Posted by Spencer Sink.
Volkswagen is currently in the process of being sued for deliberately manufacturing cars that essentially cheat the emissions test. This case is somewhat similar to the cases with Toyota and General Motors, as Volkswagen will most definitely be forced to compensate the current vehicle owners for selling faulty products. However, we will most likely see even higher punitive damages being paid in the Volkswagen case because of the fact that Volkswagen admitted to intentionally cheating on emissions. The Toyota and General Motors cases were both honest mistakes made by the companies.
Volkswagen was given a short amount of time to attempt to find a way to mechanically fix the issue in the cars, and make them environmentally acceptable. However, even if they did fix the emissions, either the fuel efficiency or the overall vehicle performance would change, forcing Volkswagen to compensate owners for the loss in value.
What Volkswagen did was completely wrong, and must be punished accordingly. Deliberately cheating the emissions tests, and creating excess pollution, is unacceptable. If it were up to me, I would force Volkswagen to pay high punitive damages to ensure that nothing like this ever happens again. Volkswagen owners should be compensated accordingly for being blindly brought into this situation.
Spencer is a business law student at the Stillman School of Business, Seton Hall University.
Posted by Brianna Montalvo.
Since 2014, General Motors has been having ignition switch issues with their vehicles which has lead to 30 million recalls. As of Tuesday, March 29 2016, a jury in New York City has yet to reach a verdict on the ignition switch controversy. This case was brought to the jury by a lawyer who is defending a man and a woman whom were in an accident on a New Orleans bridge back in 2014. The couple claim the ignition switch of their GM vehicle is to blame for the accident.
As stated, “Hundreds of claims remain against the automaker after GM revealed two years ago that it had continued to sell flawed vehicles for more than a decade after discovering an ignition switch defect in Chevy Cobalts and other small cars,” (Neumeister). It has been said that the ignition switch itself can slip out of position making it difficult to steer or stop the vehicle, which then would cause the vehicle to stall. GM has claimed they fixed their problem, which I believe is highly doubtful. The plaintiff’s attorney claimed that a key chain had pulled the weight of the keys down which would cause the switch to be pulled out of position, initiating the car to stall and cause an accident. General Motor’s attorney blamed ice as the probable cause in the accident, since there were no serious injuries or dents to the car, only a few minor scratches on the bumper.
Although a verdict has not been reached, I would not be surprised if the ignition switch in fact was the cause of the accident. In September of 2015, General Motors declared it had settled 1,385 death and injury cases for $275 million and a class-action shareholders’ lawsuit for $300 million. The company has given millions towards a numerous amount of claims. $600 million was paid to settle 399 claims to a fund GM established. 124 deaths, as well as 275 injuries were covered with those claims.
I feel that it was unethical of General Motors to continue selling their vehicles with the ignition switch defect. They claim they fixed it, but I do not believe it is something to fix that easily and quickly. There have been hundreds of deaths and injuries due to the ignition switch recall. They will always get business since vehicles will always be in demand, but I believe they should fix the ignition switch so that they wouldn’t have to deal with so many recalls, as well as have any deaths or injuries on their conscious.
Brianna is an accounting major at the Feliciano School of Business, Montclair State University, Class of 2018.
Posted by Sheyenne Hurt-Lewis.
General Motors created millions of vehicles with defective ignition switches. This defect is linked to more than 100 deaths and 200 reported injuries. Many lawsuits have arisen from these defective switches which makes General Motors likely to face a large sum of punitive damages which, “could amount to millions, if not billions of dollars,” as stated by Judge Gerber. Punitive damages are those intended to punish the wrongdoer and deter others from similar wrongdoing. “GM had sought to block plaintiffs, including those suing for personal injury or wrongful death, from making punitive damages claims.” The recent defects ignited numerous other complaints of other GM cars recalled in 2014 that were “equipped with a faulty ignition switch that can slip out of the run position and disable safety features including air bags.” The effects of these defects have resulted in numerous injuries and lost lives.
Robert Hillard is representing nearly 1,500 plaintiffs suing GM for the injuries and deaths that are tied to the defective ignition switch. Hillard is confident that his clients are capable of being awarded the punitive damages they are seeking. GM has already spent $575 million to settle Hillard’s cases but there are still a large number of cases that remain unsettled. In September, GM agreed to pay nearly $900 million to settle a case similar to this. In addition to this payment, they were also forced to pay a $35 million fine for failing to report the defect themselves when they were first made aware of it. The company created a compensation fund of $625 million for victims.
GM attempted to restructure, and split into “New GM” and “Old GM.” Old GM kept all liabilities but agreed to be held responsible for “future product-liability cases involving other vehicles.” Judge Gerber wrote, “New GM may be held responsible, on claims for both compensatory and punitive damages, for its own knowledge and conduct” on the basis that workers were aware of the defective switch and related accident claims. However, it was made clear by Judge Gerber that punitive damages can only be sought against New GM if and only if it’s solely on the basis of the conduct or knowledge of New GM.
Sheyenne is a management major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Kristen Czerepusko.
Recently, General Motors has been facing some lawsuits stemming from defective ignition switches in millions of their vehicles. This defect has led to over 100 deaths and 200 injuries. General Motors has decided to block those who are suing for personal injury and those making punitive damage claims. The defective car models were recalled in 2014 and were further proven to have been equipped with faulty ignition switches. With this defect, the switch can disable safety features including air bags which are vital to safety when operating a vehicle.
To make matters worse, not only did General Motors know they had a defective product, they acknowledged the fact that they mislead regulators about the defect altogether. To cope with this, General Motors invoked upon a “bankruptcy shield” to limit legal exposure on account of their defective switch. Today, there are over 1,385 individuals with death or injury claims who didn’t receive anything from General Motors. The company still faces hundreds of cases that have yet to be settled.
Punitive damages are something that should never be limited when dealing with defective products. There should never be a cap on the amount of money somebody should be allowed to receive from the careless act of a company manufacturing and selling a defective product. What makes it even worse is the fact that General Motors knew their products were defective and did not care enough to try and prevent further injuries. They acted very unethically and inhumanely with how they handled their cases by using a so-called “bankruptcy shield.” If punitive damages were ever to have a limit, companies would not care to try and make their products better but would instead continue to make harmful products. It is not yet clear how much will be awarded to the individuals who have had serious damages or to the loved ones to those who lost their lives but I hope justice is served to all who deserve it in this case.
Kristen is a marketing major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Shakil Rahman.
For a car to be eligible for sale, it has to pass various tests which are placed in order to make sure that the cars for safe for use by the customers. Certain improvements are made to cars to also make sure that during an accident, there are some protections for the customer inside the car. GM motors ignition switch for the some small cars in the late 1990s and early 2000s were defective and it would shut of the engine during driving and this also prevented from the airbags from deploying during a crash. While GM executives and engineers became aware of the defective ignition switch, they did not attempt to fix the problem as it was assessed to be too costly. But by 2012, it was discovered that the defective switch also prevented the air bags from deploying. GM did not disclose the safety hazard to its customers, which led to over 120 deaths and multiple injuries. In 2014, GM started recalling cars with faulty ignition switch in order to fix it, and after the recall, multiple customers filed lawsuits against GM for the injuries caused due to the defective ignition switch. Lawsuits were filed against GM for false advertising due to not disclosing the defect to customer before buying the product. GM came to a settlement with the customers and agreed to pay $575 Million as compensation and also paid $900 million pay to US.
There are various points of interest in the case that are related to corporate responsibility, advertisements and negligence. The lawsuits that were filed against General Motors were for false advertising, and for injuries caused from malfunctioning products created by General Motors. General Motors car’s ignition switch was faulty and therefore sometimes it would shut down the engine while driving and since the engine shut down, the air bags would not deploy during an accident. So the defective ignition switch would cause the car to shut down while driving and therefore causing car accidents and also the air bags would not be deployed which would lead to the injury from the crash to be amplified. Therefore, General Motors is liable for the injuries caused by the defect, because their product is directly causing the accidents and the injuries that are related to it.
The other portion of the lawsuits was about false advertisement by General Motors about their cars. General Motors did not know about their defective ignition switch before 2005 but decided to not recall the cars after a risk assessment about the expense that will needed to fix the ignition switch. Now even if they decided to stop selling cars with faulty ignition switch, they still did not make an effort to fix the ignition switch for cars that were already sold and also did not warn the customers about the product’s defect. This is not only false advertisement but also negligence because the customers were going to be harmed even after using the product as it was intended to be used. So in conclusion, General Motors was liable for the injuries that were caused by their defective products because they did not inform the customers about the hazard of using the product and also for not attempting to fix a defect that could injure the customers.
The irony of the whole situation is that General Motors decided not to recall the vehicles in 2005 to fix the defect because of the fact that they came to the conclusion that it would too expensive. And now in 2015, their insistence on not recalling the cars back for repairs back in 2005 has led to a federal fine of $900 million and settlements of $575 million for the customers who were injured due to the cars faulty switch.
In the business world, when a company is attempting to look at the direction the company is going they need to see how their actions might affect the company in the long term. While paying for the repairs in 2005 may have been expensive, right now they have paid around $2 billion dollars in fine and are predicted to pay around $2.7 billion for repairing the recalled cars. And on top of that, the break of trust between GM and the customers are surely going to affect the company’s progress and profit.
Shakil is a business student at the Stillman School of Business, Seton Hall University.
Posted by Connor Lynch.
An article from The Wall Street Journal titled, “General Motors May Face Punitive Damages Over Ignition Switches” is a perfect example of short-run profit maximization versus long-run profit maximization. As of November 9, General Motors can face punitive damages in several lawsuits regarding defective ignition switches in millions of vehicles. Although those vehicles have all been recalled, the defective part has been linked to more than 100 deaths.
U.S. Bankruptcy Judge Robert E. Gerber has linked GM to the deaths and injuries caused by the defective part in millions of their vehicles. After the case has been discussed, “Texas lawyer Robert Hilliard, who represents people suing GM for injuries and deaths tied to the defective ignition switch, called the decision ‘a major win’ for plaintiffs, contending that punitive damages are the only way to properly compensate victims who have been harmed by the defect.” Although it seems as if it was a complete loss for the defendant, a GM spokesperson said the company disputed the statement that the ruling was an utter victory for plaintiffs.
Punitive damages are damages intended to deter the defendants and others from getting involved in conduct that is similar to the actions that formed the basis of the lawsuit. Punitive damages are also used to punish corporations for wrongdoing such as selling defective products. Those defective products usually lead to death/injury which often can lead to large awards from the jury. It is unclear to what the punitive damages of this case will amount to: “Judge Gerber at one point in his ruling suggested GM’s punitive damages exposure could amount to millions, if not billions, of dollars, though any actual exposure will depend on whether legal claims against the company are settled or ultimately successful.”
This is not the first time that General Motors has been involved with a defective product recall resulting in punitive damages. Last year GM agreed to pay $35 million for failing to alert the public about the specific defect in a timely manner. Judge Gerber’s ruling stems from separating the “Old GM” and “New GM” because of the controversial belief that GM has retained liabilities pertaining to their restructuring.
“Old GM” had so many problems at one point that they were forced to restructure and become a new and reformed company. This has resulted in product-liability, “GM, as part of the bankruptcy restructuring, agreed to assume responsibility for future product-liability cases involving older vehicles, or those under the purview of Old GM.” General Motors’ reconstruction has allowed them to avoid several lawsuits because of their “bankruptcy shield.” Judge Gerber has ruled that “New GM” may be held responsible for the recent defective ignition switch that has caused over 100 deaths. Punitive damages may be sought out to the extent of new GM’s knowledge on the subject matter involving the defective ignition switch. Because of all the injuries/deaths, there are over 1,000 plaintiffs represented by Texas attorney, Mr. Hilliard. General Motors seems as if it is doomed to pay more money in punitive damages in addition to the $575 million they have paid recently to settle cases involving defective products.
Connor is an accounting/finance major at the Stillman School of Business, Seton Hall University, Class of 2018.
Posted by Genna Salvtoriello.
General Motors has been hit with a $3 billion dollar lawsuit by the state of Arizona. The lawsuit is due to a record number of 2.6 million vehicles this spring that have been claimed to be linked to safety defects such as a faulty ignition switch. This defect has been linked to 33 deaths and more injuries according to Kenneth Feinberg, who is looking after compensation to the victims of this defect and the damage that it has caused. Arizona’s lawsuit is focusing on the loss of value GM car owners have suffered due to the now damaged reputation of the “General Motors” name. The law that Arizona is suing General Motor’s under is a consumer fraud law that has a maximum penalty of $10,000. And that’s just for each individual violation. There are about 300,000 GM vehicles that are registered in the state of Arizona. Which means a judge could fine General Motors up to $3 billion dollar, according to a report in the New York Times.
However, the ignition doesn’t seem to be the only issue with GM cars. The lawsuit that Arizona is pending shows not just one, but multiple defects with the GM vehicles. These defects include seat belts, brake lights, airbags and transmission cables. The GM vehicles have dropped significantly in value because of the safety defects, which has cost those car owners to lose thousands of dollars. “GM is committed to setting a new industry standard for safety, quality and excellence. This includes recalling vehicles proactively when we identify a safety issue,” said spokesman James Cain. GM is also under investigation by the U.S. attorney in New York, congressional committees, and the National Highway Traffic Safety Administration. The number of claimants is rising for GM who is running a compensation program. The company is allowing potential victims of this recall over faulty ignition switches an extra month to file claims seeking compensation. It will be clear in the near future to see just how many people have been put at risk, or even worse, actually hurt by this life threatening recall.
Genna is a marketing major at Montclair State University, Class of 2017.
One of the causes of action a plaintiff can bring in a product’s liability lawsuit is a defective design claim. General Motors is facing multiple lawsuits over faulty ignition switches installed in the following vehicles: Chevy Cobalt (2005-2010) and HHR (2006-2011); Pontiac G5 (2007-2010) and Solstice (2006-2010); Saturn Ion (2003-2007) and Sky (2007-2010). More than 2.6 million have been recalled.
A Georgia couple who settled a lawsuit with GM for their daughter’s death is suing again on the grounds that GM’s lead design engineer lied when he testified he had no knowledge of any design “changes” to the switches. Their daughter was killed when her 2005 Cobalt slipped into accessory mode, cutting off the engine and causing her to collide with another vehicle. Her family settled based on this information.
But in recent disclosures to the National Highway Traffic Safety Administration and Congress that testimony appears to be false. The company apparently knew about the problem for years. Now, the family has filed another lawsuit claiming they would not have settled if they had known that evidence was concealed. GM denies the accusation.Settlements are contractual, and therefore, considered final once the parties agree to the terms. Like all contracts, there are certain situations where a settlement agreement would be deemed void. In this case, plaintiffs would have to convince a judge that they were somehow misled or defrauded by what GM did or said in order for the settlement to be void and the case to proceed.