A New Jersey judge has approved a class action settlement bringing an estimated $1 billion to $3 billion in value to customers of Cooper Tire & Rubber Co., though Cooper itself estimates its actual cost at $55 million.
Cooper admitted no wrongdoing in the settlement, which received preliminary court approval last October, and stressed there were never any personal injury or property damage claims or demands for product recalls associated with the class action.
Also, consumer group Public Citizen, which filed a formal objection to the settlement, dropped its suit after both Cooper and the plaintiffs' attorneys who negotiated the settlement agreed to make some minor changes to ensure all potential claimants received their benefits.
Judge Marina Corodemus of the New Jersey Superior Court gave final approval Sept. 13 to the agreement, which settled 33 class action lawsuits brought against Cooper in 2000 and 2001. In those suits, attorneys claimed that faulty manufacturing methods caused adhesion problems resulting in bubbles or blisters in the tires' inner linings, a charge Cooper denied.
The agreement, as approved, covers approximately 40 million consumers who purchased approximately 170 million Cooper-built, steel-belted radial tires between Jan. 1, 1985, and Jan. 6, 2002.
Through the settlement, Cooper offers these consumers a five-year program which guarantees them free replacement tires-along with mounting, balancing and disposal costs-for every Cooper steel-belted radial that suffers a tread separation for whatever reason.
If consumers prefer not to take the replacement tire, the agreement offers a simplified alternative dispute resolution through which they can receive cash reimbursements instead.
In addition, Cooper agreed to implement an enhanced inspection process in its manufacturing facilities to ensure that potentially under-performing tires never leave the factory. The Findlay, Ohio-based tire maker also will fund a consumer education program on tire maintenance and safety in collaboration with the National Highway Traffic Safety Administration and the National Safety Council.
``This is a great deal for the class-action members-no ifs, ands or buts,'' said Allan Kanner, a New Orleans attorney who led the consolidated class action and negotiated the settlement.
Mr. Kanner, who called the agreement a ``gold standard'' for future class action settlements, noted the deal also includes an education program for dealers who carry Cooper tires, ``to make sure everybody gets benefits.''
Cooper has estimated of its actual cost of $55 million, approximately $30 million will go to the attorneys who negotiated the agreement.
The figure of $1 billion to $3 billion came from Mr. Kanner; a Cooper spokeswoman said that this is the estimated cost if all class members choose to claim benefits.
The failure rate of the Cooper tires involvement in the settlement is ``dramatically'' less than one-quarter of 1 percent, Cooper claims.
``This settlement proves we are committed to customer service and satisfaction,'' said Thomas A. Dattilo, Cooper chairman, in a news release. ``We stand by our tires, and this settlement reflects our confidence in the safety and durability of our product.'' The financial provisions Cooper made in the third quarter of 2001 should be sufficient to pay all the claims related to the settlement, Mr. Dattilo added.
Saul Ludwig, a tire industry analyst with McDonald & Co. in Cleveland, agreed with Mr. Dattilo that the settlement will have minimal financial impact on Cooper. ``Since the final agreement is no different from what was provided for last year, the financial provisions Cooper made would seem to be adequate,'' Mr. Ludwig said.