Favorable Results for Compass Lexecon Clients General Motors and Polaris in Two Widely Publicized Class Action Product Defect Cases

Compass Lexecon experts provided analysis in two recent and successful outcomes in consumer class action cases alleging product defects. The first was GM’s class settlement of economic loss claims resulting from recalls of ignition switch assemblies, side airbags, and electronic power steering systems covering millions of vehicles. The second was the denial of class certification in an action against Polaris, a manufacturer of all-terrain vehicles (ATVs).

In the GM matter, plaintiffs claimed in court filings that class members suffered more than $77 billion in damages. However, they agreed in late March to settle for less than 1% of that amount following summary judgment rulings in favor of GM on key issues. Compass Lexecon supported multiple experts who rebutted plaintiffs’ damage claims, which relied on conjoint surveys to evaluate the impact of GM’s alleged misrepresentations about product reliability on the price of vehicles purchased by plaintiffs.

Compass Lexecon Senior Consultant Professor John List of the University of Chicago testified for GM about the deficiencies of plaintiffs’ damage analysis and showed that their conjoint-based analysis was unreliable and failed to establish the impact of the alleged defects on prices paid by plaintiffs. Compass Lexecon Senior Consultant Professor Robert Willig of Princeton University showed that plaintiffs’ experts failed to establish class-wide impacts. Dr. Laurentius Marais, Executive Vice President at Compass Lexecon, showed that the survey methods and statistical analysis applied by plaintiffs’ expert were unreliable. Professor Peter Rossi of UCLA, who was supported by Compass Lexecon, testified about the deficiencies of plaintiffs’ expert’s conjoint survey and damage analysis.

Although the damage methodology used by plaintiffs’ experts was similar to those previously accepted by other courts, Judge Jesse M. Furman (SDNY) concluded that plaintiffs’ experts’ analyses failed to meet the requirements of plaintiffs’ “benefit of the bargain” damage theory by failing to establish the price of vehicles that would have prevailed in the absence of the alleged misrepresentation. Judge Furman also concluded that plaintiffs’ experts failed to establish that plaintiffs were injured. His conclusions were consistent with opinions expressed by the Compass Lexecon experts whose reports were submitted by GM in support of its successful summary judgment motion.

In the Polaris case, Judge Nancy E. Brasel (DMinn) denied certification of a class of purchasers of ATVs who alleged heat-related safety defects. Plaintiffs’ experts in this case also attempted to use conjoint surveys and market simulation analysis to establish that customers overpaid for ATVs due to Polaris’ alleged misrepresentations of product quality. The Court, however, ruled that plaintiffs’ expert-driven overcharge theory was insufficient to meet class certification requirements in that it failed to “supplant required showings of causation, injury and damages.”

Professors List and Rossi were supported by a Compass Lexecon team based in Chicago that included Hal Sider, Evan McKay, Yoad Shefi, Ron Laschever, Peter Clayburgh and Jonnie Tompkins. Professor Willig was supported by a Compass Lexecon team based in Oakland that included Jith Jayaratne, Gilad Levin and Yoad Shefi. Professor Uri Gneezy of the University of California San Diego also worked closely with the Compass Lexecon teams on both cases. Compass Lexecon previously assisted counsel for GM in settling thousands of personal injury claims related to the recalls.

The Compass Lexecon experts were retained by Richard C. Godfrey, Wendy L. Bloom, and Andrew B. Bloomer of Kirkland & Ellis LLP in Chicago. The American Lawyer named this group as “Litigators of the Week” in April for their successful representation of GM and Polaris in the 2 cases.