MEMORANDUM AND ORDER
The parties in this multidistrict litigation have requested final approval for a proposed class settlement. For the reasons explained herein, the court approves the settlement as fair, reasonable and adequate.
Plaintiffs, in these class action lawsuits
, are owners of 1973 to 1987 model year General Motors Corporation ("GM") C/K full size pickup trucks and 1987 to 1991 GM R/V pickup trucks with fuel tanks located outside the frame rails. Plaintiffs claim this is a design defect increasing the danger of a post collision fire. The consolidated amended class action complaint alleges federal claims under the Lanham Trademark Act, 15 U.S.C. § 1125(a), and the Magnuson-Moss Warranty Act, 15 U.S.C. § 23(d)(1), as well as various state law claims including strict liability, fraud, unfair trade practices and breach of contract. It seeks compensatory and punitive damages for economic losses as well as injunctive relief. The complaint specifically excludes all claims for personal injury and wrongful death.
On July 19, 1993, plaintiffs filed a motion for authorization to disseminate notice to class members of the proposed settlement. In Pretrial Order No. 7, the court approved the motion to disseminate notice since the terms of the proposed settlement were sufficiently fair, reasonable and adequate for that purpose. Pretrial Order No. 7 also certified the class for settlement purposes only. The settlement class consists of all persons or entities who purchased in the United States (except for the residents of Texas) and are owners as of July 19, 1993, of a 1973 to 1987 GM C/K full size pickup trucks or 1987 to 1991 GM R/V pickup trucks.
Plaintiffs subsequently filed an application for final approval of the class action settlement on September 15, 1993. Pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, the court conducted a hearing concerning the fairness of the proposed settlement on October 26, 1993. At that hearing, the court heard from plaintiffs' class counsel, GM and members of the settlement class on the fairness, reasonableness and adequacy of the settlement.
Under the agreement of settlement, members of the settlement class will receive, on request, a $ 1,000 certificate toward the purchase of a new GMC or Chevrolet light duty truck. (Agreement P 11A.). Settlement class members requesting a certificate that ultimately choose not to redeem it can transfer the full value of the certificate to either a family member or to a third party purchaser of the vehicle covered by the settlement. (Agreement PP 11E., 11F. and 11G.).
After negotiating the best possible deal for a new light duty truck, the holder of the $ 1,000 certificate will present the certificate to the dealer. (Agreement P 11H.). The $ 1,000 certificate must be redeemed within 15 months of its availability. (Agreement P 11B.). The $ 1,000 certificate does not require settlement class members to trade-in their current vehicle in order to use the certificate toward the purchase of a new truck. (Agreement P 11C.) The $ 1,000 certificate can also be used in conjunction with any other GM incentive program. (Agreement P 11H.). Moreover, the $ 1,000 certificate can be used toward the down payment of an eligible light duty truck. (Agreement P 11D.).
A settlement class member can also sell the certificate alone to a third-party, at which point the certificate becomes worth $ 500. (Agreement P 11I.). The new $ 500 certificate is non-transferable and must be used within the original 15 month redemption period. (Agreement P 11I(3)). The $ 500 non-transferable certificate cannot be used in conjunction with any other GMC or GMAC incentive offer. (Agreement P 11I(4)).
The settlement resolves and dismisses claims arising from the alleged defect in the fuel tank placement. (Agreement P 8 and 16). However, the settlement does not dismiss any claims for personal injury or death. (Agreement P 8 and 16). Also, the settlement does not affect the rights of settlement class members to participate in any future actions GM may undertake as a result of the pending National Highway Traffic Safety Administration ("NHTSA") proceedings. (Agreement P 17).
Courts favor the resolution of disputes through voluntary compromise. See Williams v. First National Bank, 216 U.S. 582, 595, 30 S. Ct. 441, 54 L. Ed. 625 (1910); Petty v. General Accident Fire & Life Assur. Corp., 365 F.2d 419, 421 (3d Cir. 1966). Therefore, it is well established that courts strongly encourage settlements. Bell Atlantic Corp. v. Bolger, 2 F.3d 1304, 1314 n.16 (3d Cir. 1993).
Rule 23(e) of the Federal Rules of Civil Procedure requires court approval of any class action settlements:
A class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such a manner as the court directs.
Fed.R.Civ.P. 23(e). The approval of a proposed class settlement lies within the sound discretion of the court. See Walsh v. Great Atlantic & Pacific Tea Co., 726 F.2d 956, 965 (3d Cir. 1983); Girsh v. Jepson, 521 F.2d 153, 156 (3d Cir. 1975). The approval or disapproval must be based on the proposed settlement as a whole and as submitted. The settlement must stand and fall as a whole because the court may not re-write the agreement. Davies v. Continental Bank, 122 F.R.D. 475 (E.D.Pa. 1988).
The court's function in approving the proposed class settlement is to determine whether the proposed settlement is "fair, adequate and reasonable" and in the best interests of the class members. Walsh, 726 F.2d at 965. When making this determination, the court must find that the settlement is substantively reasonable compared to the likely rewards of litigation. Shlensky v. Dorsey, 574 F.2d 131, 147 (3d Cir. 1978); Fisher Brothers v. Cambridge-Lee Industries, Inc., 630 F. Supp. 482, 487 (E.D.Pa. 1985). The court should not substitute its judgment for that of counsel who negotiated the settlement. Sommers v. Abraham Lincoln Federal Savings & Loan Ass'n, 79 F.R.D. 571, 576 (E.D.Pa. 1978).
The Third Circuit has identified the following nine factors as relevant to determining the fairness of a proposed settlement:
(1) the complexity, expense and likely duration of the litigation;