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From Products Liability Law Daily, May 16, 2014

GM to pay record $35 million penalty over handling of recall

By Joe Bichl

The National Highway Traffic Safety Administration (NHTSA) announced today that General Motors (GM) has agreed to pay a record $35 million civil penalty as a result of findings from NHTSA’s “timeliness investigation” regarding the automaker’s handling of the recall of 2.59 million small cars over faulty ignition switches, which resulted in airbag deployment failure. The automaker also agreed to take part in what the agency referred to as “unprecedented oversight requirements.” According to NHTSA, the penalty is the highest civil penalty ever paid as a result of a NHTSA recall investigation. Meanwhile, earlier this week, another putative class action was filed against the automaker in a federal district court in Texas. See the “News” section of today’s Products Liability Law Daily for further details.

NHTSA investigation. NHTSA initiated an investigation following GM’s recall announcement in February to determine why it took the automaker a decade to address manufacturing concerns and consumer complaints about engine stalling. At least 13 fatalities have been linked to the defect. The agency’s investigation found that GM had failed to report a safety defect to the agency in a timely manner, as required by federal law. For its part, GM admitted that it did not do so.

U.S. Transportation Secretary Anthony Foxx said in a Department of Transportation news release that his agency “will continue to aggressively monitor GM’s efforts.” He also encouraged Congress to support The GROW AMERICA Act, a measure that would increase the penalties the government can levy in cases such as the GM recall from $35 million to $300 million.

Consent Order provisions. In a Consent Order, GM agreed to:

  • provide NHTSA with full access to the results of GM’s internal investigation into this recall,

  • take action to ensure that its employees report safety-related concerns to management, and

  • expedite the automaker’s recall process

The Order also requires that GM notify the agency of any changes to its schedule for completing production of repair parts by October 4, 2014. In addition, GM must also make a concerted effort to “maximize the number of vehicle owners who bring in their vehicles for repair, including targeted outreach to non-English speakers, maintaining up-to-date information on its website, and engaging with vehicle owners through the media.”

So that the agency can monitor GM’s progress on the recall, GM will provide periodic reports to NHTSA and meet with NHTSA officials as the process unfolds.

“No excuse, process, or organizational structure will be allowed to stand in the way of any company meeting their obligation to quickly find and fix safety issues in a vehicle,” said NHTSA Acting Administrator David Friedman. “It’s critical to the safety of the driving public that manufacturers promptly report and remedy safety-related defects that have the potential to lead to deaths or injuries on our nation’s highways.”

Recent GM recalls hit news. On Thurdsay, May 14, GM announced that it had notified the National Highway Traffic Safety Administration (NHTSA) of five safety recalls covering some 2.7 million vehicles in the United States for a variety of safety-related issues including low-beam headlight and tail lamp malfunctions, hydraulic brake booster malfunctions, windshield wiper failures, and tie-rod defects. Please see the “News” section of today’s Products Liability Law Daily for further details.

Companies: General Motors

MainStory: TopStory NHTSANewsStory MotorVehiclesNews ProductRecallsNews

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