GM's Insulation from Accident Liability Was a Government Mediated Position

The Obama administration played a role in GM’s insulation from product liability lawsuits. As it stands, GM is not liable for any injury or death which happened before the government bailout in 2009.

General Motors has recalled 1.6 million cars to fix faulty ignition switches. It has also acknowledged 13 deaths as a result of the faulty design which led cars to lose power if the key was bumped in just the right way. In addition as many as 200 other litigants are ready to file suits for injury related to the fault.

Many of those injured or killed were young women who struggled to control cars after the power steering and power brakes suddenly cut out while driving. As a result of the loss of power, air bags also failed to inflate during a crash making serious injury more likely.

General Motors’ new CEO Mary Barra acknowledged during a congressional hearing Tuesday that something very troubling had happened when GM appeared to put cost over consumer safety. But as it stands, GM is not liable for any deaths or injuries which took place prior to the government bailout. This was not an oversight but a government mediated solution to a disagreement between GM and attorneys general for several states.

In 2009, President Obama’s auto task force played a role in negotiating the current agreement. The Wall Street Journal reported at the time:

GM advisers, members of President Barack
Obama’s auto task force and the attorneys general negotiated for several
days to address concerns about product-liability claims, among other
issues. The talks heated up Friday ahead of GM’s Tuesday court date,
when it will ask a judge to approve the auto maker’s plan to create a
new GM by selling its desirable assets to the government.

administration official recently said the government had become
concerned about murky legal precedent surrounding the issue of future
product-liability claims. The official said case law was “unclear and
ambiguous on the issue of future product-liability claims” making it
sensible “for both sides to settle.”

As a result of the government mediated settlement, anyone with a death or injury claim made prior to the date of the bailout is left trying to collect money from the remains of “old” GM. As the Journal noted, “Those victims are likely to recover little or nothing.”

That’s the situation for the parents of Amy Rademaker and Natasha Weigel who were killed in 2006 after the ignition switch in the Chevey Cobalt they were riding in clicked off. GM had been aware of the problem with the ignition switches since 2004.

The Justice Department is currently investigating whether GM committed bankruptcy fraud by hiding the ignition switch problem during 2009.

Addendum: Here’s how the Washington Post reported the same deal in 2009:

Under the deal reached by the administration, GM and state attorneys
general, the automaker will accept claims arising from defective-vehicle
accidents that occur after it emerges from Chapter 11 proceedings.