Class Lessons: Learning from Class Actions

On June 25, 2014, a New Jersey federal court approved a settlement of more than $11 million plus attorneys’ fees and costs to settle class actions involving toll and administrative fees charged to renters who used electronic toll payment systems. (Doherty and Simonsen v. Hertz Corp., et al.)

Since rental companies (RACs) have long been targets of class actions, what lessons can we learn from Doherty and other cases?

A class action is a lawsuit filed by a representative on behalf of a group (“class”) of parties with similar claims. Depending upon the claim, class size can range from 20 to hundreds of thousands.

Liability can be multiplied by the class size, and the defendants may be responsible for the plaintiffs’ attorneys’ fees and other costs.

Two categories, strict compliance and consumer protection, are instructive.

Strict Compliance Cases

Strict compliance cases are based on a range of federal and state laws, such as privacy, civil rights/anti-discrimination and state vehicle rental laws, which impose liability even if the defendant is unaware of the law or its requirements. Recent examples include:

Website accessibility: A number of class actions allege the denial of website access to the visually impaired. These cases typically allege that visually impaired persons are denied full access to a website if the site does not allow access via keyboards and software that vocalizes the website information.

Claims are made under federal Americans with Disabilities Act (ADA) and various state acts, and some also identify website standards published under the Web Content Accessibility Guidelines 2.0.

Text messaging: The Federal Telephone Consumer Protection Act (TCPA) protects U.S. consumers from unsolicited text messages. A potential claim arises when a business receives a customer’s cell phone number for texting important information.

Potential exposure arises when a business then uses that cell number to text a solicitation or advertisement. That practice potentially violates the TCPA, as well as various state statutes and regulations, and has given rise to numerous class action claims.

With strict compliance cases, remember that ignorance of the law is no excuse. Pay attention to legal developments in “hot” areas like state rental law, privacy and the ADA through newsletters such as Auto Rental News Reporter and additional resources from your advisers and industry groups.

Follow high-profile cases in other industries (such as cases related to the Target data security breach in late 2013). They may provide guidance on complying with laws affecting all businesses.

Review your marketing materials for compliance.

CONTINUED:  Class Lessons: Learning from Class Actions
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