GM has announced that it is now recalling over a million cars with defective ignition switches that cause airbags to fail to deploy. So far, it has been alleged that 303 deaths are related to the defect. This would be just another sad story where your heart goes out to the families of the victims, but for the fact that GM allegedly knew of the defect and made a “business decision” not to recall the vehicles.
Under tort law, or more specifically Proudcts Liability law, the manufacturer can be held financially responsible for damages caused by a defective product. To most this principle seems fair, a company made a product, sold it for a profit, and it turned out to be defective and injured someone. It is reasonable for the law to provide a means to compensate the victim for their injuries. However, what if the manufacturer learned of the defect, but decided that it would be cheaper to continue to manufacture the product with the defect, than to remedy the defect? What if the company decided it was cheaper to pay for the deaths caused by the product, than to fix the problem? Would you agree that this is different from the situation where the company had no prior knowledge of the defect?
We live in a time where more and more states are accepting the insurance company and corporate argument that their are too many frivolous lawsuits and therefore there needs to be limits and reforms to injury laws. The most commonly proposed “reforms” are limits on damages and the elimination of punitive damages. This post is menat to discuss the dangers associated with these so called “reforms”.
Limits on damages, often called caps, place a maximum limit on the amount of money a person can recovery for an injury. For example, in Louisiana, the maximum amount of damages that a victim can recover for injuries caused by the negligence of a doctor is $500,000. Many states have similar limits. So, regardless of the earnings or facts, a victim can recover no more. Even if a jury of citizens awards more, the law automatically reduces the amount. This certainly appears anti-democratic. However, it also encourages negligent behavior.
Punitive damages are a certain type of damages that are meant to punish the wrongdoer for its conduct. This category of damages was eliminated in Louisiana in 1996. The best way to explain punitive damages is through an example. Imagine that there was a car accident that was caused by a person who ran a red light. They had never ran a red light before, but got distracted and hit another car, injuring the other driver. Most people would agree that the negligent driver should pay for the damage caused to the other driver.
Now imagine that a clothing manufacturer makes children’s clothes. The company decides to get cheap materials from China to maximize profits. The company doesn’t do any testing on the materials. After selling the clothing, the company learns that the material is highly flammable. The company then learns that a few children have suffered serious burns when the clothing caught fire. Now, the company decides that because there is a “cap” on the maximum amount of damages it would have to pay for burning a child, and the cost to recall the clothing is less than the cost to pay the “capped” damages to the estimated number of children who will be burned. So, the company does not recall the product, and children continue to get burned.
Do you see a distinction between the behavior of the driver and the clothing manufacturer? Do you think there should be some additional punishment to the manufacturer?
Turning back to GM, evidence has been produced that shows that GM knew of the defective ingition switch in 2004 prior to it even began selling the Chevy Cobalt in 2005. Yet, it used the defective ingition switch in the Cobalt. GM Knew. GM did not recall the vehicles till 2014, so it knew for 10 years that there was a fatal defect in its vehicles, yet decided it was cheaper to pay the damages than recall the vehicle.
The only reason we know this is because a 29 year old woman died because of the defect while driving her 2005 Cobalt, and the family sued. See lawsuit. It was only through the facts exposed in lawsuits filed by the families’ of victims that the public was made aware of the defect and pressure mounted to recall.
Caps on damages have the potential to encourage corporations to make “business decisions” that lead to death and injury. Punitive damages serve the important roll of preventing these corporations from making these decisions. The corporations cannot accurately estimate the punitive damages and therefore are far less likely to make these “business decisions” that cause needless death and injury.
For more information, see our website at New Orleans Product Liability Attorneys