Home Depot Wins Summary Judgment on Class Action Relating to Rented Tools

Plaintiffs rented tools from Home Depot and then sought to bring two claims on behalf of a purported class of similarly-situated individuals. First, plaintiffs alleged that Home Depot overcharged them for late rental returns. Second, plaintiffs allege that when Home Depot charged them for 15% of the rental price as a “damage protection fee” that fee should reflect the original rental price, not the rental price adjusted upward to reflect late rental returns.

Darin Mathews rented a piece of equipment. The contract provided that Home Depot could impose a “daily recurring charge” of $119 for late return of the equipment or $476 per week. Mr. Mathews returned the equipment eleven days late, and Home Depot imposed two weekly fees, charting him $952. Mr. Mathews argued that he should have been charged $119 for the first late day but then at the weekly rate, which comes out to $68/day multiplied by eleven days.  If the fees had been so calculated, he should have been charged $867. Jesus wept.

Mr. Mathews also rented a drain camera for $139 hours, and he agreed to pay the 15% damage protection fee, which came out to just over $20. However, while Mr. Mathews rented the camera for four hours, he returned it three days and five hours later. The rental fee was adjusted upward, as was the 15% damages protection fee. Mr. Mathews, on behalf of a class of people lacking common sense, maintained that the 15% should relate only to the original rental fee and not the rental fee plus the late fees.

That all seems pretty lame. But the case doesn’t even turn on any of that. Rather, the contract provides that the customer must provide written notice of any fee dispute within 25 days of receipt of the invoice. Mr. Mathews disputed the costs in telephone calls, but he did not send written notice within 25 days, and that decided the case.

In Mathews v. Home Depot, Inc., the District Court for the Northern District of Georgia granted summary judgment because Mr. Mathews failed to dispute the charges in writing. That is, the only part of the case that makes me sympathetic to the class is what doomed the class. I can understand a consumer not paying attention to the requirement of written notice of a dispute. The substantive part of the claim seems like a good example of what David Hoffman has identified as consumers’ unrealistic expectations, a topic on which I will have a post on Friday.

The key language that decided the case runs as follows:

Renter must notify The Home Depot in writing of any disputed amounts, including credit card charges, within twenty-five (25) days after the receipt of The Home Depot rental contract/invoice, or Renter will be deemed to have irrevocably waived its right to dispute such amounts.

Plaintiff first argued that the language applied only to the customer’s right to “audit” charges, but it plainly doesn’t. The key word is “any.” Plaintiff next argued that the language in question is an “exculpatory clause” and such clauses must be prominent, but it plainly isn’t. Exculpatory clauses relieve a party from liability; this language only sets a timeline for notice. Third, plaintiff argued that the language was vague. How is the customer to know where to send the notice? The first page of the contract provides the address. From when does the 25 days run? From the date of receipt of the final invoice, which the Court says is “the only sensical [sic] reading of the provision.”

Finally, Plaintiff argued that the 25-day notice provision is unconscionable. Georgia law does not seem to be particularly welcoming to unconscionability claims, seeing them as a rare exception to the principle of freedom of contract. According to the Supreme Court of Georgia, unconscionable contracts are contracts that “no sane man not acting under a delusion would make and that no honest man would take advantage of[.]” They “shock the conscience” and are “abhorrent to good morals.” Yikes. That’s a hard standard to meet. If the first part of the test is met, we would seem to have a mental incapacity defense, and if the second part is met, the contract should be avoided on public policy grounds.

As to substantive unconscionability, a Georgia court upheld a 30-day written notice provision, so it was hard to say that 25 days was substantially different. Given the standard for unconscionability, it would have been a stretch for the District Court to accept the argument for substantive unconscionability in this case. And so the claim was dismissed for failure to give written notice. I’m not crazy about courts being sticklers for such technical requirements when the company was clearly on notice of the dispute. If the court is going to treat the writing requirement as a condition precedent to suit, it could at least consider whether enforcing the condition leads to a forfeiture and whether the defendant is prejudiced by the lack of written notice. In this case, it’s just as well, as both claims were rather silly and not a great use of court resources.