In the last few months, the world has watched with disbelief as the corporate structure of General Motors has slowly unraveled, revealing a corporate culture and a character plagued by fraud, deceit and cover-up. As we all now know, in February 2014, GM finally recalled 2.6 million vehicles related to the defective ignition switch.
After the recall, federal authorities launched an investigation to determine whether GM committed bankruptcy fraud by not disclosing the ignition switch defect. Finally, last month, GM CEO Mary Barra announced that after an internal investigation revealed a “deeply troubling” recall report, GM decided to fire 15 employees for incompetent handling of the ignition switch defect issue. All of these events showcase GM’s decision to place profits over safety. It also fails to reveal all at GM who should have been fired because of the massive cover-up of a very serious known defect.
While GM’s culture of cover-up may come as a surprise to many unsuspecting consumers, it comes as no surprise to lawyers who have litigated against this huge corporation in the past few decades. It was just 17 years ago that Plaintiffs lawyers were finally able to introduce another piece of evidence that showed GM’s commitment to profits before safety. For those who have forgotten or simply never knew about the “Ivey Memo,” I will discuss it here in detail.
In 1973, Ed Ivey, a young GM Engineer, wrote an infamous memo that determined it was cheaper for GM to pay damages for burn fatalities resulting from its defective fuel systems than to change the car’s bad design. This memo, known as the “Ivey Memo,” would be the subject of many discovery disputes. That’s because it was a smoking gun that GM viciously fought to conceal. Once word got out that this memo existed, GM lawyers misled courts and Plaintiffs lawyers as to its contents and distribution and kept the memo excluded from trials for almost 15 years. GM lawyers routinely used delaying tactics to conceal any documents related to the Ivey Memo until the case settled.
But, in the late 1990s, courts began forcing GM to produce the Ivey Memo and all related documents explaining Ivey’s reasons for writing the memo. It finally became clear that Ivey had written the memo at GM’s direction, that GM met with Ivey in the early 1980s to discuss the significance of his conclusions, and then suppressed those findings and all documents related to the Ivey Memo for 15 years. The Ivey Memo and its subsequent cover-up revealed two things about General Motors. First, it was obvious to Plaintiffs lawyers and to juries that GM placed its profits over the safety of its consumers, as the Ivey Memo concluded that it would be cheaper to pay for deaths than to change the design. Second, GM’s deceptive litigation tactics foreshadowed the corporation’s true character that the world is just now beginning to see.
While I hope that the Ivey Memo debacle is no indication of how GM and its lawyers will handle the ignition switch defect cases, I have to admit that it appears they will follow a similar plan. Plaintiffs and their lawyers must be diligent in their discovery requests and in the disputes that will surely come. GM has had three decades to perfect its deceptive litigation tactics. Plaintiffs now have the opportunity to expose GM and how it operates to the courts, the National Highway Traffic Safety Administration (NHTSA), Congress and the public.
Sources: Reuters, Associated Press, Los Angeles Times, USA Today
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