Small claims court bringing big wins against giants
New York • If you feel cheated by a big company and complaining gets you nowhere, what can you do? A handful of recent cases suggest that consumers can, if they're motivated enough, win against big companies in small claims courts.
These "David versus Goliath" battles were won against the likes of AT&T, Honda and others, without resorting to lawyers. The plaintiffs paid minor filing fees, gathered their own research and presented arguments in quick hearings that resemble the average "Judge Judy" episode.
And now, thanks to the Internet, these victors are connecting with other consumers in hopes of helping them replicate their successes. If the practice catches on, it could amount to a big-bucks difference in payouts by these giant corporations.
"It is a significant undertaking," said Heather Peters of Los Angeles, who sued Honda because her Civic Hybrid didn't meet its claims for gas mileage. She won $9,867 last month.
"But with the Internet, it's a whole different world," said Peters, a former lawyer who just reactivated her license.
Other success stories include Matt Spaccarelli of Simi Valley, Calif., and Henry Brown of New York, who both sued AT&T Inc.
Brown won $1,587.50 in October after suing the telecommunications giant for frequently dropping his wireless calls and charging him an early termination fee when he wanted to get out of his contract.
Spaccarelli was awarded $850 last week after successfully suing AT&T for slowing down the data service on his iPhone when he hit a limit for downloads, even though he had an "unlimited data" plan.
Peters and Spaccarelli have both put up websites that feature copies of the documents they used in court. Peters says hundreds of people have expressed interest, and she knows of at least six consumers who have filed cases. Dozens of people have contacted Spaccarelli, and he recently filed suit on behalf of his brother, who has the same problem with his iPhone.
Their victories aren't necessarily final. Honda says it will appeal Peters' award, and AT&T is appealing Spaccarelli's. But the new hearings will basically be reruns of the first ones. They will feature similar and relatively informal rules. So there's no way the companies can use their resources to take a small claims case to a jury trial and force the consumer to rack up enormous legal fees.
The small claims process is by no means easy. For Brown and Spaccarelli, the hearings were harrowing. They felt intimidated by AT&T's representatives. AT&T's lawyer postponed Brown's hearing three times before agreeing to a hearing date, months after the suit was filed.
Peters started her case because she was dissatisfied with a class-action settlement in the works over the same issue the Honda Civic Hybrid's gas mileage. That settlement would give Civic owners $100 to $200 each, plus a rebate on a new Honda. Peters made out much better.
Should companies be scared of consumers heading to small claims courts? A quick calculation shows they should have cause for concern.
Honda's proposed class-action settlement might cost the carmaker $40 million, if every one of the 200,000 Civic Hybrid owners claimed the maximum amount. But if all of the owners went to small claims court and fared as well as Peters, the company would be out nearly $2 billion.
"If corporations see a large number of people going to small claims, it might cut off their ability to have these relatively cheap dispositions of class actions," said Richard Cupp, a law professor at Pepperdine University in Malibu, Calif.
Although corporations have been fighting class actions, they don't seem very concerned about self-help justice through small claims. Paying off a few brave souls who head to small claims or arbitration is, after all, cheaper than settling class-action suits.
Companies are actually encouraging consumers to take their gripes to small claims courts. A clause in AT&T's contract, for instance, forbids customers from pursuing a jury trial or a class action. It points them instead to small claims court or arbitration. AT&T scored a victory on behalf of many companies when the Supreme Court upheld the clause last year.
The Davids who take down Goliaths in small claims courts say it isn't about the money but the justice the satisfaction of getting even.
"What was worth the time was sticking it to AT&T. That was the end-all," Brown said. "Especially when, at the end, the lawyer came up to me and said, 'Congratulations, you made a great case.' "