GM compensation plan falls short for victims of ignition switch defect

posted on:
June 30, 2014

author:
Staff

kenneth feinberg gm compensation program announcement 250x140 GM compensation plan falls short for victims of ignition switch defectBeasley Allen Founding Shareholder Jere L. Beasley says the fund set up by General Motors (GM) to compensate victims of its defective ignition switch falls short of providing justice. Beasley said he appreciates the hard work of the plan administrator, Kenneth Feinberg, and acknowledges the compensation fund is on the right track in two areas: It will pay pre-bankruptcy matters, and Feinberg intends to pay those who previously resolved cases with GM before the ignition switch defect came to light. However, Beasley has some substantive concerns about the plan.

“We do not believe the compensation fund described this morning by Ken Feinberg is fair for the vast majority of GM’s victims. The Feinberg plan falls far short of the requirements for an adequate and fair compensation plan,” Beasley said. Some objections to the plan include:

  • The plan fails to address all of the vehicles that have been recalled for ignition switch defects. GM has limited the scope of eligible vehicles. Therefore, the plan – as proposed by Feinberg – would not compensate all of GM’s victims. GM is calling the shots on eligibility and appears to have tied Feinberg’s hands.
  • There are legitimate claims against GM involving defective ignition switches where the air bags did deploy. Even the death of Brooke Melton would not be covered by the proposed plan. That is totally unacceptable.
  • The proposed plan gives Ken Feinberg unbridled control over claims. He would have the sole discretion to accept or reject claims.
  • The plan does not take into consideration the element of punitive damages, which must be factored in. GM’s conduct, based on the incompetence and gross negligence found by the Valukas investigation, deserves punishment. It is totally unfair to allow GM to escape being punished for its wrongful conduct over a period of 11 years.
  • In spite of GM’s acknowledgement that its ignition switch is defective, the plan places a greater burden on claimants to prove their cases. There is no presumption that GM’s ignition switch caused one’s injuries. Specifically, the administrator – who is paid by GM – is given the latitude to reject any and all claims. It is unclear from the plan how the evidence will be viewed by the administrator.
  • There are some good features of the plan: paying pre-bankruptcy claims, and paying those claims that were settled before the truth came out about GM’s covering up a known defect that had killed and injured hundreds for more than a decade.
  • Finally, this is a voluntary plan. Unless GM changes its litigation strategy, which is contrary to the automaker’s public claims to do “right” by persons with pre-bankruptcy claims and by those persons who had settled their claims before GM’s ignition switch defect and cover-up came to light, this fund won’t work. It’s contrary to “doing right” to force those claimants into the Feinberg plan.

“We favor a compensation plan and have no objection to Mr. Feinberg being the administrator, but I believe there must be court supervision,” Beasley said. “That is our proposal as an amendment to the Feinberg plan with increases in the amounts to be paid.”

In February 2014, only after evidence emerged in a wrongful death lawsuit proving GM had longstanding knowledge of the ignition switch defect, did the company start recalling its affected vehicles. That initial recall now encompasses 2.6 million vehicles, and GM admits to 13 deaths related to the defect. Earlier this month, GM announced it is recalling an additional 3.4 million midsize and large cars for the same ignition switch defect.

Lance Cooper, who was instrumental in uncovering the ignition switch defect, also reacted to the GM compensation plan. After reviewing GM’s compensation plan, Lance Cooper, founder of The Cooper Firm, says that it may benefit certain victims who were involved in accidents caused by defective key systems in GM vehicles. “Unfortunately, the Final Protocol, however, excludes over a million of the vehicles GM recalled to replace defective ignition switches,” Cooper said. The Cooper Firm news release continues as follows:

If it is GM’s intent to “make it right” for the victims of the key system defect, the final protocol should include all of the recalled vehicles listed in the compensation plan. There should be no distinction between production part vehicles and service part recalled vehicles. Simply put, if an engine stalls in a recalled vehicle as a result of the key inadvertently moving from the run to accessory position, the model year should not matter. “Mr. Feinberg has had to rely on GM’s technical expertise in defining the scope of the vehicles which would be included in the plan,” Cooper added. “Unfortunately, GM has tied Mr. Feinberg’s hands by limiting the scope. These families will now be forced to file lawsuits and ask jurors ‘make it right’ since GM has chosen not to allow Mr. Feinberg to make it right.”

The decision by GM to exclude these recalled vehicles from the compensation plan makes little sense since GM’s own internal testing shows that the ignition switches in 40% of the 2008-2009 recalled vehicles did not meet GM’s minimum torque specifications. This explains why The Cooper Firm is investigating numerous engine stalling claims involving post-2007 model year recalled vehicles.

Another concern is the evidence that the claimants’ are required to present in order to prove that the defect caused their harm. In many cases, much of the evidence that would normally be available was destroyed as a result of GM’s cover-up of the defect. There is some concern that the GM plan does not provide victims with the benefit of the doubt if the evidence is no longer available. Furthermore, GM should not benefit from its fraudulent conduct by using the lack of available evidence as a barrier to compensation.

Finally, it is encouraging to note that the Final Protocol gives families the opportunity to opt in or opt out of the plan. No doubt, some families will decide that the plan makes the best sense for them, while others will decide to pursue their lawsuit against GM. Of course, for those who decide to pursue their lawsuit, GM should waive any bankruptcy or statute of limitation defenses so that these families are not forced into a plan that is not acceptable to them. This would be consistent with Mr. Feinberg’s comments that families should be given a choice.

Read the Final Protocol for Compensation
Visit the Compensation Claims website
Watch the full video of Feinberg’s remarks on C-SPAN.

In the News

Bloomberg Businessweek – GM’s Victim Compensation Plan Won’t End the Liability Mess
Los Angeles Times – GM compensation fund will pay millions to switch-defect victims
Washington Post/Bloomberg – GM Will Pay All Claims from Switch Flaws, Feinberg Says
Detroit News – Lawyers criticize GM compensation plan for failing to include punitive damages
New York Times – As Recalls Expand, G.M. Offers Plan for Victims of Faulty Ignition Switch
National Law Journal – Attorneys Complain GM’s Compensation Plan Falls Short
WAKA – Compensation for Family Members of General Motors Victims
TheTruthAboutCars.com – Feinberg Plan to be Funded Out-of-Pocket by GM

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