GM Faces Angry Consumer Group
MORE THAN ONE General Motors executive is having difficulty these days thinking about GM diesels without also wondering about Diane Halferty and her Seattle-based group “Consumers Against General Motors” (CAGM). The giant auto company has taken out newspaper ads in 16 Northwest cities and sent four of its officials to negotiate with Halferty’s group, which now numbers more than 600 lemon owners and is stimulating similar associations in Texas, California, New York and other states.
It all started with the upper-middle-class fury of GM owners scorned. The Halfertys bought a 1979 Cadillac Seville for $20,000. Diesel engine No. 1 failed at 3,000 miles while under warranty. GM replaced it with diesel engine No. 2. That failed and GM said: So sorry. The owners bought a used engine and had it installed at their own expense. That also failed. Then they put in a claim to GM for $42,000 to cover the purchase price, interest, lawyers’ fees, towing bills, car rentals, insurance expenses and time lost from work. In response, GM offered a used Cadillac for $7,000 on a trade-in.
Mrs. Halferty said no, declaring that she “wasn’t going to test drive any more cars for them.” Then she went to work to form what may be the most sophisticated and organized automobile model revolt in the country. The detailed structure of CAGM will provide a pattern for many Americans who find themselves defrauded by a nationally known brand-name product.
First, Halferty’s research soon found that GM indeed was having engine and transmission problems in its 1978 through 1981 diesel-powered cars and pickups. CAGM put classified ads in newspapers which brought forth a torrent of lemon complaints from owners of Cadillacs, Oldsmobiles, Buicks, Chevrolets and Pontiacs with 350-and 260-cubic-inch- diesel engines and THM 200 transmissions. A newsletter was started to keep the growing membership up to date. At times, after an advertisement or a local news report came out, Halferty would receive 30 to 50 calls a day.
Meetings were held in high school auditoriums; rallies were arranged to strengthen the solidarity among CAGM members and keep their stamina strong. GM is known as a company that knows how to wear down dissatisfied consumers with delays, stonewalling and other maneuvers. Also, GM was trying to lure its “unhappy” customers into agreeing to binding arbitration through the Better Business Bureau. Customers who lost this arbitration by the business-sponsored BBB found they had no further rights of appeal. CAGM warned about this procedure and set a policy of group negotiating to prevent GM from a divide-and-rule tactic. Strength in numbers is Halferty’s motto.
CAGM members are encouraged to become active on several committees including technical, legal, finance, publicity, facilities and communications, and membership committees. The technical committee, for example, keeps members up to date on the engineering problems of their cars, reviews member surveys, holds meetings with component service shops and provides recommendations on the operation and maintenance of the diesel engine to minimize mechanical problems. A computer contains data for ready retrieval.
CAGM’s strategy has been to try settling the cases via full refunds plus expenses, or an equivalent compensatory satisfaction, and should that approach fail, move to litigation. The group retained a major Seattle law firm. After a five-hour negotiating session on June 30 with four GM representatives from Detroit, it became clear that the company wanted to deal with each complaint individually. Halferty and associates made it quite clear to GM that they are a group and will no longer be fragmented and treated inconsistently. Quite consistently, the consumers treated their GM guests to lemonade and passed out yellow note pads with a lemon printed at the top.
GM made it quite clear that there was to be no precedent set for group negotiating with consumers. CAGMinspired groups were emerging around the country and getting similar ideas. So CAGM’s attorneys initiated the first of the group lawsuits against GM in mid-October. Consumer attorney Mark Hough filed the case under a Washington state consumer protection act and under the federal Magnuson-Moss warranty law. Hough noted that the vulnerable 1978-1980 models have sometimes “destroyed themselves in what is called catastrophic fashion — a rod through the block, a broken crankshaft and so forth.”
The case will not come to trial until late 1983. In the meantime, other plaintiffs may join the litigation and more action is expected by similar GM diesel lemon owners in other states. Interested persons may write to CAGM, 18036 49th Place NE, Seattle, Wash. 98155, or call (206) 363-3221.