## Facts

- Owners of certain GM full-size pickup trucks with “side-saddle” fuel tanks sued, alleging a design defect increasing the risk of post-collision fuel-fed fires.
- The consolidated MDL sought economic-loss damages and injunctive relief under federal statutes and state-law theories; personal injury and wrongful death claims were excluded.
- After limited discovery focused on class certification, the named plaintiffs and GM negotiated a settlement.
- Relief consisted primarily of a $1,000 certificate toward purchase of a new GM light-duty truck (with limited transferability), with a lower-value alternative for some third-party purchasers and time limits on use.
- The district court certified a nationwide settlement class (excluding Texas residents), covering millions of owners, approved notice, and granted final settlement approval after a Rule 23(e) hearing.
- The class notice did not disclose that GM would pay class counsel approximately $9.5 million in attorneys’ fees as part of the settlement structure.
- Thousands opted out and thousands objected, arguing the coupon relief was inadequate, functioned as marketing, and released valuable claims.

## Issues

1. Whether Rule 23(b)(3) certification of a nationwide settlement class was proper given variations in state law, choice-of-law concerns, and individualized issues affecting predominance and superiority.
2. Whether the settlement was fair, reasonable, and adequate under Rule 23(e) in light of coupon-based relief, uncertain redemption value, and the breadth of the release.
3. Whether notice satisfied Rule 23(c)(2) and Rule 23(e) where it omitted material information about attorneys’ fees and overstated the settlement’s practical value.
4. Whether intra-class conflicts required subclasses or separate representation, such that adequacy of representation under Rule 23(a)(4) was not met.

## Decision

- The Third Circuit reversed the orders certifying the nationwide settlement class and approving the settlement, and remanded.
- The court held Rule 23’s requirements are not relaxed for settlement-only classes and require heightened vigilance because adversarial testing is reduced.
- The court found inadequate analysis of predominance and superiority for a nationwide class in light of material state-law differences and choice-of-law problems.
- The court concluded adequacy of representation was not shown because significant intra-class conflicts were not addressed through subclasses or separate counsel.
- The court found the settlement’s value to class members was uncertain and likely overstated given coupon restrictions and redemption realities, while the release was broad.
- The court held the notice was deficient because it failed to disclose the negotiated fee arrangement and did not fairly present the settlement’s contingent, coupon-based value.

## Legal Principles

- Settlement-only class certification demands careful, independent application of Rule 23(a) and (b); settlement does not excuse failures of predominance, superiority, or adequacy.
- In nationwide class actions, courts must confront material variations in state substantive law and choice-of-law issues when evaluating Rule 23(b)(3) predominance and superiority.
- Adequacy under Rule 23(a)(4) requires attention to divergent interests within the class; significant conflicts may require subclasses and separate counsel.
- Rule 23(e) requires a searching assessment of whether the relief provides real value to the class in relation to the claims released; coupon structures warrant skepticism where redemption is uncertain or restricted.
- Rule 23 notice must provide absent members the best practicable information needed to decide whether to opt out or object, including material terms such as attorneys’ fee arrangements and the practical value of relief.

## Conclusion

The Third Circuit set aside a nationwide coupon settlement because the district court did not rigorously satisfy Rule 23’s certification requirements, did not resolve conflicts within the proposed class, and approved notice and relief that did not allow absent members to make an informed decision about a broad release in exchange for uncertain, restricted coupon benefits.


In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768 (3d Cir. 1995)