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Chrysler GM Throws Consumers Under The Bus

Posted by Jane Akre
Friday, June 12, 2009 11:48 AM EST
Category: On The Road, Major Medical, Protecting Your Family
Tags: Product Liability, Auto Accident, Defective Products, Defective Autos, GM, Chrysler, Bankkruptcy

Victims of GM Chrysler vehicles are out of collecting on product liability claims after Fiat bought the company this week.  

40 Million Reasons To Sell Your Chrysler GM Vehicle



IMAGE SOURCE: Amanda Dinnigan, age 10/ faulty seat belt accident February 2007/ author: Center for Justice & Democracy Web site


Alongside all the hoopla heard this week about Fiat’s acquisition of Chrysler, a little known sub-plot is emerging that is bad news for owners of 40 million GM and Chrysler autos currently on the road and for those hurt by the company's cars.    

As an individual, filing for bankruptcy allows debts to be restructured or, as in the case of Chrysler, wiped clean. 

With the help of the Treasury Department, Chrysler is wiping clean any liability for consumers who have file product-liability lawsuits against defective automobiles. 

Fiat had initially been willing to assume Chrysler’s product liability claims before the Obama administration steered the company into bankruptcy.

Reportedly, the plan to do away with product liability claims was settled on during negotiations between the Treasury Department and Fiat.  Chrysler chairman and CEO Bob Nardelli said that claimants would probably get nothing.   

GM’s lemon law cases are also affected. Cars that were defective and returned to the dealerships resulted in check to consumers which bounced.

Consumers Thrown Under the Bus

In the last five years, Chrysler claims alone has involved 3,497 deaths or injuries, more than 15,000 problems are connected to problems with GM cars.   

Defects have included seat belts that fail; seat backs that collapse and cause brain injury; vehicles that flip and roofs that cave in; cars that shift gear from park to reverse and gas tanks that catch fire or explode.    

That’s what happened to Jeremy Warriner. He lost his legs when his Jeep Wrangler slammed into a utility pole and he was pinned in the car as a fluid leaked from the car’s plastic brake fluid container burning his legs. Five weeks later after a medically-induced coma, he woke up, a double amputee.

He sued Chrysler, which makes the Jeep Wrangler, but the Huffington Post reports his lawsuit has been stayed by Chrysler’s government-guided bankruptcy.

"I voted for President Obama and I'm proud to have him as our president, but this isn't the change I believed in," said Warriner in an interview with the Huffington Post. "I have to believe our president is not fully aware of this."

To add insult to injury, the auto firms using bankruptcy to avoid liability are benefiting from billions in taxpayer bailout money.  "The most insulting thing is that they're using my money to get rid of my lawsuit," he said.

The decision also impacts Jeanne and Joseph Polio of East Haven, Conn.

They were behind the wheel of their 2000 Jeep Cherokee when it was T-boned by another vehicle. The car rolled and the roof collapsed in.  Jeanne is a quadriplegic with more than a million dollars of medical bills.

The Polios sued Chrysler for its defective roof.  They have now joined Conn. Attorney General Richard Blumenthal to have the New Chrysler accept the debts of the Old Chrysler.

“New Chrysler is trying to take all Chrysler assets but leave injured consumers with fumes,” Blumenthal said. “Abandoning countless Chrysler consumers like the Polios compounds their tragedies and condemns their legitimate claims for justice.”

300 consumers who have sued the automaker over injury of the loss of life, along with 160 people who have cases or settlements against Chrysler will likely see their cases stayed, says Ad Hoc Committee of Consumer Victims of General Motors counsel.  

Attorney Barry Bressler, said in an interview with the Wall Street Journal  that most of the plaintiffs have lost limbs, suffered brain damage or are paralyzed. Medical bills can easily go over a million dollars with the aggregate value of claims sought by 300 plaintiffs at about $1.25 billion.

Attorney Larry Coben tells the WSJ, “The plaintiffs are hoping to recover whatever the law permits. What they would like is to their “day in court,” in the community where the victims lived and where the vehicles were sold. They want to be able to go to the jury and ask the jury to decide whether or not their injuries and millions of dollars of medical expenses should be recouped from GM.”

Consumer Groups React

"It really is outrageous," said Clarence Ditlow, director of the Center for Auto Safety, in an interview with the Huffington Post.

The Center for Justice and Democracy said there are an estimated 500 to 1,000 serious injuries or deaths every year due to cars that are designed or built with defects.

“This is a real miscarriage of justice,” says Rosemary Shahan, president of the California group Consumers For Auto Reliability And Safety. “Why would we allow it? If we want consumers to have confidence in these companies, why should the most vulnerable consumers lose out?”

That is a “very dangerous ticking time bomb bankruptcy loophole” said a number of consumers groups in a letter to President Obama.   Center for Justice & Democracy, Consumer Federation of America, U.S. PIRG, Public Citizen and Consumers for Auto Reliability all have signed on asking that consumers be allowed to proceed with their product liability lawsuits.   

“We’re giving tens of billions of dollars to the auto industry and nothing to the victim” writes Shahan. “Those who bought their cars before (Chrysler filed for bankruptcy) were thrown under the bus.”

Senators React

A letter from the Senate Committee on Commerce, Science and Transportation to GM expressed heightened concerns about GM “abandoning its legal obligation to customers that have been injured or killed by one of its defective products.”

It goes on to say, “New GM’s request for liability protection creates an unjust and illogical dichotomy in which the company is responsible for removing and repairing a vehicle defect, but would not be responsible for the injuries and deaths caused by that very same defect. The rights and responsibilities GM owes to its customers do not end with an arbitrary date. We insist that you fulfill its obligations to injured customers and their families.”

The letter signed by 20 Senate members of the committee, asks that company to assume the obligations of the Old GM. #


Posted by George Fusner
Friday, June 12, 2009 1:55 PM EST

Only in Amercia. What is even more insulting is the workers who made the defective and unreasonably dangerous cars get to own the company. What about personal responsiblity Mr. President? I bet he will eliminate medical malpractice suits in his push for socialized medicine.

Posted by Jane Akre
Friday, June 12, 2009 6:39 PM EST

Did Obama's Treasury Department know what it was doing?

“Treasury was not involved in this decision, which the company made consistent with conventional bankruptcy practice. While unfortunate, the outcome would have been far worse had the government not intervened in the restructuring and Chrysler had liquidated.”

- says a Treasury spokeswoman in a statement.

Anonymous User
Posted by C Toth
Saturday, June 13, 2009 2:52 PM EST

Can they not just sue the new company? Sounds simplistic, but seems to be a reasonable question. Isn't the government backing the warranties of the "old companies" cars?

Posted by Jane Akre
Tuesday, June 16, 2009 4:47 PM EST

As if the story has to get any worse:

Clarence Ditlow of the Center for Auto Safety, quoting numbers from the automotive data company Polk, reports that there are really 69 million Light Duty (passenger car and light truck) GM vehicles on the road as of 2008, and 30 million Light Duty Chrysler.

Total= 99 million automobiles, GM and Chrysler. Advice to consumers stays the same!

Comments for this article are closed.

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