Honda case shines light on small-claims process

Professor Justin Atkinson

Written by Charles McCarthy, The Business Journal

A lawyer who teaches legal remedies at San Joaquin College of Law in Clovis sees no threat to other businesses large or small in a Southern California woman's much reported small-claims court case against Honda Motor Company.

But lawyer Justin Atkinson said that if the case triggers a flood of similar lawsuits against Honda, protecting itself could potentially be expensive for the automaker.

“Small Claims Court has been around a very long time, and has never been a secret,” Atkinson said this week. “While the attention that this case is getting may result in an uptick of people filing [small claims] cases against businesses, I do not believe that the uptick will be very large or long-lasting.”

Southern California resident Heather Peters was reportedly dissatisfied with her tiny cash settlement and a reported $1,000 new-car rebate offered by Honda to 2006 Civic Hybrid owners who won a recent class-action mileage-claims lawsuit against Honda. She filed her own small-claims case early in January. Peters, reportedly a lawyer herself, encourages others who won the class-action mileage-claims lawsuit against Honda now to file their own small-claims actions against Honda.

Other unhappy Honda owners seeking up to California's new (as of Jan. 1) $10,000 small-claims limit will each have to fight their own individual legal battles. In California, lawyers aren't allowed to argue in small-claims courtrooms.

Even though small-claims court is more relaxed and less intimidating, a plaintiff must still have a valid claim established by evidence, Atkinson said.

“The whole process is very cheap for consumers, but could end up being very expensive for Honda,” Atkinson said about the Torrance case. “We probably won't be able to buy a Honda at a low price anymore and a lot of people will be out of jobs.”

The idea of individuals filing small-claims lawsuits like the one in Torrance, doesn't appear to be a slam-dunk for either side.

“From what I've read, it seems that most believe that to be the end of the story ... Honda loses and everyone runs to file a claim in small-claims court,” Atkinson said. “It is not, however, because should Honda lose, they would have the right to appeal the decision to the Superior Court in which the small-claims department sits.”

At the appeal, the case would be heard by a different judge and would be heard “de novo” meaning “all over again,” Atkinson said. The higher-court hearing would remain informal but the parties have the right to be represented by attorneys.

This is where Honda's attorneys could come in and argue for Honda. The process becomes much more complicated than it appears. The issues already decided would not have the effect of deciding liability or damages in any future cases brought by other parties against Honda — even when they claim the same damages, Atkinson said.

“In effect, each subsequent plaintiff would have to establish liability in any new action. Should the consumer hit Honda with a judgment, Honda could appeal and go through the same process...,” Atkinson said.

In Fresno County, the Better Business Bureau assists up to 30 people daily with small-claims cases. The Fresno-based BBB also provides small-claims advisors to courts in Tulare and Kern counties.

Central California BBB Chief Executive Officer Blair Looney said this week that the BBB small-claims advisory offices provide assistance to anyone needing advice and direction with their paperwork. This saves the county time and money by having folks prepared when their cases are called in the courtroom.

“We have a little handout that we give them as to how to prepare themselves... We do it to help out the public,” Looney said.

Attorney Atkinson said that class actions like the one rejected in the Southern California small-claims lawsuit haven't been a bad thing at all, at least for consumers. They may feel that claimed damages (as a result of an alleged breach of contract, failed promise, malfunctioning product, etc.) are so small that it is not feasible to take the case to trial. There can be, and generally are, enormous expenses involved in litigating cases, not to mention the amount of time and effort required.

Consumers can “team up” and spread those costs out. Should the case win, the consumers get a piece of the action. They can recover some of their allegedly lost money and deter the company from doing a similar act in the future.

But then there's the Torrance case. The consumer Peters claims that she suffered damages in the thousands of dollars from Honda's incorrect mileage claims. The attorneys were well paid but she claims that the injured-party settlements were unsatisfactory.

Atkinson said: “As a consumer, I find myself rooting for the plaintiff. I too feel like I have no bargaining power when I sign contracts for credit cards, cell-phone, cars, etc...I must abide by their contractual terms because they are the only place I can get those things."