Objecting to the GM 363 Sale's Treatment of Product Liability Claims: Stepping Into The Fray

[7/6/09 Update:  The Bankruptcy Court entered this opinion and order approving the sale late last night.  I filed this notice of appeal.]  [7/8/09 Update:  Here's my post on boarding the "slow boat to China" after my motion for direct appeal to the 2d Cir. was denied.]

In today's depressed environment, Howard Beale's famous rant in Network--the 1976 movie that took several academy awards against stiff competition (Rocky, All the President's Men, and Taxi Driver)--sure reads like something that could have been written today:

I don't have to tell you things are bad. Everybody knows things are bad. It's a depression. Everybody's out of work or scared of losing their job. The dollar buys a nickel's worth; banks are going bust; shopkeepers keep a gun under the counter; punks are running wild in the street, and there's nobody anywhere who seems to know what to do, and there's no end to it.

We know the air is unfit to breathe and our food is unfit to eat. And we sit watching our TVs while some local newscaster tells us that today we had fifteen homicides and sixty-three violent crimes, as if that's the way it's supposed to be!

We all know things are bad -- worse than bad -- they're crazy.

It's like everything everywhere is going crazy, so we don't go out any more. We sit in the house, and slowly the world we're living in is getting smaller, and all we say is, "Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials, and I won't say anything. Just leave us alone."

Well, I'm not going to leave you alone.

I want you to get mad!

I don't want you to protest. I don't want you to riot. I don't want you to write to your Congressman, because I wouldn't know what to tell you to write. I don't know what to do about the depression and the inflation and the Russians and the crime in the street.

All I know is that first, you've got to get mad.

You've gotta say,

"I'm a human being, goddammit! My life has value!"

So, I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window, open it, and stick your head out and yell,

"I'm as mad as hell, and I'm not going to take this anymore!!" 

Well, Howard's rant is what a lot of panicked plaintiffs' lawyers involved in cases against GM are screaming these days as they watch years of toil on behalf of people seriously injured by defective GM products (like crushed roofs, exploding "side saddle" gas tanks, and collapsing seat backs) potentially go for naught as GM makes its grandest attempt ever to crush an entire class of former customers (presumably including anybody who buys a GM car between now and the closing date of the sale) and existing and future products liability claimants (including those who haven't even been injured yet!) in a sale that many plaintiffs lawyers of record only received written notice of in the past couple of days. 

Those following this blog know my rising concern (even anger) over how products liability claimants were completely stiffed in Chrysler, so much so that Howard's famous rant came to mind!

So, I decided to do something about it, and officially stepped into the fray by filing this Objection to the GM Sale and this Memorandum in Support.  On the brief with me is Public Citizen's Adina Rosenbaum and Allison Zieve, counsel for the Center for Auto Safety, Consumer Action, Consumers for Auto Reliability and Safety, National Association of Consumer Advocates, and Public Citizen.

We should win; whether we do is a "horse of a different color."

***

Many thanks to the Center for Auto Safety's Executive Director, Clarence Ditlow, for his help in organizing the team, Public Citizen's Adina Rosenbaum and Allison Zieve for their tremendous assistance in framing the legal arguments and drafting the pleadings, and to Public Citizen's Director, Brian Wolfman, for his support.

And, of course, special thanks to The Coleman Law Firm's own Bob Coleman for his generosity in dedicating the firm's resources to this important pro bono effort.

The sad, and all too tragic, stories of my clients, taken from the filed objection, are set forth below.  The only thing my clients did wrong here was buy a GM car.  For this act of brand loyalty, they have paid dearly.   It's not enough that people lose their lives and get severely injured from design defects and product flaws, now they and their loved ones get thrown under the bus!

If their stories don't bring a tear to your eye, then you probably support the sale's treatment of product liability claimants too!

  • Callan Campbell is a GM tort victim. On August 17, 2004—a week before she was to start college—18 year old Callan was a front-seat passenger in a 1996 GMC Jimmy when the driver of the vehicle lost control while attempting to make a left turn. The vehicle entered a driver-side leading roll and rolled 1.5 times before ending on its roof. The roof collapsed over Callan’s seat, partially paralyzing her. The strength to weight ratio of the GMC Jimmy roof is about 1.9, which is among the lowest of all GM vehicles. GM’s own tests revealed that roof strengths in rollovers should be 3W to 4W. Callan’s paralysis could have been avoided at a mere fifty dollar cost to GM. Callan’s medical bills total $200,000 for the life-saving treatment she received immediately after the crash. Additionally, Callan’s parents have spent $160,000 renovating their home to accommodate Callan’s physical and medical needs as a C6 incomplete quadriplegic. A life care planner has estimated Callan’s current and future needs for extra doctor visits, medicine, durable equipment and home modifications at $4,518,831.00. An economist has predicted her work loss based on total disability at $4,120,538. Callan is also entitled to significant compensation for pain and suffering including loss of life’s pleasures, loss of dignity and independence, loss of the use of her limbs, and disfigurement.
  • Kevin and Nikki Junso are the parents of Tyler, Matt, and Cole Junso. On April 25, 2006, Tyler and Cole Junso were involved a single car rollover accident while driving a 2003 GMC Envoy. During the rollover, the windshield and side windows were knocked out, reducing the strength of the roof structure. The Envoy sustained catastrophic damage to the roof structure, which buckled violently inwardly toward Tyler and Cole. Despite being belted, both occupants were partially ejected from the vehicle during the roll over. Seventeen year old Tyler, the driver, sustained massive skull and neck injuries and died at the scene of the accident. The evidence showed that Tyler’s head was partially outside the vehicle during the roll over sequence, due to the broken window and lateral displacement of the roof structure, and made contact with both the ground and the roof during the accident. The paramedics found Kevin, the passenger, with his left leg out the windshield and his right leg out the passenger side window. Kevin sustained serious injuries to his arms and legs, which eventually led to the amputation of his right leg below the knee.
  • GM has been aware of the significant risks of “occupant excursion” if the safety mechanisms in its vehicles fail. Despite this knowledge, GM failed to introduce cost effective safety measures into its designs, which could have included side window plastics or laminates or seat belts resistant to excessive spool out. Not only has the Junso family lost a son as a result of GM’s failure to correct the strength instabilities in its SUVs, but Kevin has also lost his right leg. To date, Kevin has incurred medical bills totaling $555,204.19, and his future medical expenses are predicted to exceed $800,000.
  • Edwin Agosto was driving his 2000 Chevrolet Blazer on September 22, 2008, when he lost control of his vehicle causing him to cross the center line and strike a tree. After striking the tree, the car once again crossed the center line and collided with a guardrail where it finally came to rest. Edwin’s airbags failed to deploy throughout the course of the entire accident. Because of that failure, Edwin suffered injuries including multiple spinous process fractures, a heavily comminuted fracture of the left scapula extending into his scapular spine and glenoid, multiple rib fractures, a humerus fracture, a subclavian vein injury, and a post traumatic subdural hygroma upon striking his head on the windshield. Due to these injuries, Edwin spent the next two and a half months of his life in a coma.
  • Joseph Berlingieri was parked in a driveway on September 21, 2006 when the driver side impact airbag in his 1998 Cadillac DeVille malfunctioned and deployed. The air bag struck Joseph in his left ear, arm, and shoulder causing trauma injuries including hearing loss, tinnitus, and other serious injuries. The vehicle had previously been recalled for faulty side airbags, and after its repair was warranted to Joseph as being free from defect and suitable for purchase. However, the vehicle was not suitable for use, and was sold to Joseph despite the defective airbag mechanism. 

© Steve Jakubowski 2009

Written By:Trent Jason On June 20, 2009 2:27 AM

I am a consumer activist. My position
is that the general public must not
purchase products where, for years,
the companies that manufactured them
did not act in good faith in ensuring
that certain qualifications existed in
their products.
In 1992, I sued the tobacco industry.
I did it alone, without an attorney.
I myself am not an attorney and I have
no formal education.
I filed the complaint in California,
for causes of action relation to
environmental tobacco smoke. The issue
was how it affected persons, including
children. I spent a year of research
before filing the complaint.
Yet, the court dismissed the complaint,
in part, because of the Willie Brown Act.
But, where was the general public behind
me? There was no one there. People most
often only get involved when it affects
them personally.
I have spent most of my life fighting for
other persons.
Where is the general public standing
against the injustices in this country?
For example, why are we still purchasing
tobacco products, and even allowing them
to be manufactured, distributed, sold,
and consumed?
Why did persons purchase General Motors'
vehicles, knowing that the vehicles
were so unqualfiied in the first place?
Why be loyal to a company that isn't
loyal to the general public as a whole?
Now that certain persons are injured do
those persons feel the injustice.
But Americans only fight for things that
affect them personally. Persons are
still purchasing Chryslers, and
General Motors vehicles and Ford vehicles? But why? They are not as safe as they could be.
These are American made vehicles which
caused most of these injuries.

Written By:dw On June 20, 2009 12:40 PM

I find it very distressing that companies can get out of their responsibility for their products. but considering that these companies collapsing will not help any of these folks any more than now. I think we need a better way to deal with product liability since its to easy to get out of if the economy collapses and takes the companies with them.

Written By:joe On June 20, 2009 8:53 PM

Somebody fail, all ths balilout is making me ill. Fake bankrutpcies, lobbiest/bribbery, Any how, seems GM is requestion the rest of the added 33 billion. Where is this going? Seems like not gonna have any money to run the wothless car company next year, either. We are gonna loose 100,s of billions and not even build a car. Pitiful comes to mind
. ((((((((((((((((((())))))))))))))))))))))
They don't want t be called back, they are getting paid all summer to not build cars. Glad the UAW did away with some vacation time, casue having 3 months off with most pay sounds good to me. When is this madness gonna stop. We are so gonning to loose and loose again. Fold this POS and let it grow back normally. Where have all the billions gone while factories are idle?

Written By:FJP On June 22, 2009 9:05 AM

There is another interesting aspect of this which relates to the effect of the proposed exculpatory order on dealers. Frequently, the selling dealer gets sued along with the manufacturer, at least when the vehicle purchaser is the plaintiff. The dealer is, after all, the party in actual privity with the customer. Dealers always tender the defense of such suits to the manufacturer.

This seems to lead to two questions:

1. If "New GM" is exculpated, are the dealers off the hook too? I think not. I wonder how many dealers have insurance coverage limits high enough to handle one big dollar claim, let alone several.

2. To the extent the basis for tender of defense is an indemnification provision in the dealership agreement (as opposed to common law indemnification), would the assumption and assignment of the dealership agreement under 365 include assumption of that indemnification obligation? Or are we entertaining the fiction that New GM is entering into new dealership agreements so nothing is being assumed?

Written By:Lawrence D. Loeb On July 1, 2009 1:15 AM

Steve:

I'm sorry to hear about your client's misfortune.

There is no way that GM could continue as a going concern without this process.

Quite frankly, I'm not convinced that they will be able to continue even with the process!

If you look at their financials, they showed a negative gross margin in 2008 (total sales of $148.98 billion vs. cost of sales of $149.31 billion). This continued in Q1 2009 ($22.4 billion in total sales vs. $24.6 billion in cost of sales). You can't run a business if you can't sell products for more than it costs you to make them!!

Your clients were unfortunate to purchase products from a company that became insolvent.

Written By:Trevor Ingold On July 12, 2010 5:35 AM

Since a defense is raised by the defendant in a direct attempt to avoid what would otherwise result in liability, the defendant typically holds the burden of proof. For example, if a defendant in an assault and battery case attempts to claim provocation,

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