Honda headed to court tomorrow for false advertising of hyped up Hybrid Civic claims

Posted by | January 02, 2012 | Disputes, General | 4 Comments

Honda is defending five separate class action lawsuits in various California state courts.  The false advertising suits allege that Honda misrepresented the fuel economy of its Honda Civic Hybrid model automobiles sold during 2003-2009.  Honda advertised that its Civic Hybrid got approximately 50 miles per gallon (MPG) when in fact it got around 30.  I find it more than a little ironic that Civic Hybrid’s current website prominently says 30 MPG (even though that refers to a customizable display and not to the current model’s MPG which Honda claims to be around 40).  Not only did the 2003-2009 Hybrid Civics not deliver the gas mileage performance promised by Honda, but then in July 2010 Honda released a software update to address the gas mileage problem in its 2006-2008 Hybrid Civic models, which update apparently exacerbated the problem instead.

Honda set up a website with information for members of the Class.  The website was last updated on October 17, 2011 and states, “[i]f you purchased or leased a Honda Civic Hybrid model year 2003 through 2009, you are a member of the Settlement Class and you may be entitled to a cash payment and other benefits.”  The proposed settlement is explained in a 6 page Notice issued by the Honorable Timothy B. Taylor of the Superior Court of the State of California in San Diego on October 3, 2011.  The Notice requires all members of the Class to opt-out by February 11, 2012 or they will automatically be included in the settlement.

The terms of the settlement are:

(1) Cash payments of $100 to each person who bought a Honda Civic Hybrid between 2003-2009 (with an additional $100 going to those who purchased the car during 2006, 2007 or 2008), plus;

(2) A $1,000 non-transferable rebate certificate on a new Honda or Acura or a $500 fully transferable rebate (with an additional $500 going to those who purchased the car during 2006, 2007 or 2008).

According to an article in LA Times, Heather Peters is one of the unlucky folks who purchased a 2006 Honda Civic Hybrid.  Peters was as disappointed with the low gas mileage as she was with the low compensation offered under the class action settlement — pennies on the dollar — so she opted-out of the class action suit and instead filed a California small claims suit.  According to the LA Times article, only non-attorney employees may represent companies in small claims court in California, which levels the playing field between Peters and Honda.  California small claims awards may be up to $10,000 in damages, far more than the $100 Peters could receive in the class action settlement.  Peters seeks damages for the “hybrid premium” she paid, her increased gasoline costs due to getting just 30 MPG and the reduced resale value of her car, which could well be in the $10,000 range.

Peters didn’t just file a small claims suit against Honda, however.  She also launched a website (DontSettleWithHonda.com) to help others opt-out of the class action suit and learn how to file their own small claims action.  In big red letters on the homepage of the site, it states: LAWYER’S GET $8,474,000.00!  On December 28, 2011 Don’tSettleWithHonda.org issued a press release announcing the time and location of Heather Peter’s January 3, 2012 court date against Honda.  If her case is successful, Peters’ hopes it will cause others to opt-out of the class action settlement and instead file their own small claims suits.

There’s a big disparity between the amount sought in legal fees and the amounts awarded to the Class members (save the lead plaintiffs who each get between $5,000 – $12,500).  I know these attorneys take on huge financial burdens and risk to bring these cases, but how “successful” is a case when the majority of class members get pennies on the dollar?

 

About Lara

Lara Pearson is a trademark attorney with Exemplar, where she also serves as the firm's Sustainability Steward. Lara's legal practice focuses on trademark and copyright law, including: intellectual property audits; trademark search & clearance; trademark and copyright registration & maintenance; intellectual property transfers; transactional work; and dispute resolution, including litigation when necessary. Lara primarily represents other social enterprises -- those leveraging their businesses and brands as catalysts for positive social and environmental change. Such businesses engage in CSR (Corporate Social Responsibility) to have a positive "triple bottom line" of people, planet and profit. As Exemplar's Sustainability Steward, Lara works with others in her law firm to measure and reduce the firm's carbon emissions and encourage engagement in social responsibility initiatives, including pro bono legal work and volunteering. Lara is a proud member of the Social Venture Network. Brand Geek is a member of 1% for the Planet and a Certified B Corporation, whose Incline Village office is certified under the regional Keep the Sierra Green program. Exemplar Companies is the most innovative professional services firm in the New Economy. Our unique, diversified expertise spans the disciplines of corporate law, business advisory, and capital/investment banking to better meet the needs of our high-potential customers. We have assembled a comprehensive suite of service to meet the complex issues facing companies in today’s challenging business environment. Our unique, holistic approach ensures the growth and success – and greatly increases the competitive advantage - of our customers. The Exemplar team is comprised of knowledgeable, highly skilled experts in a wide range of industries and disciplines. They work closely with our customers to provide trusted advice, incomparable support, expert guidance and the ultimate competitive advantage as they accelerate their businesses and position themselves to transform industries.

4 Comments

  • Bob Tregilus says:

    Boy this story sure got around the ‘net! I’ve had several friends email it to me. So we see the judge “didn’t issue a ruling Tuesday, saying that he would review the case and mail his decision” (LA Times).

    Frankly, I don’t see where the complainant has any standing.

    The EPA requires the automakers to post the “estimated” gas mileage stickers on every car. The EPA mileage estimates are ubiquitously used to advertise the vehicles, and generally all sales materials carry the caveat that “your actual mileage may vary.”

    Amusingly, in 2007, the EPA revised the way they test gas mileage. The 2006 Honda Civic Hybrid was revised downward to 40mpg city and 45mpg highway with a low rating of 30mpg and a high of 72mpg .

    Also, Car and Driver and many others did new product reviews in 2005 of the 2006 Honda Civic Hybrid. Here’s what Car and Driver said:
    “The EPA testifies that the Civic hybrid gets 49 mpg in city driving and 51 on the highway. But those numbers are rarely achieved. To get mileage in the high-40-mpg range requires gradual acceleration, timid cruising speeds, and cautious use of the throttle. Suffer a short lapse in concentration or accelerate immoderately, and fuel economy will suffer. Fact is, to do this right, you will drive more slowly than you ever have….Over about 1000 miles of mostly highway driving and with a variety of uncaring editors who cheated their way through ninth-grade algebra, we got 40 mpg, far short of the EPA figures but nonetheless translating almost into the lofty 500-miles-per-tank plateau. The Prius we road-tested in February 2004 managed 42 mpg in our hands” .

    I think Honda is the victim here–although, admittedly they should post honest, real world, gas mileage ratings despite what the government tells them to do. I wonder what these sorts of legal actions will look with electric vehicles–and the mind numbing EPA Miles Per Gallon equivalent (MPGe) rating? ;)

    You’d think a former lawyer would *still* read the fine print–and as for the class-action trolls, well…

    • Lara says:

      Thanks for making the time to read and comment on my post, Bob. Class action lawsuits for false advertising by unsubstantiated green marketing claims (apparently including hybrid vehicle gas mileage) are the new thing in the “plaintiff’s bar,” haven’t you heard? Seriously though, I think all class actions are useful to remedy certain wrongs (like toxic torts), but I question their effectiveness when they only benefit a few people.

      The complainant has standing cause she would be a member of the class — someone who purchased a Hybrid Civic between 2003-2009. The real issue is whether Honda engaged in false advertising and if so, what damages did Ms. Peters suffer as a result, if any? I imagine Honda submitted the customary percentage of error (or whatever the proper term) for MPG ratings and that plus any disclaimer sure help Honda’s case. On the other hand, if Honda made a material representation (MPG) on which the purchaser relied when making her purchase, and such representation turns out to be false to the detriment of the purchaser, then I think the purchaser is not only entitled to sue, but should be entitled to whatever her provable damages may be.

      I wasn’t aware of the “actual mileage may vary”

  • Mike Rebate says:

    Are we to presume this legal eagle wasn’t aware of class action injustice prior to her involvment with this issue? What prevented her (or thousands of other lawyers) from addressing the issue previously and attempting to reform the system.

    Class action justice is rigged to unjustly benefit corporations and members of the legal profession at the expense of the hapless masses. I suspect the only reason members of this dishonorable profession embraced the incentive award for class reps was a self serving. They determined offering a petty financial inducement for those who might otherwise be reluctant to step forward would ultimately serve their financial interest.

    Many class action issues could/should be resolved by the state attornery generals, with a few percent of the settlement going to the individual citizen (sometimes referred to a private attornery general) who identifies and exposes corrupt practices.

    • Lara says:

      Thanks for reading and commenting on my post, Mike. I appreciate that you took the time to do so. I am certain that Ms. Peters DID know about the class actions prior to her small claims suit. In fact, it was Peters’ dissatisfaction with the remedy offered via the Class Action settlement that sent her on what some in the media have categorized as a “crusade” against the class action settlement. While take issue with your comment that the legal profession as a whole is dishonorable, I don’t think it is in the best interest of the “hapless masses” — as you put it — to craft a settlement that leaves them inadequately compensated. Few issues get AGs riled up enough to take action. I think class action lawsuits can be a good means to an end, but only when the end is just. In the case of the Civic Hybrid justice will not be served. Of course, the first proposed settlement of one of the 5 class actions was rejected, so this one may well be too, though the only thing that guarantees are more legal time (and fees) spent coming up with a suitable settlement. A vicious cycle indeed.

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