Posts Tagged ‘Heather Peters’


2006 Honda Civic Hybrid

On February 1, 2012, Heather Peters, owner of a defective 2006 Honda Civic Hybrid (HCH), was awarded $9,867.19 in her Small Claims Court suit against Honda Motor Co.  Ms. Peters has reached out to other disgrunteled HCH owners through her website DontSettleWithHonda.org.  She urges owners to opt out of the class action cases and sue Honda directly in Small Claims Court.

On January 3, 2012, the case, Heather Peters vs. American Honda Motor Co., Inc., was heard in Small Claims Court in Torrance, California (Honda’s US headquarters is in Torrance).  The court ordered an additional hearing on January 25, 2012, to tie up some loose ends.  Approximately 90 minutes of testimony was given on each day – a very long case for Small Claims Court.  We covered the case here.

This case has been closely watched both by Honda Civic Hybrid owners (model years 2003 – 2009) as well as the trial lawyers and big corporations.  Instead of settling for up to $200 and a $1,000 voucher towards the purchase of a new Honda or Acura vehicle, plaintiffs in a class action suit against Honda may opt out of the class action lawsuit and take their cases to small claims courts around the country, opening a floodgate of small claims court lawsuits that, in theory, class action claims were meant to stem.

Heather Peters with Neil Schmidt from Honda in Small Claims Court, Torrance, California.

Unfortunately, as most of us know, being included in some sort of class action – credit card fees, defective part, overpaid interest, etc. – doesn’t usually net you much. Sometimes you have to go back for years in your records to submit a claim.

For example, many people don’t have the time and inclination to spend hours going over credit card statements from 6 years ago to see how much they paid in foreign transaction fees. You have to read lengthy letters and small print and fill out confusing forms. You can remain in the class and (1) accept $10 for all the fees you may have overpaid during a 4 year period, (2) opt out of the settlement and sue the big corporation yourself (good luck), or (3) spend lots of time and effort going back over years of statements and submit a claim, with the appropriate paperwork, on a timely basis, in hopes of getting maybe $50 or $100.

Most people just give up and accept a small check that comes months or years after a claim is submitted and the matter is settled.

If you think that the only people who win in these cases are big corporations and an army of attorneys (on both sides), you’re not alone.  Ms. Peters was mad as hell and she wasn’t going to accept a paltry $200 from Honda while the attorneys made over $8 million.  And she won!

I’ll try and summarize the 26 page ruling by Superior Court Commissioner Douglas G. Carnahan:

  • Ms. Peters has the right to bring this case in small claims court.
  • She properly opted-out of the proposed class action settlement.
  • Both sides had stacks of “testimony” from happy HCH owners and dissatisfied HCH owners. The court really didn’t look at either of these submissions as dispositive of either Honda’s defense or Ms. Peter’s claims of monetary injury.
  • Ms. Peters paid $30,485.96 for her 2006 Honda Civic Hybrid on April 23, 2006 from Honda of Santa Monica.
  • She had always been dissatisfied with the fuel economy of her HCH. The EPA ratings of 50 mpg were never achieved and the performance of her HCH was closer to 40 mpg. Starting in March 2008, she began a series of technical consultations and repairs with the Honda dealer having to do with the hybrid operations of the vehicle. These lasted from 2008-2011.
  • In August of 2010, she received a “Product Update” from Honda to “fix” factory-installed software that made the hybrid battery deteriorate and fail before its normal useful life, particularly in warm weather.  It also rewrote the code for the start/stop engine function.
  • After the software update, the car’s performance deteriorated, not improved.  It went from around 40 mpg to 30 mpg.
  • Ms. Peters was eligible to participate in the class action lawsuit against Honda, Lockaby v. American Honda, pending in San Diego Superior Court. Under the settlement, she would have received $200 plus a $1,000 voucher towards the purchase of a new Honda or Acura vehicle.
  • Ms. Peters sued Honda for $122,113.46: (1) MSRP LX v. Hybrid premium, $5,440; (2) premium paid over MSRP for “Hybrid Premium,” $3,290; reduced resale value due to stigma, $5,208; actual increased gas cost to date, $1,110.48; future increased gas costs, $8,200; IMA battery replacement costs, $2,304.98; punitive damages for fraud, $91,585.09.  You go girl!

Findings of the court:

  • The court found that Honda had misrepresented the mileage of the 2006 HCH and that Honda’s advertising and printed literature was “misleading.”
  • Honda’s defense of “your mileage may vary” didn’t stick. The judge noted that drivers in large urban areas like Los Angeles are naturally going to experience stop-and-go driving and normally use their AC. Something Honda didn’t note anywhere in its advertising or literature.
  • Honda misrepresented at least one of the points of the Product Update (software) as the engine didn’t start sooner than represented. The engine in Ms. Peters’s car had trouble shutting off at stops, let alone restarting.
  • The court found Honda guilty of “negligent misrepresentation,” but not fraud. Fraud is very hard to prove.

Damages:

  • No punitive damages were imposed as the court did not find clear and convincing evidence that Honda concealed or misrepresented problems with the HCH generally, or with the software patch, out of oppression, malice or intentional fraud.
  • Damages, battery replacement: Ms. Peters is entitled to the replacement cost for the IMA battery, $2,304.98.
  • Damages, Federal Tax Credit: Ms Peters did not take the credit of $2,100 (bad tax preparer, IMHO) and Honda’s not responsible for her not taking it. Award, nothing.
  • Damages, fuel costs: For the period of purchase to the Product Update, the court awarded Ms. Peters $803.24 for the difference between 50 mpg and 40 mpg based on actual mileage.
  • Damages, fuel costs: From the date of the Product Update to the day the lawsuit was filed (December 2, 2011), when fuel economy dipped to 30 mpg from 40 mpg, the court awarded Ms. Peters $237.38.
  • Damages, loss of use:  Since Ms. Peters is keeping the car and there was no specific evidence before the court, Ms. Peters was awarded nothing.
  • Damages, diminution in value: The court found that Ms. Peters successfully argued that she was stuck with a car that had diminished resale value, and using Kelly Blue Book figures, the court awarded her $5,208 in compensation.
  • Damages, loss of future fuel costs: Ms. Peters claimed future loss of $8,200, assuming she keeps the car for 200,000 miles. The court applied a different loss methodology assuming she only kept the car for 150,000 miles, using the difference between 50 mpg and 40 mpg (assuming the replaced battery upped the fuel economy again).  Total award, $2,767.50.
  • Costs, prejudgement interest: The court awarded Ms. Peters $313.22 based on the battery replacement award of $2,304.98 over 496 days at 10% interest rate. [Where can I get 10% interest??]
  • Cost, filing and copying: The court found that Ms. Peters’ $247.87 for copying was reasonable and awarded her a reimbursement of her $85.00 filing fee.
  • Total award: $9,867.19.

Honda has already indicated that it intends to appeal the Small Claims decision to Superior Court in Los Angeles County. In Superior Court, Honda can bring in the heavy legal guns, including outside council Latham & Watkins.  It will be expensive for Ms. Peters to fight Honda in Superior Court, but in her February 1, 2012 press release, she says:

Honda has said it will appeal, but Heather anticipates being able to put on an even stronger case next time supported by additional evidence received through her website, including a Honda whistleblower.

No matter how this turns out, this is a public relations nightmare for Honda. This case has garnered national attention and it will continue to be closely watched.  And who doesn’t love whistleblower information? When you have the David v. Goliath thing going on, people tend to root for the underdog and Honda just comes off as the big bad corporation, not the gentle, humble, economical, earth-friendly, mass-market company Honda portrays itself in advertising.

Honda’s Japanese and American managers have done a terrible job here. This case should have been settled long before this legal action.

#dontsettlewithhonda


Update: January 10, 2012: The Court has ordered both parties back to Small Claims Court for more questions from the judge on January 25, 2012  Here’s the court order:

The court has reviewed the evidence currently before it, including some late-filed papers by the
plaintiff responding to the defendants previous motions.

Before making its decision final the court is concerned about one issue that, in the court‘s
opinion, was not adequately discussed at the hearing on January 3, 2012. This is the possible
effect on the plaintiff’s various theories of relief oft he statutes oflimitations that would be
a
pplicable to her theories.

So that the parties are given an opportunity to comment on this question, among any others they
wish, the matter is removed from submission and reset for further hearing on January 25, 2012,
i
n Department 8 at 1 :30.

Of particular interest to the court is whether, considering the date of purchase of the vehicle, the
pla
intiff is within operative statutes of limitation relating to claims of relief based on Civil Code
1770 et seq., Business & Professions Code 17200 et seq., Business & Professions Code 17500 et
seq .. and common law theories of intentional and negligent misrepresentation. Of further
interest i
s the effect of Code of Civil Procedure 338( d), the discovery rule.

The court is also interested in the parties‘ views of the effect of the presuit notice requirement of
C
ivil Code 1782.

Note that while the parties may be assisted by counsel in asserting their positions, counsel cannot
appe
ar in court nor sign presentations to the court. To that extent, the plaintiffs January 4
objection to the latest document signed by Mr. Peim is sustained, such that detailed consideration
o
f it is prevented. CCP 116.530.

Clerk to give notice.

Update: January 6, 2012: No ruling yet, but one is expected soon. See the video below of Ms. Peters being interviewed after her appearance in Small Claims Court:

Original post from January 2, 2011:

On January 1, 2012, the compensatory limit in Small Claims Court in California was increased from $5,000 to $10,000.  On January 3, 2012, Heather Peters, an owner of a 2006 Honda Civic Hybrid, will face down a non-attorney representative of American Honda Motor Co., Inc. in a closely-watched case of David vs. Goliath.  She is suing for the new maximum of $10,000.

2006 Honda Civic Hybrid

Ms. Peters and tens of thousands of other owners of model year 2003-2009 Honda Civic Hybrids are mad as hell and they aren’t going to take it any longer. For a few years now, five class action lawsuits against Honda have been winding their way through the courts.  The proposed settlement consolidates the cases down to two cases with subclasses:

In the first case, John True, et al. v. American Honda Motor Co., Inc., plaintiffs allege that the fuel economy estimates Honda advertised for the Honda Civic Hybrid could not be achieved under normal driving conditions. Honda has not acknowledged a defect, but they do acknowledge that due to technical problems, the cars get only around 30 mpg, not the 40 city, 42 combined, 45 highway, as advertised.

In the second case, Logan and Anita Lockabey, et al. v American Honda Motor Co., Inc., in addition to complaints similar to True, plaintiffs allege that a July 2010 Software Update to the Integrated Motor Assist (“IMA”) battery system for model years 2006-2008  Civic Hybrids negatively impacted the fuel economy and performance.

The proposed Honda Civic Hybrid Class Action Settlement is pretty paltry.  You get a whopping $100 if you are a member of the True class action and and additional $100 if you are also a member of the Lockabey class and sub-class (the software update).  As a “sweetener,” you get a voucher for either $500 or $1,000 (depending on your class and sub-class) towards the purchase or lease of a new Honda or Acura vehicle.  Some plaintiffs who had to replace their hybrid battery are eligible to be reimbursed for the cost of the replacement and Honda agreed to extend some warranties for a longer period.

Ms. Peters wasn’t happy with $100 in cash and a $500 voucher, so she opted out of the class action and pursued a novel course of action by suing Honda in Small Claims Court in Torrance, CA (the city where Honda has its US headquarters).  She is suing for damages including the “hybrid premium” paid over the price of a standard Civic, increased cost of gas due to getting only 30 mpg and reduced resale value of her car.  She may win up to the court maximum of $10,000 – far more than she would have received under the proposed class action settlement.

2006 Honda Civic Hybrid engine bay

This is a closely-watched case, needless to say.  If she wins, it could open the floodgates to individual small claims lawsuits against not just Honda but any company with class action litigation.   If a company had to defend itself against thousands of smaller suits – in all 50 states and hundreds of county jurisdictions – it could be very costly both in terms of total settlement dollars and human resources.

On the consumer side, a win may force corporations to increase class action settlements with plaintiffs. Perhaps if all the money wasn’t going to the trial attorneys (in the Honda class action, it’s estimated to be $8,474,000), less people would be pissed off enough to take alternative actions.   For example, if Honda had offered the people $1,000 cash plus a $4,000 voucher towards the purchase of a new Honda (and Honda would be required to take the technically-challenged Civic Hybrid in trade), Ms. Peters may not have opted for her more creative option.

In California, neither party is permitted to send an attorney – either in-house or outside council – to represent them in a small claims action.  The plaintiff, Ms. Peters, happens to be a former corporate defense attorney and is permitted to present her own case.  She probably has an edge over the average Civic Hybrid owner, but if she wins, other owners could use her tactics and adapt the evidence she will present to their specific set of facts and circumstances.

2006 Honda Civic Hybrid interior

Ms. Peters is encouraging other Civic Hybrid owners not to settle with Honda.  In a December 27, 2011 LA Times article, The Times estimated that 200,000 Civic Hybrids had been sold during the class action period. And due to resales, the number of people who could be eligible for compensation could be as high as 500,000.  Separately litigating possibly hundreds of thousands of small claims cases is a PR and financial nightmare Honda doesn’t want, but may get.

Even if Ms. Peters doesn’t win her case against Honda, other people who suffered damages could still try the same tactic in their local jurisdiction.  One judicial decision at the small claims level doesn’t necessarily mean the same results will happen in other jurisdictions – win or lose.  I predict this strategy will be used more frequently — much to the dismay of large companies and trial attorneys.

Here’s the press release from DontSettleWithHonda.org:

FOR IMMEDIATE RELEASEDecember 28, 2011 CONTACT: Heather Peters Info@DontSettleWithHonda.org

Viral Small Claims Case Could Sink 5 Class Action Settlements

and Cost Honda $2 Billion

Los Angeles, CA – Honda is on the brink of settling five class action lawsuits alleging false advertising of 50 MPG for its Civic Hybrids for pennies on the dollar, but one small claims case gone viral could change all of that and leave Honda facing liability of $2 billion instead and defending itself in thousands of small claims courts across the nation.

A front page article in the Los Angeles Times used the term “a small-claims flash mob” to describe the filing of a single small claims case against Honda in Torrance, California together with the launch of www.dontsettlewithhonda.org and its associated Twitter and YouTube sites that teach 200,000 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.

Heather Peters will have her day in small claims court on January 3rd and could win up to $10,000 (the new 2012 California small claims limit) 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. It may be the biggest little small claims case that Honda will ever face evidenced by the fact that the Associated Press is sending the same reporter who covered the trials of Conrad Murray, O.J. Simpson and Rodney King. Ms. Peters, a former corporate defense attorney, says:

“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. 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.”

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, and they may object again. Civic Hybrid owners have until February 11th to opt-out, or they can remain in the class and still object to the settlement.

Honda has attempted four different legal maneuvers to postpone the trial of Ms. Peters’ small claims case until after the deadline had passed for Hybrid owners to opt-out of the class action, but the small claims judge said “no” all four times and the trial will proceed as originally scheduled on January 3rd at 1:30 p.m. in Torrance Small Claims Court, Dept. 8, at 825 Maple Ave., Torrance, California. For more info about media access to the courtroom visit http://www.lasuperiorcourt.org/courtnews/ui/main.aspx

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