Court Rules Consumers Union Must Face Trial On Suzuki's Charges of Rigged Testing in Consumer Report magazine

Clic4Video Used In Court Pleadings

BREA, Calif.--June 25, 2002--Suzuki Motor Corp. today announced that the U.S. Court of Appeals in California has issued an important ruling in favor of the company in its product-disparagement lawsuit against Consumers Union ("CU") and its magazine, Consumer Reports.

Reversing an earlier ruling by a federal district court in Santa Ana, Calif., the Court of Appeals held that Suzuki had presented enough evidence to warrant a jury trial on its charges that CU, for financial motives, published knowing falsehoods when it claimed, in 1988 and several times since, that CU's tests had shown the Suzuki Samurai "easily rolls over in turns" and was therefore "Not Acceptable."

In its decision, the Court of Appeals concluded that that the district court "did not give adequate credit to ... evidence of test-rigging" presented by Suzuki, and that "(a) reasonable jury could find by clear and convincing evidence that CU sought to produce a predetermined result in the Samurai test."

Among other things, the court relied upon a statement by CU's editorial director, after CU's test drivers had failed to make the Samurai roll over, that "If you can't find someone to roll this car, I will." The Court also emphasized that, at the time CU initially criticized the Samurai, CU had just purchased a new building and therefore "needed to boost its revenues to complete its capital campaign."

The court further concluded that this "evidence of financial motive dovetails with the evidence of test rigging." Based on this and other evidence, the Court of Appeals reversed the district court's earlier ruling against Suzuki, and sent the case back for a jury trial.

According to Suzuki's managing counsel, George Ball: "Today's ruling means that CU will now have to answer in court for the false charges it has spread and continues to spread regarding the Suzuki Samurai sport-utility vehicle. We look forward to presenting our evidence and moving the case toward final resolution."

Suzuki's lawsuit asserts claims for product disparagement based on statements by CU since April 1994. Those statements repeated CU's earlier allegations, dating to 1988, that the Suzuki Samurai is "Not Acceptable" because, according to CU, it is "likely to roll over during a maneuver that could be demanded of any car at any time."

Suzuki further alleges that these statements created substantial harm, not only to sales of the Samurai, but also to sales of other Suzuki automobiles. The court's ruling will allow Suzuki to seek damages for its lost sales of Samurais and other vehicles to the extent it can prove that those losses were caused by disparaging statements made by CU after April 1994.

In addition to Ball, Suzuki was represented on appeal principally by Robert Fiske of Davis Polk & Wardwell and Gene Schaerr of Sidley Austin Brown & Wood.

Additional information can be obtained at www.media.suzuki.com/auto.

Editors Note:I have given you a link to a story by Marc Rauch that discusses how CU and TACH disagree on testing methods, Click here for the story "Mitsubishi Montero: Consumer Reports vs. Reality"

FROM SUZUKI:
KEY ALLEGATIONS BY SUZUKI AGAINST CONSUMERS UNION
AT A GLANCE

  • Consumers Union (CU) rigged its tests of the Suzuki Samurai in the spring of 1988, then published a false accusation that it "rolls over too easily" and unfairly labeled it "Not Acceptable."

  • CU continued its relentless criticism of the Samurai. Suzuki filed its product disparagement lawsuit in April 1996, after CU repeated and exploited its unfounded claims in its January 1996, 60th anniversary issue of Consumer Reports, its on-line material and a multi-media CD-ROM on automobiles.

  • From the very beginning, the Suzuki Samurai was unfairly singled out by CU officials to support a rollover story with pre-determined results.

  • The Samurai sailed through CU's "very stringent" standard course 37 times without a tip-up and was rated the best of all sport utility vehicles tested at that time by CU's professional test drivers.

  • Consumers Union then modified its long-established course, deliberately designing the new course to make the Samurai tip up on two wheels.

  • Despite having its evaluation of the Samurai repudiated by government safety agencies worldwide in the fall of 1988, CU repeatedly published false criticisms of the Samurai for years without ever re-testing it or seeking independent validation of its own test results.

  • Consumers Union officials purposefully concealed incriminating evidence about their rigged testing of the Samurai until Suzuki filed its lawsuit in 1996.

  • After Suzuki filed suit, CU republished its attack on the Samurai again in connection with its criticism of the Isuzu Trooper in August and October 1996, and, as one CU employee put it, poured "more salt in the wound for Suzuki."

  • Consumers Union exploited its disparaging Samurai story and photographs to raise money, boost sales and recruit new subscribers.

  • Suzuki and its employees have been greatly damaged by Consumers Union's publication of statements about the Samurai that it knew to be false. In its 1996 multi-media CD called, "Cars: The Essential Guide for Buyers and Owners," CU bragged that after it published the Samurai rollover story, " …sales of this once-popular car plummeted."


  • SUZUKI v. CONSUMERS UNION
    BACKGROUNDER

    Suzuki alleges in its product disparagement lawsuit against Consumers Union (CU) that CU rigged the tests for its "Not Acceptable" rating of the Suzuki Samurai in the spring of 1988 and then exploited that false evaluation for financial gain.

    Suzuki filed suit in April 1996 after CU repeated and sought to further capitalize on its unfounded claims. Specifically, in its 60th anniversary issue, published in January 1996, Consumer Reports magazine singled out the Suzuki Samurai as the prime example of a "Not Acceptable" safety hazard that the magazine prides itself on exposing. CU bragged to its readers that its tests showed "the Suzuki Samurai easily rolls over in turns."

    Suzuki has challenged these statements - and similar ones made around 1996 -and contends that CU knew they were false when published.

    The case was dismissed by the U.S. District Court in Santa Ana, California, in May 2000 and Suzuki appealed to the U.S. Court of Appeals for the Ninth Circuit. The issue before the Ninth Circuit is whether enough evidence exists to take this case to a jury on the issue of whether CU acted with actual malice when it republished its Samurai statements, i.e., whether it made the statements with knowledge of falsity or with a reckless disregard of the truth.

    Based on evidence of fraud, deceit and cover-up developed in Suzuki's case, as set forth below, Suzuki alleges and intends to prove that CU knowingly published false statements about the Samurai:

    1) The Suzuki Samurai was unfairly singled out by Consumers Union officials.
    • The Samurai, introduced in the United States in 1985, was an immediate success, with 150,000 sold in three years and favorable reviews from the automotive press.
    • The Samurai soon became the target of consumer advocates who had been trying for some time to persuade the National Highway Traffic Safety Administration (NHTSA) to remove some or all sport utility vehicles from the nation's highways.
    • In early 1988, before CU ever ran the Suzuki Samurai through its avoidance maneuver course, CU began developing a story about the Samurai's supposed propensity to roll over.
    • This planned story was so significant to CU that for the first time in the history of CU's auto testing, both Editorial Director Irwin Landau and Technical Director David Pittle of Consumers Union came to CU's test track (100 miles from CU's headquarters) to witness the events first-hand.
    • Landau came to observe the April 20, 1988 avoidance maneuver runs on the Suzuki Samurai and other SUVs at the invitation of David Pittle, who had told Landau he could expect to see the Samurai tip up or roll.
    • Equipping the Samurai with outriggers from the start of its accident avoidance runs was a sign that CU had pre-determined the Samurai would tip up.
    2) When the Suzuki Samurai was first tested in 1988, it not only successfully passed the accident avoidance maneuver Consumers Union had been using for 15 years, but performed the best of all sport utility vehicles evaluated at that time.
    • On April 20, 1988, the Samurai was driven by two professional CU drivers a total of 37 times through the rigorous standard course CU had been using since 1973.
    • Despite being run through the course twice as many times as the other vehicles, the Samurai remained stable and was rated the most maneuverable of all vehicles.
    • The most experienced test driver, Kevin Sheehan, drove the Samurai through the course 16 times, with the outriggers attached, reaching speeds over 50 mph without its tires ever leaving the ground. In the official driver log he noted that the Samurai "never felt like it would tip over."
    • Because the Samurai performed so well during Sheehan's runs, CU removed the outriggers. Test driver Richard Small then took the wheel for another 21 runs and the Samurai remained stable. He gave the Samurai the highest possible rating (a "5+"). His notes in the log: "responds well…corrects quickly…leans normally…no real problem."
    • At this point, had CU followed the practice it had in place for 15 years, the Suzuki Samurai would have received the highest rating of all SUVs tested that day on CU's standard course. There never would have been a Samurai rollover story.
    3) When CU test drivers gave the Samurai a favorable rating using Consumers Union's own standard test procedures, CU concocted a new test course deliberately designed to make the Samurai tip up on two wheels for the cameras.
    • After CU's regular test drivers did not tip the Samurai, an eyewitness said that Landau remarked to Sheehan, "If you can't find someone to roll this car, I will."
    • From this point forward, the story dictated the test results instead of the test results dictating the story.
    • Pittle, who supervises all CU testing, stepped forward. After Pittle completed nine runs without tipping, he wrenched the Samurai off the standard course and finally got its right wheels to lift about eight inches off the ground. At that time, CU's test videotape captured the sound of its employees cheering and shouting.
    • Pittle then directed the auto test personnel to develop a modified test course to duplicate the driving maneuver he used to tip up the Samurai.
    • On April 26, CU went back to the track for more runs on its new course. However, videotapes show that CU's professional drivers, far from being able to make the Samurai "easily" roll over, still had difficulty achieving a tip-up.
    • When test driver Richard Small was able to tip up the Samurai on the newly rigged course, a CU employee shouted "All right Ricky baby!" which was captured on videotape and made public for the first time after this lawsuit was filed.
    • On the third and last test day at CU's track in the spring of 1988 - after Landau wrote the article, after Pittle signed off on it and after CU's public relations office arranged for a press conference to announce CU's findings - CU's drivers were again having difficulty tipping up the Samurai for the publicity shot. On the videotape Pittle is heard to say, "Can't you just see it, we get no lift off the ground. Oh God!"
    4) Consumers Union falsely reported the results of its testing and continues to make false statements about the Samurai and its performance.
    • Despite the Samurai's excellent performance in CU's established tests, CU maliciously rated the Samurai "Not Acceptable."
    • Although CU portrayed its analysis as objective, after three days of testing the Samurai had run two courses a total of 71 times - 42 times more than the Isuzu Trooper II, 36 times more than the Jeep Cherokee, and 17 times more than the Jeep Wrangler - the three other vehicles being compared to the Samurai in 1988.
    • Landau assigned himself to be both author and editor of the Samurai story.
    • In CU's haste to criticize the Samurai, Landau circulated a draft of his Samurai roll-over article before the testing on all of the SUVs was complete. In it, he described the test results of the Cherokee on the modified course, even though it had not run the course yet.
    • At a national press conference in the summer of 1988, Pittle said the course was "benign" and involved "very limited steering." Yet his own test driver admitted in sworn testimony that the maneuver required to tip the Samurai was "sudden and violent," requiring a 180 degree left steer followed by a 270 to 360 degree right steer.
    • From 1988 to 1997, CU continued to exploit the Samurai story by repeating these false claims and showing a staged photo of the vehicle tipped up on two wheels.
    • Despite the 47 runs it took before CU drivers could make the Samurai tip up on its standard course, CU falsely reported in 1996 that, based on its 1988 testing, CU discovered that the Samurai "easily rolls over in turns."
    5) Consumers Union officials concealed incriminating evidence about their testing procedures until it was sued by Suzuki.
    • While CU was disparaging the Samurai, its files contained a trove of documents and videotapes that show key CU officials knew the Samurai did not "easily" roll over in turns and that they had deliberately manipulated CU's testing practices.
    • At the press conference, Pittle said the Isuzu Trooper II had gone through the course with a "yawn." Yet CU ran the Trooper II through the modified course only four times and three of those times it failed by hitting cones. The Samurai was put to the same modified test 17 times.
    • Suzuki's driving experts later showed that SUVs could be tipped up intentionally on CU's modified course using stunt-like steering maneuvers similar to those used on the Suzuki Samurai.
    • Despite professing to have nothing to hide, CU refused to make its driver logs, videotapes and other test data available to Suzuki in 1988.
    • CU continued to conceal these materials from Suzuki, NHTSA and the public until Suzuki's lawsuit was filed in 1996, after CU's renewed attack on the Samurai.
    6) Despite being repudiated by the NHTSA and other government safety agencies worldwide in the fall of 1988, CU continued to publish false criticisms of the Samurai for years, without re-testing it or seeking independent validation of its own test results.
    • In September 1988, the NHTSA denied requests to recall the Samurai in the United States, finding that the procedures CU used in its Samurai testing "do not have a scientific basis and cannot be linked to real-world crash avoidance needs, or actual crash data. Using the same procedures, probably any light utility vehicle could be made to roll over under the right conditions and driver input."
    • Later in 1988, government safety agencies in Great Britain, the Netherlands, New Zealand and Switzerland all rejected charges against the Samurai that stemmed from CU's testing.
    • The Samurai continued to be sold in more than 100 countries for years after CU's 1988 article was published.
    7) Consumers Union has derived substantial financial benefit at Suzuki's expense.
    • As the record shows, in 1988 CU was financially overextended. It stood to benefit from a sensational exposé that would generate publicity and revenue by reaffirming CU's reputation as a consumer watchdog.
    • Almost immediately after the mass media was notified about the results of the Samurai testing, CU began to feature the SUV prominently in solicitation letters to raise funds for a new building and in its marketing efforts for subscribers.
    • The Samurai story in fact generated more publicity for CU than any story it had previously published and CU continued to boast about its Samurai testing for years in Consumer Reports magazine, promotional material and solicitations, in its 1996 multi-media CD called "Cars: The Essential Guide for Buyers and Owners," and in on-line publications.
    • In response to Suzuki's 1996 lawsuit, CU only intensified its exploitation of the Samurai story as a fund-raising tool. Within months, it sent thousands of solicitation cards to potential contributors featuring an 8-year-old photograph of the Samurai tipped up on two wheels.
    8) Consumers Union put "more salt in the wound for Suzuki" after Suzuki's lawsuit was filed in April 1996.
    • Suzuki alleges that CU intended to harm Suzuki when it linked the Samurai to CU's "Not Acceptable" rating of the 1995-96 Isuzu Trooper in the summer of 1996. This was within a few months of Suzuki filing its lawsuit in April 1996.
    • A handwritten note by a CU employee in the margin of an early draft of the Trooper article indicates that references to the Samurai were included with the knowledge that they would rub "more salt in the wound for Suzuki."
    • CU continued to disparage the Samurai in connection with its attack on the Trooper, by re-circulating critical material in print, on videotape and over the Internet. A review of popular media found that CU's tactic produced an estimated 200 million negative exposures in 1996 alone.
    9) Suzuki and its employees have been greatly damaged by CU's malicious conduct.
    • In the wake of Consumers Union's attack on the Samurai in 1988, the vehicle's annual sales in the United States plunged precipitously from about 80,000 in 1987 to approximately 5,000 in 1989.
    • Suzuki stopped selling the Samurai in the United States by 1995. But CU's relentless disparagement of the Samurai has caused the company to suffer nearly $60 million in damages since 1994 relating to lost sales of other Suzuki vehicles.
    • In its 1996 multi-media CD called, "Cars: The Essential Guide for Buyers and Owners," CU bragged that it was responsible for wiping out one of the most popular - and at $8,045 the most affordable - SUVs on the road. CU wrote that with its "Not Acceptable" rating of the Suzuki Samurai, "CONSUMER REPORTS made worldwide headlines in the summer of 1988" and that after it published its Samurai story, "sales of this once-popular car plummeted."


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