General Mills Coupon Settlement Decried : Consumers: Group opposes company’s attempt to settle class action in offering public free boxes of cereal.

General Mills Inc.’s attempt to settle a class-action lawsuit by handing out millions of coupons for free cereal, with proof of purchase, has drawn opposition from a public interest group.

Ralph Nader’s Public Citizen filed court papers Monday in Chicago objecting to the settlement, claiming it should be thrown out because it provides a marketing push for General Mills and a windfall for lawyers, while giving little to consumers.

Public Citizen’s intervention in the case comes just weeks after the group successfully represented truck owners who challenged as inadequate a settlement with Ford Motor Co. over charges that the auto maker’s Bronco II was prone to rolling over.

General Mills hotly disputed the characterization of the settlement as a promotional effort, saying the agreement calls for the company to provide at least $10 million worth of cereal to anybody who can prove they’ve bought a General Mills oat cereal.

“This is not a situation where the company’s going to benefit. This is going to cost the company a minimum of $10 million,” spokesman Craig Shulstad said.

The General Mills case stems from the disclosure that the Minneapolis-based firm made as many as 160 million boxes of Cheerios and other cereals from oats treated with a pesticide that is not approved for use on oats.

After talks with lawyers representing consumers nationwide, General Mills agreed to distribute certificates that can be redeemed for coupons worth a free box of Booberry, Kaboom or other cereals with proof of the purchase of another General Mills product. As part of the settlement, anybody who has a receipt showing that they purchased oats cereal during parts of 1993 or ‘94, when the pesticide was used, can also receive a refund.

Lawyers representing consumers in the class action can receive as much as $1.75 million under terms of the agreement, which is awaiting a judge’s approval in a Chicago court.

The settlement, in which the company agreed to redeem as much as $10 million in coupons, is “essentially a promotional opportunity for General Mills to sell more cereal,” said Con Hitchcock, a lawyer for Public Citizen.

In court papers, the group said the settlement “is highly beneficial to General Mills, holding out as it does the possibility of extinguishing all claims by all consumers across the country for virtually nothing.”

Shulstad, however, said the settlement is a real benefit because it provides free food despite the fact that there is no evidence the pesticide is harmful and no allegations that anybody was harmed. “Consumers are not being compensated for any harm done to them. There was none. This is a total benefit for consumers,” he said.

The challenge comes amid growing controversy about class-action lawsuit settlements that provide rich fees for lawyers but little or nothing for consumers.