(adds Consumer Union, Suzuki statement, prev. DETROIT)
SAN FRANCISCO, June 25 (Reuters) - A federal appeals court ruled Tuesday that Japanese automaker Suzuki Motor Corp can pursue a lawsuit against the publisher of Consumer Reports magazine over a 1988 article which claimed the Suzuki Samurai was more likely to roll over than other sport utility vehicles.
The 9th Circuit Court of Appeals ruled 2-1 that Suzuki, which is 20 percent owned by General Motors Corp., had presented enough evidence to warrant a jury trial on its claim that Consumer Reports rigged tests of the vehicle before giving it a "not acceptable" rating.
Consumers Union, which was founded in 1936 and has made Consumer Reports one of the most respected consumer publications in the country, said it strongly disagreed with the ruling and would probably appeal.
Suzuki had sold about 120,000 of the inexpensive Samurais by June 1988, when Consumer Reports said the Samurai could roll over during tight turns and gave the vehicle a "not acceptable" rating, the first of its kind from the magazine.
Samurai sales tumbled about 70 percent, but recovered slightly after Suzuki started offering $2,000 incentives to dealers. The Samurai was discontinued a few years later.
Suzuki sued, claiming that Consumers Union faked the tests to draw attention to itself in the midst of a fund-raising drive.
Other automakers have challenged Consumer Union's tests, but with little success. Isuzu sued Consumer Reports in 1997 over its "not acceptable" rating for the Trooper. While a jury found the magazine had made some false statements, it did not award any damages to the Japanese automaker.
The National Highway Traffic Safety Administration has raised doubts about Consumer Reports' testing in the past, saying the results were unscientific and could be influenced by the driver. NHTSA reviewed the Samurai's safety, but declined to open a defect investigation.
The 9th Circuit, in reinstating Suzuki's suit, said it should be up to a jury to decide.
"Suzuki has also raised a genuine issue of material fact as to whether CU (Consumers Union) purposefully avoided information that would have undermined its assessment of the Samurai's rollover propensity," the majority opinion said.
FREE SPEECH THREAT
The lone dissenting member of the 3-judge panel, Justice Warren Ferguson, said the ruling in favor of Suzuki "intrudes on the field of free expression in two of its most important contexts -- consumer protection and public safety."
"If taken to its logical end, the majority's reasoning will allow any deficiency in a consumer group's test to become the grounds for litigation," Ferguson said.
"This will inhibit free speech of organizations and individuals who would fear voicing their findings," he said.
Suzuki, which no longer markets the Samurai in the United States and says the Consumer Reports article substantially harmed its ability to sell Samurai and other vehicles in the country, said it would pursue the suit and seek damages from Consumers Union.
"Today's ruling means that CU will now have to answer in court for the false charges it has spread," George Ball, Suzuki's managing counsel, said in a statement. "We look forward to presenting our evidence and moving the case toward final resolution."
Consumers Union, for its part, said that nothing in the court's ruling had challenged its belief that its testing of the Samurai was "valid, truthful, unbiased, and in the best interest of consumers."
The ruling "fails to give the appropriate legal protection established by the First Amendment and upheld by the Supreme Court in previous defamation cases," Consumers Union President Jim Guest said in a statement, adding that appeals were being considered.