Hybrids, Lawyers, and Opting-Out of Class Actions (too good to be true?)

Most people get postcards in the mail once in a blue moon saying they can opt-out of a lawsuit if they want.  Most people also don’t understand what a class action is, what opting-out really means and what their rights are. 

Class actions are lawsuits in which so many persons interests are implicated that it is impractical for all those affected to sue separately.  If the court certifies the class (generally gives their approval), then the class action lawsuit is binding on all those affected even if they don’t participate.  So, even if you never step into court, the case can affect your rights and prevent you from suing later on your own. 

Under Federal law, class actions seeking damages have to give class members (like you and I) a chance to opt-out.  This means having an opportunity not to be bound.  If one opts-out they will not receive any benefit from the suit and also won’t be bound by it.  Under California law, class actions seeking damages do not have to, but MAY give class members a chance to opt-out.  It is within the judge’s discretion whether or not notice and a chance to opt-out should be given.

Heather Peters bought a Honda Civic Hybrid.  The sticker on her new 2006 hybrid Civic looked a lot like the one to the left.  (The sticker if for a 2007).  Recently someone started a Federal class action lawsuit against Honda, claiming that the real world mileage of the Honda Civic Hybrid is not anywhere near what was advertised.  An Edmunds forum has some reviews by owners claiming they get between 29-35 mpg.  Heather Peters received one of those postcards telling her about her right to opt-out.  She did.  She then sued Honda in small claims court in Los Angeles.  She won $9,867.  If she had stayed in the class action she probably would have gotten some coupons good for the next time she buys a Honda, while the lawyers involved are looking at around $8.5 million if they succeed (oh great!).  Heather’s class action is getting a lot of press coverage and is going to be pretty problematic if Honda Civic Hybrid buyers all opt-out and sue separately in small claims courts across the country.  Frankly, our courts can’t handle the number of cases they are currently facing and Honda’s litigation staff will be stretched to its limits.  Time will tell if others follow Heather’s example.

Now, Heather is probably going to have to deal with an appeal and not everyone has a legal background like Heather, but next time you get one of those postcards in the mail think twice about opting out.  In the meantime I am going to opt-out of buying a hybrid.