After a U.S. district court judge granted General Motors’ motion for summary judgment, the judge preliminarily approved a settlement that is less than 1 percent of the Plaintiffs’ originally claimed damages in excess of $77 billion.
Retained by Kirkland & Ellis
The judge granted General Motors’ motion for summary judgment against plaintiffs’ benefit-of-the-bargain economic loss damages claims, holding that the plaintiffs could not prove any such damages. The plaintiffs ultimately agreed to settle for less than 1 percent of their originally claimed damages.
Consistent with our experts’ findings, the judge ruled that plaintiffs’ conjoint survey “does not provide competent proof of Plaintiffs’ damages.”
GM announced numerous recalls stemming from an ignition switch system assembly. The resulting lawsuits were consolidated in a multidistrict litigation in the U.S. District Court for the Southern District of New York. Plaintiffs retained several experts, including an expert who submitted a conjoint survey aimed at measuring plaintiffs’ alleged benefit-of-the-bargain economic losses due to GM’s recalls.
Counsel for GM retained Cornerstone Research to support several academic experts who filed reports analyzing plaintiffs’ allegations and rebutted plaintiffs’ analyses, including the conjoint survey. These experts concluded that plaintiffs’ allegations were inconsistent with the real-world market data and the proffered conjoint survey was not equipped to measure market value, was unreliable, and its results were inconsistent with market and other survey data:
- Professor Kevin Lane Keller of Dartmouth College conducted surveys demonstrating that many consumers expect that vehicles may not be defect free and may be recalled to fix a safety defect, directly contradicting the plaintiffs’ expert’s assumptions.
- Professor Wayne Hoyer of the University of Texas at Austin conducted surveys demonstrating that putative class members varied widely in whether they relied on GM advertising and in the reasons for purchasing the at-issue vehicles, directly contradicting plaintiffs’ assumptions that putative class members had uniform reasons for purchasing at-issue vehicles and were uniformly influenced by GM advertising.
- Professor Dominique Hanssens of the UCLA Anderson School of Management analyzed GM vehicle sales and the effect of GM’s advertising on vehicle sales. Contrary to plaintiffs’ allegations, he found that there was not a statistically significant change in sales after the recalls and, consistent with the academic literature, the effects of GM’s at-issue advertising were de minimis.
- Professor Shari Diamond of Northwestern University evaluated plaintiffs’ conjoint survey from a survey design perspective, and found that it contained several flaws and sources of bias that rendered its results unreliable.
- A marketing expert demonstrated that the plaintiffs’ conjoint survey did not account for any supply-side factors and therefore could not measure any alleged difference in value for at-issue vehicles. He also found that the plaintiffs’ conjoint survey suffered from multiple methodological flaws that rendered it unreliable.
- Cornerstone Research also supported other experts who evaluated the reliability and validity of plaintiffs’ conjoint survey results, and analyzed transaction data finding no evidence of a negative, class-wide impact on at-issue vehicles due to the recalls.
Consistent with our experts’ findings, U.S. District Judge Jesse M. Furman ruled that plaintiffs’ conjoint survey “does not provide competent proof of Plaintiffs’ damages” because it “measures consumers’ private valuations (on average) of certain hypothetical GM vehicles sold with fully disclosed defects; it does not measure the market value of those vehicles.”
Judge Furman further concluded, “the Court must grant New GM’s motion for summary judgment on the named Plaintiffs’ claims to the extent they seek damages measured as the difference in value between their cars as bargained-for and their cars as received.”