Posted by Sara Firnstein.
Everybody knows that General Motors, or “GM,” has had its fair share of issues throughout the years. Many recalls have been raised based on multiple different issues. In 2014, GM came out and recalled over 3.4 million cars because of an ignition switch issue on top of the already 2.6 million small cars they recalled four months earlier to fix the same issue. GM said that they needed to change the keys to these cars. The major issue that prompted this recall is that the switch could rotate out of “run” if the key has excess weight on it. This could lead to the car shutting off the engine and then the power steering with become disabled, leaving the driver without any control. This recall had an effect on cars ranging from 2000 to 2014.
The most surprising facts about this recall is that after the first recall of 2.6 million small cars, GM has only repaired seven percent of the vehicles. This leaves ninety-three percent of the recalled cars not fixed yet, and another 3.4 million cars just recalled, which obviously haven’t been fixed yet either. Also, the effect of the first recall has caused a minimum of 54 crashes and 13 deaths, but lawyers who are suing GM say that there have been at least 60 deaths. The deaths from this issue are the most surprising, but also “GM has acknowledged knowing about the problem for more than a decade, yet the cars weren’t recalled until this year” (CBS News, 2014).
An issue that arose from these ignition switch recalls are the massive amount of lawsuits filed against GM. This has led to many different court cases and GM has tried to avoid lawsuits that deal with cars that were made by the old, pre-bankruptcy GM. Recently in July, the “U.S. Second Circuit Court of Appeals overturned a bankruptcy judge’s ruling this week that had protected GM from those lawsuits because of the company’s 2009 bankruptcy restructuring” (Bomey, 2016). Because of this ruling, it may expose the new GM to liabilities for a defect that killed a minimum of 124 people and injured over 275 more in the small cars that were made by the old GM before bankruptcy. This ruling gives life to hundreds of cases where the victims decided to take their chances in court and refused to settle. Attorney Robert Hilliard says that he is happy for his clients because for years “the victims of the GM ignition switch have had their claims languishing in bankruptcy court and now these folks will have their day in court” (Bomey, 2016). These victims aren’t going to back down and GM has to continue to deal with the old GM car lawsuits along with the new GM car ignition switch lawsuits. GM is not out of the clear just yet, as they have to deal with these lawsuits that can now proceed based off of the court’s most recent ruling.
Sara is a criminal justice major with a minor in legal studies at the College of Arts and Sciences and the Stillman School of Business, Seton Hall University, Class of 2019.
Works Cited:
GM recalls 3.4 million more cars for ignition defect. (2014, June 16). Retrieved September 26, 2016, from http://www.cbsnews.com/news/gm-recalls-3-16-million-cars-for-ignition-problems/.
Bomey, N. (2016, July 14). Court: Ignition-switch lawsuits against GM can proceed. Retrieved September 26, 2016, from http://www.usatoday.com/story/money/cars/2016/07/13/general-motors-bankruptcy-ignition-switch-lawsuit/87029916/.
Posted by Hijab Sheikh.
A long case of a Louisiana man and woman’s car accident in 2014 ended on Tuesday, March 29, 2016. The jury in Manhattan listened to them for more than two hours, blaming their accident over a defective ignition switch while the GM lawyer said there was no evidence that there was a flaw in the ignition switch.
Since 2014, there were more 30 million GM automaker recalls. There were hundreds of claims made against GM automaker. “Under certain conditions, the ignition switch can slip out of the on position, making it difficult to steer or stop as the car stalls” (Niemeiser). GM says that they fixed this issue. But if that’s the case, then why have there been so many recalls? Instead of acknowledging the fact that there was a flaw in the ignition switch, GM blamed the accident on “a key chain pulled down by the weight of other keys might have pulled it out of position” (Nieumeiser).
Randall Jackson, Plaintiff’s attorney, said the GM lawyer’s statement doesn’t make sense. GM attorney Mike Brock blamed the accident on ice and claimed that there wasn’t any major damages to the vehicle or the passengers; there were minor scrapes on the bumper, but that is about it.
GM announced the following statistics, settling “1,385 death and injury cases for $275 million and a class-action shareholders’ lawsuit for $300 million. The company paid nearly $600 million to settle 399 claims made to a fund it established. Those claims covered 124 deaths and 275 injuries.” (Nieumeiser).
GM rejected 90 perecent of the claims that were made, out of the 4,343 they received.
Bibliography
Neumeiser, Larry. “FindLaw | Legal News & Information.” Lawyers Clash over Ignition Switch Claims in 2nd GM Case. Find Law, 29 Mar. 2016. Web. 31 Mar. 2016.
Hijab is a public health major at Montclair State University, Class of 2017.
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 Deane Franco.
In a recent article posted in the Wall Street Journal, I read about General Motors being charged with punitive damages due to a defective part causing multiple deaths. General motors had been in the process of recalling millions of vehicles, when a defective ignition switch caused 100 or so deaths.
The punitive damages will be limited to the extent of a lawsuit based on claims and knowledge that GM had of a new company auto maker’s 2009 restructuring. GM attempted to prevent plaintiffs for bringing punitive damages based on personal injury or wrongful death. Unfortunately for GM, Robert Hilliard who is representing all those injured by GM feels that punitive damages “are the only way to properly compensate victims who have been harmed by defect.” This is because punitive damages are meant to be a large enough punishment to the corporation to send a notable message with the intent of assuring the corporation understands its wrong doing.
Although GM tried to fight the punitive damages, the plaintiffs won outright. What this means for GM is that punitive damages could reach millions or even billions of dollars awarded to those affected, depending on the ruling, previous defective GM part cases may also be included.
GM has already paid $935 million in damages and has also agreed to $625 million in compensation for the victims. But we will see if the court will stop there. Moreover, GM is being considered for additional charges because they had acknowledged that they mislead regulators about the defective car parts and still put them into production. The hairy part, however, comes in when GM addresses their bankruptcy filing, because technically, “Old GM” filed for bankruptcy and would be responsible for all these defective parts liabilities and, “New GM,” the product of the bankruptcy reorganization, is a new company separate from the actions of the old.
This article relates to the discussion post this week in class where we discussed the hot coffee spill in Liebeck vs. McDonalds. In that situation, punitive damages were used not necessarily as a fair compensation to the victim, but to ensure McDonald’s knew of its intentional wrong doing and would be more likely to halt such procedures.
The pricing of the punitive damages was said to be very important for Mr. Hillard because he knows that those damages tend to run very high and would lead to fair compensation for the victim’s losses. This is a little different from the Liebeck case, because in that case, there appeared to be dual responsibility as to both the temperature and the spilling of coffee; in this GM case, all responsibility falls on the manufacturer for selling a defective car which caused death to numerous victims. It does not matter that GM has rebranded itself after going through bankruptcy filings. At this point in time, there may be products on the market that have not been recalled, which caused injury and or death to numerous victims. For these reasons, the punitive damages should be high to balance out the victim’s loss and GM’s punishment.
Deane is a member of the The Gerald P. Buccino ’63 Center for Leadership Development at the Stillman School of Business, Seton Hall University, and a finance and information technology management major, Class of 2018.
Posted by Abigail Anaemeje.
In September of this year, a settlement was finally reached involving GM and their issue involving small- car ignition switches. In the last year, the company has had to recall over 2.6 million of their older cars to replace defective switches that, “shuts off the engine and disables power-assisted steering, power brakes and the air bags.” Such problems have been found in models such as the Saturn Ion and Chevrolet Cobalt. This deadly case drew even more attention when it was the cause of at least 124 deaths and 275 injuries. GM, the Detroit automaker, admits that, “some of its employees knew about the problem for more than a decade, but no cars were recalled until early last year.” After hiring a federal prosecutor, Anton Valukas, he discovered that there has been no wrongdoing made by the top executives. However, in light of the incident, 15 employees of GM have been fired for falling to act in correcting the issue.
Overall, GM Motors will have to pay a wire fraud charge of $900 million in a late prosecution agreement. As for the families who have lost their loved ones, each will receive at least $1 million. In addition, $625 million has been set aside to compensate people who will agree with the settlement. Ironically, this case occurred a year after Toyota was caught hiding information about its defects that caused similar outcomes. Since it was much severe, Toyota agreed to pay a penalty of $1.2 billion; making it the largest penalty enforced on an automobile company.
Abigail is a finance major at the Stillman School of Business, Seton Hall 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 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 Jessica Page.
In 2008 and 2009, there was a huge salmonella outbreak traced to peanut butter produced by the Peanut Corporation of America. Nine people died from this incident and 700 were reported ill. The $30 million company was shut down and liquidated after the incident and the CEO, Stewart Parnell, was indicted and prosecuted. In late September, he was sentenced 28 years in prison.
What’s intriguing about this article is the comparison to the GM faulty ignition case. In this particular incident, the defect caused 124 deaths and over 200 injuries. GM has recently settled for $900 million and a three year prosecution agreement. The major difference between the two cases though – indictment of employees. Preet Bharara, one of the best federal prosecutors in Manhattan, explained, “it is unusually difficult to prosecute auto industry executives” and because of the national auto safety laws, there is a call for punishing the corporation as a whole, rather than any one individual.
The main conviction in the salmonella case is the fact that Parnell committed fraud by “knowingly introducing tainted peanut butter paste into interstate commerce.” The fact of the matter is though, there were GM executives who knew about the faulty ignition but failed to report it within the five-day span. The company itself was fined as a corporation for this matter, but there was not specific indictment of GM executives. The real issue at hand is how much harder it is to prosecute auto executives when it comes to cases of product liability. There is currently a bill that many senators are working to pass that would make this process easier and hold executives accountable, if they were knowledgeable of the faulty auto product or provided false statements to consumers, as GM did. This could change future product liability cases within the auto industry and as Senator Blumenthal stated, “one sentence like Parnell’s [within the automotive industry] would change auto safety dramatically and enduringly.”
Jessica is a finance and marketing major at the Stillman School of Business, Seton Hall University, Class of 2016.
Posted by Jessica Page.
General Motors Co. has recently been in the news for its faulty ignition switches in over 2.6 million of the company’s Chevrolet Cobolts and other models that were recalled in 2014. The faulty ignition switches were found to “slip out of the run position and disable features including air bags.” This product defect has been connected to over 100 deaths and over 200 injuries. In September, the U.S. Justice Department brought a criminal case against GM. They agreed to pay $900 million to settle and a $35 million fine for not reporting the defect.
On Monday, Judge Robert Gerber stated that it is possible GM will also face punitive damages to compensate consumers who were harmed by the defect, even though the company sought to block plaintiffs making these claims. Judge Gerber has suggested the punitive damages could amount to billions of dollars if the legal claims are settled or successful. This is partially due to the fact that GM admitted in the original settlement that they “[mislead] regulators about the defective switch and [failed] to recall millions of vehicles.”
Another interesting factor for this case is the bankruptcy restructuring GM went through. In the restructure, they assumed responsibility for “future product-liability cases involving older vehicles.” Since this is so broad, it is likely that GM could be held responsible for claims on both compensatory and punitive damage because of its knowledge of the defect and conduct, but only to the extent that the “New GM” holds. GM has agreed to spend over $500 million to settle these cases and over the next few months, the company is expected to face even more death and injury cases that have yet to be settled.
Jessica is a finance and marketing major at the Stillman School of Business, Seton Hall University, Class of 2016.
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.