QUESTIONS: GM CEO Mary Barra said victims could seek compensation “in lieu of going to court.” (Diego M. Radzinschi / NLJ)
Plaintiffs lawyers are pushing for punitive damages and inclusion of a broader scope of accidents in a planned compensation fund for victims of General Motors Co.’s ignition-switch defects.
During a June 18 congressional hearing over GM’s recalls, chief executive officer Mary Barra promised there would be no overall limit on payouts and that people who suffered injuries or the loss of loved ones predating its 2009 bankruptcy could be eligible. She said GM would begin processing claims on Aug. 1.
“If the ignition switch was part of the issue, we want them in the program,” she said.
But she deferred specifics to the fund’s administrator, claims attorney Kenneth Feinberg, who was expected to announce the details as early as June 30. He has been meeting with plaintiffs lawyers to gather their views. Some of those lawyers, speaking on condition of anonymity, said they were pleased with some details, such as the possibility of including cases in which the driver was at fault, even if he or she was intoxicated. But they’re pushing for additional concessions.
“We know the direction he is leading us into, and we’re not sure we like all of it,” said Jere Beasley, founding shareholder of Beasley, Allen, Crow, Methvin, Portis & Miles in Montgomery, Ala.
Feinberg and GM spokesman Greg Martin declined to comment.
Feinberg is a seasoned administrator of victim funds, including those for last year’s Boston Marathon bombings, BP PLC’s Deepwater Horizon oil spill and the Sept. 11, 2001, attacks. GM has recalled 2.6 million vehicles this year over the defect, which could shut down engines, disabling power steering, airbags and other functions.
Plaintiffs lawyers, many of whom remain embittered about Feinberg’s handling of BP’s $20 billion fund for oil-spill victims, argue that punitive damages are warranted, given that GM knew of the defect for more than a decade. Unlike the BP fund, which focused primarily on business losses incurred in the months after the spill, GM’s fund involves injuries and deaths directly caused by the defect.
In court, juries could award punitive damages. “In fact, if a jury hears what we know already — and we don’t know everything yet — they will punish General Motors severely, without any doubt,” Beasley said.
And unlike the Sept. 11 fund, the corporate wrongdoer is bankrolling this fund to compensate for injuries and deaths, said Julie Goldscheid, professor at the City University of New York School of Law. “A lot of these questions were answered by Congress, so it took some of the discretion out of his hands for better or worse,” she said of the Sept. 11 fund, which taxpayers paid for. “He’s in a different place now.”
MORE THAN AIRBAGS
Several plaintiffs attorneys raised ­concerns about how Feinberg might ­categorize the causes of accidents. U.S. Rep. Morgan Griffith, R-Va., was among several officials who asked Barra during the hearing whether the claims administrator was looking at “other ­parameters” than airbag failures. His concern stemmed, he said, from the 13 dead whom GM has acknowledged, all of them killed in accidents in which ­airbags failed.
“How many deaths are there and accidents are there that aren’t on GM’s list where the proximate cause of the accident was the stalling itself, not just an increase in the injuries because air bags didn’t deploy?” Griffith said in an interview. “I don’t think air bags are the only issues they have to deal with.”
Then there are the additional recalls — most recently on June 16 of 3.2 million vehicles — which GM said involved an unrelated ignition problem.
“It’s clear from the comments from Mr. Feinberg that there’s nothing set in stone yet about even what vehicles will be included in the scope of the plan,” said Lance Cooper, founding partner of The Cooper Firm in Marietta, Ga.
Also unclear is whether victims would abandon all legal claims by participating in the fund — although Barra told Congress that the program would be “in lieu of going to court.”
Regardless of such details, the fund might be the best choice for some victims. “I don’t like to put somebody in a lawsuit — in a products case, which is extremely expensive to litigate — for a broken leg,” Beasley said. “In the compensation fund, a broken leg would be compensated.”
Contact Amanda Bronstad at firstname.lastname@example.org.