GM Plunges into Legal Tangle

The failure to recall faulty ignition switches immediately following the initial complaints and later customer deaths has plunged GM to a legal battle.

General Motors is facing tough legal battles as a probe is launched as to why the auto manufacturer failed to recall its faulty ignition switch which had been known to be dangerous as early as 2001 and caused many injuries and even death. The plot involves GM’s internal legal department which the company’s CEO Mary Barra accuses of hiding facts. The probe seeks to find out the seemingly purposeful under-reporting of issues by the legal department and whether GM’s top brass was really kept in the dark about the ignition issues, a problem which could have saved the lives of more than 12 people while preventing injuries in others, had it been rectified promptly.

GM’s Legal Department Taking Action on its Own

Recent hearings conducted by the House and Senate revealed that the legal department of GM had been settling individual lawsuits regarding deaths or injuries caused by the faulty ignition switch for more than 10 years without informing GM’s top management. Barra held on to this view at the Senate hearing and in response to questions dealing particularly with a deposition in which Sen. Claire McCaskill led the charge, revealing that the lead switch engineer of GM had lied during a deposition in a lawsuit in 2013 about the reason a part of the ignition switch was changed without the part number being changed as well. He had said that the part change was never approved by him.

A Troublesome Deposition for GM

McCaskill branded the switch engineer’s statement a lie saying that the truth behind all this seemed to be that the engineering team sought to conceal the defect by not recording the part replacement. With the proof of GM’s internal documents, McCaskill revealed that the engineer had indeed approved the change. McCaskill also wanted to know at the Senate hearing whether the lawyer, from the law firm King & Spalding, representing GM at the deposition was hired by the GM senior team or someone else.

Barra had no answer to give initially, and even refused to consult with Michael Millikin, GM’s general counsel who was at the Senate hearing. But on further pressing by McCaskill, Barra said that the deposition lawyer could have reported to the senior members of the company’s legal team. Barra reassured that the events that occur during that deposition would form the basis of an internal investigation by GM along with a thorough study of the way the complaints, which started coming from 2001, were handled. The core of the investigation is obviously why it took such a long time for issuing the recall.

How Transparent Will the Internal Probe Be?

The internal investigation seems a controversial matter itself since there are no independent investigators involved in the probe. Millikin, GM’s general counsel, and Jenner & Block’s Anton Valukas are heading the investigation with assistance from King & Spalding. Jenner & Block is known to have a long-term relationship with General Motors. Robert Osborne, GM’s former general counsel, was from Jenner & Block. He had guided GM through the bankruptcy stage and then returned to Jenner & Block. King & Spalding also enjoys close ties with General Motors and had led the organization through the 2009 bankruptcy and US bailout stage.

NHTSA and DOJ to Investigate as Well

However, National Highway Traffic Safety Administration (NHTSA)’s David Friedman testified at the Senate hearing that the agency would be conducting an investigation as well to discover things that went wrong with the safety procedures. It also needs to investigate whether GM had failed to convey critical information to the agency promptly. The US Department of Justice will also launch an investigation on GM’s delayed recall.

Looks like the world’s largest carmaker had buried its business in some deep legal quagmire. Its attorneys need to investigate thoroughly and work smartly if they wish to bring down the intensity of the punishment which GM might have to face if it is found to have been grossly negligent. In their efforts, and those of the Department of Justice and NHTSA, proper documentation and possibly even transcription of the trial might be needed for further analysis.