Honda Wins Appeals Decision in Civic Hybrid Lawsuit: How It Happened

By Jacob Brown | May 09, 2012
After more than four months of legal battles, a Torrance, California, judge overturned the February 1 decision that awarded $9,867 to 2006 Honda Civic Hybrid owner Heather Peters. She won the judgment in California's small claims court system, convincing the court that Honda made false claims about her car's ability to achieve 50 mpg when, in reality, she reported her car achieving 29 mpg. Judge Dudley Gray II was nonplussed with the original decision, reversing it today. Because of California law, there can be no further appeals of the case. Regarding the ruling, Honda said in a statement, "We are never satisfied when a customer is anything less than satisfied with one of our products, and the company does not relish the necessity to defend the truth in opposition to any of our customers. However, it is important to note that, since January of this year, 17 similar small claims cases involving Civic Hybrid owners have been heard in courts across the country and Honda has now prevailed in 16, based on facts and the law." Peters countered in a statement of her own that "It's a sad day when regulations designed to protect consumers are used against them. I'm certain that the EPA and FTC never intended to shield Honda from liability for advertising claims that a court of law determined to be false." Below is a report of how it all unfolded. Puffery vs. Fact "Things like this happen around the country, every day," Honda spokesman Chris Martin said April 19 as he stood outside a Torrance, California, courtroom. Just minutes earlier, the second of three nights of the court case you've heard all-too-much about on Automotive.com had concluded: Heather Peters v. American Honda. Martin continued: "There have been 10 other decisions handed down to customers who've opted out of the class action lawsuit across the nation. Honda hasn't lost any of them." [Note: There have been more since Martin spoke to Automotive.com, as noted in the second paragraph of this story.] I asked Martin what made Peters' hearing different from any other small claims court case regarding second-generation Honda Civic Hybrids. He said he'd get back to me when he publishes his memoir, an obvious nod of sarcasm. Martin, much the same as Honda's legal, PR, and technical teams, otherwise stayed hushed throughout the three-day appeals hearing that ran April 13, 19, and 20. Paragraphimage [caption id="attachment_92257" align="alignright" width="300" caption="As shown in this cutaway, the electric motor in the Honda Civic Hybrid is relatively compact and sandwiched in a ring between the engine and transmission. It never fully powers the car."][/caption] Peters originally brought suit against Honda late last year after her car had allegedly been unable to achieve anywhere near its advertised 50 mpg fuel economy figure. In January, she said her car mustered around 29 mpg, prompting her to sue Honda for advertising fraud, negligence, and misrepresentation of the product, among her litany of claims. She also said battery degradation caused her car to underperform, as her 2006 Civic Hybrid had its hybrid software reflashed in 2010 to use less energy in order to preserve its integrity. As a result, she won $9,867 in small claims against Honda, doing courtroom battle against technical specialist Neil Schmidt in a venue where lawyers weren't allowed. Honda appealed the decision, Peters reactivated her long-dormant law license in February, and she starting dispensing legal advice to aggrieved Civic Hybrid owners across the nation. The entire case became something of a cumbersome mess of interpretation versus reality, and puffery versus fact. At first sight, it's a story that looks as though a woman scorned in the wake of her defective car fought back against the big, mean corporation and won. And that's all well and good. But as is usually the case, there's more to the story than the clear-cut right versus wrong case this appears to be on the surface. Not the Only Unhappy Customer A class action suit, by its very nature, isn't ideal. Heck, many times, members of the class don't even find out about the hearing until they receive a letter a few months down the road. There is always a reason for them starting, though. Paragraphimage [caption id="attachment_92173" align="alignright" width="300" caption="On the homepage of Peters' site, it says 1,705 people opted out of the small claims settlement. It doesn't say why."][/caption] On Peters' website, she implied the 1,705 people who opted out of the Honda Civic Hybrid class action, known as Lockabey v. Honda, were all dissatisfied with fuel economy numbers their cars simply couldn't deliver and didn't agree with the relatively small settlement amount. But Honda's Martin said, despite the fact that there are plenty of unhappy customers, many aren't. The class action settlement, which was finalized March 16, was simply meant as a compromise to benefit the aggrieved and add some peace of mind to everyone else. "When you look at the whole process and costs associated, the best thing to do is reach an equitable settlement," he said. And certainly, Honda still has plenty of fans on its side despite the uproar against it. "I am satisfied with my Honda's performance and battery pack both before the IMA service and after…I am very happy with both American Honda…and my dealer," says owner Mark Baum in a comment he sent to Lockabey's Judge Timothy B. Taylor. In the 43-page decision, Taylor noted plenty of comments from people who dissented with the class action settlement because they didn't feel right claiming money when they were happy with their cars. He also included comments from those who felt they deserved more from the automaker. Some cited Peters' small claims winning, and about 30 customers had filed suit against Honda at the time of this writing. Peters often criticized the settlement in public, yet this was after even she notified the class action counsel that they had "negotiated one of the best class action settlements [she] had ever seen," according to Taylor's notes. Payouts to Civic owners will include an extended warranty, $100 to $200 cash, and a transferrable voucher that can be used toward the purchase of a new Honda vehicle worth up to $1,500. But customers still unsatisfied with the outcome will also be able to enter arbitration with Honda for $250. The automaker will cover all additional legal costs. It's become a lot more widely known recently, but the Lockabey case has been in the works since 2007. It didn't gain much traction in the media until 2010 and 2011, which is when California customers started feeling the pinch at the pump, said one of Honda's lawyers. The cars' reprogrammed software in 2010 coincided with the loss of carpool lane access for California hybrids in mid-2011. Between higher gas prices and more stop and go driving with the loss of carpool lane privileges, the lawyer said it "seemed like a double whammy." Paragraphimage A Rather Big Small Claim [caption id="attachment_92255" align="alignright" width="300" caption="Peters used pictures of her car's digital fuel economy readout, similar to this one, as evidence in her court hearings."][/caption] In December 2011, Peters filed suit against Honda in small claims court for $7,500. Then she raised her damages claim to $10,000 after California increased its maximum payout for 2012. Much of her evidence used in the small claims case came from what was used in the Lockabey settlement, but she also subpoenaed other documents regarding the Honda Civic Hybrid, its development, and advertising literature involved with its introduction. All told, Peters said she could show more than $122,000 in damages, but she didn't have the "time, money, or energy to go to regular court." "I could have filed [the lawsuit] anywhere," Peters said after the first hearing. "I filed it here because I wanted [Honda] to have no excuse for not coming," noting her Hollywood area home was some 15 miles from Torrance, the home of American Honda. Less than a month later, she'd win $9,867.19 because she had proven with pictures of her dashboard display showing fuel economy, and her mechanic testifying on her behalf that Honda had misrepresented the Civic Hybrid's ability a achieve 50 mpg. Of Tests and Testimony But Peters' car was never tested by an independent party to see how much her driving habits played a role in her fuel economy. As it is, Honda's IMA system never runs in a pure electric mode; an aggressive driver could get unhybrid-like fuel economy if the engine is always being pushed. Before the appeals case started, we said that the only true way to see if her car was defective would be to properly test it according to EPA standards. That didn't happen. Here's why: Peters claimed that after her car's software reflash, fuel economy dipped by 10 mpg to 29 mpg on average. During her husband Michael Cassadine's testimony, he said the car averaged 25.4 mpg on its 15-mile trip to the courthouse. Hollywood Honda's service manager, Karen Takahashi, said she drove a reflashed 2008 Honda Civic Hybrid last month owned by another small claims litigant and averaged 51 mpg over 115 miles of driving in Los Angeles. Paragraphimage [caption id="attachment_92065" align="alignright" width="300" caption="Early on in the case, Peters spoke with reporters before her hearing to share her story."][/caption] "I just drove the car normally," says Takahashi. "I wasn't trying to manipulate anything," noting that she drove a Civic Hybrid in mixed driving, with and without cruise control in heavy traffic. Why not test Peters' car specifically? Peters said she would have let Honda run her car through testing in one of its independent dealerships, but the automaker specified she couldn't share any video she might take outside the courtroom until they were made public knowledge. "That's not fair," Peters said. So she refused the evaluation and skirted around one of the court's last remaining questions. Of note, Peters flew in former Honda technical specialist Jeffrey Holliday on April 19 to testify on her behalf. He said his superiors discouraged him talking directly with customers when he investigated isolated problems. As the Civic Hybrid was one of his cars he'd troubleshoot during his tenure with Honda, Holliday said it was "a great car." However, "I was not able to duplicate the advertised mileage." On the following day, Peters briefly brought Holliday back to the stand to clarify that the best he was ever able to achieve in a Civic Hybrid was around 42 mpg in the three or four cars he tested. He said he usually averaged numbers in the high 30s. Peters' Driving Past But other evidence did shed more light onto her specific driving patterns. Honda's defense attorney Roy Brisbois charted Peters' driving patterns based on her service records, noting during her 50,000 miles of ownership that she was averaging more than 40 miles of driving per day from 2006 to 2008. When she changed jobs, her average use decreased to 7.8 miles per day, mostly in stop and go traffic. In her defense, Peters said in her arguments that EPA testing showed cars are evaluated without use of air conditioning, which she said is unrealistic in California climates. "Drive it as you would any other car," she cited in 2006 marketing materials for her Civic Hybrid, or clearly not in her case. Paragraphimage [caption id="attachment_92063" align="alignright" width="300" caption="In the second part of small claims hearings, Peters is seen explaining a document she prepared to prove her case."][/caption] Brisbois also brought up her former cars as a comparison to what she might be comparing her Civic—two BMW Z3 roadsters, a BMW X5 crossover, and a Mazda RX-8 sports car—inferring she suffered from chronic lead-foot syndrome. A 2010 service report seemed to corroborate that claim, noting all four tires showed excessive outside shoulder wear, a possible sign of hard driving, alluded Brisbois; Honda technical specialist Neil Schmidt later said as much in his testimony. Peters, however, said she drove her Honda Civic Hybrid conservatively, but not with the low-friction tires recommended by Honda. She said her car was sluggish, bordering on dangerous at times, evidencing 50 affidavits from other customers who said their cars lost power after the 2010 software update. Brisbois countered: "You're so afraid (of driving it), you're planning on keeping it another 150,000 miles?" he asked. "I'm not that scared," she replied. Brisbois said Civic Hybrid owners had logged "billions and billions" of miles on the almost 200,000 Civic Hybrids sold in the U.S., and no one had ever reported an accident as a result of sluggish acceleration. Brisbois then picked apart each line of advertising for the 2006 Honda Civic that Peters contended in the 2006 pamphlet Peters cited in her argument. She stammered her way through Brisbois' cross examination on the second of three days, as he shook apart what had appeared a much sturdier case in the initial small claims hearings in January, when Honda's legal team wasn't allowed to participate. Decisions, Decisions… After nearly two hours of wrap-up testimony April 20, Honda brought three witnesses to testify on behalf of the automaker. First was Neil Schmidt, the engineer who defended Honda in the first small claims hearing. Based on Peters' service records, he said her IMA system never had any problems, but he noted the aforementioned excessive outside shoulder tire wear, a sign of aggressive driving. Judge Dudley Gray II seemed nonplussed, however, as his 1983 Porsche 911 has seen similar wear without heavy use. Paragraphimage [caption id="attachment_92053" align="alignright" width="300" caption="Honda technical specialist Neil Schmidt testifies April 20 in front before Honda's legal team."][/caption] Then compliance engineer Darin Johnson took the stand, testifying that a 178-page document published in 2006 by the EPA that Peters evidenced for variance in hybrid fuel economy held little value because the government agency had tested an out of production 2003 Civic Hybrid. Johnson also said the 2006 Civic Hybrid's fuel economy numbers were "verified and repeatable" in lab testing and in full compliance with EPA standards. "The actual measured results are much higher than what's on the label," Johnson said, adding the EPA tests cars with a 300-pound load to simulate two passengers. Numbers are then adjusted for real-world conditions. Honda's senior customer service manager Bryan Morris completed Honda's set of witnesses. "We respond to a customer, no matter what it is," Morris said when questioned about his department. "Most customers who have problems call us," he continued, noting that Peters never had. In fact, Peters asked why she never received redress to a letter she sent dated Nov. 18, 2011. Morris handed the letter to Judge Gray. "It basically said 'Comply to my three conditions, or I'll sue you,'" Gray said. "I think it's reasonable for them to turn it over to their legal department." There was no gasp from the already silent courtroom, but an air of tension could be felt throughout it. Had Peters really come across so aggressively? Was there a need to push so forcefully when she hadn't even ever called Honda's customer service line to complain? For its part, amid dozens of press releases, news stories, and dozens of lawsuits prompted by the Peters case, Honda stayed silent, only bringing out the highly regarded auto industry lawyer Roy Brisbois for this, its most publicized case about the Civic Hybrid. Paragraphimage [caption id="attachment_92175" align="alignright" width="300" caption="Found on Peters' website is a page to purchase an informational CD for how to successfully sue Honda in small claims court. It costs $15."][/caption] Peters told the Associated Press' Linda Deutsch her goal for this lawsuit was to "hold Honda accountable for false advertising and to raise awareness." But Judge Taylor of the Lockabey class action said in his decision he agreed Peters likely had ulterior motives. "Class Counsel are correct in asserting that Peters' demand for access to the fruits of discovery as actually a thinly disguised effort to use the discovered material to assist Peters in ‘begin[ning] a cottage industry of representing consumers or selling her $15 CD to them,'" Taylor wrote. Peters said in another article she was already taking clients in suits against Honda, too. Honda's Martin says hundreds of lawsuits happen all over the U.S. for every automaker. Honda isn't alone by any stretch. Added Martin: "It's just part of the cost of doing business in the U.S."
  • 2006 Honda Civic Hybrid Exterior Rear Quarter
  • 2006 Honda Civic Hybrid Exterior Front Quarter
  • Judge Gray Heather Peters Honda Hearing1
  • Heather Peters Honda Appeals Case Day 11
  • Honda Civic Hybrid Appeals Heather Peters And Roy Brisbois Standing
  • Honda Civic Hybrid Appeals Neil Schmidt Testimony
  • Honda Civic Hybrid Appeals Neil Schmidt Testimony Full Room
  • Honda Civic Hybrid Appeals Schedule Posting Peters American V Honda
  • Heather Peters 2006 Honda Civic Hybrid
  • Heather Peters And 2006 Honda Civic Hybrid Front Quarter
  • Heather Peters Explaining Court Documentation
  • Heather Peters Interviewed Outside Small Claims Courtroom
  • Heather Peters Website Media Exposure
  • Heather Peters Website Homepage Opt Out
  • Heather Peters Website Info CD For Sale
  • 2006 Honda Civic Hybrid Interior
  • 2006 Honda Civic Hybrid Instrument Cluster
  • 2006 Honda Civic Hybrid IMA Engine And Motor Cutaway
  • 2006 Honda Civic Hybrid IMA Operation
 
3 comments
Jacob Brown
Jacob Brown

Stevie, There was never any validation her car wasn't driven in a manner that shouldn't warrant bad fuel economy. Testing her car to validate it could get better fuel economy would have laid that question to rest. But it didn't.

Stevie
Stevie

The judge is an idiot. Two major mistakes in his ruling. First, the statement that most drivers get the mileage advertised. Anecdotal at best. The data presented to him is wholly unreliable. There are at least three significant problems using data from fueleconomy.gov. 1. The data is self reported. There is no way to validate any of the information. It could have been Honda employees that wrote the reviews. The site itself says: "DISCLAIMER: Average user estimates are based on data from Your MPG users rather than official sources. Since the source data cannot be verified, neither DOE nor EPA guarantees the accuracy of these estimates." 2. The sample size is too small for statistical significance. For the data, if you were to accept it, to be valid you need about 1000 samples. Less than 300 have reported mileage on the site. 3. Finally if you look at the mileage averages before the software change and after, the mileage drops around 7% for those who reported. Secondly, the point that the software package doesn't increase performance is the problem. It decreases performance. He totally misses that point. There are other issues I have with the ruling like what are "normal driving" practices. I'll still continue with my suit and hopefully get a reasonably intelligent judge.

Mumashik
Mumashik

Bought my wife a 2006 Civic Hybrid, broke the engine in right myself. It has always had synthetic oil in it (Honda dealer uses dino oil), so it should get slightly better gas mileage. It has NEVER gotten 50mpg and my wife is SMALL AND LIGHT. On the other hand, it has never gotten 29mpg. 35 - 44 depending on conditions and load. If the EPA got 50mpg it was all downhill. It is a nice car, has never given any problems, but it does NOT get 50mpg.

close