Bankruptcies taking away your right to sue?

June 24, 2009 3:23:09 PM PDT
If your vehicle has a defect that injures you or even kills someone you love, you probably count on your right to sue the automaker.But the bankruptcies of Chrysler and General Motors appear to be taking that right away.

Chrysler and G-M field thousands of death and injury claims every year. But now that they're bankrupt they appear to be getting immunity from any of that liability.

"Life has changed for my son and myself."

It happened in the blink of an eye but scarred Terri Cartier forever. Her 2001 Jeep Grand Cherokee was involved in a roll-over accident three years ago.

"The seatbelt released and she was thrown out the driver's window," said consumer attorney Stewart Eisenberg.

Terri's injuries are extensive and many are irreparable.

"Broken bones, both lungs collapsed and filled with blood."

But because of the bankruptcy deal Chrysler struck with the government Terri now has no right to sue. You see Chrylser and G-M have agreed to honor current and future warranty claims on parts.

"But if you're injured or killed as a result of that product, you have no claim against the company," said Sean Kane of Safety Research and Strategies.

That goes for current claims and any future claims made on vehicles sold before the bankruptcies.

"They don't care about people's lives. They don't care about family's lives, children, people who die? But they'll fix a part? I think that's wrong. It's sad."

The seatbelt in Terri's vehicle is called the Gen-3. Consumer advocates allege the Gen-3 is defective but are still in about 14-million Chrysler vehicles on the road today.

"Because it's raised so high any pressure that's put on the seatbelt releases."

But the only way consumers can re-assert their right to sue is if Congress acts.

Consumer advocates are calling for a fund for victims or a provision that specifies automaker liability.

"I'm hopeful. I never give up hope."

Meantime, the automakers and the federal government are pointing the finger of blame for this situation on one another. Each saying it was the other's idea to relieve the car companies of this liability.

Full Chrysler Statement:
Chrysler is saddened anytime someone is injured in one of our vehicles. We note that our vehicles meet or exceed all federal safety standards and have excellent safety records. The safety of our customers will always be a paramount concern for Chrysler. The reality is that automobile accidents are unpredictable and dangerous events where bad things sometimes happen. An injury resulting from an accident or contact with a motor vehicle is not evidence that a vehicle is defective, to suggest otherwise would be misleading and irresponsible.

Bankruptcy is a complex and difficult process, but it became the only option available to produce a viable company. The other option, liquidation, would have had far dire consequences for employees, retirees, dealers, suppliers and creditors (including unsecured tort claimants). Chrysler will continue to work through the bankruptcy process in accordance with the law and the judge's rulings, and take into account all creditors including those with legal claims. We appreciate the sacrifices all of our stakeholders have made through this challenging bankruptcy process to support the creation of a vibrant new automotive company.

Given the early status of the Cartier case allegations and facts have not been fully developed.

Full GM Statement:
All claimants will have the opportunity to submit their claims and have them resolved as provided by the Bankruptcy Code and other applicable law, both as to amount and priority. We won't discuss specific claims or the possible outcomes, as that will be determined by the court.

Full U.S. Treasury Dept Statement:
Treasury was not involved in this decision, which the company made consistent with conventional bankruptcy practice. While unfortunate, the outcome would have been far worse had the government not intervened in the restructuring and the auto companies had liquidated.

To get in touch with your legislator about this issue:

Study Predicts More Than 3,400 Americans Will Be Injured or Killed by Defective GM or Chrysler Cars in First Year of Post-Bankruptcy Era

Rehoboth, MA - A new report predicts that defective General Motors and Chrysler vehicles sold before the bankruptcies will continue to cause deaths and injuries long after the companies emerge as new entities. Based on data provided by both automakers to the National Highway Traffic Safety Administration (NHTSA), more than 3,400 Americans will be injured or killed by a defective Chrysler or GM vehicle during the first year of the post-bankruptcy era. The report, "Public Safety at Risk: Bankruptcies Leave Legacy of Defects, Injuries and Deaths," also forecasts fewer recalls for vehicles built by the old companies, decreasing public safety.

The report examines the consequences of a provision in the GM and Chrysler bankruptcies which allows the automakers to shed liability for the vehicles built pre-bankruptcy. While both would be responsible for launching recalls and repairing defects in their current fleet, they would not be responsible for injuries and deaths caused by those defects. This leaves thousands of individuals and families who have current claims uncompensated for injuries or deaths caused by defective vehicles. The loophole will also wipe out any future claims.

The report, released by Safety Research & Strategies, finds that between the third quarter of 2003 and the fourth quarter of 2008, Chrysler fielded 3,497 death and injury claims; GM fielded 15,284. These represent an annual average of 636 and 2,779 casualties (individual deaths and injuries) respectively. With more than 40 million vehicles in the U.S. fleet, the two companies accounted for 47 percent of all claims filed against auto manufacturers during that time period. Yet, GM and Chrysler only represent 38 percent of the market share.

"Combined, GM and Chrysler have a disproportionate share of the claims," said Sean Kane, president and CEO of Safety Research & Strategies "And there is every reason to conclude that the injury and death rates will continue. But the claims will disappear and that will impact the rate of GM and Chrysler recalls and public safety in the future." From 2004 to 2008, Chrysler issued 109 recalls, affecting 11.4 million vehicles; GM launched 129 recalls, affecting 19 million vehicles. The absence of death and injury claims will likely decrease the number of recalls and remedies GM and Chrysler will conduct after the bankruptcies.

"Automakers and NHTSA use death and injury data to monitor and recall defective vehicles," Kane added. "If the claims aren't filed, we lose an important defect surveillance tool. And if the companies bear no liability for deaths and injuries caused by the uncorrected defects, what incentive do they have to recall?"

The report, which includes a full state-by-state breakdown of claims, finds that Texas, California, Florida, Ohio and New York lead the nation in Chrysler and GM death and injury claims. The states with the least number of claims are Washington, DC, North Dakota, Vermont, Wyoming and South Dakota.

Safety Research & Strategies is a consulting and advocacy firm based in Rehoboth, MA.

To view the full report, go to:

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