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From Products Liability Law Daily, June 5, 2014

Independent internal report finds no cover-up of ignition switch defect

By Pamela C. Maloney, J.D. and Joe Bichl

During a town hall meeting at the company’s technical and engineering center in Warren, Michigan, General Motors CEO Mary Barra announced the firing of 15 employees—a disproportionate number of whom were executives or senior officers—as well as the taking of disciplinary action against five others in response to an internal report commissioned by Barra and conducted by former U.S. Attorney Anton R. Valukas. According to Barra, these individuals “either were incompetent or irresponsible in their actions, or simply didn’t do enough” in addressing the ignition switch defect (Mary Barra’s Remarks to Employees, June 5, 2014).

The Valukas report. The Valukas report, which was delivered to GM on Monday, June 2 and forwarded to federal regulators, found “no conspiracy by the corporation to cover up the facts” and no evidence that any GM employee “made a trade-off between safety and costs.” Instead, the Valukas report uncovered a pattern of “incompetence and neglect” and “of management deficiencies and misjudgments—often based on incomplete data—that were passed off at the time as business as usual.”

The report, which was based on more than 350 interviews with over 230 individuals and more than 41 million documents, traced the history of the ignition switch at issue, from GM’s design and production of the ignition switch to its belated recall in 2014. It also proposed recommendations to avoid another such tragedy.

The report blamed a lack of urgency “throughout the 11-year odyssey” in the engineering and legal departments, but could not pinpoint any conspiracy to cover up facts. According to the report, the entire episode was an example of what a top GM executive called the “GM nod,” where everyone nods in agreement to a proposed plan of action, but then leaves the room and does nothing.

Indicating that from beginning to end the Cobalt incident was “one of numerous failures,” the report stressed that GM reexamine its policies, procedures, and culture in an effort to ensure consumer safety. Further, it recommended changes to GM’s organizational structure; a cultural emphasis on safety; individual accountability; and improved communications between and within groups. In addition, the Valukas report recommended:

  • open communication with government regulators, such as the National Highway Traffic Safety Administration;

  • legal staff should play a “critical and unique role in assisting with the identification, analysis, and resolution of safety issues”;

  • interactions with suppliers should reflect the significance that supplier quality control has on vehicle safety;

  • improved data storage, retrieval and analysis, as well as engineering processes and databases;

  • improved product investigation process; and

  • that appropriate policies and training are followed.

GM’s response. Characterizing the report as “extremely thorough” and “brutally tough,” Barra stated, “In short, we misdiagnosed the problem from the beginning.” Barra then pledged that the company would do the right thing for those who were harmed by this event and would “accept responsibility for our mistakes and do everything within our power to make sure this doesn’t happen again.” To that end, Barra outlined five critical steps the company has already undertaken to correct the problems and restructure the internal systems of the company that allowed this event to happen. Specifically, GM (1) named Jeff Boyer Vice President of Safety for the company, to elevate and integrate the company’s safety processes under a single leader; (2) added 35 safety investigators; (3) instituted its Speak Up for Safety program to encourage employees to report potential safety issues quickly; (4) announced the creation of, and implemented, a new Global Product Integrity organization; and (5) restructured the safety decision-making process to raise it to the highest levels of the company.

Press briefing. Immediately following her announcement, Barra, along with GM President Dan Ammann, answered questions from the press relating to the report, the history of the defect problem, and the compensation program announced by Barra. In response to questions regarding who would be eligible for compensation, Ammann stated that the specific rules on eligibility for the compensation program will be set by Ken Feinburg who will decide who gets paid, how much, and the amount GM ultimately will have to spend on compensation. The company expects Feinberg’s report in a few weeks and the program to begin accepting claims on August 1, 2014.

MainStory: TopStory DesignManufacturingNews MotorVehiclesNews

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