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. One question and two observations:
    1.) Does the government fine and consent decree override and eliminate any private rights of action (lawsuits), or can the decree be cited as evidence of wanton negligence in private lawsuits?

    2.) GM is owned by the UAW with managers employed by the UAW and its workers are solely dues-paying members of the UAW. What do you expect?

    3.) Isaac says, “Every other advanced democracy has at least four parties, four opinions, four choices. We are the least democratically structured nation. No wonder half the voters are republican.”
    a.) Most “every other advanced democracy” is in the EU so they are superseded in law and regulation by unelected civil servants in Brussels and not at all “democracies.”
    b.) We are not, and do not claim to be a “democracy.” That’s a so-called goal of the Democrat Party. Democracy means “majority rule” and if you look at the IQ Bell Curve, you will see the majority is dumber than IQ 101.
    c.) Switzerland (non-EU) offers truer democracy and every male citizen there possesses a firearm.

  2. A good read is the book, Saboteurs: The Nazi Raid on America. There was a strong network of both Japanese and German Americans who were traitors during WW2. But, govt. is always stupid and inefficient. The network of traitors remained free. The aforementioned book details these saboteurs coming ashore and making contacts w/ these German American traitors. Ironically, one of the saboteurs had family members who were traitors living in the Chicago neighborhood where I lived in the 80’s. It’s still German and a couple of the old man bars seemed a little Nazi like. There is something to learn about what swift justice looked like back then. These German saboteurs had a trial and were executed within a few months! They did inter some Italians but Lucky Luciano helped stem that. Italian Americans loved the US. Luciano allowed the FBI to ignore the docks on the eastern seaboard, freeing them up to do other work. The mob controlled all the docks and policed them for saboteurs. But, when they found saboteurs there was no trial. They were simply no longer seen again.

    1. In return Luciano was returned to Sicily at the end of the war. Although he did sneak back into the US.

  3. ‘jap’ is a racial slur. Please do not use the degrading term.


  4. All the Japanese in the lower 48 were interned, no? Was that justified? Some Germans were also arrested and interned. And to add insult to injury, some of those interned Germans were also Jews.

    1. Annie – they were not all interned. There is a line drawn somewhere in Arizona, if you lived West of that line you were interned, if you lived East, you stayed in your home. Many of the Germans in WI were interned and were held longer than the Japanese. There were also Italians interned. Surprisingly, no Japanese on Hawaii, where there were actual Japanese spies were interned.

    2. I have deleted an uncivil and profane comment from Melanie. I have also deleted comments from RTC and Feynman again. If you engage in name calling or uncivil comments in a comments, I am not going to edit out the personal attacks. At some point, if you cannot comply with our civility rule, you will have to be suspended. I have no dog in this fight. I do not care how each of you feel about the others or the sources or viewpoints that the others espouse. If you cannot discuss a subject without name calling or personal attacks, we ask you again to move on to another blog where such biting comments are not just tolerated but welcomed. If you believe someone is beneath contempt than ignore them. I am perfectly willing to reduce the comment section 99 percent to avoid this type of juvenile discourse.

  5. Had we been operating in a Capitalist economy, GM would have been liquidated and those with cash would have purchased the remaining valuable assets for pennies on the dollar. It’s Capitalism – Naturalism. The predators and scavengers make good use of carcasses. Life goes on without the artificial interferrence of elite intellectual know-it-alls who, as it turns out, know nothing, especially about unintended consequences. Competitors would have assimilated those salvaged segments and the industry would have moved forward vigorously. Who propped this corporation up? Certainly and absolutely NOT Capitalists. Could it have been the collectivist elites who think they know more than Mr. Market? Chrysler, GM and likely Ford would have been museum pieces by now but for the collectivists (i.e. UAW, teacher, union thugs in a collectivist thugocracy). Long live the Dictatorship of the Proletariat! Hear, hear, Comrades!

    1. John – you have to protect the unions if you are a Democrat. Remember they hire minimum wage protesters to front for them. They are helping the economy.

  6. Chump change for Obama (Chump) Motors. Revolting. #boycottGM

  7. The word “Jap” is a racial slur from the years that so-called Americans put true Americans in prison camps without cause (Symbolic Racism: A Look At The Science – 4). Of course, racism does not violate the civility rules because symbolic racism covers up the reality in America today.

    Racism is a conspiracy theory.

    1. Dredd – some of those people in the concentration camps (not prison camps) were not ‘true Americans.’ At the end of the war a certain amount of the population returned to Japan. And this was not symbolic racism, this was blatant racism.

  8. What do you expect in a country with two choices, one more than a dictatorship and run by oligarchs: Koch brothers, NRA, and anyone else with enough money to purchase and pull the strings of the politicians. When will the US evolve into the democracy of which it boasts? Every other advanced democracy has at least four parties, four opinions, four choices. We are the least democratically structured nation. No wonder half the voters are republican.

    1. isaac – first you have to get over the idea that we are a democracy. We are a republic. How much money do you think George Soros spends every year through his various foundations to control the press, fund candidates and causes? The Koch Bros are small potatoes compared to Georgie boy. But Soros never seems to come up in the conversation when Democrats or progressives are talking? Bloomberg says he is willing to spend $50 million this year on gun control. Are you against that?

      You are aware that we were not designed to have parties. It just kind of happened. We had Federalist and Anti-Federalist when they were ratifying the Constitution. Everybody agreed on George Washington for President. It was after he decided to step down (not run again) that things suddenly got messy.

  9. Al, Japan brought quality and innovation that Detroit did not. You do believe in Darwinism, don’t you?

  10. I saw a report yesterday that $35 million dollars is what GM makes IN A DAY.

    1. Nick – that 35 mill is not profit, but gross revenue, right? If they were making that kind of profit they could have paid the American people back at full value plus interest.

  11. If you want to penalize them buy a jap car. Send the jobs overseas. We don’t need no jobs in America. The ignition thing can be fixed. I “hotwire” the car that I drive. But that is for other reasons. How many complainers on the blog here own an American made car? Detroit went to hell in a handbasket and the handbasket is coming to a town near you.

  12. In 1977 I last purchased a GM product. In 1983 I made my last purchase from Sears. I seldom walk into a Pennys store. Lowe’s is on that same list. The answer to this outrage is to boycott!

    1. Al – those Jap cars are made in the good ole US of A.. I have one foreign car (by name) and two American cars. But the foreign car was actually built in the USA. It is a global market these days.

  13. Lobbyists write the tax code to get deals for their clients, why shouldn’t they write laws to protect their clients from fines. In this case, Government Motors is costing us more than we are getting back in fines.

  14. Well, isn’t that nice of them! If a person murdered 13 people would that person get off with a fine?

    It doesn’t just “seem ridiculously small” it IS RIDICULOUSLY SMALL!

    Corporations and their CEOs can lie, cheat, steal and kill and our government lets them AGREE to pay a fine. I guess now that bribery, sorry, lobbying is legal we should not be surprised about anything corporations are allowed to do.

    You know in China when a CEO screws up and people die, the CEO often goes to prison for a long time or worse. Could we outsource this case to China, please? Of course I am not serious but……

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