DISTRESSED DAILY: Hertz Loses Key Fight in False Arrest Dispute

Hertz Corp.lost a key court battle Thursday when a federal judge allowed more than 70 customers that the company had accused of stealing a rental vehicle to sue for false arrests.

The unusual ruling is a blow to the car renter, which was seeking to resolve hundreds of false arrest claims in bankruptcy court instead of fighting the lawsuits one-at-a-time around the U.S.

U.S. Bankruptcy Judge Mary Walrath found that Hertz should have told the customers that they could file claims as part of the company’s Chapter 11 reorganization, which ended last year. Because the customers weren’t given ...