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APRIL 2013 issue of
Rental Management

Hertz agrees to settlement in loss damage waiver case
04/08/2013

In early March, Hertz Equipment Rental Corp. (HERC) agreed to a settlement in the case Davis Landscape Ltd. v. Hertz Equipment Rental Corp. in U.S. District Court for the District of New Jersey.

The case initially was filed in November 2006 by Miquel V. Pro, a Texas landscaper, and Davis Landscape, a Pennsylvania corporation. In December 2008, the case was made a class action suit and by August 2010, a total of 746,959 plaintiffs had joined the class action suit.

The plaintiffs in the case, people and businesses who rented equipment from HERC and who paid a loss damage waiver or an environmental recovery fee, were seeking damages, claiming the loss damage waiver and environmental recovery fee violated the New Jersey Consumer Fraud Act. In July 2012, U.S. District Court Judge Dennis M. Cavanaugh threw out the environmental recovery fee portion of the suit, saying that the plaintiffs had not shown that the environmental recovery fee violated the New Jersey Consumer Fraud Act.

In the proposed settlement, HERC would pay up to $3 million to class members who had to pay for partial damage to equipment despite paying the loss damage waiver. Other plaintiffs could receive either a cash payment of 15 percent of the amount they spent on the loss damage waiver fees or receive a credit in the amount of 50 percent of those fees, which they could apply toward future rentals.

At press time, the judge in the case had not yet approved the proposed settlement.

According to the suit, HERC had automatically included a 14 percent damage waiver fee on its rental contracts. The customer was given the option to decline the fee, but without doing so, the fee was automatically charged. The damage waiver required customers to maintain $1 million worth of insurance. The damage waiver also included a list of 10 exclusions and customers were provided a separate “Loss Damage Waiver Guide” and would be required to give written acknowledgement of receipt of the guide. The damage waiver deductible was the larger of $500 or two times the four-week rental charge. The plaintiffs argued that these factors, combined with fine print on the reverse side of the rental contract, made HERC’s loss damage waiver deceptive and illegal under New Jersey law.

 

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