Civil Penalties For General Motors Capped At $35 Million For Defective Ignition Switches

800px-Chevrolet_Cobalt_LT_sedan150px-General_Motors.svgI previously wrote about the growing controversy over the delay of General Motors in dealing with its defective ignition switches — a defect that appears to have caused multiple deaths. Now the company has agreed to pay a $35 million civil penalty for delays in responding to defect. If this seems ridiculously small, it is. The fine is the largest that can be imposed by the National Highway Traffic Safety Administration (NHTSA) under a federal law protecting companies from higher penalties. The Administration is trying to get Congress to approve the Grow America Act, which contains an increase of fines for the most serious violations from $35 million to $300 million.


GM admits to knowing about the potentially lethal defect for over a decade. It will face some additional fines, but this “maximum” fine is trivial in comparison to the horrific costs imposed on individuals and families by the decision of GM to do nothing in the face of mounting evidence of a lethal defect.

The question is why federal law would cap the fines at such a low level in a field where companies make billions in profits. The obvious answer seems to be the power, again, of lobbyists in Washington is leaving “penalties” in laws while reducing their actual bite for the industry.

In light of the federal law, the torts system again seems the only effective deterrent in terms of real damages for companies. While many members love to rail against the tort system, they simultaneously work (or remain silent) for different corporate shields and caps like this one. The result is uncertainty by a company like GM as to whether (and to what extent) it will be forced to internalize or assume the true costs of a defect. This problem is more severe where the company believes that bankruptcy will protect it from civil lawsuit, as we previously discussed. Thus, GM can use one law to cap fines and use another law to negate judgments. That is one heck of a one-two punch for families who lost loved ones in these defective cars.

Even if the company succeeded in blocking civil damages, a government fine would presumably not be able to be blocked through bankruptcy — further supporting the need to increase the potential fine under federal law. The proposed act however includes other items that may lead to a stall in Congress. It would seem warranted to have a stand alone bill that only addresses this one fix if Congress is serious about addressing this controversy.

Source: Washington Post

46 thoughts on “Civil Penalties For General Motors Capped At $35 Million For Defective Ignition Switches

  1. I wonder what it would actually take for a corporation to have its charter revoked. Killing people does not seem to be enough. Spoiling the ecology and economy of the Gulf Coast is not enough. Crashing the economy with your bank is not enough. Anyone want to speculate what would be enough?

    • I am not sure a charter for a corporation can be revoked as long as it keeps within its stated purpose and pays its fees, taxes and makes its yearly reports.

  2. old fox33

    2.) GM is owned by the UAW with managers employed by the UAW and its workers are solely dues-paying members of the UAW.
    ==================================================

    did it hurt when you pulled that one out of your a$$?

  3. Sergeant Shulte(s),

    I KNOW NOTHING!!!

    Hell, I haven’t gotten over the Civil War! You know what they say. The biological bipeds of identical plumages are gregarious. That seems axiomatic to me. I’d have to postulate the you who commingle are the deviant physical anomalies.

    Did you ever see that Twilight Zone episode in which the protagonist, a hospitalized patient, was head-bandaged until his countenance would be revealed at the end? The busy doctors and staff were all literally pigs and normal. When the patient was unmasked, he looked gross, unbearably ugly and completely repulsive; he looked like a human.

    To suggest there is something untoward when birds of a feather flock together is twisted somehow.

    • John – other than you turned on your thesaurus on your computer, I have no idea what your point was or what you were referring to. You are going to have to make a more specific reference if you would like them to respond.

  4. Desperate times call for desperate measures.

    The African Tribal Chiefs sold their tribal members into slavery, the king needed cash (see, slavery was just a simple little wage dispute from beginning to end – kind of like indentured servitude).

    The Mayans cut the hearts out of thousands of citizens in one day (their deity was in dire need of some appeasing – Geez, I would have rather been a slave).

    The Israelites killed every living thing in Jericho in order to prevent an attack from the rear as they moved into the promised land.

    The British tarred, feathered and hung Captain Kidd on the Thames for all the departing ship crews to see and remember. Traitors and insurrectionists were drawn and quartered through the 17th century.

    How about that Vlad the Impaler??? Desperate times manifested themselves as a need for defensive terror tactics so he showed his enemies thousands of people alive and impaled on stakes (that would have scared the be-heysoos out of me!).

    Etc., etc. Things are tough all over.

    • John – most scholars think the Maya sacrificed either slaves or war prisoners or both. There may have been some child sacrifice for building foundations and the source of the children is unknown.

  5. Nick,

    An American, W. Edwards Demming, taught the Japanese how to produce that quality:

    He is best known for his work with Japanese after WWII, particularly his work with the leaders of Japanese industry which began in August 1950 at the Hakone Convention Center in Tokyo with a now seminal speech on what he called Statistical Product Quality Administration, which many in Japan credit with being the inspiration for what has become known as the Japanese Miracle of 1950 to 1960, rising from the ashes of war to become the second most powerful economy in the world in less than a decade, founded on the ideas first taught to them by Dr Deming:

  6. I threw the J word up there to open a discussion on slurs on American Indians. I am part Osage. I lived in Washington DC for a short internment and was annoyed by the Washington Redskins name. Its a slur. I think it should be banned along with Japs. But, I don’t take shots at other commenters here and did not mean to stir up apCray. But I do reserve the right to call bad cops “igPays”. If Jonathan wants to throw us all off or just me then I guess he will let me know. He does have a dog in this fight and its name is Luna and we all like the dog.

  7. I have absolutely no idea of what I wrote that was uncivil. It is not my practice to call people names. Did I? Is it objectionable to point out the political affiliation of a source? My two comments here consist of about 10 words regarding Soros and the use of the slur ‘jap’. There is no indication of a confrontational exchange. The short length of the thread is illustrative.

    It’s as if you have given an exam with 100 questions, posted the grades on a bulletin board but neglect to return the exam for our review.

    How can one learn the rules with such a system?

  8. Two words a foreigner living in Japan learns pretty quickly are baka (stupid) and gaijin (foreigner).

    Oh yeah. Those friendly little Japanese didn’t bomb Pearl Harbor, murder POW’s on the Bataan “Death March” or atrociously torture prisoners.

    But, hey! That doesn’t make them bad people.

    We’re all innocent! It was a gross miscarriage of justice!

    • John – the Japanese were not signatories of the Geneva Convention. To them surrendering, as did the US force on Corrigidor and Bataan, meant the prisoners where less than human. Hence the inhumane treatment. This attitude of no surrender became more and more off a problem as we attempted to take islands closer to the homeland. On the last few islands were were having to kill all of the Japanese, there were no or very few surrenders.

      On the flip side, I am sure Curtis LeMay did not firebomb the wooden and paper cities of Japan causing hundreds of thousands of civilian deaths.

  9. I see Govt. Motors recalled another 3 million cars today. Why not just recall every freakin’ car they made!

    • Nick – they probably will but they cannot repair them all at once, so they have to recall them in stages.

  10. John, “I object! This is a travesty. It’s a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham.”

  11. John:

    You also have a comment deleted which was entirely committed to insulting another poster.

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