The Honda Civic Hybrid Class Action lawsuit is a ‘sweetheart deal’ for Honda!

The Peters vs Honda case is art meeting reality. In this case the manufacturer is Honda, and the problem is the Civic Hybrid and it’s batteries. Honda found it cheaper to defend themselves against the lawsuits rather than fix their cars.
By: Allen S Miller, HitmanPR
 
 
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Heather Peters
Honda Hybrid
Randy Sottile
CA Lemon Law Auto Expert
Batteries
Class Action

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Automotive
Industrial

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Arcadia - California - US

Feb. 22, 2012 - PRLog -- Opinions by Randy Sottile, Lemon Law Auto Expert
It’s a lot like the scene out of the 1991 Gene Hackman Movie “Class Action”, wherein the plot is for the automobile manufacturer to fight the cases brought against them in court rather than spend the money to fix the problem.  http://movieclips.com/CVpzd-class-action-movie-simple-actuarial-analysis/


In this case the manufacturer is Honda, and the problem is the Civic Hybrid and it’s batteries.  The hybrid batteries are failing, or as Honda calls it “deteriorating” This affects over 200,000 Civic Hybrid cars sold. This is not the movies – this time it’s real-life.

Honda apparently knew that their hybrid batteries were deteriorating. Did they recall the cars and replace the batteries with a new or improved hybrid battery? Answer –no. Question: “why not?”

In the movie “Class Action” they call it a ‘”retrofit” - more commonly known as a “recall”, replacing the defective part with an updated or improved one. In the movie, they used what was called a “simple actuarial analysis” to assess their potential losses. In simpler terms, ‘what is the cost of fighting lawsuits and lemon law claims nationwide vs. doing a retrofit/recall on the hybrid battery packs?’.

With Honda apparently knowing that their hybrid batteries were deteriorating, did they recall the cars and replace the batteries with a new or improved hybrid battery? Answer –no. Hondas “solution”  was to update’ the computer software to slow down the battery deterioration. The bad news for Honda was that it got hit with multiple Class-Action lawsuits over the hybrid fuel economy and software updates. But was it really “bad news” for Honda? I don’t think so.

Let’s take a closer look using an “actuarial analysis”, at how a Class Action Lawsuit can turn a multi-million dollar problem into a less expensive way for a manufacturer to get out of a potential legal, public relations and expenditure headache. Usher in the Class-Action lawsuit, and how in my opinion, it is a “sweetheart deal” for Honda.

Let’s ‘take a look at the numbers…’
If Honda were to be forced buy back 200,000 cars by consumers filing lemon law claims, at $30,000 per car they could stand to lose upwards of $6 BILLION dollars. That doesn’t even figure in attorney’s fees. What if they just replaced all the $2,000 battery packs with an improved version? That’s about $400 million, not counting labor.

So, they are trying to “settle” a Class Action lawsuit, one that
1.   All members in the class that don’t ‘opt-out’ by February 11, 2012 lose their right to take legal action against Honda.
2.   Gives each class member a minimal amount of $100-$200, and an instructional video.
3.   Gives each member an additional warranty.
4.   Gives each member a discount voucher for $1,000 if they want to buy another new Honda

What does this “sweetheart deal” of a Class Action Lawsuit cost Honda to get out from under the potential financial “headache” of lemon law lawsuits or a recall? The Class Action costs Honda about $8 million in paid-out attorney’s fees to the Class Action firm(s) bringing the lawsuit, and based upon $200 per consumer, another $40 MILLION in cash payouts. That’s still less than $50 million dollars. Compare THAT to the price of a recall of an updated replacement battery pack ($400 million), or buying the cars back ($ 6 BILLION), and you can begin to see how the Class Action Lawsuit, financially, is a “sweetheart deal” for Honda.
Now, for the “loser” in this game. It’s the consumer who owns the Honda Civic Hybrid with the potential Class Action settlement. You get your $100-$200. You get a video. You get a voucher – and you have a car that gets less gas mileage than you bargained for, and even less gas mileage once the “software update” is done to your car. These are the allegations made by the vehicle owners. In any decision to choose to “opt-out” of a “class” (the Honda Civic Hybrid or any class action), a consumer should first have  their situation reviewed by an attorney, as there are ‘statute of limitations’ and other potential legal issues that need to be examined before a final decision is made). Settling a Class Action lawsuit also tends to put a “lid” on a potential public relations nightmare.

There are scores of Class Action lawsuits filed every year – with consumers receiving letters that automatically included them in the “class” if they don’t send back a “opt-out” form. Let’s be real here. How many people really pay attention to a Class Action notice they receive, and take the time to read it, yet alone mail-back a “opt-out” letter to preserve their legal rights.
In this writer’s opinion, as with all my opinions expressed above, the legal foundation of Class-Action lawsuits should be changed. When a Class-Action lawsuit is filed, the affected owners should NOT be automatically ‘in’ the ‘class’, but rather receive a notice for them to ‘sign up’ for the ‘class’ if they want to. Otherwise, they would not be part of the class.
There still may be hope for the some of the owners of the Honda Civic Hybrids involved in the Class Action lawsuit. The Attorney Generals Offices in multiple states are looking into the pending approval of the Honda Class Action lawsuit, and may put a hold on it getting completed. It’s too soon to tell.

I encourage every consumer to write a letter to their Congressman or Congresswoman, to your State Attorney General’s Office and other state/governmental resources and voice out loud how you feel about the way Class Actions are being done.

The power of ‘social media’ has been proven to change the course of how large corporations in America conduct business. The old “David vs. Goliath” of consumers vs. big corporations has changed completely. The recent Twitter on Bank of America proved that quite nicely.

The question remains, is Honda going to get out of this situation with the pending approval of the Class Action lawsuit “settlement”? Time will tell – and the voice of the public through social media may indeed change the whole game….

The opinions expressed by the author, Randy Sottile, who is a lemon law auto expert for California’s largest automobile lemon law attorney fir, The Law Offices of William R. McGee.

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Tags:Heather Peters, Honda Hybrid, Randy Sottile, CA Lemon Law Auto Expert, Batteries, Class Action
Industry:Automotive, Industrial
Location:Arcadia - California - United States
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