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Research Paper on General Motors Ignition Switch Recall

Abstract

This report aptly examines the GM Class Action Lawsuit. The lawsuit occurred due to a failing of the Ignition Switch, in approximately 6 million cars. This created a significant safety issue as the engine and electric system could potentially shut off, disabling airbags (Lief Cabraser Heimann & Bernstein Attorneys at Law, 2015). Tragically the Ignition Switch defect has been responsible for the deaths of numerous individuals. These individuals crashed, and were subsequently killed when the front air bags did not deploy. Even more troubling is the fact that this defect could have been fixed for approximately 57 cents per unit (Lief Cabraser Heimann & Bernstein Attorneys at Law, 2015). Although there are various aspects of the Ignition Switch Recall, the primary concern is the legal implications.

This report concerns factors like procedural due process (notice & opportunity to be heard) and substantive due process (fairness). This report also addresses the 4 R’s (Rights, Remedies, Responsibilities, and Reasonableness. Ultimately, GM and the National Highway Traffic Safety Administration (NHTSA) are viewed as responsible for failing to take reasonable actions. Their negligence resulted in tragic outcomes including the loss of numerous individuals. This report also briefly discusses how general compensatory damages are determined by GM. There is a protocol established to articulate the conditions of compensation by claimants. Finally, there are the elements of case negligence including injury, actual and proximate causation and failure of stakeholders (GM and NHTSA) to appropriately react.

Introduction

The events leading to the global recall of 2.6 million GM cars can be traced to 2001and the Saturn Ion malfunction. Ultimately a redesign became necessary, due to a failure in the mechanism built to hold the ignition key in place. According to a 2003 internal report, a GM service technician reported that the Saturn Ion stalled when a heavy key ring was inserted in the ignition switch. The heavy keys had apparently worn out the ignition switch. There was also a 2004 incident where the Chevy Cobalt lost power when a GM engineer inadvertently bumped the keys (CNN Money, 2015).

By 2007, GM had begun to install a now redesigned ignition switch for 2007 model year cars. However, by the end of 2007 there were 10 reported mortalities, from accidents involving the Cobalt. In each of those incidents the airbag did not properly deploy (CNN Money, 2015). This prompted GM to assign an engineer to investigate common patterns in the Cobalt front crash accidents. The engineer reports that the ignition was not in “Run” during front crash impact. An official from the National Highway Traffic Safety Administration was discouraged from opening an investigation, on airbag non-deployments involving the Chevy Cobalt (CNN Money, 2015).

Between January and June of 2014, the situation resulted in a massive recall of numerous GM vehicles. The recall included several models of the Buick (Lacrosse, Lucerne, Regal), Cadillac (Deville, CTS, DTS, SRX), Chevy (HHR, Impala, Malibu, Monte Carlo), and a number of other vehicles (Lief Cabraser Heimann & Bernstein Attorneys at Law, 2015). This report will explore events leading up to the recall. It will also seek to understand the timeline of the identified Ignition switch recall. It ultimately leads to questions such as would Amber Marie Rose have died at 16 if her 2005 Chevy Cobalt had been recalled in time? Also, what are the legal implications for a company that fails to comprehensively address such a significant issue for more than a decade?

Narrative

The Long Investigation into the Root Cause

By June 2006, the mechanical issues associated with the Cobalt had been a focus of GM engineers for two years. However, to date there had been no identified correlation between airbag non-deployment and the Ignition Switch. Further from 2006-2011 GM did not properly address issues related to the Cobalt Ignition Switch. In 2006, claims associated with the airbag non-deployment and ignition switch malfunction were filed (Valukas, 2014). Even more troubling is that attorney’s & engineers working jointly could not locate files within GM facilities (and public records) related to causative factors. This revealed several legal and investigative blunders including failure to locate critical data, failure to elevate relevant safety & mechanical issues, and narrowness in understanding roles (i.e. lawyers & engineers) (Valukas, 2014).

Background of GM Legal Department

This department deals with product liability cases particularly when such issues intersect with safety concerns. In July 2009 Michael Milliken became the General Counsel (GC) of GM for North America. The lawyers in charge of safety issues and the lawyers in charge of product litigation report directly to the GC. Two of Clark Dougherty’s direct reports are Bill Kemp and Larry Buonomo. Structurally having the products liability and the safety department intersect ensures that engineers can receive such feedback real-time (Valukas, 2014).

Product litigation staff attorneys are primarily concerned with lawsuits and claims not considered litigation called not-in-suit-matters (NISMs). Outside counsel is often used in the defense of lawsuits or NISMs. The outside counsel provides an early evaluation to discover whether or not a case should be settled or proceed to trial. When cases proceed to litigation outside counsel provides updates (Valukas, 2014). Other key stakeholders include the Field Performance Assessment (FPA) engineers and ESIS claims administrators. FPA engineers collect data and assess technical issues in lawsuits and NISMs. The technical assessments provided by the FPA engineers’, becomes vital data in the determination of settlement decisions (Valukas, 2014).

Claims Resolution

As the claims began to roll in it required the establishment of a compensation protocol. According to reports the effective date of the First Protocol was August 1, 2014. Court documentation defines the Ignition Switch Defect as an incident where the switch unintentionally moves from the run to the accessory or off position. Ken Feinberg ultimately created a protocol to process claims for automobile accidents resulting in death or physical injury. The process of creating a protocol essentially meant the establishment of a Claims Resolution Facility (gmignitioncompensation.com, 2014).

Those eligible for claims submission include either the physically injured claimant or the legal representative. Insurance companies seeking reimbursement for payments to the claimants are not eligible to file under this compensation plan. For minors a legal representative would be eligible to file a claim. Eligible production parts under the compensation plan are divided into two groups (gmignitioncompensation.com, 2014). The first group consists of vehicles where the Ignition Switch Recall repair was not performed prior to the accident. The second group includes vehicles where the Ignition Switch Recall was replaced by a Dealer or Independent Service Center. The vehicle part number was 10392423 (gmignitioncompensation.com, 2014).

For the purpose of the claim, it was also important that the accident took place before December 31, 2014. Another key term is the Ignition Switch Recall, which involves a repair by either a dealer or independent service center. For individuals and families filing claims, qualification for compensation must include the fact that the air-bag did not deploy during the crash (gmignitioncompensation.com, 2014). According to the established Protocol, individual claims that are filed will fall under one of three categories. The three categories include (individual death claims, category one physical injury claims, and category two physical injury claims (gmignitioncompensation.com, 2014).

Also, all claims require significant documentation to validate the stated facts. Documentation requirements included a claim form, an official police report, individual death claims (when applicable), and Category 1 or 2 Physical Injury Claims. For Category Two Physical Injury claims, confirmation of hospitalization and any outside medical treatment was required within 48 hours of the accident (gmignitioncompensation.com, 2014). Equal Access and Fair Adjudications in the Claims process was also mandatory. The Equal Access requirement includes treating individuals with respect, dignity, and fairness. Proper treatment is required regardless of race, color, sexual orientation, gender, or disability (gmignitioncompensation.com, 2014).

In terms of the Process and Procedures the claimants have several ways they can submit claims. The first way is via the internet at http://www.gmignitioncompensation.com/. The website provides simple instructions enabling the completion of a claim. Another process for claims submission is the US mail at the appropriate listed address. Once the claim was submitted then it was evaluated to determine whether it met the required criteria (gmignitioncompensation.com, 2014). In order to be eligible for compensation a claim form needed to be properly filled out and submitted. The stated deadline was December 31, 2014. The Legal Representative operates as a liaison between the deceased members’ family and the claims resolution facility. In the event a claimant accepts the terms of the compensation, GM is released from all present and future damages (gmignitioncompensation.com, 2014).

Analysis of the GM Ignition Switch Recall

A final analysis of events like the October 2006 accident in the 2005 Chevy Cobalt reveals several shortcomings of key stakeholders. The first tragedy is that the air bags did not properly deploy, indicating a manufacturing malfunction. The second potentially avoidable tragedy was the inappropriate response of GM and the National Highway Traffic Safety Administration (NHTSA). Following the accident a State Trooper filed a report indicating that the Ignition Switch was a probable cause of the accident (U.S. House of Representatives Committee on Energy and Commerce Chairman Fred Upton, 2014).

Yet despite the accident and the 2007 report neither GM nor the NHTSA were able to properly address this malfunction in a timely manner. This ultimately led to numerous fatalities that could have potentially been avoided. It took seven years and at least 13 fatalities before there was finally a recall of greater than 2 million vehicles (U.S. House of Representatives Committee on Energy and Commerce Chairman Fred Upton, 2014).

Imagine what could have been avoided had GM and NHTSA had properly responded to reports of accidents involving the Chevy Cobalt and the Saturn Ion. In these reports the frontal air bags did not properly deploy. Although GM and NHTSA had the necessary information to identify the ignition switch defect they overlooked the data (U.S. House of Representatives Committee on Energy and Commerce Chairman Fred Upton, 2014).

Even GM’s own internal investigation conducted by attorney Anton Valukas (Valukas Report) indicated that GM obtained a copy of the State Trooper’s Report. This report was specifically given to a GM contractor who handles claims and administration and electronically saved in the files of GM’s Legal Department. Further, the Valukas Report indicated that the State Troopers report was only accessible by employees who provided claims data. This claims data was requested by the NHTSA under the (TREAD) Transportation Recall Enhancement, Accountability, and Documentation Act (U.S. House of Representatives Committee on Energy and Commerce Chairman Fred Upton, 2014). So how come GM investigators and attorneys reviewing Cobalt cases were oblivious to the State Trooper’s Report?

In the case of the NHTSA, they did actually review the State Trooper’s report. Such findings were combined with data collected from a separate independent investigation associated with the Cobalt crash. Both reports subsequently identified the ignition switch as a probable causative factor of non-deployment of the frontal air bags (U.S. House of Representatives Committee on Energy and Commerce Chairman Fred Upton, 2014). The broader implication is concerning the way that manufacturers’ and regulators’ approach vehicle safety.

The Energy and Commerce Committee (ECC) reviewed such findings and determined that the NHTSA has not properly kept pace with the industry that it oversees. This is a troubling conclusion particularly since the NHTSA is the federal regulator responsible for motor vehicle safety. According to the ECC there are several notable observations.

  1. The GM recall revealed that NHTSA fails to properly understand how advanced air bag systems, applied per the agency’s own regulations, operate. Given the rapid advancement of technology NHTSA must remain current on the latest technology developments.
  2. The GM recall reveals workflow malfunctions within the data collected by NHTSA. Although a significant amount of data is obtained and analyzed there is often no comprehensive distribution of such data among specific divisions or functions. This means that specific expertise or knowledge of vehicle systems and performance is not properly utilized across the organization.
  3. The NHTSA must hold itself to the same high standard of accountability as those it regulates.
  4. The NHTSA must focus on specific issues or investigations and simultaneously evaluate new issues.

Conclusion

This report reveals several important lessons. GM and NHTSA had sufficient data about the Ignition Switch malfunctions, but failed to properly respond. The organizational failure including the processing and sharing of vital information cost the lives of unsuspecting individuals. The second lesson is that there is a collective organizational responsibility to address safety issues. GM failed to address vehicle safety as an organization and subsequently took a hit financially and in terms of brand trustworthiness. Failure to respond to information about potential defects for more than a decade is simply unacceptable (U.S. House of Representatives Committee on Energy and Commerce Chairman Fred Upton, 2014).

Also the response of NHTSA was inconsistent with that expected by a federal safety regulator. The expectations of NHTSA is that they would have at least investigated the potential defect theory, regarding the ignition switch. Especially since it was detailed in a several reports including one that the agency commissioned. Moving forward NHTSA must make greater efforts to ensure that staff are properly trained on the constantly changing vehicle systems they regulate (U.S. House of Representatives Committee on Energy and Commerce Chairman Fred Upton, 2014).

Currently there’s an estimated 100 fatalities associated with GM’s flawed ignition switch. This sobering statistic has been provided by Kenneth Feinberg, the attorney overseeing the compensation fund for victims. Additionally there are still thirty-seven other fatal accidents being reviewed for possible compensation. This does not include the 12 individuals whose injuries led to them being paralyzed with amputated limbs, brain injuries, and burns (CNN Money, 2015).

One positive indicator is that NHTSA and GM have both began to implement changes following the General Motors Ignition Switch Recall. There was a question asked at the beginning of the report. Would Amber Rose have died at 16 if her 2005 Chevy Cobalt had been recalled in time? The findings of this report would appear to indicate that she likely would have lived.

References

CNN Money. (2015). GM: Steps to a recall nightmare. Retrieved from http://money.cnn.com/infographic/pf/autos/gm-recall-timeline/

CNN Money. (2015, May 12). GM ignition switch death toll reaches 100. Retrieved from http://money.cnn.com/2015/05/12/autos/gm-ignition-switch-recall-100-deaths/

Lief Cabraser Heimann & Bernstein Attorneys at Law. (2015). GM Faulty Ignition Recall. Retrieved from http://www.lieffcabraser.com/Personal-Injury/Car-Accidents/GM-ignition-defect-recall.shtml

U.S. House of Representatives Committee on Energy and Commerce Chairman Fred Upton. (2014, September 16). Staff Report on the GM Ignition Switch Recall: Review of NHTSA. Retrieved from http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/Hearings/OI/20140915GMFootnotes/NHTSAreportfinal.pdf

Valukas, A. R. (2014, May 29). Report to Board of Directors of General Motors Company Regarding Ignition Switch Recalls. Retrieved from http://s3.documentcloud.org/documents/1183508/g-m-internal-investigation-report.pdf

gmignitioncompensation.com. (2014, June 30). GM Compensation Claims Resolution Facility Final Protocol for Compensation of certain death and Physical Injury Claims pertaining to the GM Ignition Switch Recall. Retrieved from http://www.gmignitioncompensation.com/docs/FINALPROTOCOLJune302014.pdf

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