(Photo by Jonathan Ernst/Newscom)
[Editor’s Note: An earlier version of this story appears in the July issue of Corporate Counsel magazine. The issue went to press just before General Motors released the report by Anton Valukas on what went wrong at various levels of the automaker. We’ve updated the story, including material from the Valukas report about what transpired in the legal department as the ignition switch defect became known, and what happened after the report’s release. This full-length, feature story wraps up the main developments on the legal front thus far.]
The deadly ignition switch fiasco at General Motors Co. has spawned a remarkable breadth of legal issues, ranging from the law department’s role in recalls to the company’s duty, if any, to compensate victims after it declared bankruptcy. Indeed, seldom has a legal department been thrust into such a high-profile role in a huge public controversy.
The ignition switch debacle inevitably cast the legal team in a harsh light and led to the oft-repeated phrase: Where were the lawyers? Well, they were right here.
GM’s legal department has had three different, and impressive, leaders since the defective switch was uncovered. Any one of them might have led the company down a very different path, and perhaps saved lives along the way. But they didn’t.
Instead they allowed the company to waste nearly 10 years. That’s 10 years of committee meetings and haggling and ignoring possible solutions. And 10 years of not issuing a recall while GM cars crashed and people died.
The recall delay appears unprecedented. Allan Kam, who spent 25 years as an enforcement attorney with the National Highway Traffic Safety Administration (NHTSA) and now operates a consulting firm called Highway Traffic Safety Associates in Bethesda, says most delays involve a few months or maybe even a year. But a decade? Kam explained, “I’ve seen hundreds of safety defect investigations at NHTSA, and I can’t say this is the most severe defect I’ve ever seen. But it is among the most severe delays in conducting a recall. A 10-year delay is extraordinary.”
In Kam’s mind there was no good reason for the delay. After recently examining GM’s filings with NHTSA, Kam said the company knew enough by 2004, or early 2005 at the latest, to know it had a problem and should have issued a recall then. But it didn’t.
So now 13 people—investigators suggest that number will rise—are dead, and hundreds are injured because of the defect. The flaw involves a small, malfunctioning spring-like device in several models that lets the key fall back to an off or accessory position while the car is running. This switch-off can disable air bags, impair systems such as power brakes and steering, and startle drivers, who sometimes crash. The ignition issue, and how it was mishandled, has nearly brought GM to its knees.
The company has suffered a massive blow to its reputation. It faces dozens of lawsuits carrying billions of dollars in potential liability. GM conducted an internal investigation, and a report was released in early June [PDF]. At least four in-house lawyers, one a vice president, lost their jobs—though not general counsel Michael Millikin. No former or current GM lawyer responded to requests for comment for this story.
The Valukas report made several recommendations to reform how the legal department works. The U.S. Department of Justice is conducting a criminal investigation, and several state attorneys general were also investigating the matter. And Congress is looking into why the recall took so long. Since February the company has agreed to recall 2.6 million vehicles over the defect and to pay a $35 million settlement to NHTSA—the maximum civil penalty allowed by law.
At the heart of it all is a legal department of about 200 attorneys who failed to communicate. And that’s putting their failure in the best possible light. Some observers prefer the phrase “cover-up.” At least one class action suit over the defect clearly points at the lawyers’ role in not disclosing the truth during GM’s 2009 bankruptcy proceedings.
First the complaint offers a detailed timeline of GM actions, along with emails that show the company knew about the defect for over a decade. Then the complaint states that it is “inconceivable that individuals within GM’s upper management and general counsel’s office did not know about the ignition switch defect in GM vehicles, or the attendant contingent liabilities, when GM entered bankruptcy in June 2009.”
Some U.S. senators were incredulous too. At a hearing in April, they voiced similar concerns about what the lawyers knew. After all, GM’s attorneys worked on cases over the years involving crashes caused by the defective switch. But as GM chief executive Mary Barra tried to explain to the senators: “Within GM there were silos, where information was known in one part of the business, for instance in the legal team, but was not communicated to the engineers.”
GC Millikin has been taking the brunt of the scrutiny. But so far he’s not talking. One plaintiffs attorney, Robert Hilliard of Hilliard Munoz Gonzales in Corpus Christi, is trying to depose Millikin. Hilliard told The Detroit News in May: “As soon as I ask for GM to make its general counsel, Millikin, immediately available for deposition to get to the bottom of this cover-up and to hopefully shed some light on the issue of whether and for how long GM’s legal department delayed immediate and forthright disclosure of the defect so as to buy more time to circle the wagons, GM delays the litigation.”
But Millikin wasn’t the only legal chief to miss the problem. To fully understand decisions that GM made, it helps to review the three general counsel during this time period and the legal and other issues flying around them. Millikin took over in 2009; the others are Thomas Gottschalk, who served from 1994 to 2007, and Robert Osborne, who had the job from 2006 to 2009, overlapping Gottschalk’s final months.
If early responsibility falls on any GC’s shoulders, it is Gottschalk’s. He was in charge of the legal department when the pre-2007 decisions were made about how to handle the defect. The first ignition-related lawsuits hit in 2004 and 2005, both involving cars in which air bags didn’t deploy. If he did not know about his lawyers’ ensuing discussions—which carried high legal risk for the company—then why didn’t he?
His own policies, quoted in the internal report, stated that lawyers were to inform him of such matters. The report doesn’t say what precise questions Gottschalk was asked by the internal investigator, or even if he was asked if he knew about the deadly defect at the time.
Gottschalk referred all questions to the company. GM spokesman Greg Martin referred questioners to the internal report.
Tom Gottschalk’s history with GM goes back to before he joined the company. While a litigation partner at Kirkland & Ellis in Washington, D.C., in the mid-1970s, Gottschalk served GM as outside counsel. In that role he successfully defended the automaker against several high-profile cases, including allegations that it fixed prices in one action, and that it covered up brake defects in another. GM was so taken with him that it hired him as general counsel in 1994.
So Gottschalk was there for the great explosive gas tank legal battle in the mid-90s. The truth came out only after GM sued the Ralph Nader-founded Center for Auto Safety over the Center’s claims that side-mounted gas tanks on GM trucks were dangerous and prone to explode on impact. The company denied there was a problem, and there was no public record of any crash victims suing GM.
But the Center found out otherwise. In 1996 the Center obtained through the court the names of 245 gas tank defect cases that had been filed starting in 1973. And it later came out in 2003 that GM had settled 297 gas tank cases for $495 million, demanding confidentiality as part of the settlements.
It was the same legal strategy that GM’s legal team would follow in the ignition switch cases. And the same “safety” lawyer, William Kemp, was involved in both the gas tank and the faulty ignition cases. Kemp, a 30-year GM veteran, was one of the in-house lawyers who was let go in early June.
Still, Gottschalk was always highly regarded in legal circles. He strived for diversity and a strong in-house pro bono program. In 1997 he convinced lawyers at Ford Motor Company and other local companies to join GM in forming a pro bono legal clinic to serve Detroit’s poor. GM lawyers, including Gottschalk, voluntarily handled everything from wills to dog bites for clinic clients. Today he leads the pro bono program at Kirkland & Ellis, where he is of counsel.
Right after Gottschalk became GM’s general counsel, he decided to restructure its legal department. By creating a global law department, the GC arranged for in-house attorneys to report to his office rather than to business leaders. As he told Corporate Board Member magazine earlier this year, the change allowed his attorneys “some professional independence within the company so they could be objective legal advisers and counsel on risk and . . . not be overruled by nonlawyers.”
In 2000 GM brought on a new CEO, Richard “Rick” Wagoner. Such a switch can sometimes mean turmoil for a general counsel. Gottschalk navigated the change, however, and in May 2001 the company gave him a promotion and an additional title: executive vice president for law and policy.
But that same year, the first problems with the ignition switch were noted, according to a document GM just filed in March with NHTSA. The document states that a 2001 preproduction report on the Saturn Ion “addressed an issue relating to the ignition switch’s ‘passlock’ system.” The issue involved the same defect that eventually led to the 2014 recalls.
And there were more red flags during Gottschalk’s tenure. In 2003 NHTSA received the first complaint about the defect. A year later GM opened its first inquiry into the ignition problem, which it closed in early 2005 because “none of the solutions represents an acceptable business case,” according to GM documents. After consumer suits were filed and there were more field reports about vehicles losing power, an engineer proposed that GM redesign the key. Though initially approved, GM admitted to NHTSA that the idea was later canceled. Still, neither GM nor NHTSA ordered a recall.
At the time GM labeled the problem one of “inconvenience” to drivers, and not a safety issue. With a safety issue, cost is not a determining factor. But the internal report explained that the failure to understand that a stalling car might be a hazard meant that the issue was put into a different category of problems—and cost was a relevant consideration for problems of mere “convenience.”
And cost was on everyone’s mind at the time. The company was hemorrhaging money, suffering quarter after quarter of multimillion-dollar losses. In June of that year, Gottschalk pulled Millikin out of his role as coordinator of global legal services and named him associate general counsel, presumably grooming him for the top job.
Then, what is believed to be the first crash death related to the ignition switch occurred in July 2005 in Maryland. Six months later, in December, the company issued a service bulletin to dealers alerting them to a faulty ignition problem, but still didn’t recall any vehicles.
What GM did do was delete a reference to “stalling” in the proposed service bulletin language. The report states that employee Steve Oakley, who drafted the language, explained that “the word ‘stall’ is a ‘hot’ word that GM generally does not use in bulletins because it may raise a concern about vehicle safety, which suggests GM should recall the vehicle, not issue a bulletin.’’
Also the company had warned employees not to use sensitive words that could be turned against them in later lawsuits. “A number of GM employees reported that they did not take notes at all at critical safety meetings because they believed GM lawyers did not want such notes taken,” the internal report notes.
Or perhaps the wording decision was related to cost. The company posted a $4.8 billion loss in the fourth quarter of 2005, and a $10.6 billion loss for the entire year. By early 2006, shareholders were calling for CEO Rick Wagoner’s head.
Still more ignition complaints poured in. Seven sour quarterly earnings were stated and later restated downward. The losses grew, and rumors of bankruptcy circulated. At one point the GM board of directors called a secret meeting to talk about firing Wagoner, according to a Wall Street Journal report, but he confronted the directors and talked them out of the action.
Amid this raging firestorm, Gottschalk announced his pending retirement. And during the turmoil, the GM design engineer who first approved the ignition switch—which never met GM specs in the first place—quietly signed a form that authorized the supplier to change the defective switch.
But that change wouldn’t occur until later models in 2007. And he never told anyone at GM nor documented the change. The internal report would blame his lack of communication for leaving others stumbling in the dark for years as they searched for the defect’s cause. The engineer was recently fired.
The general counsel’s job was also storm-tossed. Gottschalk left the role in September 2006, but stayed at GM under his other title as executive VP for law and policy until April 2007. Rather than promote Gottschalk’s number two, Millikin, GM brought in a short-term expert to restructure the company.
That expert was outside counsel Robert Osborne, who became GC in September 2006. Osborne had worked for 23 years at Gottschalk’s old firm, Kirkland & Ellis, before joining Jenner & Block in 2002, where he chaired its corporate practice. He also had served for a time as general counsel to Lands’ End Inc. Considered a whiz at mergers, acquisitions and spinoffs, Osborne had represented GM in the 1995 sale of National Car Rental, the later sale of Hughes Electronics, and various spinoffs and public offerings of stock and debt, according to the company.
His work was cut out for him. Osborne and the CEO were clearly focused on how to save the company in 2007, and probably not on product problems. At the same time, NHTSA officials cited 29 more complaints about the bad switches, four fatal crashes and 14 field reports. In addition, in 2007 GM learned of four more crashes when the engine turned off and air bags did not deploy, according to NHTSA documents. But still no one at GM or NHTSA insisted on a recall.
The following year things only got worse. While the ignition complaints and crashes continued, NHTSA responded to one victim, “There is insufficient evidence to warrant opening a safety defect investigation.” In addition, the global economic crisis of 2008 doomed GM’s financial health. Osborne, with Millikin’s help, focused on planning for bankruptcy and receiving a government bailout. Meanwhile, others at GM still studied data from more crashes. In May of 2009 the company found that seven of 14 crashes showed the ignition switch had jumped to the “accessory” position while the car was running.
But that fact may have been temporarily lost in the financial abyss. The company filed for Chapter 11 bankruptcy the following month, June, citing nearly $173 billion of debt. Thanks to the planning, the so-called New GM quickly exited bankruptcy in July. His main assignment over, Osborne left GM two months later and in 2010 became general counsel at consulting firm Booz Allen Hamilton. Today he is retired but of counsel at Jenner & Block, and he writes a conservation blog.
So in mid-2009 Millikin finally took control of the post he was groomed for. The former federal prosecutor had joined GM’s legal department in Detroit in 1977, and 10 years later became head of in-house litigation. In Gottschalk’s restructuring, Millikin headed the global litigation practice. Two years later, in 1997, Gottschalk moved him to Zurich to be general counsel of GM’s burgeoning international operations as well as GC of General Motors Europe. In an interview with Corporate Counsel magazine after returning to Detroit and becoming associate GC, Millikin fondly recalled his days abroad and shook his head in mock disbelief at his decision to return to Detroit.
Millikin had little time to celebrate his promotion to GC. A month after taking the job, the company underwent a series of leadership shockwaves and revolving CEOs. First CEO Wagoner was ousted, to be replaced by the chief operating officer, Fritz Henderson. That move lasted only a few months, when newly named board chairman Edward Whitacre Jr. shifted to the CEO post in December.
Though GM was finally seeing financial daylight, the year 2009 ended dismally otherwise. Around the time Whitacre took over the CEO role in December, a Chevy Cobalt crashed, killing its occupant when the air bags did not deploy. And 2010 brought more turmoil. The lawsuits over crashes due to the defective switches kept growing.
Outside the litigation efforts, the company wanted to pursue an IPO in 2010. Whitacre, unwilling to make a long-term commitment to the CEO job that an IPO would require, felt he had to step aside. So board member Daniel Akerson took the reins.
Akerson seemed to bring some stability. In 2011 the company was making a solid profit, and the legal department began quietly settling lawsuits over crashes due to defective switches.
But there was a problem: The internal report states, “By 2011, outside counsel, privy to . . . engineers’ data, had repeatedly warned GM in-house counsel that GM could be accused of egregious conduct due to its failure to address the problem of airbag nondeployment [due to faulty ignitions], and that such conduct might subject GM to liability, including punitive damages.”
So in July, GM called a meeting involving people from legal and two other departments to authorize a new probe into crashes. But the investigation, an analysis of its data, then more analyses would continue for nearly three years. And there was still no recall.
Meanwhile GM was handling the ignition suits in a structured way. In-house product litigation attorneys had authority to settle cases up to $100,000, according to the internal report. Cases over $100,000 and up to $1.5 million required approval of a committee called the Roundtable, which met weekly and was led by the litigation practice area manager. All product litigation staff attorneys were invited to attend and chime in.
Cases settling for $2 million to $5 million required approval of a higher-level Settlement Review Committee, which met monthly and was chaired by the head of global litigation. Members included both the general counsel for North America and Kemp, the safety lawyer. Cases over $5 million required the approval of the general counsel. No faulty ignition cases settled for that much, according to the report.
At both settlement committees, member attorneys would vote on outcomes. But the committee chair was the ultimate decision-maker. Litigation manager Michael Gruskin chaired both committees from mid-2007 to March 2012. Lawrence Buonomo, who was also let go last week, replaced him beginning March 8, 2012. The report said the Roundtable considered an average of 3.4 cases per meeting in 2012, and 3.76 in 2013. The Settlement Review Committee averaged 1.4 cases in 2012 and 1.3 in 2013.
Then came the litigation “bombshell.” In 2013, in one key case involving a fatal crash, plaintiffs’ attorneys learned of the secretly replaced switch. King & Spalding attorney Philip Holladay wrote an almost desperate letter saying, “This case needs to be settled . . . There is little doubt that a jury here will find that the ignition switch used on [a certain] 2005 Cobalt was defective and unreasonably dangerous, and that it did not meet GM’s own torque specifications.”
Holladay’s April 2013 letter [PDF] said the plaintiffs’ lawyer would cite the fact of “an investigation [of faulty switches] that has now been dragging on for almost two years as proof positive of GM’s conscience [sic] indifference and willful misconduct when it comes to the safety of its vehicles’ occupants.”
But no one reportedly told the boss. The internal report says that no GM lawyer “elevated Holladay’s letter or specific issues related to the case to general counsel Michael Millikin prior to the settlement.” So still there was no recall.
The revolving CEO door continued. Akerson retired in January 2014, to be replaced by current CEO Mary Barra. Then in February the engineers’ analysis finally reached a conclusion, and GM began the first of what became a series of recalls. The action set off what became a chain reaction of government investigations and media scrutiny of why the recall took so long.
That’s when GM and Millikin countered with their own internal inquiry. The company announced in March that Millikin and outside counsel Anton Valukas of Jenner & Block would cohead the internal investigation, with help from another law firm often used by GM, King & Spalding. Both Jenner & Block and King & Spalding were longtime GM defense counsel. But critics claimed that the probe needed independent leaders, not GM insiders. As Kam, the ex-NHTSA attorney, put it: “You sort of think they may be part of the problem, rather than part of the solution.”
In a strategic move, Valukas brought in another firm to interview Gottschalk and Osborne for the report. Osborne had worked for Jenner & Block, the report explains, and GM wanted to avoid the appearance of a conflict of interest. A GM spokesman refused to identify the firm, but it is named in a footnote in the report: defense law firm Cotsirilos, Tighe, Streicker, Poulos & Campbell of Chicago. Presumably Valukas saw no conflict in Jenner & Block interviewing Millikin, who hires the law firm. The report also names only Valukas, and not Millikin, as sole author.
Not surprisingly, critics have lambasted the 325-page Valukas report. For example, it offers meticulous details about facts and events that support the report’s theory that GM was negligent but not maliciously or criminally so. But it offers scant details on questions like: What did Gottschalk and Osborne know, if anything, about the defect? Who did Buonomo and Kemp tell about the settlement cases and what did they say? What was Lucy Clark Dougherty’s role in the defect decisions, if any, when she was North American GC, when Kemp and Buonomo reported to her?
One senator called it “the best report money can buy.” The activist Center for Auto Safety labeled it an “elaborate whitewash.” The Center mocked GM’s contention that the ignition switch wasn’t considered a safety issue. “Stalling has been the subject of over 300 safety recalls,” it said in a statement. “GM is certainly aware that stalling is a safety defect because it litigated and lost the issue in a seminal case that established loss of vehicle power on the road as a safety defect” [in U.S. v. General Motors Corp., 1976].
GM disagreed. “Most people who read the report objectively consider it thorough and brutally tough,” company spokesman Greg Martin told Corporate Counsel.
But some plaintiffs’ attorneys, who asked not to be named because they are actively litigating GM cases, were also critical. They called the report a clever defense strategy that tries to spin the story. It creates a scripted “company line” for future GM witnesses to follow in any investigations, they said, as it simply blames poor communication and a lax culture that lacked urgency.
Now GM, Millikin and the legal department face an uncertain future. Auto industry gadfly Peter DeLorenzo, writing about the recall mess, said in an April blog post: “GM’s legal staff needs to be blown up, starting with a regime change at the top and a thorough purging of any and all who have enthusiastically taken their marching orders from the current chief counsel.”
Some media have speculated on whether Millikin will be ousted. But GM issued a statement saying the general counsel, who turns 66 in August, has no plans to retire and will remain in his position.
Elsewhere the U.S. bankruptcy court in Manhattan is considering whether some suits against GM over the defects should be removed from bankruptcy protection. Under terms of the 2009 bankruptcy, the so-called New GM (a new entity created by the bankruptcy) was given protection against all liabilities that arose prior to the bankruptcy, including crashes due to defects.
But attorney Alexander Schmidt, who brought an action in bankruptcy court on behalf of eight plaintiffs, argued that GM knew, or should have known, about the massive potential for liabilities over the defect “and failed to disclose that information to the court or other interested parties” during the 2009 proceedings. Schmidt, of Wolf Haldenstein Adler Freeman & Herz, told Corporate Counsel that GM “pulled the wool over the eyes of the government when it fraudulently induced the government to support it during bankruptcy.”
Harry Wilson, an Obama administration adviser to the 2009 auto task force, confirmed the lack of knowledge. Wilson said in May that the task force was unaware of the switch problems when it crafted the $49.5 billion bailout for GM five years ago, according to a Detroit News story. The issue, Wilson said in the article, “sadly is emblematic of the cultural problems” at the automaker.
Now GM says it’s changed. And it’s looking for a way to compensate crash victims. It hired Kenneth Feinberg, the victim compensation expert who administered the September 11 Victim Compensation Fund and One Fund Boston, arising out of the Boston Marathon bombings, to come up with a plan to address hundreds of damage claims filed against the automaker. The company, however, appears to continue fighting economic claims that seek loss of value of defective vehicles, according to its bankruptcy court filings.
And then there are the ongoing multiple investigations. Both houses of Congress have held hearings on the recall delay and intend to hold more. In fact, Barra and Valukas appeared before the House Energy and Commerce Committee’s Oversight and Investigations subcommittee for further questioning on June 18. (See our report here.)
Legal observers wonder how much information, beyond the report, Congress will demand. For example, in the Hewlett-Packard Company pretexting scandal in 2007, the lawmakers demanded and got executives’ emails and transcripts of internal investigative interviews, including with the general counsel. Will GM face similar demands?
The U.S. Securities and Exchange Commission is looking into GM as well. But perhaps most worrisome to the automaker is a criminal probe by the Justice Department. Neither GM nor the DOJ will discuss it, but the investigation has been widely reported. Some government officials already accused the company of committing a crime by not reporting the defect years ago.
Kam said he expects Justice to use its March settlement with Toyota Motor Corporation as a model. In that deal, Toyota agreed to pay a record $1.2 billion penalty for concealing deadly accelerator problems, admitted that it misled consumers, signed a deferred prosecution agreement for criminal wire fraud and accepted an independent monitor to oversee its safety procedures.
But at least one law professor wondered if the Toyota model can work for GM. Peter Henning, a professor at Wayne State University Law School, told Corporate Counsel that the Valukas report will make it difficult for prosecutors.
Henning explained that Toyota saw red flags but made false statements about the problem being solved when it wasn’t. He said that doesn’t appear to be the case at GM, “which had red flags and didn’t act. How can [prosecutors] get them on what they didn’t do?”
Henning said it would be a better case if prosecutors can show that someone lied or deliberately turned a blind eye. But the Valukas report makes it sound like the engineers and lawyers were “too stupid” to say or do anything, he said. “They were so clueless that they didn’t even get to the point of lying.”
Meanwhile, within GM some changes are evident. Some safety officials reportedly have retired, left the company or moved to other jobs. GM created a new job of vice president of global vehicle safety. And Millikin named Dougherty, the GC of GM North America, to be the company’s chief legal adviser for global vehicle safety, even though she was Kemp’s and Buonomo’s supervisor.
The Valukas report recommended some 10 other changes in the legal department. Most have to do with better communication and an improved culture of accountability. Besides Kemp and Buonomo, the company let go Jennifer Sevigny, an attorney who led GM’s field product assessment group. As head of this group, Sevigny worked with the litigation staff on lawsuits and legal claims. She is mentioned numerous times in the report as having worked on assessments of the ignition problem.
And it removed Michael Robinson, vice president for environmental, sustainability and regulatory affairs since 0ctober 2009, and previously general counsel for GM North America for one year. Robinson joined General Motors in 1984 and held a number of positions on the legal staff, according to a previous GM press release. Before assuming the North America GC role in 2008, he served as a practice area manager on the legal staff and then managing attorney responsible for a variety of regulatory functions. Prior to that, he was responsible for GM compliance activities and led development of the GM “Guidelines for Employee Conduct.”
In other GM moves, the Detroit News reported that the company is more than doubling the number of engineers who look at safety issues. With all this emphasis on safety, GM so far has recalled a record 15.8 million vehicles worldwide for various unrelated reasons—about 20 times as many vehicles as it recalled last year. And on June 17 it announced it would recall another 3.4 million for unrelated ignition problems.
The company said it expects to take recall-related charges of $700 million in the second quarter, up some $300 million from an earlier estimate. And GM now expects to spend some $2 billion on recalls in the first half of 2014 alone.
But some critics still want more. In May, Sens. Richard Blumenthal, D-Conn., and Lindsey Graham, R-S.C., introduced a sunshine-in-litigation bill. The bipartisan bill would require federal judges to consider public health and safety in product liability cases before agreeing to seal court records. The senators said sealed settlements in GM lawsuits since 2005 prevented the public from having earlier knowledge of the defective ignition switches. But such legislative efforts have failed in the past.
Safety expert Kam would like to see Congress do one more thing. “We need criminal penalties in the Safety Act,” he said. Kam explained that now a company executive considering a recall that could cost hundreds of millions of dollars might choose to wait, “and they just might get away with it. Or at worst they face having to do a recall down the road and pay a civil penalty to NHTSA . . . It’s a cold cost-benefit analysis.”
But, Kam continued, “imagine if in that hypothetical case, instead of saying, ‘Let’s wait and save money,’ the manager says, ‘But I can go to jail if I don’t do this recall as the law requires.’ Then it’s a different equation.”