6 Million Owners of GM Pickup Trucks to Receive Class Action
Settlement Certificates and Cash Alternative Offer
HOUSTON, April 19 As part of one of the largest automotive
class action settlements in history, nearly six million owners of GM pickup
trucks will receive a letter from General Motors over the next few days
offering them a certificate they can use toward the purchase of a new GM
vehicle.
At the same time, class members should watch their mail for a letter from
the attorneys who represented them in the lawsuit. This letter will include a
groundbreaking offer from Houston-based Certificate Redemption Group (CRG) to
pay class members $100 for their certificates if they are not in the market
for a new car or truck.
The unusual cash offer is endorsed by the attorneys representing the class
members and several consumer organizations. It was designed to create a
secondary market for the certificates to ensure that all class members
actually get something of value as part of the settlement.
"Class action settlements too often ignore the little guys and they get
nothing from these multi-million dollar settlements," says James R. Dawley,
chairman and CEO of CRG.
"This is the first attempt in an automotive class-action lawsuit of this
size to put money in the hands of a significant number of class members. In
previous certificate settlements, typically no more than 10 percent of the
class members have redeemed their certificates. Apparently, that is what GM
is counting on to keep their exposure down in this lawsuit. If one million
truck owners -- who aren't going to use their certificates anyway -- accept
our cash offer, we could return $75-$100 million to the class. If GM
continues to try and prevent the operation of a secondary market, the class
members may lose again."
In addition, CRG is making a donation of up to $4 million to the
Automotive Safety Research Institute (ASRI) to help fund research into
designing safer fuel systems.
The settlement comes after nearly nine years of legal wrangling over GM
pickups with sidesaddle gas tanks which class attorneys argued were defective
because they were prone to explosions in side-impact collisions. Initially,
GM tried to make the transfer or sale of the certificates almost impossible.
However, consumer groups including Public Citizen and the Center for Auto
Safety, along with class counsel fought back in the courts, contending that
consumers would get very little from a settlement in which the only thing they
could do was buy a new vehicle, which many couldn't afford.
In the final order and judgment signed by Judge Jack Marionneaux, he was
particularly concerned that the certificates be freely transferable in order
to create a successful secondary market.
In the order he wrote: "Because of the objections by some class members
that they can only benefit from this Settlement by purchasing a new vehicle
which they cannot afford, and related criticisms of the previous settlement,
the Court was extremely focused on the importance of transferability of
certificates. The Court concludes, after a thorough examination of all
evidence in the record, that the certificates will be freely transferable,
which transferability, combined with market forces, will facilitate the
creation of a secondary market and should yield an estimated minimum value per
certificate of $100."
Starting April 18, separate mailings are being sent by both GM Settlement
Headquarters and the Lead Class Attorney to more than 5.8 million owners of
1973-1991 full-size GM pickup trucks. The GM mailing includes an "application
for certificate"; enclosed with the Lead Class Attorney's mailing is the "cash
alternative offer".
The get a certificate to buy a new GM vehicle, recipients must fill out
and sign the "application for certificate" in the GM envelope and mail it back
to redemption headquarters.
To exchange the certificate for $100 cash, recipients must sign both the
"application for certificate" from the GM mailing, and must also sign the
"cash alternative offer" that's in the Lead Class Attorney envelope. Both
forms must be enclosed in the business reply envelope provided and mailed back
to redemption headquarters.
Truck owners can also sell their certificates by telephone at
1-800-317-4997 or online at http://www.CertificateRebates.com where settlement
information is available. But time is very short. CRG's $100 offer is good
for only 30 days from the date of the mailing. After that, the offer amount
could be reduced.
By mid-May, dealers, leasing companies and fleets will be able to access a
special Web site designed for them at http://www.CertificateDepot.com where
certificates may be purchased in large quantities.
CRG's cash alternative has the support of attorneys for the Class and
consumer groups including Public Citizen and the Center for Auto Safety, the
Ralph Nader-formed advocacy group. CRG has worked closely with the nation's
leading information, banking and fulfillment companies to ensure that the
certificate transfer and exchange is handled smoothly and accurately.
Houston-based Certificate Redemption Group, LLP, was formed in 1996 for
the sole purpose of creating a secondary market for GM certificates in the GM
pickup truck class settlement. CRG is the exclusive secondary market maker
endorsed and supported by class counsel for the GM Program 01-50, GM Full-Size
Pickup Settlement.
Certificate Plan Complex But Effective
How The Deal Works
Coupons or certificates are rarely used to successfully settle
class-action law suits for the benefit of the class members. Defending
companies prefer them because typically no more than 10 to 15 percent of the
certificates ever get redeemed. Certificate Redemption Group (CRG) of
Houston, TX offers a consumer-friendly solution that could substantially
increase the use of certificates while putting cash in the pockets of class
members. CRG is working closely with attorneys for class who have endorsed
CRG and its solution.
Who Will Get The Certificates?
On April 18, General Motors mailed the Final Notice and Application for
Certificate to 5.8 million eligible members of the class-action lawsuit.
These are people and businesses that were owners-of-record as of 12:01 a.m.
July 4, 1996 of GM 1973-1986 Model C/K series and 1987-1991 R/V series pickup
trucks and chassis cabs.
It is important for these truck owners to reply to the mailings so they
can apply for the $1,000 Settlement Certificate. They can use this
certificate to either buy a vehicle or sell the certificate to CRG for $100
cash. Consumers have 30 days to take advantage of CRG's $100 offer. After
30 days, the cash offer may decrease.
Who Can Use Them or Sell Them?
The rules agreed upon by the courts and General Motors are stringent.
Only the named owner of the truck, a spouse or immediate family members who
live at the same address and can prove it by showing a driver's license are
eligible to use the $1,000 certificates. Someone who purchased the truck and
can prove the sale with a title and registration also can use the certificate
in its full amount. In addition, there are provisions for fleet owners and
government entities that own one or more trucks to use the certificates in
their full amount. Holders of transferred or exchanged certificates get
substantially less.
To get the full $1,000 value, truck owners must use the certificates to
purchase a new GM vehicle (except Saturn and electric vehicles). The
certificates are not good for retail leased vehicles and under no
circumstances can the certificates be redeemed for cash. When these
certificates are sold or transferred, the value drops drastically. Their
value to anyone but the original owner of the truck and immediate family or
the subsequent owner of the truck is no more than $500, but most often only
$250.
What Are The Certificates Worth to Consumers?
Consumer First 15 months Final 18 months
Original owner $1,000 $500
Eligible family member $1,000 $250
Subsequent truckowner $1,000 $500
Holder of Bearer Certificate* N/A $250
*During the final 18 months, the certificate becomes a "bearer
certificate" and anyone who holds the consumer certificate can redeem it.
What are the Certificates Worth to Third Parties?
Third Party First 15 months Final 18 months
Third-party holder of certificate
without other GM rebates $500 NA
Third-party holder of certificate with
GMAC financing or GM credit card $500 NA
Third-party holder of certificate with
any available cash rebates $250 NA
What are the Certificates Worth to Fleets? (Three or more vehicles).
Fleet offer only is good for 50 months.
Fleet/government First 15 months Final 35 months
Original owner $1,000 $250
Subsequent owner $1,000 $250
General Motors C/K and R/V Series pick-up trucks
in the Class as of July 4, 1996*
(according to court records)
GM C/K and R/V series pick-up GM C/K and R/V series pick-up truck
truck counts by state counts ranked by state
alphabetically
AA 26 MT 50,038 TX 610,432 MA 65,249
AE 199 MX 4 CA 498,349 ID 60,462
AK 22,349 NC 133,028 OH 221,455 WV 57,016
AL 159,244 ND 41,617 PA 190,776 NJ 52,089
AF 101 NE 71,353 MI 181,918 MD 51,819
AR 108,850 NH 31,889 MO 175,878 MT 50,038
AS 6 NJ 52,089 OK 171,532 SD 42,773
AZ 137,655 NM 78,131 GA 165,305 ND 41,617
CA 498,349 NV 35,520 IL 163,910 ME 40,858
CO 99,612 NY 151,789 IN 163,595 CT 40,018
CT 40,018 OC 732 FL 161,675 NV 35,520
DC 1,355 OH 221,455 AL 159,244 WY 32,912
DE 11,082 OK 171,532 TN 153,645 NH 31,889
FL 161,675 OR 95,518 NY 151,789 AK 22,349
GA 165,305 PA 190,776 WA 142,118 VT 14,981
GU 11 PR 72 KY 138,007 DE 11,082
HI 10,123 RI 9,467 AZ 137,655 HI 10,123
IA 123,754 SC 101,017 NC 133,028 RI 9,467
ID 60,462 SD 42,773 IA 123,754 DC 1,355
IL 163,910 TN 153,645 LA 122,391 OC 732
IN 163,595 TX 610,432 VA 122,283 Unknown 421
KS 116,006 UT 80,200 MN 117,399 AE 199
KY 138,007 VA 122,283 KS 116,006 AF 101
LA 122,391 VI 7 WI 112,776 PR 72
MA 65,249 VT 14,981 AR 108,850 AA 26
MD 51,819 WA 142,118 MS 104,484 GU 11
ME 40,858 WI 112,776 SC 101,017 VI 7
MI 181,918 WV 57,016 CO 99,612 AS 6
MN 117,399 WY 32,912 OR 95,518 MX 4
MO 175,878 Unknown 421 UT 80,200 MP 1
MP 1 TOTAL 5,838,342 NM 78,131 TOTAL 5,838,342
MS 104,484 NE 71,353
* The above listings total 5,847,282 which is slightly higher than the
actual number of vehicles registered (5,838,342) due to occasional
overlapping registrations state to state.
HISTORY OF THE GM PICKUP TRUCK CLASS ACTION LAW SUIT
Like Ford and Chrysler, General Motors made pickups with gas tanks inside
the cab in the 1960s. Because of safety concerns about putting a gas tank
next to passengers, the Big Three automakers all decided to relocate the tank
outside the passenger compartment in the early 1970s -- but only GM opted to
put the tank outside the frame. The results of that decision have led to a
25-year history of fiery accidents and heavily publicized court action.
1973 -- GM started positioning two 20-gallon tanks outside the frame rail
on nearly 10 million full-size pickups and cab-chassis trucks
(pickups without beds). The models with this design feature
include the 1973-1986 Model C/K series and 1987-1991 R/V series
pickup trucks and chassis cabs. It was alleged that when these
vehicles were involved in a side-impact crash, the unprotected gas
tank was in danger of exploding.
1992 -- The first widely publicized suit over this issue was filed by
Thomas and Elaine Moseley of Snellville, Ga. Their son, Shannon,
died after his 1985 GMC pickup was struck by a drunk driver
in 1989. The Moseleys said that their son survived the crash but
died from a fire caused by the improperly placed fuel tank. The
government began investigating the pickups' safety after petitions
by two public interest groups, the Center for Auto Safety and
Public Citizen, as well as a controversial "Dateline NBC" program
in November 1992 that portrayed the trucks as fire hazards in
crashes. (NBC later retracted its story and apologized after GM
revealed the network had used toy rocket engines to ignite fuel
tank fires in crashes staged for broadcast.)
1993 -- The jury in a state court in Atlanta found GM negligent in
February and awarded $105.2 million, most of it as punitive
damages, to the parents of Shannon. GM appealed, and ultimately
the case was settled in 1998 for an undisclosed amount. GM also
settled at least 35 other similar cases before they went to trial.
In April 1993, the National Highway Traffic Safety Administration
(NHTSA) called on GM to voluntarily recall the vehicles, but GM
refused to comply and instead submitted a 50-page study supporting
the safety of its truck.
1994 -- U.S. Secretary of Transportation Federico Pena headed up an
investigation into the safety defect and found at least
150 related fire deaths. The investigation also found that GM had
known about the defect since the early 1970s and had neither
remedied it nor warned the public. In response, GM committed
$51 million to safety programs. GM also was hit with class-action
suits in virtually every state. They were consolidated into a
Multi-District Litigation affecting 49 states in Federal District
Court in Philadelphia. A separate state class action continued in
Texas, where pickup-loving residents owned more than 1 million of
the vehicles.
Both class-action suits initially were settled by offering a
$1,000 certificate good toward the purchase of a new GM truck or
car to current owners of the pickups with sidesaddle tanks.
Several state and local objectors along with Public Citizen and
the Center for Auto Safety appealed the settlement because the
Certificate plan benefited only those who could afford to buy a
new vehicle and had no value to those who did not. The Court of
Appeals for the Sixth Appellate District of Texas agreed and
overturned the Texas class-action settlement with harsh words for
both sides.
The court said: "This suit was instituted because of the hazard
posed by the side-saddle gasoline tank, yet this issue is given
scant attention in the settlement agreement." Lawyers defending
the identical settlement for the other 49 states were grilled by
the U.S. Court of Appeals for the Third Circuit a few days later.
Like the Texas Court, the federal court questioned the fairness of
the national class-action settlement and what it did for safety.
1995 -- The Third Circuit reversed the trial court's approval of the
nationwide settlement in a scathing and lengthy opinion that
rebuked the court, counsel and GM. GM appealed to the U.S. Supreme
Court, but the Supreme Court refused to hear the case and it went
back before the federal trial court.
1996 -- The case was refiled in Louisiana, combining the Texas and the
national class action suits. A state court judge in Louisiana
approved a new class-action settlement covering all GM truck
owners. The case is White et al v. General Motors Corp. et al.
The settlement includes the same deal, but adds the stipulation
that attorneys for the class-action suit will establish a fund to
develop and implement a repair for the GM truck fuel system
defect. Certificate Redemption Group (CRG) was asked by the
attorneys handling the settlement to implement the sales or
transfer of the certificates to create a secondary market. The
purpose was to ensure that owners who don't want to buy a new
truck would at least get enough cash to fix their old ones and get
some benefit from the settlement.
1997 - 2000 -- The Court of Appeals of the Louisiana First Circuit
overturns 1996 settlement on a technicality and sends it
back to the district court.
1999 -- The NHTSA's Fatality Analysis Reporting System shows that more
than 1,600 people have been killed in fiery crashes involving the
GM pickups from February 1993 - December 1999.
2001 -- The case continued to languish in the court system with objections
to administrative details, but GM signed a final agreement
April 12, 2001 and launched the required mailing April 18, 2001 to
all 5.8 million eligible class members. Also on April 18,
attorneys for the Class launched a separate mailing to the class
members that included an offer to buy certificates from consumers
who had no use for them. The program is being handled by
Certificate Redemption Group (CRG), the market maker brought in by
Class Counsel to increase the settlements value to class members
who don't intend to buy a new vehicle.
The GM Class Action Settlement At a Glance
What is it?
A major class-action lawsuit against General Motors that claimed its
"side-saddle" fuel tank design is defective, because the fuel tanks on certain
model GM pickup trucks are placed outside the frame rails. Attorneys for the
class argued that the location of the tanks outside the frame rails makes them
more susceptible to rupturing and igniting in a collision. GM has paid out
nearly half a billion dollars in settlements.
GM's 1973-86 Full-Size "C" and "K" series, and 1987-91 "R" and "V" series
Chevrolet and GMC models involved:
GM 1973-1986 "C" and "K" full-size pickup trucks or chassis cab models
including Chevrolet C10, C20, C30, K10, K20, K30; and GMC Truck C1500,
C2500, C3500, K1500, K2500, K3500 models.
In addition, the following GM 1987-1991 full-size pickup truck or chassis
cab models including Chevrolet R10, R20, R30, R2500, R3500, V10, V20, V30,
V2500, V3500 and GMC R1500, R2500, R3500, V1500, V2500, V3500.
Consumers Affected:
Nearly 10 million of the trucks were built; 5.8 million people who still
owned these trucks as of July 4, 1996 are eligible for compensation.
Number of deaths:
According to the Center for Auto Safety ( http://www.autosafety.org ), in the
six years from February 1, 1993 to Dec. 31, 1999, there have been 1,600 deaths
linked to these model trucks. This number is based on computations derived
from the National Highway Transportation Safety Administration's (NHTSA)
Fatality Analysis Reporting System.
First Individual Law Suits:
Thomas and Elaine Moseley of Snellville, GA filed the first high-profile
suit in 1992 after their son died in a fire when his GM pickup was hit by a
drunk driver in 1989. The Moseleys won the case and were awarded
$104.2 million, but GM appealed and ultimately the case was settled, as were
35 other similar cases. GM was then hit by class action suits in nearly every
state.
First Class Action Law Suits:
The various class action suits were consolidated in a Multi-District
Litigation in Federal District Court in Philadelphia in 1994. A separate
Class Action continued in Texas. Both were eventually settled by GM which
promised to give all 5.8 million class members a $1,000 certificate good
toward the purchase of a new GM vehicle. Several states and consumer groups
objected on the grounds that only class members who purchase a new GM vehicle
would benefit and others would get nothing. They appealed the settlement to
the Court of Appeals for the Sixth Appellate District of Texas, which
overturned it, along with the same settlement for the Multi-District
Litigation. GM then appealed to the U.S. Supreme Court, which refused to hear
the case. Both class actions were then combined and refiled in Louisiana
under "White et al v. General Motors Corporation."
Court Jurisdiction for "White et al v. General Motors":
18th Judicial District Court for the Parish of Iberville, Plaquemine,
Louisiana. Presiding Judge: Jack T. Marionneaux.
Plaintiffs:
Joseph A. White III, John L. Monson, and Anthony O. Cashiola, Sr.
Lead attorneys:
Lead Class Counsel: Don Barrett, Barrett Law Offices, Lexington, MS
(Contact: 662-834-2376)
For General Motors Corporation, Detroit: Lee A. Schutzman. (Contact: Jay
Cooney, 313-665-3149)
Chronology of Latest Settlement
Dec. 19, 1996 -- Iberville Parish District Court approves a new class
action settlement covering all GM truck owners.
June 29, 1998 -- Court of Appeals of the Louisiana First Circuit overturns
1996 settlement on a technicality and sends it back to
the district court.
Jan. 20, 1999 -- District court signs an order supporting the decision
and judgment.
April 1, 1999 -- GM and Class Counsel agree to a revised settlement plan.
June 1999 -- District Court approves the agreement.
July 1999 -- GM appeals the part of the decision that allows for CRG
or its affiliated companies to contact class members by
including its cash offer in the GM mailing to class
members.
Nov. 17, 2000 -- Court reaffirms agreement. GM appeals, contending
administrative procedural errors.
Jan. 16, 2001 -- First Circuit Court of Appeals, State of Louisiana
reaffirms several administrative details of the
settlement agreement.
April 18, 2001 -- GM and the Lead Class Attorney each send out letters to
the 5.8 million class members announcing their
respective settlement offers.
The Settlement:
In addition to the nearly $500 million GM has paid in settlements, GM also
agreed to provide a $1,000 certificate to each of the 5.8 million consumers
involved in this case. GM was ordered to mail a letter to each member of the
class advising them of the settlement and explaining how to get their
certificate.
Further, GM agreed that the certificates will be transferable so consumers
can use them or give or sell them to a family member or friend. Consumers can
also sell the certificates to Certificate Redemption Group (CRG) for $100
cash.
The Cash Offer of Certificate Redemption Group (CRG):
Focus groups conducted by Class Counsel revealed that many of the
5.8 million consumers involved will not be in a position or don't want to
purchase a new $20-$30,000 car or truck, even with the certificates. For
them, CRG's $100 cash offer may be the only viable alternative.
About Certificate Redemption Group, LLP:
Houston-based Certificate Redemption Group, LLP, was formed in 1996 for
the sole purpose of creating a secondary market for GM certificates in the GM
pickup truck class settlement. CRG is the exclusive secondary market-maker
endorsed and supported by class counsel for the GM Program 01-50, GM Full-Size
Pickup Settlement. Its Chairman and CEO is James R. Dawley.
Additional Information:
http://www.CertificateRebates.com
http://www.consumerlawpage.com/article/gm_pickup_settlement.shtml
http://www.citizen.org/autosafe.htm
http://www.autosafety.org
