GM legal department could be getting ‘overhauled’ as company continues to announce recalls

Even more recalls are possible at GM in a year of recalls, as the company has to worry about the future of its brand and pending lawsuits

With General Motors breaking records for the number of recalled vehicles in a single year, news reports are suggesting that GM’s legal department is getting its own “overhaul.”

Bloomberg News reported on Wednesday that GM general counsel Michael Millikin named a “legal adviser to work with the heads of global safety and vehicle development so information about defects is shared more quickly between departments.” Additional changes are likely in the legal department after an internal investigation is finished, the report adds.

It was reported too that Lucy Clark Dougherty, the company’s general counsel for North America, will advise Jeff Boyer, who was recently named to direct global safety, on “legal matters.”

Also, GM said Millikin has no “current plans to retire” and will remain in his position “at an important time for the company,” Bloomberg said.

GM is now up to 13.6 million vehicles recalled this year in the United States alone, raising more questions about the future of the brand, even if the company decided strategically to undertake needed recalls basically all at once. The company said it has announced 29 recalls this year, as of Tuesday.

On Tuesday, GM announced four new recalls involving 2.42 million vehicles in the United States. There have been no fatalities associated with the latest recalls.

Two additional recalls are likely, news reports said.

The latest recalls include problems with air bags, electrical systems, safety belts and transmissions.  They impact varied cars, pickup trucks and SUVs.

There is also some cynical speculation by industry watchers that the many recalls may be serving a role in the company’s legal defense and public relations efforts to basically overwhelm everyone with the sheer number of recalls so that the faulty vehicles which pose the most legal risk do not look as bad.

The company is facing multiple class-action lawsuits in connection a defective ignition system. That defect was associated with 13 deaths and led GM to pay a record $35 million fine and agree to a Consent Order with the Department of Transportation, InsideCounsel reported. GM delayed in reporting the defects to the government. Since then, the defect led to a recall of about 2.6 million vehicles.

But Adam Levitt, director at Grant & Eisenhofer and leader of the law firm's Consumer Practice Group, who is representing some plaintiffs in the faulty ignition system class action lawsuit, compared GM paying $35 million in a fine to a "rounding error.”

“That’s what it comes down to,” Levitt said in an interview Tuesday with InsideCounsel, adding it was a “meaningless gesture.”

He said that the consent order entered into by GM with the Department of Transportation included some “interesting admissions” by the company and showed a “culture of wrongful conduct.”

Levitt adds, too, that the company is involved in the “largest cover-up in U.S. automotive history.”  

Critics have claimed GM is trying to sweep its broken system under the rug and simply failed to properly respond. “Actions speak louder than words,” Levitt said.

Currently, the Bankruptcy Court in New York is considering the extent of GM’s liability for the ignition system case, InsideCounsel reported. GM does not want to pay for economic loss claims experienced by the owners of the cars, but apparently is willing to pay for personal injury claims. The company says that the other claims should be the problem of the Old GM entity, which was created during bankruptcy proceedings in 2009. Old GM has little in the way of assets, with designated trust funds being among the only available resources.

On May 29, a panel will meet in Chicago to determine where class-action lawsuits on the defective ignition system will be held. Current options include: California, New York, Illinois, Florida, Michigan, Oklahoma, Ohio and Pennsylvania. The idea is to consolidate the cases.

Still, because of the Bankruptcy Court issues, which include whether owners were given “due process” rights, there is a limit on how far the class-action cases can proceed. It is possible that cases could proceed against other possible defendants in the lawsuits, such as GM suppliers Continental Automotive and Delphi Automotive.

Meanwhile, last week The New York Times reported that a review of internal documents, e-mails and interviews show that “high-ranking officials, particularly in G.M.’s legal department, led by the general counsel Michael P. Millikin, acted with increasing urgency in the last 12 months to grapple with the spreading impact of the ignition problem.”

“And as the automaker finally began to face up to the issue, G.M. lawyers moved to keep its actions secret from families of crash victims and other outsiders,” the report added.

In the Consent Order, GM agreed to provide full access to the results of its internal investigation into the recall, ensure its employees report safety-related concerns to management, and to speed up the process for GM to decide whether to recall vehicles.

GM was also criticized by government officials for instructing employees in internal communications not to use certain words that could later be used against the company in litigation.

On May 20, a GM spokesman declined to offer new comments on the many issues facing GM. The company recently issued a statement, where GM CEO Mary Barra predicted, “We will emerge from this situation a stronger company.”

“We are working hard to improve our ability to identify and respond to safety issues,” Boyer added in the statement. “Among other efforts, GM has created a new group, the Global Product Integrity unit, to innovate our safety oversight; we are encouraging and empowering our employees to raise their hands to address safety concerns through our Speak Up for Safety initiative, and we have set new requirements for our engineers to attain Black Belt certification through Design for Six Sigma.”

GM has added 35 product investigators to its ranks since the beginning of 2014.

 

Further reading:

 

General Motors is conducting internal reviews and has added more safety investigators

Economic loss is focus of Bankruptcy Court proceeding related to GM recall

Bankruptcy court may play a key role in GM class-action lawsuits

GM’s legal department reportedly being investigated in internal inquiry, company pays record fine

 
 
 
 

Contributing Author

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Ed Silverstein

Ed Silverstein is a veteran writer and editor for magazines, websites and newspapers. A graduate of Harvard's Kennedy School of Government, he has won several...

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