GM Liability for Vehicle Defects a Win for Consumers

by Sally Greenberg, NCL Executive Director

Consumers won an important victory this week, and hats off to the consumer organizations, victim’s groups, and state attorneys general who made it happen.  General Motors agreed to assume legal responsibility for injuries drivers suffer from vehicle defects – say, an airbag that failed to deploy or a gas tank that exploded – after the auto maker comes out of U.S. Bankruptcy protection. Credit goes to the Obama Administration as well for ensuring that consumers who had been injured and had liability claims against GM for defects in their vehicles – and those who may be injured in the future – will have their rights preserved. Under the original bankruptcy plan arrived at by GM and government negotiators, the auto maker would have been able to shed such liability after selling its assets to a new GM owned by the government.

But consumer groups protested, as did victims of auto accidents who allege that defects in vehicles caused their injuries, and AGs from more than a dozen states, saying that this arrangement would block car accident victims from having their day in court. After several days of negotiations to address these concerns the parties arrived at an agreement. GM was quoted in the Wall Street Journal June 29 saying it would take on future product liability claims “to alleviate certain concerns that have been raised on behalf of consumers.”

A cornerstone of consumer protection is the right to hold companies accountable when their products have caused injury. It is essential for many reasons, including helping to ensure companies fix defects when they are discovered, for compensating injured consumers for their injuries, and preventing taxpayers from having to care for injured parties when a product – or vehicle defect – causes the injury.  This outcome – with GM continuing to be held accountable to injured plaintiffs who can prove their case – is important to consumers and valuable precedent.

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