I previously wrote on the scandal at General Motors (GM) over its lethal defect in the ignition switch on various models. Now General Motors has fired 15 employees and disciplined five others after an internal investigation by attorney Anton Valukas. The move raises some interesting litigation issues going forward in the controversy with both civil and criminal elements.
I am always leery of internal investigations and the report has yet to be released. GM CEO Mary Barra described it as “extremely thorough, brutally tough, and deeply troubling.” The move to fire the workers could help on the margins in expected litigation, though GM has pushed to be protected from liability under bankruptcy laws. They may well succeed. However, if not, there is little chance of making a type of rogue employee defense with so many workers. Respondeat superior kicks in.
Given this report and the obvious gross negligence of the company, it would be a second victimization of the families of lost ones to find themselves barred from suing GM. This is likely to be of little solace for them.
Life while … Waiting For The World To Change …
Life while … http://blogdredd.blogspot.com/2014/06/waiting-for-world-to-change.html“>Waiting For The World To Change …
Free market capitalism would have seen Government Motors liquidated long ago. The assets of which would have been beneficially purchased for pennies on the dollar by those conservative investors who had preserved their cash. The natural and eminently rational, survival of the fittest. The manipulating “money changers” like Bernie Madoff, however, prevail perversely.
P.S. Post bailout, thug unionists benefit as “government workers.” Congratulations, comrades.
I, too, am leary of internal investigations. And yet it’s the status quo in Washington. (The latest committee to investigate Benghazi includes Elija Cummings, who is implicated in the IRS targeting.)
But it is nice that GM can fire wrongdoers without requiring a literal act of Congress to do so.
Byron,
I don’t agree. If government wasn’t regulating corporations at all, things would be even worse. If government had allowed GM to fold, why wouldn’t they also allow all of those big banks and investment companies from folding when they gambled Billions of depositor monies and lost and then came hat in hand to the government? I guess the lesson is that the big guys can get bailed out by government, even when they are at fault for their losses, but not so for the workers.
nick:
That’s difference in incentives. The path was made easier for claimants in both situations. The tragedy is that GM’s delay probably led to more deaths.
Byron:
“GM should have been left to its own devices. Government allowed/promoted a sick entity which should have died and been used by stronger companies as additional capital to promote profitable outcomes.”
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That’s an easy political position so long as GM workers and their families and its stockholders don’t vote.
Byron:
“How so? GM supposedly knew about the issue for 11 years and Barra supposedly has her name on an email from 2011.”
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Apparently the problem started in 2004 and continued under several GM CEOs. I applaud GM for making the case easy for claimants with a public mea culpa and purge. The alternative was millions of dollars in discovery costs and interminable delays for the victims while hearing after hearing is held on every request for information. I’ve been there against the auto manufacturers and they can delay cases for decades if they want to do so.
rafflaw:
Steve H brings up a very good point. Government should not be involved in economics. GM should have been left to its own devices. Government allowed/promoted a sick entity which should have died and been used by stronger companies as additional capital to promote profitable outcomes.
Steve H:
Now that stings. But you are probably right.
” the incompetence within GM that not just led to ~13 deaths, but the corruption that covered up”
Perhaps someone can clarify, was it incompetence or cost benefit analysis that led to the use of defective switches?
Remember that GM is a corporation and high corporate officials are immune from prosecution, even though corporations are “people”. And of course, the underlings will be fired, no matter who knew what and when in the executive suite.
A few years back, during the “great recession”, GM filed for bankruptcy and Obama stepped in to guarantee GM’s survival. The rhetoric was that there were too many American jobs at stake; the reality was there were too many union jobs at stake and the union wanted its payback for its role in getting Obama elected. And so now we find another reason why GM should have been allowed to fail: the incompetence within GM that not just led to ~13 deaths, but the corruption that covered up, and ignored the cover-up, its callous calculations that death is a financial entry on the income statement.
Mark my words, GM will escape punishment. There are too many union jobs at stake and Clinton needs the union to get elected.
GM has yet to take the “righteous path”. The new CEO was part of the coverup and she lied to Congress. If she was a baseball player she would be prosecuted. GM continues to avoid disclosing the entire truth about its murder of at least 13 humans. If GM was a human, it would be facing the death penalty is some states.
Internal investigations rarely get to the truth and often paint low level employees as culpable decision makers when nothing could be further from the truth. Too bad the CEO was not troubled when she first hear about these problems whenever that was–another fact we are unlikely to ever know.
nick:
that is how I remember it too.
Mespo:
How so? GM supposedly knew about the issue for 11 years and Barra supposedly has her name on an email from 2011.
I listened to her mea culpa and it sounded pretty lame to me, heads will roll, we will change the culture, blah, blah, blah.
This is just another example of the systemic problems with any sort of arganization when the become to large.
I was in Chicago when the Tylenol incident occurred. There is a major difference here. Johnson took the righteous path immediately. GM did it kicking and screaming.
GM sales are up:
(USA Today).
I read that GM promises to compensate victims. We’ll see. But for now we have to admire the current company management for admitting wrongdoing and publicly acknowledging the firing of those claimed responsible. GM took the Johnson & Johnson (Tylenol) approach and that is to their credit.
Since GM seems to have known about the defects for some time and not responded to them, other than bankruptcy protection I don’t see much hope for them. Although, I wonder if, since the United States government was a party to this, if you could not sue them.