Michigan employees of General Motors who buy a lemon from their employer are one step closer to gaining the right to sue GM instead of having to arbitrate their claims.
A suburban Detroit judge has granted class-action status to a lawsuit challenging a requirement by General Motors for binding arbitration for warranty and repair-related claims by participants in its employee discount program in Michigan.
The judge previously had ruled that the compulsory arbitration provision of GM's New Vehicle Purchase Program for employees violates both Michigan's lemon law and the federal Magnuson-Moss Warranty Act.
'This is a major victory for consumers in Michigan, as they now have the opportunity to have their lemon law claims determined by courts and juries rather than by arbitrators selected by the automotive industry,' said plaintiffs' lawyer E. Powell Miller of Troy.
The company will appeal. 'In the meantime,' said GM spokesman Kelly Cusinato, 'we're not requiring people to go through binding arbitration until the legal issue is resolved.'
At issue is a provision in the GM program that requires new-vehicle purchasers after Feb. 28, 1999, to waive their right to sue and instead take any warranty coverage and repair claims to binding arbitration.
In his decision, Oakland County Circuit Judge David Breck ruled class-action status is appropriate since 'many thousands' of Michigan purchasers and lessees are affected.
The lawsuit does not seek financial damages for members of the class, Breck said, and it is the 'limitation of binding arbitration that is the actual injury suffered by the members.'
He ordered GM to send notices of his decision to all participants in the employee discount program. The notice says in part: 'The judgment permits separate lawsuits for warranty and repair claims by class members. GM will not suspend your privileges under the New Vehicle Purchase Program or otherwise retaliate or restrict your rights under Michigan law for bringing such a claim against GM.'
The plaintiffs' other lawyer, Christopher Lovasz of Garden City, said the decision 'effectively levels the playing field and prevents GM from retaliating against their (employees) for bringing lemon law suits in the courts.'
GM's Cusinato said the arbitration requirement was adopted to make it quicker and easier to resolve disputes among customers who receive 'significant discounts off the price of a new vehicle' under the plan.
'Our goal in having a mandatory and binding program for those customers who purchase under our employee plans was never to deny any remedies to any customer,' she said, adding that arbitrators can award the same remedies a judge or jury can, including ordering GM to repurchase the vehicle.