hyundai in 2019 over a design defect that resulted in engine failures and fires in more than 2.1 million of their vehicles. A settlement was approved in February that is to extend engine warranties and provide reimbursements for repairs and associated costs.

MWH Law Group, which has served as an outside attorney on a growing number of city cases, will support Keller Rohrback’s theft litigation as it relates to Milwaukee.

A copy of the Seattle complaint, which cites Urban Milwaukee’s reporting, is available for download.

UPDATE: Milwaukee filed its suit following the publication of this article. A copy of the complaint is now available.