Hertz Loses $53.4 Million Class Action

RENO, Nev. (CN) - Hertz must pay $53.4 million in class damages for deceptively advertising its fees at Nevada airports, a federal judge ruled on Oct. 30.

U.S. District Judge Larry R. Hicks ordered Hertz to pay $42.3 million in restitution and $11.1 in interest for concealing costs it passed on to customers who rented vehicles primarily at airports in Reno and Las Vegas.

Car rental companies at Reno and Las Vegas must pay a percentage of their gross revenue to the airports as concession fees.

"These companies, including Hertz, pass along the fees to their customers as surcharges labeled 'airport concession recovery fees,'" Hicks wrote.

But "Hertz 'unbundled' the surcharges from the base rental rate, such that the rental rate quoted to customers did not include the additional 'airport concession recovery fee,' which was itemized separately in the rental agreement," Hicks ruled.

However, Nevada law requires that car rental and leasing companies must advertise a rate "'that includes the entire amount except the taxes, any fees paid to airports and any charges for mileage that a short-term lessee must pay to lease the car for the period to which the rate applies,'" according to the original complaint, which cites the Nevada statute.

Hicks denied Hertz's motion seeking a refund of any unclaimed awards.

"Unclaimed funds revert to the defendant if 'the defendant had followed the letter of the law and could not have anticipated its liability,'" Hicks wrote. "The court finds that cy pres may be appropriate in this case and grants leave to the parties to move the court to establish a cy pres fund once the amount of unclaimed awards becomes more definite."

Lead plaintiff Janet Sobel filed the lawsuit in October 2006. The amended complaint defines the class as anyone who rented a car from Hertz at a Nevada airport between Oct. 13, 2003, and Sept. 20, 2009.

Sobel said the Reno and Las Vegas airports had to pay 10 percent of their gross revenues to the airports as concession fees.

But to advertise lower rates, Hertz agencies at most airports across the country would "pass through airport concession fees to their customers as surcharges," Sobel claimed.

"(H)owever, concession fees are imposed on the rental car firms by the airport authorities; concession recovery fees are a different charge that was created by the rental car firms, which those firms impose on renters in order to maximize their revenues while maintaining artificially low base rates," Sobel said.

The class accused Hertz of deceptive trade practices and unjust enrichment. The court in March 2013 partly granted the class's motion for summary judgment.

The class was represented by G. David Robertson of Robertson & Benevento in Reno, David B. Zolotnick in San Diego, and Susan F. Thomas of Berger & Montague in Philadelphia.

Hertz was represented by Anna McLean and Dan C. Bowen of Sheppard Mullin Richter & Hampton in San Francisco.

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