Honda Small Claims Case Could Affect Class Action Settlements

Heather Peters, a Honda Civic hybrid owner unhappy with a proposed settlement relating to a class action lawsuit alleging Honda falsely advertised the gas mileage of the car as 50 miles per gallon, instead paid $75 to file a small claims action in Torrance, Calif., the home of Honda’s U.S. headquarters.

According to a report by USA TODAY, Honda postponed the action five times. A press release on Peters’ website, www.dontsettlewithhonda.org, suggests Honda attempted to delay the case in order to adjourn it until after the deadline had passed for Hybrid owners to opt-out of the class action.

A decision in the trial, which took place yesterday, is expected by Friday. Peters could win up to $10,000 in damages including the “hybrid premium” she paid over the sticker price, her increased costs of gas due to getting just 30 MPG and the reduced resale value of her car.

If other claimants follow her lead, she estimates Honda could be forced to pay $2 billion in damages. No high-priced lawyers are involved and the process is streamlined.

“I would not be surprised if she won,” said Richard Cupp Jr., who teaches product liability law at Pepperdine University. “The judge will have a lot of discretion and the evidentiary standards are relaxed in small claims court.”

A win for Peters could encourage others to take this simplified route, he said.

Peters launched the website and associated Twitter and YouTube sites to teach other disgruntled Civic Hybrid owners nationwide how to “just say no” to a $100-$200 proposed class action settlement (where lawyers get $8.474 million) and take Honda to small claims court instead, where at least in California, lawyers are not allowed.

“I was shocked,” she said. “I wrote to Honda and said I would take $7,500, which was then the limit on small claims in California. It is going up to $10,000 in 2012.”

She said she also offered to trade her hybrid for a comparable car with a manual transmission, the only thing she trusted at that point.

“I wrote the letter and I said, ‘If you don’t respond, I will file a suit in small claims court.’ I gave them my phone number,” she said. “They never called, and I filed the suit.”

She said she also sent emails to top executives at Honda with no response.

“Class actions are great for little cases, but not for cases like this where Honda’s false advertising is costing already cash-strapped families more every day at the gas pump,” said Peters. “It’s time for Honda to go one on one with its customers where they can’t hide behind high priced lawyers. I want people to know that small claims court is not so scary, it’s a lot like Judge Judy,” the former corporate defense attorney said in statement on the website.

Filing a complaint in small claims court does offer benefits to private citizens, according to Michael Packer, supervising attorney for insurance coverage and bad faith matters for the law firm of Marshall, Dennehey, Warner, Coleman & Goggin Florida office.

“Small claims court is one of the truest remaining forms of personal participation in our legal system citizens can have,” Packer said. “They provide access to the court system for those that cannot afford attorneys or have claims that just aren’t financially feasible for attorneys to handle. In addition, in most jurisdictions, the formalities of the rules of civil procedure do not apply unless stipulated to, so that the lay person does not have to worry about getting caught up in the technicalities that the rules can impose.”

Besides the relaxed rules, a person only needs the filing fee and the cost of having the local sheriff’s office serve the Summons and Claim Form in order to file a small claims suit, Packer said.

“In most jurisdictions, court personnel will assist people in completing the necessary forms. Typically speaking, actions brought in small claims courts can be resolved through trial or settlement in under 90 days,” he said.

According to Packer, the benefits to the plaintiff create the greatest problems for the defendant.

“Everything that is great about the small claims courts for the individual is what makes it a difficult proposition for insurance companies or really any corporation,” he said.

A limited time to respond and proceed with the case in small claims court can prove frustrating to business owners and their insurers.

“While an individual can represent themselves in small claims court (or really any court), a corporation must have an attorney, so right off the bat, they are incurring expenses, often times more in expenses for attorneys than the claim is worth or what is being sought,” Packer said. “In addition, insurance companies and corporations are not equipped often times to deal with the time constraints imposed on them in small claims court, where often times the judge requires the parties to mediate the dispute at the pre-trial conference go to trial within 60 days.”

Lax civil procedure coupled with plaintiff sympathy can further annoy defendants.

“Small claims court judges are often sympathetic to pro-se plaintiffs allowing them to amend pleadings or seek discovery informally or loosely apply the rules of evidence,” Packer said. “All of this leads to expenses which likely far exceed whatever is being claimed.”

If other claimants follow her lead, she estimates Honda could be forced to pay $2billion in damages.

It remains to be seen if the San Diego judge presiding over the five class action lawsuits against Honda for false advertising will approve the proposed settlement on March 16, 2012. A prior proposed settlement was rejected by the court when the Attorney Generals from twenty six states, including California, objected to it as unfair to consumers. Civic Hybrid owners have until February 11th to opt-out, or they can remain in the class and still object to the settlement.

(Linda Deutsch, Special Correspondent to the Associated Press contributed to this article)