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Ford Explorer Settlement Called a Flop

Cheryl Miller

07-13-2009

Just 75 Ford Explorer owners -- out of a possible 1 million -- have redeemed discount coupons secured as part of
2007's four-state legal settlement, according to a report filed in Sacramento County Superior Court last month.

Under terms of the deal, owners of Explorers built between 1990 and 2001 could claim $500 toward the purchase of
a new Explorer or $300 to buy a different Ford, Lincoln or Mercury model. The offer, advertised in magazines,
television ads and online, was meant to settle claims in California, Connecticut, Illinois and Texas that the Explorer
was prone to dangerous rollovers.

But just 2,267 claims for the vouchers were submitted, according to the court filing. Of those, only 1,647 were
approved. The vouchers are each good for a year, and to date, only 75 have been cashed in.

The period to apply for a voucher ended April 29, 2008.

Assuming every voucher was spent on a new Explorer -- the report doesn't specify -- Ford has spent just $37,500
on the claims, far less than the $500 million contemplated had every owner taken the deal.

The deal generated attorney fees totaling $15.9 million, split among 13 firms. Class counsel and other parties
involved in the settlement also received $5.8 million for expenses.

Clarence Ditlow, executive director of the Center for Auto Safety, said the low participation numbers are proof that
so-called coupon settlements rarely benefit consumers.

"In most class action settlements, particularly ones involving automobiles, claims of hundreds of millions of dollars
are often settled with coupons," Ditlow said. "Our position is they're not really worth the paper they're printed on."

Tracey Buck-Walsh, the Sacramento, Calif.-based plaintiffs' liaison counsel in the case, said she and other attorneys
are disappointed that so few claims have been submitted. But, she said, the settlement was the best deal that could
be crafted considering the American automaker's shaky financial footing.

"We were fairly well-convinced that Ford could not have survived a large judgment," Buck-Walsh said. "If Ford had
gone bankrupt ... consumers would have received nothing."

The sinking economy and sagging demand for low-mileage SUVs haven't helped either, she said.

Co-lead counsel in the class action were Elizabeth Cabraser of San Francisco's Lieff Cabraser Heimann & Bernstein
and Kevin Roddy of Woodbridge, N.J..

In addition to the vouchers, plaintiffs lawyers secured settlement language that forced Ford to stop touting its SUVs'
safety characteristics without providing "reasonably reliable scientific evidence." Ford also agreed to provide
consumer warnings about rollover and tire safety dangers as well as information on proper cargo storage.

Buck-Walsh said the four-month trial preceding the settlement also resulted in testimony from a Ford safety expert
agreeing that the early-model Explorer, using eventually recalled Firestone tires, "was a defective product."

"It's easy to be a Monday morning quarterback, but we definitely believe it was in the best interest of the class,"
Buck-Walsh said.

Ditlow said his organization helped several owners appeal the original settlement. That appeal, he said, resulted in
the class counsel contributing $950,000 to car safety research.

He also sees a benefit to the low participation numbers reflected in the June report. The next time a judge asks for
proof that a proposed coupon settlement won't benefit consumers, Ditlow said, he'll point to the Explorer case.

"These cases are difficult cases, no doubt about it," Ditlow said. "The government couldn't get Ford to recall the
Explorer, so class counsel had an uphill battle. But at the end of the day, you shouldn't approve a settlement that
doesn't benefit consumers."