General Motors Co. (GM) will pay $120 million to state attorneys general to settle claims that the automaker concealed the now well-known ignition-switch defect. The settlement, announced on Oct. 18, comes three years after GM issued recalls for more than 9 million vehicles in the U.S. for a defect that could cause cars to suddenly lose electrical systems, including power steering and power brakes. Air bags would also fail to deploy in some collisions.
The settlement benefits the attorneys general of 49 states and the District of Columbia. Only Arizona, which has its own lawsuit, did not participate. GM claims that improvements will be made, including continuation of a new organizational structure it says is devoted to global vehicle safety.
As we have previously reported, GM has paid about $2 billion to the Department of Justice, the Federal Trade Commission, consumers and shareholders. That amount includes nearly $600 million placed in a victims’ compensation fund overseen by Ken Feinberg. GM filed for bankruptcy in 2009. The states claimed GM employees knew as early as 2004 that the defective ignition switch created a safety risk. But recalls were delayed for years. GM agreed as part of the settlement not to tell consumers a vehicle is safe unless it meets federal motor vehicle safety standards. The agreement required that used vehicles may not be called “safe” or “subject to rigorous inspection” unless there are no open recalls affecting them. The settlement also requires GM to instruct dealers to complete recall repairs before making a car eligible for certification or delivering it to a customer.
The defect that gave rise to this suit, the massive recalls, the multidistrict litigation (MDL), and all of the individual civil actions filed was discovered by Beasley Allen’s colleague Lance Cooper, a lawyer with The Cooper Firm in Marietta, Georgia. Lance’s 2011 wrongful death case against GM (Melton v. GM, 2011-A-2652) exposed the automaker’s knowledge and cover-up of the faulty ignition switches. In my opinion, without Lance’s good work, GM would have continued to get away with hiding a known defect from the public and the National Highway Traffic Safety Administration (NHTSA).
The GM investigation and negotiation that resulted in the states’ settlement was led by the attorneys general of Connecticut, Florida, Maryland, Michigan, New Jersey, Ohio, Pennsylvania, South Carolina and Texas. New Jersey Attorney General Christopher Porrino said in a statement:
Like any other business – large or small – automakers have an obligation to represent the products they sell honestly, to ensure those products are safe, and to alert consumers when they discover a product defect that threatens consumer safety. When they fail to do so, as was the case with GM, we are committed to holding them accountable.
The $120 million settlement includes $6 million for Florida, $4.3 million for New York, $4.1 million for New Jersey, $7.3 million for Texas and $3.2 million for Connecticut. Other states will get lesser amounts. New York Attorney General Eric Schneiderman said in a statement:
Instead of prioritizing customers, General Motors turned a blind eye for years and chose to conceal the safety defects associated with several models of their vehicles. New Yorkers should not have to worry about their steering or brakes failing or their air bags not deploying when they get behind the wheel. Today’s settlement ensures that drivers receive the transparency they deserve when they purchase a car.
It’s good seeing state attorneys general protecting the cities of their respective states. This is a prime example of being willing to take on Corporate America when they do wrong and hurt people.
Source: Daily Business Review