Money, not Hybrid Cars, is the Green in Honda Civic Class Action Settlement

Honda Civic Hybrid owners everywhere feel they’ve been cheated.  Or at least that’s what their class action lawyers have said. Numerous lawsuits have been filed in the past several years alleging that Honda misled consumers in advertisements on the amount of miles per gallon their Civic Hybrid would get.  Honda denies these allegations, but has decided to settle a number of lawsuits filed against it by paying up to $200 to each purchaser of the Civic Hybrid between 2003 and 2009.

The seven plaintiffs’ lawyers for the settlement have requested $8.474 million for their services – as compared to $200 for each plaintiff.  

This amount seems especially exorbitant when compared to what is likely to be paid out in the settlement.  Approximately 120,000 people bought Civic Hybrids between 2003 and 2009.  The compensation package for these owners will amount to $24 million (120,000 owners X $200 per owner). Accordingly, the plaintiffs’ lawyers’ fee ($8.474 million) is 35.3 percent of the amount being given to ALL owners – seven people are getting 35.3 percent of the compensation given to the group of 120,000 class members.

The disparity becomes even more pronounced if one considers that in most class action settlements, only a small percentage of the class members actually claim their “reward.” What if only 50 percent of the 120,000 fill out and mail the claim form? If based on that number, the actual number of claimants (something the judge won’t take into consideration, though, when setting the fee), the fee percentage rises to a whopping 71 percent!

If this were a freely negotiated, free market, contract between the plaintiff’s lawyers and the class, then I would say “so be it.”  But instead, the $8.474 figure is named by the lawyers themselves and is approved (or not) by a judge.

This has led to an out-of-control plaintiffs’ bar that routinely secures payments of 25 to 35 percent (Class Action Litigation Information).  Payments such as these serve to make instant multi-millionaires of high-profile plaintiff’s lawyers. But they also work to the detriment of the class. If, for example, the seven lawyers in the Civic Hybrid case took only 25 percent of the winnings of the class, then the proposed $32.474 million settlement would be divided by giving $6.5 million to the seven lawyers and $25.974 million to the class, $2 million more than originally proposed.  If the percentage dropped even further – to 11 percent – then the money would be divided accordingly: $3.2 million for the seven lawyers and $29.3 for the 120,000 plaintiffs ($5.3 million more than originally proposed).  This means that each plaintiff would get $244.

American lawyers have the liberty to pursue as much money as they can in the free market.  But when the payment is set by a government official (judge) as it is in this case, the public deserves to have an input on the amount claimed by attorneys.  The current percentages claimed by plaintiff’s lawyers seem unreasonably high, and this fact is severely eating into the awards given to the class members who were allegedly harmed.

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