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DaimlerChrysler Settles Nationwide Class Action Over Allegedly Defective Brakes for $14.5 Million

DaimlerChrysler ushered in the new year by settling for $14.5 million a class action filed in New Jersey state court. The settlement of the nationwide class action reportedly won court approval on December 26, 2006, bringing to a close Lubitz v. DaimlerChrysler Corp. The class action settlement covers the more than one million people who bought or leased a Jeep Grand Cherokee between 1999 and 2004. The class action complaint alleged that the brakes on Jeep Grand Cherokees were defective, causing them to sustain uneven wear and occasionally fail. In approving the settlement, the court noted that plaintiffs’ counsel would have had to overcome substantial obstacles if the case proceeded to trial, particularly with respect to damages as the cause of any problems associated with a vehicle’s brakes may be attributable to the individual driving habits of the class members.

The terms of the settlement reportedly call for DaimlerChrysler to repair or replace the brakes on Jeep Grand Cherokees that were purchased or leased between 1999 and 2002, and to inspect the brakes on Jeep Grand Cherokees manufactured in 2003 and 2004. Plaintiffs’ counsel requested almost $3 million in attorney fees, but the judge found the request excessive and awarded approximately $2.1 million. Even so, this worked out to a 50% lodestar factor based on hours actually worked.

Several news reports provide greater details on the settlement. One such report, entitled “N.J. Judge OKs $14.5M Settlement in Class Action Over Bad Jeep Brakes,” by Mary P. Gallagher of the New Jersey Law Journal, may be found in a December 29, 2006 posting on Law.com.