Class Actions – Objections to Proposed Settlements
|Citation:||U.S. Dist. Lexis 3507 (E.D. La. Mar. 20, 1995)|
|Date Of Involvement:||11/04/1994|
The Bronco II's alleged defect is that it rolls over in avoidance maneuvers and other sharp steering situations because its center of gravity is too high, its wheel base is too short, and its suspension system is too rigid. In various class actions, plaintiffs sought retrofit and damages for repair and diminution in value because of the rollover problem. The class actions that were in federal court were sent to the district court in New Orleans by the Judicial Panel on Multidistrict Litigation. There, the plaintiffs' lawyers settled for a warning sticker, and other "safety" information that was already required by NHTSA about how to drive utility vehicles more safely. By lumping together all utility vehicles with the Bronco II, the plaintiffs' lawyers essentially adopted the defendants' view of the case — that all utility vehicles are alike and that roll over is the drivers' fault. The settlement also provided an "inspection" to determine whether the vehicle met Ford's specifications for tire size and vehicle height, the very specifications that the plaintiffs had originally said were defective! The inspection was, in our view, a ploy by Ford to get the 700,000 class members into their showrooms and to buy Ford's cellular phone service (a "free" phone came with the inspection if the class member was willing to buy a subscription to a cellular phone service owned by Ford). In a one-page fee request, class counsel asked for a $4 million fee to be paid by Ford! No time records or expense records were submitted — and yet, Ford did not object to the fee request.
We were the principal objectors. We took discovery, moved to compel Ford's settlement history in Bronco II rollover personal-injury cases, and filed the briefs upon which the court relied in rejecting the settlement. We also played the lead role at the fairness hearing on November 8, 1994, in New Orleans. We were the only objectors to submit evidentiary materials from experts, with assistance from the Center for Auto Safety, including affidavits from marketing experts, engineers, and a brilliant videotape from an expert who had run side-by-side tests with the Ford Bronco II and the expert's retrofitted vehicle (the former rolled over; the latter did not). Through discovery and our evidence, we were able to show that the settlement was virtually worthless, and that the class counsel had exaggerated the value of the settlement, and had made statements in their briefs that were not accurate.
We were the only objectors to challenge the fees. The federal judge was bothered a good deal by the fee request. We had asked for and obtained all the underlying information with respect to fees and expenses (time records, expense receipts). This material undermined counsel's claim that they had done serious work on the case or had contacted experts at the time they had previously alleged. Further, we were able to show that the amount of the fees was totally out of line.
The settlement was rejected in a blunt opinion, saying that the value of the settlement was "effectively zero." The court also called the fee request exorbitant and suggested that Ford's failure to oppose the fee request was evidence of collusion. We were also successful in obtaining a ruling that counsel are obligated to disclose to the class in the class notice the amount of the fees that will be sought.
Another settlement was presented to the federal court in late January 1997 which bore a close resemblance to the original settlement. The court refused to give that proposal preliminary approval for essentially the same reasons that it rejected the initial settlement. The court again indicated that the fee request (now up to $6 million) was "unconscionable and suggestive of collusion."
To our knowledge, no effort was made to revive this class action.