There were multiple calls for GM’s Chief Counsel Millikin (above left) to resign, which ultimately happened, as well as for GM to unseal ignition switch death – at least 124 – and serious injury settlements during the ignition switch cover up and safety recall debacle, which didn’t happen. No GM executive has been charged.
General Motors Co. (NYSE: GM) said today it reached a settlement via a Deferred Prosecution Agreement with the U.S. Attorney’s Office for the Southern District of New York. GM has cut a controversial deal over the company’s handling of an ignition switch defect in millions of GM vehicles that killed or seriously injured at least 1,380 innocent people who have lawsuits pending in the Multi District Litigation (“MDL”) in the United States District Court for the Southern District of New York.
General Motors CEO Mary Barra announces GM reached a Deferred Prosecution Agreement with the U.S. Attorney’s Office for the Southern District of New York on GM’s criminal company’s handling of an ignition switch defect.
It is a Pyrrhic victory for GM whose employees covered up the deadly defect for a decade before the recall was announced in February and March 2014. The GM ignition switch safety defect results when the ignition key suddenly turns the car off while disabling its safety systems – including anti-lock braking and air bag deployment. GM’s recall of 2.5 million small cars, mainly Chevrolet Cobalt and Saturn Ion cars from the 2003 to 2007 model years exposed it to civil litigation and criminal charges. (See: NHTSA Changing after Flubbing GM Ignition Switch Recall)
“To have the single most egregious and successful cover up in the history of this country result in such a gentle slap on the wrist through the payment of these pennies in a fountain, does not bode well for tomorrow’s victim of the next auto defect,” said Bob Hilliard of Hilliard Muñoz Gonzales L.L.P. “Without a change in the law, there simply will be no deterrent for car companies that decide to cut corners and kill customers.”
Under the Agreement, the U.S. Attorney’s Office agrees to defer prosecution of charges against GM related to the ignition switch defect and recall for three years. If GM satisfies the terms of the Agreement, federal prosecutors will then seek dismissal of the charges with prejudice, thereby giving GM a free pass for knowingly killing people.
The Agreement includes a requirement that GM cooperate with the federal government and establish an independent monitor to review and assess the company’s policies and procedures in certain discrete areas relating to safety issues and recalls. GM will also pay a $900 million financial penalty associated with this Agreement and will record a charge for this amount in the third quarter.
Concurrently, General Motors also announced today it has settled some civil actions against the company related to 2014 product recalls, including the ignition switch recall. The first settlement resolves a shareholder class action filed in the United States District Court for the Eastern District of Michigan. In addition, the company has reached a memorandum of understanding potentially covering approximately 1,380 individual death and personal injury claimants. They include more than half of the personal injury plaintiffs who have lawsuits pending in the Multi-District Litigation (MDL) in the United States District Court for the Southern District of New York.
“The parties to these agreements have resolved difficult claims without the burden, expense, and uncertainty of litigation,” said Craig Glidden, GM executive vice president and general counsel. Because of these settlements, the company will record a charge of $575 million in the third quarter. More charges are likely to follow.
