Hertz reaches settlement in false arrest lawsuits

The Hertz Corp. has agreed to pay $168 million to settle lawsuits brought by hundreds of customers alleging the Lee County rental car giant reported vehicles stolen while the drivers were in good standing.

Hertz did not release details of the settlement in a statement issued Dec. 5 but said in a filing with the  Securities and Exchange Commission that it will make the payments during its fourth quarter of 2022. It also said the settlement is not “expected to have a material impact on the company’s capital allocation plans for the balance of 2022 or 2023” and that it would try to recoup a “meaningful portion” of the money from its insurance carriers.

According to the statement, the settlement resolves 95% of the pending suits.

The company, which entered into bankruptcy in 2020, has been fighting lawsuits for several years now brought by customers alleging they were falsely arrested after the vehicles they rented were incorrectly reported stolen. Since emerging from bankruptcy in 2021, the legal battle has been mostly dealt with where the cases should be heard and litigated in the media.

A Philadelphia law firm headed by Francis Malofiy has been leading the fight, representing more than 230 claimants who were asking for $530 million. The firm did not respond to request for comment.

Since taking over as Hertz’s CEO in February, Stephen Scherr has prioritized closing out this chapter of the company’s long history, a history that now includes customers going on national television to tell stories about how they went to jail despite being up to date on their rental contracts.

“As I have said since joining Hertz earlier this year, my intention is to lead a company that puts the customer first. In resolving these claims, we are holding ourselves to that objective,” Scherr says in the statement.

And in the SEC filing, the company told investors that it “has policies to help ensure the proper treatment of its customers and to protect itself against the theft of its services and assets. It has taken significant steps to modernize and update those policies.”