Hertz makes settlement offers to end false-arrest lawsuits
Hertz Corp. has offered to settle about three dozen cases filed by renters who say they were wrongly arrested on suspicion of auto theft, the company said.
The settlement push comes after Colleen Batcheler took over as general counsel for the company. During her first month on the job, Batcheler made it her top priority to end lawsuits from more than 230 customers accusing Hertz of improperly calling in police on its renters, mostly while haggling about overdue rentals.
“We’ve tried to take a step back and say, how can we make progress in a way that is fair to our customers and is based on individual facts and circumstances?’” Batcheler said in an interview.
Hertz lost a key court battle this month when a federal judge allowed more than 70 customers to sue over false arrests. Until then, Hertz had successfully forced nearly all of the lawsuits to remain under the supervision of a bankruptcy judge in Wilmington, Del.
Batcheler declined to say how much money the company was offering to the plaintiffs.
Hundreds of Hertz customers say the rental firm had them improperly arrested for car theft.
Many of the customers say in court papers that they were arrested at gunpoint. A small number of cases allege that errors by Hertz employees caused police to pull over innocent customers on suspicion of driving stolen cars. Lawyers for the customers say about 100 more claims are being prepared.
Plaintiffs will review the offers, said Francis Alexander Malofiy, a Philadelphia lawyer who has spent years fighting Hertz in court.
“Hertz has indicated interest in settlement in the past, only to reveal they were not serious about addressing the full scope of the harm they have caused,” Malofiy said in an emailed statement.
Hertz must also agree to withdraw theft reports it filed against about 40 customers who are still being prosecuted, Malofiy said.
The false-arrest claims are an early challenge for Batcheler, who became Hertz’s top lawyer last month, and Chief Executive Stephen Scherr, who took over in February and pledged Hertz would change its practices to protect customers from false arrests.
The company will try to settle as many of the cases as it can in the coming months, Batcheler said. Some offers will be for more money than the plaintiffs requested in their Bankruptcy Court claims. Other offers “will be for significantly less,” the company said in a statement.
Hertz Corp. is the unit of Hertz Global Holdings Inc. that operates the Hertz, Dollar and Thrifty rental brands in Europe, the Americas, Asia, Africa, Australia and other regions. The company filed for bankruptcy protection in 2020 as the COVID-19 pandemic ravaged the economy and brought car rentals to a halt.
Hertz exited bankruptcy oversight last year but left a shell company behind to pay off its older, disputed debts, including the false-arrest claims.
Hertz files thousands of criminal cases against customers annually, according to court documents. The company says the majority involve disputes about vehicles that weren’t returned on time and probably have been stolen. It says it tries to contact customers via phone calls, text messages, emails and certified letters about overdue cars and get them back through private means, working for about 63 days beyond the return date before involving police.
Lawyers for the drivers say all the cases could cost Hertz more than $700 million. The company said in a quarterly filing that it doesn’t expect a significant impact.