Pennsylvania Injury Law Report : Pennsylvania Personal Injury Lawyer & Attorney : Stuart Carpey Law Firm : Auto Accidents & Product Liability : Pennsylvania Injury Law Report

Chrysler has now agreed to cover defective product liability claims that occur after the company came out of bankruptcy protection as of June 10, 2009. Still, approximately 300 claims ending before the company emerged from bankruptcy protection will not be covered. 

In a press release dated August 28, 2009, the New Chrysler's senior Vice President,  John Bozzella, stated "while Chrysler still faces challenges, we are confident that the future viability of the company will not be threatened if we accept these claims. We want our customers to feel comfortable and confident buying, driving, and enjoying one of our vehicles."

In testimony involving the bankruptcy hearing for Chrysler in May 2009, CEO Bob Nardelli confirmed injured consumers with liability claims against Chrysler would have to proceed against a bankrupt Old Chrysler, meaning those injured individuals  would have no recourse for their personal injury claims against Chrysler.

The testimony of Nardelli in front of the bankruptcy court last May is astounding. Here's what Mr. Nardelli said at page 422 of the actual transcript.

The Court: Sir, you have millions of customers who own vehicles right now made by Chrysler. And when these customers find out their vehicles may be worth less because if there is a problem with the vehicle, or an injury, something that is not covered by the warranty which is being assumed, is that going to make those people less likely to buy cars when they want to buy a new car from NewCo?

Nardelli: ...customers might be willing to take the risk if it had a very attracive price on it.

The Court: Okay. So if Chrysler isn't willing to stand behind-and by that I mean NewCo-injured customers and people who have things that are not covered by the warranty on the old cars, doesn't that send a signal to the market that the cars from NewCo you should also avoid?

Nardelli and the boys at New Chrysler finally got it. Consumer groups had been pushing the FTC to put a skull and crossbones sticker on any used Chrysler car to warn consumers about problematic Chrysler vehicles . That couldn't have helped new car sales for the New Chrysler. In other words, any connection between "Chrysler"and "safety" would have been destroyed. Chrysler's team's first instinct was to cut out all prior liability claims. When the bankruptcy court and public opinion made it clear that the New Chrysler's name would be irreparably damaged if the company did not pick up prior liability claims in effect before the bankruptcy, the New Chrysler people changed their tune. But let's be clear; it wasn't because they felt any moral responsibility to do so.

Chrysler's decision follows that of GM's, who, under pressure from state attorneys general, agreed to assume responsibility for product liability claims caused by  vehicle defects after the auto maker emerges from bankruptcy protection. GM's decision was made in late June 2009.

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Bottom line: if you have a Simplicity drop side crib, it has been recalled.  Replace the crib. The risk to the infant is suffocation.

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Chrysler has filed for bankruptcy, and the Obama Administration is pressuring Chrysler into a merger with European automaker Fiat. The proposed Chrysler purchase by  Fiat would leave victims of defective Chrysler products sold before the Fiat purchase is completed without recourse to pursue defective products liability claims against the new automaker.

Existing liability lawsuits would be dismissed. "It would wipe out all liability claims currently filed as well as those arising in the future, so long as a vehicle was sold before the merger," says Clarence Ditlow, director of the nonprofit Center for Automotive Safety in Washington, D.C.

The General Motors bankruptcy puts plaintiffs in liability suits against GM in the same boat as Chrysler victims.

As presently framed, the Chrysler and GM bankruptcies, and the Chrysler-Fiat merger, are unusual in that they would prevent anyone from bringing a future liability claim against Chrysler or GM if a vehicle already purchased from either company is defective and results in an accident causing death or injury.

Usually money is set aside for liability claims. For instance, asbestos manufacturers who went into bankruptcy were required by the bankruptcy courts to set aside funds for liability claims.

Victims of defective GM vehicles must make their claims against the old GM company which emerges from bankruptcy. They will need to stand in line with other unsecured creditors to seek compensation.  The new GM that emerges from bankruptcy  and joins with Fiat will not be liable for existing claims.

Typically in product liability claims against car manufacturers, component part manufacturers are also sued. So if those companies survive, plaintiffs in cases against Chrysler and GM may have some ability to seek compensation for their injuries. But survival is a big "if" in today's economic climate. If I own a company that sells brake pads to GM, if GM goes under, who am I selling to now?

The irony is that taxpayers may be on the hook again. If a catastrophically injured victim of a defective Chrysler or GM vehicle can't be compensated by Chrysler or GM for his or her injuries, who eventually pays for the care, treatment and medical expenses of that victim? Ultimately the taxpayer does, because tax revenues pay for Medicare and Medicaid, to which victims will have to turn.

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