Hertz Settles Claims of Illusory Rental Coverage

(CN) - Hertz Equipment Rental can pay $76.5 million to settle claims that it overcharged customers for loss and damage waivers and fake environmental recovery fees, a federal judge ruled.

In a 2006 class action, Miguel Pro and Davis Landscape claimed that Hertz's loss and damage waiver provided illusory coverage for a premium price, and that its environmental recovery fee did not reflect any expenses actually related to protecting the environment.

With Carella Byrne, Complex Litigation Group LLC and Seeger Weiss serving as co-lead counsel, the parties reached a settlement in March 2013.

U.S. District Judge Dennis in Newark, N.J., quickly granted the deal preliminary approval and finalized the settlement on June 20.

Hertz has agreed to reimburse certain customers up to 75 percent - totaling up to $3 million - of loss and damage waiver deductibles that they paid for damaged rented equipment.

One-time or sporadic customers, on the other hand, may elect to receive either discounts on up to four future rentals - totaling half of all loss and damage waivers they purchased - or a cash payment of 15 percent of the total they paid for waivers.

Hertz agreed to pay about $65 million in economic relief to the class, plus $11.5 million in attorneys' fees, including $1.3 million in hard costs class counsel incurred.

The company also agreed to plainly state the waiver and fee's deductible amounts on the first page of its disclosure documents from now on.

Judge Cavanaugh said the offer met all nine factors the 3rd Circuit identified in the 1975 ruling, Girsh v. Jepson.

"This court finds that the settlement agreement satisfies Rule 23(e) because the relief it provides the class is 'fair, adequate, and reasonable' pursuant to the 3rd Circuit's nine-factor Girsh test," Cavanaugh wrote. "Notably, none of the members of the class, numbering in the hundreds of thousands, have objected to the terms of the settlement."

Class counsel have had plenty of time - more than six years - to conduct discovery in the matter, the judge found.

"This matter has been extensively litigated through certification and multiple summary judgment motions, and numerous depositions of witnesses and experts have been conducted," Cavanaugh wrote. "Counsel was well-versed in the merits and complexities of this matter before beginning negotiations."

A trial is not necessary in this case, the court ruled.

"The risks of litigation in this matter include the risk of losing at trial or reversal on appeal," Cavanaugh wrote. "The settlement agreement provides substantial monetary and injunctive benefits without the inherent risk of being unable to establish liability during litigation. Accordingly, this factor also weighs in favor of approval."

Hertz is to pay class counsel within 10 days of final approval, the judgment states.

"It is clear that class counsel has been extensively involved in each aspect of this case from its inception more than six years ago," Cavanaugh wrote. "The court is therefore satisfied that the attorneys' fees requested are fair and reasonable."

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit