How much was paid in incentive awards in the Daniel Klein case against Budget?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
practices. The case was settled with ABG paying $3.25 million on June 2, 2016.
Daniel Klein and Stephanie Klein, on behalf of themselves and others similarly situated v. Budget Rent A Car System, Inc. and Avis Budget Car Rental, LLC (United States District Court for the District of New Jersey, Case No. 2:12-CV-07300-JLL-MAH). On November 27, 2012, Plaintiffs Daniel Klein and Stephanie Klein, participants in Budget's travel rewards program ("Travel Rewards Program"), filed a putative class action against ABCR and Budget, alleging a failure to adequately disclose to participants in the Travel Rewards Program that defendants impose a surcharge for frequent flyer miles earned through online rental transactions. Plaintiffs have asserted claims for violations of the New Jersey Consumer Fraud Act, breach of contract, breach of implied covenant of good faith and fair dealing, and seek monetary damages, and injunctive and declaratory relief. The District Court granted final approval to a class action settlement in this matter on June 21, 2016. Pursuant to the district court's final approval order, payment of $3,050,000 in attorneys' fees and $10,000 in incentive awards was paid by ABG on December 5, 2
Source: Item 3 — LITIGATION (FDD pages 12–16)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the case of Daniel Klein and Stephanie Klein v. Budget Rent A Car System, Inc. resulted in a class action settlement approved by the District Court on June 21, 2016. As part of the final approval order, $10,000 was paid in incentive awards. This payment was made by ABG (Avis Budget Group) on December 5, 2016. All settlement benefits were distributed to the class by February 20, 2017.
For a prospective Budget franchisee, this information is relevant as it provides insight into the types of legal claims that have been brought against the company in the past, specifically those related to the Travel Rewards Program. It also shows the costs associated with settling such claims, including attorney's fees and incentive awards. Understanding these potential liabilities can help a franchisee assess the financial risks associated with operating a Budget franchise.
The fact that Budget agreed to a settlement, including incentive awards, suggests a willingness to resolve disputes and avoid potentially larger judgments. However, it also highlights the importance of adhering to disclosure requirements and fair business practices to minimize the risk of future litigation. Franchisees should ensure they are fully compliant with all applicable laws and regulations, particularly those related to consumer protection and advertising.
It's worth noting that the $10,000 incentive award is a relatively small portion of the overall settlement, which included $3,050,000 in attorneys' fees. This indicates that the primary cost to Budget was legal representation rather than direct compensation to the plaintiffs. Nevertheless, the incentive award serves as a reminder that even seemingly minor claims can result in significant expenses for the company and its franchisees.