G.M. and Chrysler Liability Differences

By Christopher Jensen As General Motors and Chrysler go through bankruptcy, the casual observer might think there would be some consistency in how consumers are treated. But when it comes to injuries or deaths caused by safety defects, current owners of G.M. vehicles are likely to get a much better deal.
There is something very wrong with that, said Norman Silber, a law professor at Hofstra University, where he teaches consumer law. “Justice is not supposed to be a lottery system,” he wrote in an e-mail message.
Last month, a bankruptcy judge granted Chrysler’s request that it not be held liable for product-liability suits filed by people who already owned a Chrysler, Dodge or Jeep. The argument was that it was unfair to burden the new company with such obligations.
According to Robert L. Nardelli, then-chief executive of Chrysler, the idea of a “get-out-of-court-free” card came up during talks between Fiat and the Treasury Department.
Consumer groups such as Public Citizen, the Center for Auto Safety, and Consumers for Auto Reliability and Safety were outraged and dismayed. Who was representing the rights of consumers in those chats? they wondered. Chrysler had abandoned and betrayed people who trusted the company and bought its vehicles.

That’s exactly the kind of negative image that G.M. does not want to project as it now goes through bankruptcy. A G.M. spokesman declined to discuss the matter, but in the last week G.M. has told a bankruptcy court in Manhattan that it is willing to accept responsibility for owners of current vehicles, who have accidents in the future and file product-liability suits.
The judge has yet to approve that plan, but assuming it goes through, here’s the kind of weirdness that could result, according to Mr. Silber.
“Think about Victim A, who is for instance crushed by the roof of a poorly designed Chrysler that she happens to be a passenger in,” he said. “She would probably find it impossible even to find a lawyer to represent her where there is no responsible party from whom to recover. Then, think about Victim B, crushed by the roof of a defective G.M. car, who as fate would have it, can recover damages.”
Mr. Silber said the situation with Chrysler “deserves revisitation — especially since both these companies are receiving subsidies” from taxpayers. But he admitted that he doesn’t see how that could happen.
What G.M. and Chrysler share is how they would treat people who have already had accidents and are either involved in suits or are preparing them. And that is basically to abandon them, consumer advocates said.
Chrysler got the okay to leave those people and their suits behind, forcing them to be satisfied with whatever money the old Chrysler has left to pay off creditors — virtually nothing.
“Unfortunately, General Motors is trying to do the same thing that the Chrysler bankruptcy did,” said Adina Rosenbaum, a lawyer for Public Citizen. That leaves hundreds of suits involving people who were badly injured or killed unable to bring claims against the new G.M., she said.
Mr. Silber said there was also an economic downside for current Chrysler, Dodge and Jeep owners. As more people become aware of the legal limitations on those vehicles, their value was likely to drop.
The one slightly positive aspect of this episode might be greater awareness of the need for a change in how bankruptcies are handled, he said.

 

My cousin would be in that group of people