Law Office Management
May 2, 2011
I Object!
Once I learned more about a class action coupon settlement for Ford Explorer owners, I decided to become an objector.
In 1998 I purchased a used 1993 four-wheel-drive Ford Explorer, a perfect vehicle for my wilderness trips to remote, rugged areas that are often snow covered, wet, and muddy. And after nine years and 286,000 miles, I had no reason to regret my purchase. So I was quite surprised to discover in December 2007 in a Los Angeles Daily Journal article that I was a member of a class action involving about a million Explorer owners in California, Connecticut, Illinois, and Texas. The lawsuit claimed that Explorers such as mine were unsafe and prone to rolling over. After a 50-day bench trial in Sacramento Superior Court, attorneys for Ford and class counsel for Explorer owners, still apparently unsure of the strength of their cases, decided to settle. The settlement omitted advising owners such as myself about any defect, dangerous condition, remedy, or repair for the vehicle. Instead, we would get a coupon entitling us to a minuscule $300 to $500 reduction off the price of a new Ford Motor Company vehicle. To qualify, I would have to submit a lengthy, detailed application and, if approved, I had one year to buy a new Ford before the coupon expired. By contrast, class counsel expected to receive $25 million in attorneys fees and expenses. Although the plaintiffs' firm worked for several years on the case, my wife and I felt class counsel's motives and behavior were self-serving. They audaciously claimed that the settlement was worth $300 million to $500 million, on the dubious theory that every potential class member would obtain and use the coupon. Rosemary Shahan, director of Sacramento-based Consumers for Auto Reliability and Safety, said that the value of the coupons was "questionable," according to the Daily Journal article. I agreed, as did my wife and another couple we know who also own an Explorer. I contacted Shahan, offering the four of us as objectors to the coupon settlement. Shahan and Clarence Ditlow, director of the Center for Auto Safety in Washington, D.C., promptly arranged for California attorneys to assist us. In April 2008 the court held a fairness hearing that lasted several hours. At the hearing, four objectors from other states joined with the four of us from California. Class counsel repeated their flawed claims. Several months later, Judge David DeAlba dismissed our objections and concluded that class counsel deserved a full fee, plus a multiplier of 1.21. He granted the $25 million. I was dismayed that he seemed unconcerned about class members, and the public in general, receiving no real benefit. I believe that class counsel are entitled to nothing if the client gets nothing. So we and the out-of-state objectors decided to appeal. Eventually, class counsel offered to buy off each objector with a payment of $2,500. All of the out-of-state objectors took the money, but my friends, my wife, and I refused. Actual redemption figures for "coupon settlements" are rarely disclosed, but I felt that if I could expose such settlements as worthless, my reason for objecting would be validated. I proposed a counter offer: We would drop the appeal and take less, or even nothing, on the condition that (1) the number of settlement coupons applied for, issued, and redeemed would be announced in well-publicized press releases, and (2) part of class counsel's $25 million had to be donated to auto-safety research. Class counsel eventually agreed to my conditions and contributed $950,000 to Georgetown University's auto-safety programs. The redemption results were announced in March 2010: Of approximately 1 million class members, only 1,647 applied for and received coupons. Of these, only 148, or less than .01 percent of the class, used a coupon. Then, with no explanation, the other couple and my wife and I were paid $2,500 each. (We donated our $5,000 to the Center for Auto Safety.) The Ford Explorer case has been cited in other class actions, including a case in the Central District of California involving Honda Civics. In fact, I sponsored an out-of-state attorney pro hac vice who was representing the objectors in the Honda litigation. And in that matter, I'm happy to report, federal Judge Virginia Phillips in Riverside rejected a proposed coupon settlement. Stephen E. Webber is in the process of retiring from his elder and disability law practice in Los Angeles.
Kari Santos
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