Hertz rental sign
Hertz rental sign (enjosmith / Flickr)

Car rental giant Hertz Corporation has agreed to an $11 million settlement of a class action by customers hit with unauthorized charges for using the company’s electronic toll payment system.

The agreement, given final approval by a federal judge in Camden, N.J., on Wednesday, also provides for $3 million in fees to class counsel.

The suit alleged that Hertz, of Park Ridge, N.J., failed to tell customers in advance that a $2.50 daily administrative fee would be tacked on to their bills when they used its PlatePass service to pay tolls electronically, on top of the amount of the tolls themselves. Hertz did not honor a promise to cap such charges at $10 per week, the suit said.

The complaint included claims of violations of the New Jersey Consumer Fraud Act, conversion, unjust enrichment and civil conspiracy.

The class consists of all persons in the U.S. who rented a car from Hertz between July 1, 2006, and March 31, 2010, used PlatePass and paid for it.

U.S. District Judge Noel Hillman said approval of the settlement was warranted because only 51 of the 1.6 million class members opted out of the settlement and only two members objected.

Hillman found resolution as a class action appropriate because the members’ average losses of roughly $10 made it unlikely that they would have their day in court otherwise.

Class members will receive a refund of 67 percent of all PlatePass charges for their first rental transactions and a 38 percent refund for subsequent transactions. The difference was attributed to the likelihood that additional knowledge of the PlatePass terms can be imputed to repeat renters, the plaintiffs said.

The defendants must set aside a common fund of $11 million for satisfaction of claims, as well as $3 million in legal fees and $100,000 in expenses. They also agree to pay $5,000 each to the two class representatives, Susan Doherty and Dwight Simonson.

Hillman said the $3 million in legal fees is reasonable considering that it comes to 20 percent of the aggregate class recovery, meaning the common fund, legal fees, costs, service awards to class representatives and costs of administering the settlement.

Although Hillman previously expressed concern that the legal fees were unreasonable when compared to the amount actually realized by class members, he reconsidered based on the defendants’ consent to the fee award.

“We’re happy the judge understood the case and saw it was a good case for the consumers of this country,” said Steven Jaffe of Farmer, Jaffe, Weissing, Edwards, Fistos & Lehrman in Fort Lauderdale, Fla., who represented the class along with Christopher Placitella of Cohen, Placitella & Roth in Red Bank.

Hertz was represented by Michael Vassalotti of Brown & Connery in Westmont, and John Ward and Ross Bricker of Jenner & Block in Chicago. Ward referred a reporter’s questions to Hertz. Corporate spokesman Richard Broome said only that “we are satisfied with the settlement in this matter.”

The parties reached the settlement after a series of mediation sessions in 2011, 2012 and 2013 with former U.S. Magistrate Judge Joel Rosen, now of Montgomery, McCracken, Walker & Rhoads in Cherry Hill.

Also bound by the settlement is American Traffic Solutions of Tempe, Ariz., which provides the PlatePass service through a subsidiary.

Jaffe said Hertz and ATS did not disclose how much of the settlement funds each of them contributed.

ATS’s lawyers, Robert Friedman and Benjamin Caldwell of Burns & Levinson in Boston, did not return a reporter’s calls seeking comment.

Contact the reporter at ctoutant@alm.com.