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Is Remington getting too good a deal in rifle settlement? Judge wants to know

The Remington 700 trigger mechanism
Brandon Ancil | CNBC
The Remington 700 trigger mechanism

The federal judge considering a landmark class action settlement involving 7.5 million allegedly defective Remington rifles is raising new concerns about what he called the "exceedingly small" number of gun owners who have filed claims to get their guns fixed.

"It seems inconceivable to me that someone would have a firearm that might injure a loved one and not have it fixed," said U.S. District Judge Ortrie Smith at the start of a three-hour hearing in Kansas City on Tuesday to consider final approval of the settlement.

As of Monday, only about 22,000 owners have filed claims in the two years since the settlement was announced, attorneys say. With as many as 7.5 million guns, that's a claims rate of about 0.29 percent. Critics, including attorneys general from nine states and the District of Columbia, are urging Smith to reject the deal, in part because of those numbers. They also complain that the settlement sends a mixed message by allowing Remington to continue claiming the guns are safe.

The case involves some of Remington's best-selling guns including the wildly popular Model 700 rifle, which CNBC first investigated in 2010. Lawsuits have alleged that for decades, Remington covered up a design flaw that allows the guns to fire without the trigger being pulled, resulting in dozens of deaths and hundreds of serious injuries.

Remington has consistently maintained the guns are free of defects and that the incidents are the result of user errors. But in late 2014, the company said that to avoid drawn-out litigation, it was agreeing to replace the triggers on millions of guns free of charge.

Judge Smith noted that the fewer people file claims, the less expensive the settlement will be for Remington.

"If the settlement is approved, Remington is absolved of close to half a billion dollars in potential liability…at a cost of less than $3 million," Smith said. "That is a very small payment for Remington in this case."

Smith also questioned the $12.5 million in fees that plaintiffs' lawyers stand to collect if he approves the deal—no matter how many claims ultimately are filed.

"That sum sort of looms," Smith said, saying it "seems large compared to the benefit to the class."

In addition to the criticism from the attorneys general, a handful of Remington owners have formally objected to the settlement, claiming that the plan to notify the public is needlessly complicated and uses ineffective methods like internet banner ads to direct owners to a special settlement web site. Smith already sent the parties back to the drawing board once before, in December of 2015.

But attorneys for plaintiffs and Remington say the claim numbers do not tell the full story. Many gun owners are unwilling to turn over their guns to be repaired, especially if they never had a problem with theirs. And because the guns in question were manufactured as far back as 1948, many might no longer exist, they say.

That means the seemingly small claim numbers are not insignificant, argued plaintiffs' attorney Mark Lanier, and the attorney fees are well deserved.

"20,000 guns is a whole lot of potential life saving," Lanier said.

Further complicating the decision for Judge Smith is what the alternative would be if he rejects the deal.

An attorney representing the state of Massachusetts argued Smith should let the case go to trial.

"The settlement is deeply flawed and can't be fixed at this point," said Gary Klein, a Senior Trial Counsel for Massachusetts Attorney General Maura Healey.

But going to trial carries the risk of losing. Five previous class action cases have been dismissed or withdrawn.

"Then you'd have zero guns fixed. Zero," Lanier said.

As if to underscore that point, attorney Dale Wills, representing Remington, said the company continues to defend the trigger design.

"There are millions of users and owners across the country that know one thing well," he said. "The guns work."

Judge Smith has promised a ruling within 30 days.

"You have given me a lot to think about," he said.

If he approves the settlement, owners will have an additional 18 months to file a claim.

The agreement covers Remington models 700, Seven, Sportsman 78, 673, 710, 715, 770, 600, 660, XP-100, 721, 722, and 725.

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