GM Gets Preliminary Approval for Class Action Settlement

07/08/96

18th Judicial District Court Judge Jack Marionneaux in Plaquemine, Louisiana granted preliminary approval to a settlement of a class action lawsuit filed against GM. The lawsuit was brought against GM on behalf of people who own GM full size C/K pickups with side saddle fuel tanks. As many as 5 million vehicles are involved.

Attorneys representing truck owners initiated the suit against General Motors to seek compensation for the loss of resale value that resulted from the controversy surrounding the trucks. Although the carmaker maintains that the trucks are as safe as any of their competitors' products, GM has long been under fire for constructing trucks with fuel tanks mounted outside the vehicles' frame rails. All full-size C/K pickups were built that way between 1973-87, and critics say they are prone to ruptures, fires, and explosions in side impact crashes. As of 1988, the C/K pickups have the tanks on the inside of the frame rails.

According to the settlement, GM will send truck owners a transferable coupon worth $1,000 off the price of any new or used GM car or truck. The coupons are valid for 33 months, although they depreciate past 15 months. Owners will be able to sell the coupons, if they desire, although their value will drop to $500 if they do. The Settlement replaces an earlier coupon deal that a judge in Texas dismissed as inadequate.

The National Highway Safety Administration had demanded that GM recall the trucks, but dropped that demand in 1994 in exchange for a GM funded $51 million general auto safety awareness campaign. Safety advocates have called for the deal to be terminated because of continued fire related fatal accidents involving the trucks.

The Louisiana settlement also requires GM to contribute $4.1 million to a national research project to promote fuel system safety. The settlement specifies in GM's favor, however, that that project may not involve research on the 1973-87 C/K trucks involved in the settlement.

Paul Dever -- The Auto Channel