AP NEWS
Related topics

Court Rejects Settlement in GM Gas Tank Case

April 17, 1995

PHILADELPHIA (AP) _ A federal appeals court Monday threw out a settlement under which owners of allegedly fire-prone General Motors Corp. pickups would have gotten $1,000 coupons toward new GM trucks.

The 3rd U.S. Circuit Court of Appeals agreed with opponents who branded the 1993 settlement merely a ``sophisticated marketing program″ to sell more GM trucks.

The court also said the $1,000 coupon would be worthless to rental companies and ``less wealthy″ truck owners unable to purchase new GM trucks.

The case involved the ``sidesaddle″ fuel tanks GM put on trucks built from 1973 to 1987. Last fall, Transportation Secretary Federico Pena said the trucks were prone to catch fire in a crash, and he blamed the design for 150 deaths.

Last December, GM averted a recall by reaching an agreement with the government to spend about $51 million on safety and research programs. Some industry analysts estimated a recall would have cost GM $1 billion.

The plaintiffs in the Philadelphia settlement argued that the truck design and lawsuits over fiery accidents had reduced the value of their vehicles. The settlement combined 36 class-action lawsuits filed across the country.

The appeals court said that because of a failure to take all factors into consideration, the federal judge who approved the settlement overestimated its cost to GM, which was put at $1.9 billion to $2.8 billion at the time.

When the settlement was reached, GM estimated 5 million to 6 million trucks remained on the road.

``We’re delighted that the court threw out a bad decision that rewarded lawyers and did nothing for consumers,″ said Clarence Ditlow, executive director of the Center for Auto Safety, which contested the settlement.

``When they started marketing these trucks in 1973, GM ads said 60 percent of them would still be on the road 18 years later. They made the trucks rugged, but they made the gas tanks like balloons waiting to be punctured.″

Ed Lechtzin, a GM spokesman in Detroit, did not immediately return a call for comment. The attorney who argued the case for GM, James Schink, refused to comment. The plaintiffs’ lawyer, Diane Nast, did not return a call for comment.

The decision came after the stock market had closed. GM shares were unchanged at $43.875 on the New York Stock Exchange.

The case now returns to U.S. District Court, where Ditlow said his agency will continue pressing for an order requiring a recall.

The trucks were built with their gas tanks outside the vehicle’s frame, a design that critics said made them vulnerable when hit from the side. GM has since abandoned the design but denied it was unreasonably dangerous.

In 1993, a jury in Atlanta found GM negligent in the death of a teen-ager in a fiery crash involving a GM pickup and awarded the parents of 17-year-old Shannon Mosley $105 million. The verdict was later thrown out; an appeals court said the jury should not have been told about other lawsuits against GM.

AP RADIO
Update hourly