GM Hides Defect that Killed 124 People, but No One Goes to Prison
by Joe Watson
Not one executive or employee of General Motors Corporation (GM) will face jail time despite an admission by the company that it concealed an ignition switch defect that resulted in the deaths of at least 124 people and injured hundreds more.
“Unfortunately, it’s the same old story,” said Lance Cooper, a Georgia attorney. “If you have enough power and money, you can always buy your way out of truly being held accountable.”
While representing a GM victim in a lawsuit, Cooper discovered the company’s concealment of the defect, which caused crashes by suddenly shutting off the engines in moving vehicles, disabling the power steering and braking. Court documents eventually revealed that although GM engineers were aware of the defect as early as 2004, the company rejected a simple fix and instead opted to mislead the public and government regulators for years.
With the public disclosure of the defect and its cover-up, GM faced a public relations nightmare. Its CEO was called to testify before Congress. In September 2015, the company entered into a settlement with the U.S. Department of Justice (DOJ) for $900 million to resolve federal criminal charges.
A separate agreement reached at the same time settled most outstanding lawsuits against GM related to the crashes for $575 million. Together, the two settlements brought GM’s costs, along with fines, to more than $5.3 billion – including costs to repair the 2.6 million cars affected – in a case experts said could have been avoided for a few dollars per vehicle.
Federal prosecutors originally charged GM with wire fraud and conspiracy related to “a scheme to conceal a deadly safety defect.” However, according to then-U.S. Attorney Preet Bharara, who was recently fired by the Trump administration after refusing to resign, the criminal case against GM posed a major challenge because failing to disclose automobile safety defects isn’t against the law. Indeed, there is no such law – hence the charges of conspiracy (to lie to government regulators) and wire fraud (for denying the problem in emails to customers sent over the Internet).
“In the end,” Bharara said, “we can only do what the law permits.”
The law does allow prosecutors to enter into what’s known as a “deferred-prosecution agreement” with criminal defendants. [See: PLN, July 2012, p.22]. The agreement between GM and the DOJ allowed the corporate defendants to escape potential penalties – including incarceration – if they agreed to certain reforms and conditions.
In this case, in which GM concealed an ignition switch defect from both regulators and the public for more than a decade before finally recalling the affected vehicles, the charges against the company will be officially dismissed in 2018, provided the automaker adequately fixes its recall process.
“There are people at GM who made decisions that caused these deaths. Yet, they will not suffer any consequences,” said Laura Christian, whose 16-year-old daughter was killed in a 2005 crash in a vehicle affected by the defect.
A consumer advocate and a federal judge who went out of his way to put his opinion on the record also were critical of the DOJ’s decision to dismiss the criminal charges against GM officials.
Clarence Ditlow, executive director of the Center for Auto Safety, blasted the agreement, saying it allowed GM to “walk off scot-free while its customers are 6 feet under.” And U.S. District Court Judge Emmet Sullivan called the settlement “a shocking example of potentially culpable individuals not being criminally charged.”
In an unrelated case involving bribery by government contractors, Judge Sullivan cited the GM settlement in his opinion to rail against “sweetheart deals” between prosecutors and private corporations.
“Despite the fact that the reprehensible conduct of its employees resulted in the deaths of many people,” Sullivan wrote in his October 2015 ruling in the bribery case, “the agreement merely ‘imposes on GM an independent monitor to review and assess policies, practices, and procedures relating to GM’s safety-related public statements, sharing of engineering data, and recall processes,’ plus the payment of a $900 million fine.”
Sullivan also lamented that deferred prosecution agreements have not been of greater significance in the national debate over criminal justice reform.
“[T]he court is disappointed that deferred prosecution agreements or other similar tools are not being used to provide the same opportunity to individual defendants to demonstrate their rehabilitation without triggering the devastating collateral consequences of a criminal conviction,” he wrote, noting that such agreements are typically reserved for corporate wrong-doers. See: United States v. Saena Tech Corp., 140 F.Supp.3d 11 (D. DC 2015).
However, U.S. Attorney Bharara noted that GM received some credit for sharing with prosecutors the results of an internal investigation – one that also led company CEO Mary Barra to fire 15 employees for failing to fix the ignition switch defect or disclose it to federal regulators.
Meanwhile, GM has moved forward to resolve around 400 outstanding lawsuits not covered by the previous settlements, agreeing with plaintiffs’ attorneys to jointly select six “bellwether” cases to provide a roadmap for resolution of the remaining suits.
The first case was dismissed in January 2016 after the plaintiffs admitted they hadn’t lost their home due to a vehicle accident as they originally claimed, but had in fact been evicted when their lender discovered they forged a document to obtain a mortgage.
In the second case, a March 2016 verdict held that GM’s defect did not cause a crash on an icy New Orleans bridge on the same night that 38 other vehicles were involved in accidents at the same location.
GM settled a third case in April 2016 plus two more last September under undisclosed terms, while the last bellwether case was dismissed by a Texas judge in August 2016.
Sources: www.nationallawjournal.com, USA Today, www.money.cnn.com, www.latimes.com, www.autonews.com, www.chicagotribune.com, www.mlive.com, www.fortune.com