Topic: GM faces Canadian class-action lawsuit

[canadianexpress]

by GARY NORRIS -- Canadian Press posted April 25, 2006
 
TORONTO - General Motors faces a possible class-action lawsuit over allegedly defective intake manifold gaskets in 400,000 cars in Canada - a claim which lawyers say might total $1.2 billion.

Toronto law firm Stevensons LLP said Tuesday it is suing General Motors of Canada Ltd. and its U.S. parent, General Motors Corp. (NYSE:GM), the world's largest automaker.

The action claims that various Buick, Chevrolet, Oldsmobile and Pontiac engines from the 1995 to 2003 model years have intake manifold gaskets which degrade prematurely and allow coolant to leak into the engine.

"The claim here is based on problems that have surfaced right across North America arising from the fact that General Motors used nylon or other plastics in the manufacture of the intake manifold gasket," stated lawyer Colin Stevenson.

"The coolant can cause serious problems once it escapes," Stevenson added.

"In some cases the engines overheat and seize completely. The vehicles often need complete engine replacements at considerable expense to the owners."

The statement of claim says General Motors introduced a new gasket in 2004 but refuses to acknowledge a defect in the previous part.

The group of lawyers working on the case said it's too early to determine how much money will be sought from GM, but estimated that 400,000 vehicles in Canada would be covered by the proposed class action, with a possible average claim of $3,000 each, totalling $1.2 billion.

A Stevensons website (www.classproceedings.ca) says similar actions in the United States "have been hard-fought and continue to be pursued in various jurisdictions," with a class action certified in January in Missouri.

The next stage in Ontario is for the lead plaintiffs to confer with the judge managing the potential class action.

-

The vehicles involved, according to Toronto law firm Stevensons LLP:

1995-1997 Buick Riviera

1995-1998/2000-2003 Buick LeSabre

1995-1998/2000-2003 Buick Park Avenue

1996-1998/2000-2003 Buick Regal

2000-2003 Buick Century

2002 Buick Rendezvous

1996/1998-2001 Chevrolet Lumina

1998-2003 Chevrolet Monte Carlo

1997-2003 Chevrolet Venture

1999-2003 Chevrolet Malibu

2000-2003 Chevrolet Impala

1995-1998 Oldsmobile Ninety Eight

1995-1998 Oldsmobile Eighty Eight

1998 Oldsmobile Intrigue

1996-2003 Oldsmobile Silhouette

1999 Oldsmobile Cutlass

1999-2003 Oldsmobile Alero

1995-1998/2000-2003 Pontiac Bonneville

1997-1998/2000-2003 Pontiac Grand Prix

1996-1999 Pontiac Trans Sport

1999-2003 Pontiac Grand Am

1999-2003 Pontiac Montana

2001-2003 Pontiac Aztec


The law firms involved are asking concerned GM vehicle owners to visit their website at www.classproceedings.ca.

http://www.autonet.ca/News/story.cfm?story=/News/2006/04/25/1549930-cp.html

 

[AVToller]

$1.2 billion, eh? Sounds like another great reason to head for bankruptcy is the suit goes ahead and seems to have legal merit. 

[barrie1]

They have that kind of money sitting in the Bank so why would you go bankrupt when you can afford to pay it. They have that and a lot more if you read the news. 

[Accordingly]

Right, but they're losing it hand over fist in the course of simply running the business.

While this is unwelcome news for GM, it certainly bolsters the spirit of those consumers who have been affected by premature engine failures...and then told to eat it.

[asdf]

They have that kind of money sitting in the Bank so why would you go bankrupt when you can afford to pay it. They have that and a lot more if you read the news. 

If GM has the money then why would they need to sell off a part of their very profitable financial arm, GMAC?

[initial_D]

Money in Bank, the hard part is deciding what to do with it. 

[AVToller]

Money in Bank, the hard part is deciding what to do with it. 

 

[marcR]

1999-2003 Oldsmobile Alero

The law firms involved are asking concerned GM vehicle owners to visit their website at www.classproceedings.ca.

http://www.autonet.ca/News/story.cfm?story=/News/2006/04/25/1549930-cp.html

 

Sign me up!  Had the repair done a year and a half ago.  2000 Alero.

[GTI-Gabe]

Out of the $3000 each individual would get, the lawyer will probably take $2500 out of it

[BJB]

Out of the $3000 each individual would get, the lawyer will probably take $2500 out of it

nah, most people would assume 50% but in reality the deal would probably be closer to 30% which could then be "taxed" (audited) by the court and be lowered, this is fairly common in the legal system - besides lawyers are the ones assuming all of the risk in an action like this by putting out so much capital to get the action to the courts and to go through the copious amounts of evidence that would no doubt be used

[toolatecrew]

They have that kind of money sitting in the Bank so why would you go bankrupt when you can afford to pay it. They have that and a lot more if you read the news. 

Yeah they build up big reserve funds to pay off things like this.

Its easy to build reserves up by saving money using cheap components. Its like a warranty fund. Yeah we know a bunch of things will fail but if we save 2 B by using cheap parts and settling the lawsuit costs us 1 billion we just made 1 billion.

Pending lawsuits are GREAT for your stock price and the already shacky credit rating.

[marineboy]

Yeah they build up big reserve funds to pay off things like this.

Its easy to build reserves up by saving money using cheap components. Its like a warranty fund. Yeah we know a bunch of things will fail but if we save 2 B by using cheap parts and settling the lawsuit costs us 1 billion we just made 1 billion.

Pending lawsuits are GREAT for your stock price and the already shacky credit rating.

Yes, but you forgot to factor in the 10 billion lost in future business because your products are now percieved as shoddy.

[davidm]

Lots of commenters suggesting that even GMAC's new owner doesn't think much of the car biz: (from DealBook, a NYTimes blog at http://dealbook.blogs.nytimes.com/?p=2362)


Cerberus Won G.M.A.C, But What Does It Have to Lose?

As a group led by Cerberus Capital Management prepares to take a controlling stake in General Motors‘ financing arm, money managers are still trying to wrap their heads around the complex $14 billion transaction, which pitted Cerberus against a group including buyout giant Kohlberg Kravis Roberts.

In an interview with DailyII.com, a Web site run by Institutional Investor, Millbrook Capital president Clay Lifflander offers an unusually unvarnished take on the deal.


His reaction? Whether it works out or not, Cerberus and its senior managing director, Stephen Feinberg, cleverly structured the deal to protect themselves from the worst downsides. In fact, Mr. Lifflander says, despite having only 51 percent of General Motors Acceptance Corporation, Cerberus should reap rewards far in excess of its stake in the unit. The worst blow may come to the hedge fund’s reputation if the large and highly publicized investment goes bad.

Suffering more in comparison, Mr. Lifflander says, is G.M., which will retain certain buy-back rights under the deal:

I don’t think GM is ever going to be buying this back. I think they’re going to hell in a hand basket. That’s why Cerberus’ bet is more on the mortgage business and on getting more finance business on the auto side than what currently exists. To me this implies GMAC must have some good systems, some good back office and some good execs.

I wonder, though, from GM’s perspective, how they would compete not controlling this business anymore without controlling incentive offers if the other guys start putting incentives through the financing structure. I mean really this has got to be a pretty scary move for GM. They must be pretty desperate to get the cash.

[wscn008]

I have a 2001 Malubu which was manufactured in US, can I join the class action?
I just changed the gasket last December, the car was purchased second-hand in Jul 2005.
Thanks.

[Accordingly]

try asking these guys: www.classproceedings.ca

[barrie1]

I agree with that statement of asking them guys as if you bought this car without any factory warranty on it then I would think you are not going to get any money back on this problem. 

[duck]

I have a 2001 Malubu which was manufactured in US, can I join the class action?
I just changed the gasket last December, the car was purchased second-hand in Jul 2005.
Thanks.

You may receive a letter in the mail  from GM  asking you to sign and return  for an agreed amount of cash.