Group puts the brakes on Honda class action settlement

By Chris Rizo | Feb 23, 2010

Ted Frank

WASHINGTON (Legal Newsline)-An otherwise dreary Monday in the nation's capital turned especially bright yesterday for noted legal reformer Ted Frank after learning he helped to keep nearly $3 million out of the pockets of trial lawyers - at least for now.

Frank, who runs the Washington-based Center for Class Action Fairness, had objected to a proposed settlement in a lawsuit against American Honda Motors Co. Inc. that alleged the car company defrauded thousands of consumers out of nearly $7,000 when they purchased the Honda Civic Hybrid instead of a conventional Honda Civic.

Torrance, Calif.-based American Honda Motors Co. was originally sued in 2007 over mileage claims it made about its Honda Civic Hybrid, model years 2003 through 2008.

The proposed settlement had called for $2.95 million to go to the plaintiffs' attorneys, while the 158,000 consumers they represented in the California case would get unlikely-to-be-redeemed coupons that could have been used toward the purchase of a new Honda or Acura.

"These kinds of settlements are far too common," Frank told Legal Newsline on Tuesday, noting that class action settlements are supposed to provide meaningful relief to the class not just a fat check to trial lawyers pursing the case.

Under the rejected settlement, to be eligible class members would have had to "follow a contorted procedure to claim their coupons," Frank's motion to the court said. He noted that the settlement would have required coupon recipients to watch a fuel economy video of unknown length, even if they no longer owned a Civic Hybrid.

"This settlement recovers a pittance for the class, while plaintiffs' counsel is paid $2.95 million -- in cash, not DVDs or rebates," Frank quipped in his motion to U.S. District Court Judge Virginia Phillips in the Central District of California, urging her to reject the settlement.

In a 66-page tentative order, she did just that. Litigation in the long-running case may now move forward, Frank said.

Class counsel in the case was the Chimicles & Tikellis LLP firm in Haverford, Pa., Blecher and Collins of Los Angeles and the Washington firm of Cuneo Gilber & Laduca LLP.

Frank's nonprofit Center for Class Action Fairness objected to the settlement in December on behalf of class member Robyn Major of Philadelphia, Pa.

Under the proposed settlement, also opposed by 25 state attorneys general, the class members would have been able to choose between two rebate coupons.

One would allow for a $1,000 rebate on the purchase of certain new Honda or Acura vehicles before Oct. 31, 2011, if the class member trades in their Civic Hybrid; or they could get a coupon that allows a $500 rebate with no trade-in requirement.

A third option allowed class members to receive $100, but only if the class member complained about fuel economy to Honda before March of last year.

"Class members who are signed into a long-term lease or who simply cannot afford to buy a new car are barred from any benefit whatsoever," Frank argued in court papers.

Objecting to the proposed settlement were the attorneys general from Alabama, Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Iowa, Maine, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, New Mexico, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Vermont and West Virginia.

The case is True v. American Honda Motor Co., Case No. 07-cv-00287.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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