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
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
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.