Ford has settled a class action lawsuit affecting about 1 million past Ford Explorer owners in four states. Consumer advocates say the settlement helps Ford and the plaintiffs' lawyers more than it helps consumers.
The settlement, which was largely approved by Superior Court Judge David De Alba yesterday, ranks among the very worst if not the worst in terms of value to the consumer, said Clarence Ditlow, executive director of the Center for Auto Safety, a Ralph Nader-founded consumer advocacy group.
In one of the final fallouts of the Ford/Firestone safety debacle of the 1990s, owners of 1991 through 2001 Ford Explorers in California, Connecticut, Illinois and Texas will be able to apply for $500 coupons to buy or lease new Explorers or $300 coupons to buy or lease other Ford, Mercury or Lincoln products, according to court documents.
The coupons are intended to compensate consumers who say their Explorers became less valuable because of the grave safety concerns surrounding them.
$25 million in fees
But while trial lawyers who represented consumers in this case are likely to make about $25 million, most consumers will be lucky to get anything at all.
Many will never learn of the settlement results while those who do may well be unable to meet the strict requirements needed to qualify for the coupons, Ditlow said.
Not only do you just get coupons for a car that you might not want to buy, but you can't sell the coupon and even more onerous, the hurdles that the consumer has to go through to produce papers include a written statement from the Department of Motor Vehicles verifying that you owned your Explorer on August 9, 2000 (for example), Ditlow said. Very few consumers are even going to get the coupon.
The norm for vehicle class actions is to notify members via mail, since the automaker has the owners' addresses on file, but this class action only has notice by publication, which usually just means a simple website with the claim form that consumers will likely only learn about if they read or hear about it in the media.
It appears it will be very difficult for most affected consumers to actually claim the coupon. Aside from obtaining a written statement from the DMV, consumers also need to know their Explorer's vehicle identification number a number many consumers may have discarded if they no longer own the vehicle.
So, for example, a class member who sold his 1991 Explorer in 1995 would need to track down 12-year-old paperwork simply to obtain that vehicles VIN, Ditlow wrote in his official objection to the settlement.
In Howard v. Ford, a similar case that required consumers to provide their VIN, only 1% of the class members filed claims.
In another unheard-of hurdle, the settlement requires that consumers provide proof of residence within one of the four listed states on certain dates.
The requirement that class members prove where they lived on a certain date is not only unduly burdensome, but the types of documents required to prove residency (such as bank statements, drivers license numbers, and so on), require class members to disclose highly personal, private information to the parties and to the claims administrator, a requirement that, by itself, will dissuade class members from even bothering to request a coupon in the first place, Ditlow wrote in his objection.
Those are just some of the myriad of documents and proof consumers must provide by the application deadline of April 29, 2008. Ditlow said it's unlikely any consumer would jump these hurdles to get a $300-$500 coupon.
In most other automobile class actions, consumers would receive cash compensation or be allowed to choose cash or coupon, Ditlow said. But these coupons cannot be sold and are only good toward a new Ford.
If a consumer had two Explorers included in the settlement, they cannot combine the value of the coupons for one purchase, but must instead purchase or lease two new Ford vehicles to get the full value of the coupons, according to court documents.
Hundreds killed, injured
Attorneys filed the lawsuits following a federal investigation in 2000 after more than 250 people were killed and hundreds more injured in accidents involving tread separation on tires produced by Bridgestone/Firestone. Most of those accidents involved Ford Explorers.
Consumer advocates also say the lawsuit does not address continued safety concerns. The Ford Explorer, even without exploding Firestone tires, still has a higher propensity to roll over than most other vehicles and just barely passes roof crush standards.
It doesn't fix the car. It doesn't benefit people who might get injured in the car, so what's the real purpose of the lawsuit? What's the purpose in settling in that way? asked Paula Lawlor, director of the People Safe in Rollovers Foundation, a nonprofit consumer advocacy group that aims to increase vehicle roof strength.
What got lost in the course of litigation is that the Explorer is a high rollover rate vehicle and you really need to do something about that if you want to do something for consumers who own Explorers, Ditlow said.
Ford spokeswoman Marcey Evans said Ford thinks the settlement is fair and refused to comment further.
The plaintiff's lawyers did not return phone calls from ConsumerAffairs.com.
What to do
Under terms of the agreement, residents who bought Explorers, model years 1991-2001, and still owned them as of Aug. 9, 2000, can apply online at www.explorerCAsuit.com or at www.ExplorerClaims.com for a "discount certificate."