For Immediate Release
Chrysler Bankruptcy Could Leave Victims of Defective Vehicles With No Legal Recourse
Taxpayers Bail Out Detroit While Companies Resist Safety Improvements
Indianapolis, Ind., was heading home after a long day at work. Another
motorist sped through a stop sign, smashing into Warriner's 2005 Jeep
Wrangler. The poor design of the brake fluid reservoir ignited a fire
that trapped him in the driver's seat for five minutes, severely
burning his legs. Ultimately, Warriner's legs had to be amputated.
But because of the Chrysler bankruptcy proceedings,
Warriner's nightmare continues. He may have no legal recourse if
Chrysler is exempted from fulfilling its responsibilities to those
injured by its defective products.
Warriner attended a House Judiciary Committee hearing on the current
bankruptcy proposal that exempts Chrysler from most of its
responsibility and accountability for products sold before the
bankruptcy. In the bankruptcy proposal, Chrysler would honor warranties
and be responsible for recalls of defective vehicles. But victims of
poorly designed and defective vehicles would receive compensation for
For example, Chrysler will not be responsible for any vehicles on
the road today once it emerges from bankruptcy. No matter how egregious
the defect, Chrysler would have no responsibility for injuries
occurring after the bankruptcy in vehicles sold before the bankruptcy.
Those with pending claims would be left without recourse as well.
Chrysler could be held accountable only if someone is injured by one of
its sold after the company emerges from bankruptcy.
"Chrysler and other auto manufacturers are clearly facing tough
times. But that doesn't mean my legal rights should disappear, or my
injuries should be ignored, even though they were directly caused by
their defective product," Warriner said.
Farbod Nourian, a 24-year-old resident of Los Angeles, Calif.,
injured by a defective Chrysler vehicle, also attended the hearing. In
November 2007, when Nourian was in his final year of college, he was
run over by his cousin's 1998 Jeep Grand Cherokee when it self-shifted
from park into reverse. Nourian suffered extensive damage to his spine
and internal organs and will require further extensive surgeries later
in life as his back deteriorates due to the injuries.
The vehicle was recalled by Chrysler for the exact "park-to-reverse"
defect that injured Farbod, but because his cousin bought it used, he
never received notice of the recall. His trial is set for trial at the
end of this year but may be jeopardized by the Chrysler bankruptcy.
Congress and the Obama administration can take steps to ensure that
those injured by the nearly 10 million Chrysler vehicles on the road
today have legal recourse, according to Joan Claybrook, former
administrator of the National Highway Transportation Safety
Administration and former president of Public Citizen. Claybrook and
Clarence Ditlow, executive director of the Center for Auto Safety,
testified before the Judiciary Committee. The solutions include:
- Chrysler and Fiat should accept responsibility for existing products (successor liability);
- Chrysler and Fiat should establish a tort victims' fund and allow
current and future litigants to proceed within the civil justice system;
- A retroactive insurance policy should be purchased to cover past,
present and future tort claims for injured parties with a minimum limit
of $10 million, with an excess policy of another $10 million.
"If we find out next year that Chrysler vehicles purchased last
month have major defects that lead to serious injuries, the current
bankruptcy proposal leaves these people with no legal remedy,"
Claybrook said. "Something must be done to protect the financial
solvency of the automakers but also protect the lives of people injured
by defective Chrysler products."
U.S. taxpayers are pumping $40 billion or more into Chrysler,
General Motors and GMAC, and $5 billion to their suppliers to bail them
out, but these companies continue to resist key safety improvements
that would save thousands of lives and mitigate tens of thousands of
horrible injuries each year.
Ditlow added: "What needs to be done is not to stop the
restructuring of GM and Chrysler but to stop treating consumers as if
they were collateral damage. To ask consumers to bear the cost of
design and manufacturing defects in Chrysler and GM vehicles at the
same time tens of billions of their tax dollars are bailing out these
companies is too much."
The consumer advocates want Secretary of Treasury Timothy Geitner to
insist that auto makers agree to incorporate key safety improvements in
all their vehicles, which would be particularly cost-effective as they
redesign them for improved fuel economy as the president outlined
earlier this week. These should include strong roofs, side window
glazing, and pretensioning and load-limiting safety belts to protect
occupants in rollover crashes, improved crash compatibility between
different size vehicles, side head air bags, and stronger seats and
seat backs as well as long-overdue provisions for child safety.
Not only will these safety improvements save lives and prevent
devastating injuries such as brain damage, quadriplegia, paraplegia and
epilepsy, but preventing harm will play a huge role in reducing health
Public Citizen is a national, nonprofit consumer advocacy organization founded in 1971 to represent consumer interests in Congress, the executive branch and the courts.