"This settlement simply provides no meaningful benefit to thousands of Civic Hybrid owners whose cars are equipped with defective hybrid drive systems."
Today, attorneys representing owners of 2006-2008 Honda (NYSE:HMC) Civic Hybrids applauded five states that have asked the judge overseeing a proposed class-action settlement to grant the states more time to weigh the fairness of the agreement, says Seattle-based law firm Hagens Berman.
Many class members have already objected that the proposed settlement is wholly inadequate in addressing the safety concerns and economic losses associated with the vehicles.
The proposed settlement would pay consumers less than 3 percent of the expected cost to replace the faulty hybrid battery, court papers state, while attorneys pushing for the settlement, in turn, have asked the court for nearly $8.5 million in fees.
Those opposing the settlement are upset that the agreement would pay each owner just $100 and provide a coupon good only for the purchase of a new Honda or Acura, instead of requiring or compensating for the repair of the defective hybrid system, which costs at least $3,500 per auto.
"This settlement simply provides no meaningful benefit to thousands of Civic Hybrid owners whose cars are equipped with defective hybrid drive systems," said Thomas Loeser, a lawyer at consumer-rights law firm Hagens Berman and attorney for a group of Honda owners objecting to the settlement. "If I were a 2006-2008 Civic Hybrid owner, I would be angry with this proposed settlement, and would complain bitterly to anyone who would listen."
According to court filings, the class action was originally filed to represent those who were experiencing lower miles-per-gallon efficiency than Honda was touting in its advertising. During the case, a second and more serious claim appeared: prematurely deteriorating Integrated Motor Assist (IMA) batteries, which are the core of the hybrid system. These defective IMA batteries cause severe, erratic power reductions, which render the Civic Hybrid unreliable and unsafe, in addition to causing severe reductions in fuel efficiency, court documents state.
Court documents reveal that Honda and the attorneys proposing the settlement agreed to include a release of the IMA battery issue – absolving Honda of any liability for the problem – in exchange for an additional $100 per claimant and a $500 coupon used toward the purchase of a new Honda or Acura.
"What is puzzling is that it appears the attorneys proposing the settlement agreed to this deal without taking a single deposition to determine the significance of the battery issue," Loeser added.
Though it appeared little additional work was done in adding the IMA battery defect release, attorneys proposing the settlement increased their fee request from $2.95 million when they first attempted to settle the false-advertising claim to $8.474 million.
Court documents show that Honda was aware of the IMA problem and issued mandatory software updates in response. But the software updates did not repair the problems associated with the faulty IMA batteries, and in fact were designed to extend the life of the IMA battery at a tremendous cost to the safety and efficiency of the cars, claims say.
According to settlement objectors, those updates caused the cars to use the battery and electric engine less, and the gas engine more, making the drive system too weak to operate safely and further eroding fuel economy and performance.
"The net result of the software update is that Hybrid owners at best paid about $4,000 more for a car that gets even lower gas-mileage efficiency than the conventional gasoline version of the Civic," Loeser stated. "For most of these owners, they are also now saddled with a car that is likely unsafe because it cannot be relied on to move when you step on the gas."
"We have heard from Civic Hybrid owners from across the country who report trying to make a left turn across traffic, and not having the acceleration they expected. To me that sounds like playing automobile Russian roulette," Loeser added.
There are approximately 95,000 owners of 2006-2008 Honda Civic Hybrids equipped with what Honda admits are prematurely deteriorating IMA batteries, court documents show.
Under terms of the proposed settlement, Honda would pay a maximum of $9.5 million for the battery issue if every owner claimed the $100 award. Consumers claim the actual repair of the issue for the 95,000 owners will cost more than $332 million.
Attorneys general in California, Iowa, Massachusetts, Texas and Washington have asked San Diego County Superior Court Judge Timothy Taylor to give the states until February 29th to review the settlement. Judge Taylor has the ability to approve or reject the settlement.
About Hagens Berman
Seattle-based Hagens Berman Sobol Shapiro LLP is one of the top class-action law firms in the nation, with offices in ten cities throughout the United States. Founded in 1993, the firm represents plaintiffs in class actions and multi-state, large-scale litigation that seek to protect the rights of investors, consumers, workers and whistleblowers. More general information about the firm is available at www.hbsslaw.com.
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