McGraw objects to Honda class action settlement

By John O'Brien | Dec 16, 2009


RIVERSIDE, Calif. -- West Virginia Attorney General Darrell McGraw is one of 25 AGs who are objecting to a proposed class action settlement with Honda that would allow attorneys to pocket $3 million while providing small refunds and DVDs on saving gas to consumers.

The case involves allegations that Honda misrepresented the fuel efficiency of its Civic Hybrid. Under the settlement, owners who trade in their car for certain other vehicles could get up to $1,000 on rebate or $100 in cash if they previously complained. Those who do not still own the car would get a $500 coupon.

McGraw joined in the objection even though private attorneys he hired to represent the State earned $3.9 million in a settlement with Visa and MasterCard that provided for sales tax holidays on appliances with the "Energy Star" label.

"Even the plaintiffs' own expert has conceded that it is likely that only 580 consumers of the 158,639 member class estimated by Plaintiffs' counsel would receive any cash benefit," the amicus brief filed Monday by the attorneys general says.

"The receipt of coupons with strict limitations on transferability, duration, and use, coupled with a DVD containing information on how to improve fuel economy that is likely already available for free on the Internet, does not amount to meaningful relief for unnamed class members."

Three firms filed the suit against Honda in March 2007 -- Cuneo Gilbert and LaDuca of Washington, Blecher and Collins of Los Angeles and Chimicles & Tikellis of Haverford, Pa.

The Center for Class Action Fairness also objected, saying a similar settlement over Ford Explorers last year gave more than $20 million to attorneys while only 75 $500 coupons were redeemed.

The group's objection says attorneys should only recover fees if a certain amount of coupons are redeemed.

"Without such a possibility of penalty, Plaintiffs will have every incentive to exaggerate the likely recovery in order to gain settlement approval," noted tort-reform advocate Ted Frank wrote.

"But if Putative Class Attorneys know that they will not receive fees unless they make an accurate representation to the Court about the true value of the settlement, they will have the appropriate incentive to be truthful rather than engaging in a battle of the experts.

"Only then will the Court have the data it needs to determine whether the settlement is adequate."

Named plaintiffs would receive $22,500 as a result of the settlement. Attorneys would receive $2,950,000.

Georgia Gov. Sonny Perdue joined the AGs' opposition. The attorneys general are from the states of California, Tennessee, Texas, Alabama, Alaska, Arizona, Colorado, Florida, Idaho, Illinois, Iowa, Maine, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, New Mexico, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Vermont and West Virginia.

"Here, the objections raised by the attorneys general go to the heart of the settlement," the states' brief says.

"As argued in Part I, courts should embark upon enhanced scrutiny of coupon settlements such as this one. Additionally, the absence of objections does not necessarily indicate that the settlement is acceptable. Filing an objection to the settlement invokes substantial transaction costs involving an investment of time, money, and other resources.

"In the case at bar, the settlement does not withstand such scrutiny. The coupons offered to consumers are of limited value: they are worth only a fraction of the price of the original car, are valid only on select cars, and have other limitations."

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