Maytag reaches tentative agreement in Neptune class action lawsuit

BREAKING NEWS: Maytag reaches tentative settlement in Neptune class action lawsuit
 
Date September 10, 2004
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

Maytag Corporation has agreed to a tentative settlement in a class action lawsuit alleging design flaws with its early generation front-load Neptune washing machines.

The lawsuit alleges owners of front-load washers have experienced problems with the door latch, wax motor, motor control and related circuit board failures that cause the machines to malfunction and users to experience problems with odor, mold and mildew. Maytag denies the allegations and states it has attempted to fix or repair all concerns raised by its customers.

Maytag spokesperson Lynne Dragomier said registered owners of Maytag Neptunes will soon receive letters outlining the terms of the tentative settlement agreement.

“The settlement provides relief for consumers who may have incurred out-of-pocket repair costs or replacement costs on their front-load washing machine or have any existing repair issues on their front load,” she said. “While we believe there is no merit to the legal claims, we decided the settlement was the best way to serve Maytag consumers. As always, Maytag Corporation stands behind the quality and dependability of our products.”

In addition to free repairs, the settlement agreement makes available three categories of benefits to Maytag Neptune owners.

Maytag plans to reimburse out-of-pocket costs related to repairs, which are the subject of the lawsuit. Maytag will also pay up to $500 to those who already bought a new machine to replace their Neptune.

Reimbursements under these two remedies are limited to a maximum of $2 million in each category. If eligible claims exceed the maximum monetary threshold, the cash disbursements will be made on a pro rata basis with the shortfall being made up through the issuance of appliance purchase certificates good on new Maytag major appliance purchases.

The third remedy proposed under the settlement is the issuance of washing machine purchase certificates. If Maytag is unable to make the necessary repairs on the affected machine, class members will be given certificates for the purchase of a Neptune top-load washing machine. The purchase certificates will range from $200 to $1,000 depending on the age of the front-load machine. A new Neptune top-load washer retails for approximately $1,000.

Dragomier would not elaborate on the total cost to the company in agreeing to the class settlement or how many individuals might make claims in connection with the class action lawsuit. She said Maytag has increased its reserves to cover the costs.

On Nov. 22, a hearing will be held in St. Clair County, Ill., to determine whether the settlement is fair and equitable and whether the application for an award of attorneys’ fees and costs should be approved. Three law firms have been appointed class counsel by the court. In the tentative agreement, Maytag has agreed to pay an award of class counsel fees and costs not to exceed $8.25 million. The payment is separate from the benefits Maytag has agreed to pay current and past Neptune owners.

Dragomier said Maytag decided to make the settlement offer at this time in an effort to put the issue to bed. She also said most Neptune purchasers had not experienced the problems identified in the lawsuit and that the problems are limited to early generation models only. A slight redesign has now mitigated the problem, she said.

“To do this now is the right thing to do to get this behind us,” she said.

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