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Honda To Pay $2M, Clear $20M In Debt To End Repo Suit

By Aaron Leibowitz

 Law360 (April 18, 2019, 2:07 PM EDT) — Honda will pay $1.9 million and wipe out $19.8 million in deficiency balances owed by thousands of Massachusetts consumers who claim the company misled them about their rights when their cars were repossessed, then inflated the balances they owed after auction, according to a settlement agreement filed Wednesday in federal court.

More than 4,000 class members are expected to receive payments and have their loan balances eliminated under the terms of the deal, which got preliminary approval from U.S. District Judge Leo T. Sorokin Thursday.

“The agreement provides substantial benefits to the class of Massachusetts borrowers whose cars were repossessed by American Honda Finance Corp.,” the class representative, Rachel C. Williams, said in a filing in support of the deal. “The agreement negotiated by the parties is fair, adequate and reasonable.

Class counsel — Elizabeth Ryan and John Roddy of Bailey & Glasser LLP and Steven R. Striffler of the Law Office of Steven R. Striffler — are requesting $950,000 in attorneys’ fees and expenses as a share of the $1.9 million settlement. Honda has agreed not to oppose that request.

Honda has also agreed to tell credit reporting agencies EquifaxExperianTransUnion and Innovis to remove any negative credit reporting from the class members’ Honda accounts.

The company denied liability in the proposed settlement but said it agreed to the terms “for the purpose of avoiding the burden, expense and uncertainty of continuing litigation.”

Representatives for Honda did not immediately respond to requests for comment Thursday.

The First Circuit revived Williams’ suit in October, disagreeing with a district judge’s finding that the wording used in the loan-deficiency notices Honda sent Williams complied with Massachusetts consumer protection laws. An appellate panel remanded the case for further action, emphasizing that the notices sent to Williams improperly used her car’s sale price at auction, not its fair market value, to calculate Williams’ deficiency.

The panel pointed to the Massachusetts Supreme Judicial Court, which has found that post-repossession and post-sale notices of the kind Honda sent to Williams must “expressly describe the deficiency as the difference between the amount the debtor owed on the loan and the fair market value of the vehicle,” according to the opinion.

Honda sold Williams’ car at auction for $8,900 and sent Williams a second notice that apprised her of the sale. It also told her of her deficiency balance, calculated by subtracting the price obtained at auction from her outstanding loan balance plus the additional costs associated with repossessing and selling the car.

The settlement class includes Massachusetts residents who had their cars repossessed by Honda between April 2010 and July 2018.

“We think the settlement represents a fair compromise of the remaining unresolved issues and provides a significant benefit to the class of Massachusetts consumers,” Roddy, representing the class, told Law360.

Williams is represented by Elizabeth Ryan and John Roddy of Bailey & Glasser LLP and Steven R. Striffler of the Law Office of Steven R. Striffler.

American Honda Finance Corp. is represented by Eric S. Mattson and Michael C. Andolina of Sidley Austin LLP and Tracy M. Waugh of Wilson Elser Moskowitz Edelman & Dicker LLP.

The district court case is Williams v. American Honda Finance Corporation, case number 1:14-cv-12859, in the U.S. District Court for the District of Massachusetts.

The First Circuit appeal is Rachel C. Williams et al. v. American Honda Finance Corp., case number 16-1275, in the U.S. Court of Appeals for the First Circuit.

–Additional reporting by John Petrick. Editing by John Campbell.