Hertz Makes First Settlement Offers to End False Arrest Debacle

(Bloomberg) — Hertz Corp. has offered to settle about three dozen cases filed by renters that say they were wrongly arrested for auto theft, the company said.

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The settlement push comes a month after Colleen Batcheler took over as general counsel for the rental company and made it her top priority to end suits 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 earlier this month when a federal judge allowed more than 70 customers to sue for false arrests. Until then, Hertz had successfully forced nearly all of the lawsuits to remain under the supervision of a bankruptcy judge in Wilmington, Delaware.

Batcheler declined to say how much money the company was offering to the alleged victims and their families.

Hundreds of customers say in court papers that Hertz filed police reports against them and had them falsely arrested, often at gunpoint. A small number of those cases allege 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.

The claims are an early challenge for Batcheler, who became Hertz’s top lawyer last month, and Chief Executive Officer Stephen Scherr, who took over in February and pledged Hertz would change its practices to protect customers who’ve done nothing wrong from false arrests.

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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 victims asked for 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 regions that include Europe, the Americas, Asia, Africa and Australia. The company filed bankruptcy 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 likely have been stolen, and 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.