Record Number of Auto Recalls in 2014 Changing the Industry, But Victim’s Families Still Finding It Hard To Find Relief

Posted on Tuesday, June 30, 2015

Written by Rick Busby for Provost Umphrey

In 2014, the auto industry experienced a record year, yet not the kind of record year industry executives can celebrate. Driven by an ignition-switch defect that has dogged General Motors for over a decade, in 2014, the industry issued more than 700 recalls affecting over 60 million automobiles, roughly 1 out of every 5 cars on the road in the United States alone. The vast majority of these recalls are on cars that are fives years or older and symbolize the auto industry’s attempts to address defects that, at best, were previously undetected and, at worst, were altogether ignored.

The 60 million recalls in 2014 more than doubled the previous record of 30 million posted in 2004 with the eight largest automakers recalling more vehicles in the U.S. than they have on average since 1966. Of these eight auto giants, Honda, Chrysler and G.M. each set respective corporate records for recalls in 2014, while the industry at large issued recalls at the rate of almost 2 per day. Despite the record tally for recalls, statistically speaking, driving has become safer due to technological innovations.

Yet, this bit of irony is of little comfort to the families of the estimated 42 victims whose deaths are potentially linked just to the G.M. ignition-switch defect. In 2014, after almost a decade of denials and seeming corporate indifference, G.M. recalled 2.6 million vehicles to repair the defective switches. Even so, many families are still trying to learn the truth about what happened to their loved ones in accidents during the period of silence and denials from General Motors.

Even more frustrating for those families is the relatively low ceiling cap in most states on damages that can be recovered, even in the event of a death. For example, in Wisconsin there is a cap of $350,000 on damages for loss of life due to product defects. This cap serves as a barrier for law firms to take on cases to fight G.M. and others, because the cost of litigation can easily outstrip the total award. Many times law firms simply refuse to take these cases because of the economics, leaving victim’s families with virtually no recourse. While this outcome was never the intent of laws that cap damages, it effectively does so. Ironically, this serves to protect the corporate interests from punitive product liabilities and further perpetuates a culture of corporate indifference.

Further complicating the ability of victim’s families to sue G.M. is the confidential nature of out of court settlements and the corporate culture of secrecy that envelops their details. In instances where G.M. has settled out of court, confidentiality and non-disclosure clauses prevent plaintiffs and their attorneys of record disclosing any part of the legal settlements. This frustrates potential future claims because plaintiff’s attorneys always have to start from scratch and do their own discovery investigations, which runs up their expenses and makes the economic realities of litigation a barrier to the truth being discovered and justice being served.

While most auto recalls do not lead to death, any malfunction can cause undesired consequences. For example, in the G.M. case, the failure of a tiny metal pin called a detent plunger, which is intended to hold the ignition switch in the “run” position, caused the ignition switch to spontaneously turn off while the car was in motion, subsequently causing the loss of power and the failure of airbags to deploy upon the inevitable crash.

As the G.M. story played out, Honda and its airbag supplier Takata came under fire for a potential defect that allegedly was causing their airbags to explode. Because of Honda’s own corporate veil of secrecy, there were delays alerting consumers that allowed other automaker’s defects to go undetected for years. As a result, at least two deaths and more than 30 injuries have been attributed to airbag explosions in Honda vehicles. After years of dragging their feet, Honda has now recalled more than 14 million vehicles to repair the defect.

The story beneath the record recall numbers, product failures and lawsuits is how the auto industry is evolving its public relations efforts. Most importantly, the story is influencing their initiatives in timely communicating product recalls to their customers. The industry mantra now appears to be that “sending recall letters is no longer enough.” Doing so is merely the “minimum legal requirement.” The automakers and their federal regulators are beginning to see that more proactive steps are required to communicate with owners, timely repair the defects and minimize further potential liabilities.

Toyota has begun hiring outside companies to actively track down Toyota owners with potentially defective airbags and others have stepped up their strategies as well. Concurrently, Federal Regulators, who have long been criticized for being soft on the automakers, are stepping up their game too. Officials from the N.H.T.S.A. have served notice on the auto industry that they must collectively do a better job at identifying potentially defective vehicles and repair them quickly, or risk the maximum punishments.

All of these measures sound like a move in the right direction for the future safety of car owners, but it still leaves the barriers in place for those who are seeking justice and possible compensation from past defects. Even so, it remains to be seen if the auto industry follows through and evolves their corporate cultures around product safety. The answers are not easy to come by, and it seems the questions are even more complex. In either instance, this is a story that continues to evolve and there is sure to be more revealed as it develops.

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