Chrysler Offers to Settle Some Odometer Suits : Firm Would Set Up Fund for Tampered Vehicles
Chrysler Corp. has made an offer to settle a number of class-action lawsuits stemming from the auto maker’s criminal indictment last June for allegedly disconnecting odometers on vehicles driven by company executives and then selling them as new to unsuspecting customers.
Chrysler spokesman Baron Bates confirmed that the company is “negotiating with the plaintiffs, but there is no settlement. We’re just talking and we don’t expect that any resolution is imminent.”
Bates declined to disclose any details of the discussions. However, lawyers for two sets of plaintiffs said that at a meeting in Detroit last week Chrysler attorneys made an offer that would cost the company about $21 million.
‘Way Too Low’
“It’s a complicated, structured offer that took them an hour to explain,” said attorney Dale Foreman, who represents a group of Chrysler customers in the state of Washington.
“They said they were willing to put up a fund of $16 million minimum, plus an additional reserve fund to make sure every legit claimant got at least $500.” Not counting the $5 million reserve fund, Chrysler is offering to pay $500 each to 32,000 car buyers.
B. Daniel Lynch, a Pasadena attorney representing a class action on behalf of California consumers, criticized the Chrysler offer as “way too low.”
“They are just trying to wrap the whole thing up in a rush,” said Lynch, arguing that Chrysler should pay $1,500 each to 60,000 customers.
Foreman said attorneys for the plaintiffs were told at the Detroit meeting that Chrysler also has been holding a series of meetings with “a group of attorneys general from a number of states to try to settle claims those states have, but they were unwilling to tell us who they’d met with.”
Foreman said the state’s claims involved “state-purchased vehicles and, in several cases, the attorneys general want to inject themselves into the case on behalf of citizens.”
Wrongdoing Denied
Since a federal grand jury in St. Louis handed down the 16-count indictment last June, at least nine class-action lawsuits have been filed on behalf of Chrysler customers. The indictment--which names the company and two of its executives--claims that in the 18-month period ending last December, more than 60,000 Chrysler cars were first driven by corporate managers and then shipped to dealers without revealing the true mileage. In some cases, the cars were damaged in accidents, repaired and then shipped to dealers with no mention of the incident or true mileage, according to the indictment.
Chrysler Chairman Lee A. Iacocca in July apologized for the situation, but he denied that the company had committed any illegal acts. Iacocca said Chrysler would offer a two-year, 20,000-mile warranty extension for customers who purchased cars that had odometers disconnected during test drives. He said customers who bought 40 cars damaged during test drives and later sold as new would be offered new replacement cars free.
