When the U.S. Treasury Department, GM and Chrysler first cut their bankruptcy deals in 2009, they all decided it would be good policy to cruelly abandon the customers of the two companies who were - or would later be – killed or injured in collisions because of product defects. There were about 10 million Chryslers and 30 million GM cars then on the road. Eventually, responding to enormous outside pressure, both companies gave in a little so that today,
GM's product liability extends only to accidents that happened after the reorganized company left bankruptcy in July 2009. Plaintiffs injured before that time would have to seek redress from the defunct shell of GM in Bankruptcy Court, where the chance of compensation is slim.
Either way, the product liability immunity granted these two companies was unprecedented and completely unnecessary to their recovery. Today, “G.M. has posted 16 consecutive profitable quarters, with a net income of $3.77 billion in 2013” and the reprehensible immunity it received, which left a few hundred victims hanging in 2009, clearly had nothing to do with this success. And even if it did, everything's changed and there is a moral obligation to help them now.
In bankruptcy, injury victims are not usually discarded like this, especially when there are known products on the market that will continue to severely harm or kill people. Trust funds often often are established to help victims. (This is how victims of the Dalkon Shield IUD, which injured or killed thousands of women, asbestos poisoning and some priest abuse cases have been compensated.) But neither GM nor Chrysler did this even though statistically, every year there are at least 500 to 1000 serious injuries or deaths due to Chrysler and GM car defects - even aside from the ignition switch problem. And what we are learning now about that problem is terrifying: GM learned about it in 2001. Among the ways it covered up this problem was by settling death cases confidentially. The replacement part to fix these cars costs only a few dollars and take only minutes to fix.
Under the law of most states, where a new, or successor company (like “new GM”), acquires the trade name, good will and customer lists of the bankrupt company, and it continues to produce the same line of products, holding itself out to customers as the same, the new company is supposed to bear the costs of injuries from defective products sold by the old company. And when there’s fraud involved, well, clearly they should bear these costs.
That’s what attorneys will try to argue on behalf of the hundreds of victims now coming forward, who until recently had no idea that their crash may have been GM’s fault. In fact, because of GM’s massive cover-up, cases that were originally deemed the driver’s fault are now being reclassified by police as mechanical failure.
The legal task now is to challenge the bankruptcy deal itself, which GM cut with full knowledge of this colossal ignition switch problem.
The lawyers suggest that the company fraudulently negotiated the restructuring agreement because, they contend, it knew about the dangerous ignition defect and did not disclose the potential for extensive, and expensive, litigation over it.…
Or they could hope that G.M. decides, even without a court order, to treat the prebankruptcy cases like new ones. On Wednesday, consumer advocates sent a letter to Mary T. Barra, the G.M. chief, suggesting it would be “cruel and unfair” to do otherwise.
That letter was sent by Clarence Ditlow, head of the Center for Auto Safety, and Joan Claybrook, former NHTSA head and President emeritus of Public Citizen. They are asking GM to set up a $1-billion fund "'to cover losses of victims and families of safety defects whose claims have been extinguished by the bankruptcy or barred by statues of repose or limitations.' The company responded by saying it is 'focused on ensuring the safety and peace of mind of our customers involved in the recall.'" Sure.
While GM has said it knows of 13 deaths in 31 crashes with injury, this is just the tip of the iceberg. The 13 deaths don’t even include Brooke Melton who died in March 2010 and whose family’s lawsuit broke the cloak of secrecy this past month. Under the Early Warning Reporting System mandated by Congress in the TREAD Act in 2000, GM reported 400 death and injury claims on Chevrolet Cobalts in 2010 alone to the National Highway Traffic Safety Administration (NHTSA). GM reported 58 death claims to NHTSA on the recalled Cobalt and Ion on defects linked to ignition key failure from 2004 to 2013. (NHTSA has no component code for ignition key and GM has reported know ignition key death claims under airbags, steering and unknown.) Only GM knows which of the death and injury claims on the Cobalt and other recalled vehicles are due to the ignition key defect. But it’s far more than 13 deaths and 18 injuries.…
GM received $49 billion in taxpayer funds to resurrect itself through the bankruptcy process. Don’t you think in your heart of hearts that it is cruel and unfair to use those defenses to escape liability for a defect GM concealed and failed to remedy for 10 years? And what about all the other safety defects with delayed recalls and closed investigations.
At the time of the 2009 bankruptcy, statistics showed that the average number of annual dealth and injuries in GM cars was about 2,800. But also, there were about 600 casualties in Chrysler cars. So that “cruel and unfair” thing? Goes for Chrysler, too.