The bankruptcy petitions of both Chrysler and General Motors have now been approved. Most Americans still are unaware of the ramifications of these bankruptcy filings on people injured by defective Chrysler and General Motors cars and trucks. The Chrysler bankruptcy ruling basically immunizes all Chrysler products that are currently on the road. When Fiat purchased the “new Chrysler,” it agreed to accept responsibility for warranty items and recalls. But, Fiat did not agree to accept liability for defects in the Chrysler products currently on the market. There are millions of Chrysler cars and trucks on the road and many Chrysler products that have defective designs and contain parts that were defectively manufactured.
There are many people who have valid claims that are now essentially wiped out. When somebody is hurt or killed as a result of a defect, the only entity that may have liability now is the old Chrysler company, which will have virtually no assets. The claimants are now considered unsecured creditors. As it stands now, Fiat will stand behind a product if it is recalled or has a warranty issue, but if someone is injured or killed as a result of that same defect or warranty issue, there will be no funds available to pay the claim. The U. S. taxpayers may wind up paying for the injuries by way of Social Security disability benefits, Medicaid, Medicare, or other social programs.
To get a true picture of the current situation, imagine driving down the road with your family and a Chrysler product is approaching from the opposite direction. If a ball joint breaks on that Chrysler product because of a manufacturing or design defect, and the Chrysler crosses the center line, crashing into you and your family resulting in one your family members being paralyzed, there is simply no cause of action against Fiat or the new Chrysler. There will be no recovery from the old Chrysler because it will have no funds or assets. You may have a claim, however, against the dealer that sold the vehicle, or a parts supplier, such as the ball joint manufacturer. Obviously, this will put an economic strain on dealers and automotive parts suppliers.
The U.S. taxpayers supported Chrysler with tax dollars and the company has now been turned over to Fiat, along with total immunity from all claims, and left lots of victims in their wake. The taxpayers will now foot the bill for injuries or damages caused by Chrysler products. I have not talked to anyone yet who believes that this is fair or just.
In addition to being grossly unfair to the U. S. taxpayers, it is also unfair to other manufacturers. As an example, Ford now has to compete against a company that does not have to stand behind its products. This puts Ford at a competitive disadvantage. Fiat should have been required to stand behind Chrysler products, not only for the warranty and recall issues, but also for the harm that has been caused by the defective Chrysler products and the harm which will be caused in the future.
In its bankruptcy petition, General Motors was asking for the same protection as Chrysler, but as a result of strong political pressure, GM agreed to accept liability for future injuries or deaths caused by their defective products. For those injuries or deaths that occurred prior to the day of the filing of the bankruptcy petition, however, those victims are left out in the cold. There are many cases involving folks who are brain damaged or paralyzed as the result of defective GM vehicles. Many families lost loved ones due to a defective General Motor product. As it stands now, those people have no recourse. Once again, the taxpayers will pick up the bill for these injuries.
When I was in law school, I was taught that one of the basic premises of products liability is that corporations that profit from a defective product should bear the financial responsibility for injuries or deaths caused by them. While many corporations have subsidized public relations campaigns through organizations like the U. S. Chamber of Commerce touting personal responsibility, they are very silent when it comes to corporate responsibility. Unfortunately, the people who are severely hurt by defective products do not have a strong political voice or a lobbying group like the U. S. Chamber of Commerce that spends millions of dollars each year attacking and ridiculing lawyers who represent people injured by defective products. It’s a sad state of affairs when you consider how these bankruptcies came about and who all will be hurt as a result.
August 1, 2009
I appreciate very much Greg doing this piece. If you have any questions after reading this report, feel free to contact Greg at 800-898-2034 or Greg.Allen@beasleyallen.com.
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