After its ignition switch defects were connected to 124 fatalities and more than 200 injuries, GM agreed in September of 2015 to a $900 million settlement with the U.S. Department of Justice and also set aside $575 million for settling private lawsuits for wrongful deaths.
Around 2.6 million older Chevy Cobalts and other small cars had defective ignition switches which could slip out of the drive position and disable safety features such as power brakes, power steering and airbags. Americans died or were injured as a result.
GM also settled a shareholder lawsuit over its mishandling of the scandal, and extended settlement offers to as many as 1,385 victims of the defective ignition switch. These civil settlements together accounted for the $575 set aside from its third-quarter earnings.
As for the $900 million settlement, that stems from a federal wire fraud statute violation involving GM’s misleading of buyers and potential buyers about its vehicles’ safety.
In all, the ignition switch defect has cost GM over $2 billion in settlements and fines, not counting the expenses of repairing millions of recalled vehicles.
Many believe GM got off lightly after a scandal which showed negligence stemming from a corporate culture which stonewalled, deflected and delayed a recall rather than giving top priority to the safety of its customers.
GM’s ignition switch settlement wasn’t nearly as high as that of Toyota for defects causing unintentional acceleration of Toyota vehicles, for which Toyota paid $1.2 billion. Also, no individuals involved in GM corporate decisions which ultimately killed innocent Americans have been charged with any wrongdoing.
GM was charged by federal prosecutors with wire fraud and with “engaging in a scheme to conceal a deadly safety defect” from regulators. However, those charges will be dismissed in three years if GM properly revises its recall process.
GM has pleaded not guilty to these charges. However, as an element of the settlement, it admitted defrauding customers by marketing its vehicles as safe during the time of the recalls.
For 10 years GM was engaged in a cover-up and denial of its ignition switch failures, which could suddenly cut off the engine of vehicles, causing dangerous sudden stops and disabling airbags.
GM was aware of the defects for 10 years but did not recall any defective vehicles while many Americans were dying or being injured. Finally GM issued an initial ignition switch recall of 2.6 million vehicles, which was followed later by another GM recall of 3.4 million vehicles.
Despite being found guilty of corporate wrongdoing which led to so many Americans’ deaths, GM announced its settlement while congratulating itself on its response to the deadly scandal it had caused.
“We accept the penalties . . . because that’s what it means to be held accountable,” said GM CEO Mary Barra. “But apologies and accountability won’t count for much if we don’t change our behavior. We can be proud that we have.”
Though GM reportedly has fired some wrongdoers, such actions and the perceived lightness of its penalty angered some survivors of victims.
“There are people at GM who made decisions that caused these deaths,” said Laura Christian, whose daughter, 16, was killed in a 2005 crash involving the defect. “Yet they will not suffer any consequences,” she said in a statement to USA Today.
Jim Adler & Associates takes pride as well – pride in defending the legal rights of Americans who are injured by corporate malfeasance such as GM’s ignition switch scandal.
If someone in your family has been injured by a defective ignition switch or any other auto defect, notify the skilled and experienced product liability lawyers with our law firm. We can fight for your legal right to financial compensation.