Business Law: General Motors Lawsuit

GM Civil Lawsuit

Lauren Whitley

Business Law

September 27, 2015

Introduction

        General Motors (GM) is a multinational corporation that manufactures and distributes vehicles and vehicle parts throughout the world. This company was originally founded in 1908 in Flint, Michigan. The company started with Buick and then quickly acquired Cadillac, GMC and Chevrolet. GM is one of the largest enterprises in the world. For 77 years, GM sold more cars worldwide than any other car company across the globe. GM is located in 30 different countries and employs more than 210,000 employees in 396 facilities (Nelson, 2014).

        However, in the fall of 2002, GM made a decision that would change the company forever. A decision that had catastrophic results for the company as well as their customer. In 2002, a GM engineer decided to change the ignition switch in certain vehicles, mainly the Cobalt. These switches were so far below the GM’s standards that they failed to keep the car powered in circumstances where the car needed to stay powered. This led to stalled cars on the highways and ultimately led to a car accident. One of the most dangerous aspects of this situation is that without power, the airbags would not deploy at the site of impact. This failure led to devastating consequences (Gray, 2014).

 In 2006, engineers attempted to resolve this issue, however, they did not. This resulted in 54 frontal-impact crashes in which the airbags did not deploy due to the faulty ignition. Even though GM was aware of this issue that arose in 2002, they did not recall all of the cars until 2014. It took GM eleven years to address the issue that was causing deaths all over the world (Gray, 2014).

GM employees and customers began complaining about the switch in 2004 and 2005, however the company’s engineers did nothing about it. They simply left the switch alone and rejected the idea of using a cheap and simple improvement that would have reduced the problem. They were aware that the ignition switch led to moving stalls and failed to take action regarding the matter (Gray, 2014).

The critical factor in GM’s delay in fixing the ignition switch issue was their failure to understand how the car was built. GM had specifically built the airbag system to not deploy when the ignition switch was turned off. This was created to prevent any injury to passengers who were sitting in a parked car. Therefore, the company believed these two problems were unrelated (Pine, 2014).

In 2004, GM engineers were given several reports that the moving stalls were caused by the ignition switch. GM decided to view this problem as a “customer convenience” issue because the customers were still able to maneuver their cars. They viewed this problem similarly to a customer not being able to roll up their windows on a hot day and not as a safety defect. From 2004 to 2006, GM did nothing to fix the switch. GM’s Product Investigations group who is responsible for identifying and remedying safety issues opened and closed an investigation in 2005 finding no safety issue to be remedied (Gray, 2014).

In 2007, it became evident that the faulty ignition switch was leading to the airbag non-deployment. However, GM still tried to prove that the two were unrelated. GM still believed it was a mystery. This paper addresses both the class-action suit and the multiple wrongful death and personal injury cases that were brought on by GMs actions or lack thereof.

Discussion

Summary

1. Company failed to take action

GM employees and customers complained about the switch in 2004 and 2005, however the company’s engineers did nothing about it. They simply left the switch alone and rejected using a cheap and simple improvement that would have reduced the problem. They were aware that the ignition switch led to moving stalls and failed to take action regarding the matter.

From the beginning, GM personnel knew that the Cobalt ignition switch had significant problems and yet did nothing about it. The main purpose of the new ignition switch was to have a switch that required less force to turn the key. Ray Degirorgio, GM engineer, approved the production of the switch believing that the switch would not affect the car’s performance. He permitted the use of the new ignition switch (Pine, 2014).

By 2006, the company had been addressing the issue of the moving stalls for almost two years, however, they still did not view the problem as a safety issue. Furthermore, they did not see a relationship between the non-deploying airbags and the ignition switch. At this time, GM publicly announced that there were no safety issues with the moving stalls and the company determined no further investigation was warranted (Gray, 2014).

When the Cobalt launched in 2004, the chief engineer became aware that people were able to turn off the car by accidently hitting their knee against the key. After the engineers become aware of this, they quickly ran a test and replicated the incident. However, they found that these incidents were isolated with no safety implications (Pine, 2014).

The engineers were not the only ones who brushed safety concerns aside. The individuals who made the car also didn’t listen to the warnings from the suppliers about the ignition switch. Once the moving stalls started happening, both the consumers and the employees were warning GM about them. However, the company still determined that the cars stalling while moving was only a customer inconvenience and not a safety concern in itself (Pine, 2014).

According to tort law, GM acted negligent. Negligent is not considered a deliberate action. Negligent is considered present when an individual or entity falls to act as a reasonable person when they owe a duty to that person. Furthermore, negligent actions are present when it leads to personal injury or monetary damages (Pine, 2014). GM was in fact negligent when it comes to their consumers. They had a responsibility to their consumers to produce vehicles that would not lead to accidents or death. Also, they had a responsibility to fix whatever may cause these vehicles to be unsafe for consumers and their passengers. They did not, and therefore are considered negligent in the face of the law.

1. Recalls

From January 1, 2000 to December 31, 2013, GM issued 374 recalls on their vehicles. That is an average of 26 recalls a year and the total number of vehicles affected is over fifty million. Therefore, out of 3.6 million cars that were affected every year, GM only recalled 26 of them. Furthermore, the recall committee tabled the need for a recall for weeks while looking further into research. The committee was not made aware of the fatalities that were happening due to the faulty switch (Pine, 2014).