In recognition of the “justice gap,” for Californians with “minor” but still substantial claims in dollars and cents, the legislature increased the limit of small claims jurisdiction to $10,000.00 starting January 1, 2012. Studies have shown that there’s been a tremendous lack of affordable legal representation for people who fall in between the old $7,500.00 small claims limit and the larger superior court claim amount, for damages under $25,000.00.
In comments to the bill’s analysis urging its passage, proponents cited studies which show and which were confirmed by California’s Judicial Council, “that it is nearly impossible to find representation for cases involving less than $25,000 in damages. For individuals with damages between $7,500 and $25,000 justice is difficult to come by.”
While the change might not go far enough for some people, the increase means that people do not have to choose between filing an expensive superior court action or giving up $2,500.00, just to have their day in court.
The increase in the small claims limit came at a good time for a Los Angeles woman, and former attorney, Heather Peters. Ms. Peters had decided to opt out of a class action lawsuit against Honda in a case which alleged Honda had misled consumers about the potential fuel economy of Civic hybrid cars. Instead of receiving what would have been a token sum of money from a proposed class action settlement, Ms. Peters was awarded $9,867.00, by the small claims court on February 1, 2012.
By way of comparison, the proposed class-action settlement would have gotten Ms. Peters damages somewhere in the range of $100 to $200 and a $1,000 credit toward the purchase of a new car. If everyone had opted out of the class action litigation and been successful in their claim against Honda, the total award against Honda would have run into the billions rather than the millions of dollars and individual owners would have recovered a substantially greater share of the settlement for not getting the promised fuel economy.
With the larger cap on small claims matters the savvy consumer would be well advised to take a closer look at any notices informing them they are part of a proposed class action lawsuit. Opting out, might be the next “in” thing to do as “small claims” just got bigger.
Guest Blog courtesy of Richard L. Fahey, of Lieb & Lieb. For more information visit their website.