Mary Barra, Chief Executive Officer of The General Motors Company, testifies before the Energy & Commerce Committee during an Oversight & Investigations hearing looking into the GM car ignition recall. June 18, 2014. (Diego M. Radzinschi / NLJ)
General Motors Co. will create “a new norm and a new industry standard” for safety and quality, the automaker’s chief executive officer, Mary Barra, said Wednesday in her first public appearance on Capitol Hill since the publication of a critical report of the company’s handling of an ignition-switch defect.
Appearing with former U.S. attorney Anton Valukas, the Jenner & Block chairman who wrote the report, Barra tried to convince skeptical House panel members that GM’s efforts to address the findings is “more than a campaign” and is intended to change the way company employees think and act.
Although the investigation led by Valukas didn’t find an overarching conspiracy to conceal switch-defect information from the public, the probe discovered a “pattern of incompetence and neglect.” The report includes recommended changes for GM’s legal department.
The company first notified the U.S. National Highway Traffic Safety Administration about the problem on Feb. 7 and began announcing recalls three days later—despite receiving complaints from customers about switch defects for a decade. The NHTSA in May announced that GM would pay the maximum $35 million for failing to promptly tell the public about the problem.
Barra, who became GM’s CEO in January, said her company already has reformed the safety-decision making process, created a vice president of global safety position and initiated a program to encourage employees to quickly report possible safety issues. She said she also will address cultural problems that the Valukas report discovered.
“I will not rest until these problems are resolved,” she said during the hearing held by the House Energy and Commerce Committee’s oversight and investigations subcommittee. “As I told our employees, I’m not afraid of the truth.”
House members expressed dismay with a company culture that allowed a safety problem to go unresolved for years. Some lawmakers took particular issue with the “GM nod” and the “GM salute,” which were uncovered by Valukas. The nod was used among managers who agreed something had to be done, but didn’t take action. The salute was done by employees who tried to put responsibilities on others instead of themselves.
“I just find it hard to believe that [with] 210,000 employees, not a single one in that company had the integrity to say, ‘I think we’re making a mistake,’ ” said Tim Murphy, R-Pa., the subcommittee’s chairman. “ Not a single one. That’s puzzling.”
Rep. Diana DeGette of Colorado, the top Democrat on the panel, said she isn’t sure if GM can change its culture, noting that the automaker has work to do. But Congress also needs to take action, she said.
The Senate legislation from Democrats Edward Markey of Massachusetts and Richard Blumenthal of Connecticut and the House bill from Rep. Henry Waxman, D-Calif., would direct automakers to report to the National Highway Traffic Safety Administration more information about potential defects and direct the agency to make the information it receives about safety problems easier for the public to view.
“This committee should get to work on legislation to address the findings of our investigation,” DeGette said.
Barra didn’t comment on any particular bill. But she said she supports efforts to make it easier for the public to see information submitted to the agency.
GM spent $2.9 million on federal government advocacy during the first quarter of this year, according to the company’s most recent lobbying activity report. For its advocacy efforts, the company uses its own employees, as well as several outside lobbyists, including some from Holland & Knight.
Plaintiffs Lawyers Skeptical
Plaintiffs lawyers remained skeptical following Wednesday’s hearing, insisting that lawsuits against GM will uncover the truth about the recalls.
“After the hearing today, I don’t believe that we are getting the complete truth,” said Jere Beasley, founding shareholder of Beasley, Allen, Crow, Methvin, Portis & Miles in Montgomery, Ala. “To finally get the full truth about the safety culture and performance at GM, it will require the total involvement of the civil and criminal justice systems. I don’t trust GM to do the right thing to the hundreds of families who have buried loved ones who are killed because of GM’s wrongdoing and massive cover-up.”
The American Association for Justice, which has pushed to pass the Sunshine in Litigation Act—to make it harder for judges to seal settlements in product liability defects cases—released a report on Wednesday outlining the role that lawyers have played in uncovering GM’s ignition issues and other auto safety problems.
“Then and now, the civil justice system has helped to create and enforce safety standards, revealed previously concealed defects, and deterred manufacturers from cutting corners on safety for the sake of greater profits,” the association’s president, Burton LeBlanc, said.
On Wednesday, plaintiffs attorney Steve Berman, whose firm has filed several class actions against GM on behalf of consumers over the recalls, filed a new case seeking damages of up to $10 billion.
The case, which seeks to certify a nationwide class, claims the automaker’s recalls this year of more than 20 million vehicles have tarnished its reputation so much that 15 million customers have lost resale values on their cars. A woman in La Quinta, Calif., who owns a 2010 Buick LaCrosse, filed the suit.
Berman, managing partner of Seattle’s Hagens Berman Sobol Shapiro, who was co-lead counsel of the class actions filed against Toyota Motor Corp. over its sudden acceleration recalls, estimated that GM vehicles have decreased in value from $500 to $2,600 each. The class action in U.S. District Court for the Central District of California was filed on behalf of anyone who owned or leased a GM vehicle between July 10, 2009, and April 1, 2014. The class excludes owners or lessees of vehicles that were subject to the ignition switch recalls.
“The economic reality is that all GM owners are bearing the costs of GM’s actions,” Berman said in a written statement.
Contact Andrew Ramonas at email@example.com. Amanda Bronstad contributed to this report.
Updated at 2:35 p.m.