General Motors and the lawsuit(s)

Two articles from the New York Times about the General Motors situation illustrate a number of points I try to make here on Sidebar.

The first, by Hilary Stout (Lawyers Prepare for G.M. Suits With Novel Strategies – NYTimes.com.), lays out tersely how lawsuits can begin, how potential plaintiffs identify themselves to lawyers and ask for help:

Ever since General Motors announced the recall of 1.6 million vehicles because of a faulty ignition switch, lawyers across the country have been preparing to sue the automaker.

One law firm in San Francisco says it received phone calls from more than 200 potential litigants — mostly victims of crashes involving the recalled cars, or the victims’ relatives — in just the last week.

Then the article goes into another initial stage of a lawsuit, a stage that most plaintiffs don’t fully understand (or, for that matter, want to understand): how lawyers first begin thinking about, analyzing and structuring a potential case.

But some of the cases against General Motors might not be typical product liability litigation. Lawyers say the cases could hinge on extraordinary accusations of fraud — and novel legal strategies that question the very existence of the formerly bankrupt company.

The restructuring agreement helped the ailing automaker regain its financial footing in part by protecting the company from legal claims stemming from incidents before the bankruptcy filing in 2009. Since some of the crashes in question occurred before General Motors declared bankruptcy in June 2009 and was rescued by the federal government, legal arguments being explored would challenge the validity of the restructuring agreement credited with saving the automaker from dissolution, according to bankruptcy and plaintiff lawyers exploring possible litigation.

The GM case is, of course, as Stout describes it, unusual.

So I am particularly taken with a Letter to the Editor by the president of the New York State Trial Lawyers Association which sets forth clearly another point I have made many times (and this) on Sidebar: the laws that protect us from each other and in particular from corporate malfeasance exist or are strengthened because of plaintiffs and their lawsuits.

Even if you frown at Mr. Danzi for promoting the worth of his constituency, trial lawyers (that’s his job, by the way), you can’t criticize his major contention. It is trial lawyers, in alliance with us, their clients, who push legislators to make law.

To the Editor:

Your March 3 Business Day account of the faulty General Motors ignition switch that robbed 13 victims of their lives reveals the urgent need to subject auto manufacturers to much tougher safety standards and to raise penalties to make ignoring the consequences of dangerous design flaws much steeper (“In G.M. Recalls, Inaction and a Trail of Fatal Crashes”).

Safety advocates have long charged that automakers continue to put profits ahead of people, waiting to recall dangerous cars as long as the cost of doing so is higher than government fines and lawsuits. Indeed, up until the 1960s, carmakers were not even held responsible for design flaws.

It took many years of litigation by accident victims working within the civil justice system to force adoption of many basic safety standards we take for granted today, including air bags and seatbelts.

The civil justice system has also been critical in forcing accountability for other products, from the recall of dangerous medications to the creation of fire-resistant baby pajamas.

But as the Cobalt’s faulty ignition switch reminds us, automakers have still not adopted a “safety first culture.” Without stronger regulation, American drivers will continue to be needlessly at risk.

ROBERT F. DANZI
President, New York State
Trial Lawyers Association
New York, March 4, 2014

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