Does the GM ignition defect cover-up fit within the Georgia Fair Business Practices Act provisions for treble damages, exemplary damages and attorney fee awards?
The news this week is filled with reports about General Motors’ cover-up of an ignition switch defect that has caused numerous deaths and serious injuries. Congressional hearings have highlighted allegations that people died because GM failed to fix a 57-cent problem that the company had known about since 2005. One might say what GM did was an “unfair or deceptive” act in commerce.
For the past 20 years I have been looking for good products liability cases to use a legal theory I developed in a wrongful death case against both the manufacturer and distributor of a work stage attachment for a forklift. In that case, an equipment distributor substituted a knockoff in place of the forklift attachment a small, family-owned business had ordered. The knockoff looked like the picture of what had been ordered, but the latching mechanism was fatally defective. The motive was to avoid the risk of losing the sale of a reconditioned forklift with about a 5,000 percent markup.
To make a long story short, the Georgia Fair Business Practices Act prohibits unfair and deceptive acts or practices in the marketplace, and provides for treble damages, punitive damages and attorney fees. To bring that piece of warehouse equipment within the FBPA, we classified the forklift as an office supply.
The trial judge’s initial reaction was, Huh? Can you do that? But the statutory definitions fit, the initially skeptical trial judge ruled in our favor, the Court of Appeals declined to consider the defendant’s interlocutory appeal, we were able to get seven figure settlement before trial, and there was never any published court decision on the point.
Seeing the current news about the General Motors ignition switch defect and cover up, which was uncovered by my friend Lance Cooper, I wonder if the Fair Business Practices Act might apply to injury and death cases in Georgia arising from the GM ignition defect.
The FBPA at O.C.G.A. § 10-1-393 provides that, “Unfair or deceptive acts or practices in the conduct of consumer transactions and consumer acts or practices in trade or commerce are declared unlawful.” That code section lists illustrative examples, which are far from exclusive, including “Representing that goods or services are of a particular standard, quality, or grade or that goods are of a particular style or model, if they are of another.” Other statutes and regulations, such as the Deceptive Trade Practices Act, may be considered for additional examples of “unfair and deceptive” acts and practices. It is notable that the Federal Trade Commission has ruled in the past that failure to warn of a defective or dangerous condition that could cause personal injury constitutes an ‘unfair’ trade practice.”
The Georgia Fair Business Practices Act is one of the many “little FTC acts” adopted in most every state in the US, mainly in the 1970s. Some of the “little FTC acts” cover property losses only. Others, including Georgia, are worded to refer to “injury or damages” so as to include personal injury. I will not copy here the 30 page detailed analysis I years ago detailing how Georgia’s Fair Business Practice Act and Wrongful Death Act work together.
At O.C.G.A. § 10-1-399, the FBPA provides in part, provides that “any person who suffers injury or damages” as a result of violations of the FBPA may file suit individually for general damages, exemplary damages and, for intentional violations, attorney fees. In other states with “little FTC acts” worded like Georgia’s, courts have interpreted this to include personal injury and wrongful death.”
Courts have read into the Georgia statute a requirement that the transaction not be an isolated one, so that there must be some sort of pattern or practice. That was potentially a problem in our forklift case but we succeeded anyway. However, it would not be a problem where a giant manufacturer knows of a defect for nearly a decade and covers it up while selling millions of vehicles with that easily and cheaply corrected defect.
The GM ignition switch defect is only the most recent example of how a manufacturer’s failure to recall a faulty product and correct a problem, the results can be catastrophic. General Motors is learning this lesson the hard way after a delayed recall of compact cars with defective ignition switches. General Motors (GM) has linked 13 deaths to the problem while others, like Laura Christian whose daughter died in 2005 when her Cobalt’s airbags didn’t inflate, has found crashed that claimed 29 lives that we know of, and perhaps many others in which the cause of crashes was never figured out because investigators didn’t know what to look for.
The faulty ignition switches behind the recall can shut off the engine while the car is in motion. When that happens, power-assisted steering and power brakes are lost, and the airbags won’t inflate during a crash. These types of problems are difficult to navigate even for some of the most experienced drivers; however these cars were being marketed to the most inexperienced drivers and their parents.
Low-priced cards like the Chevrolet Cobalt and the Saturn Ion were marketed to the first-time buyers as well as for parents of new drivers. The cost was low and the safety ratings were high. What more could a parent or first-time buyer ask for in a car?
Kelly Bard and her parents were interested in purchasing a black Saturn Ion when we was 16 in Wisconsin.
“At the time, it had really high safety ratings,” Bard recalled. “It had good gas mileage, and it was what we could afford.”
However, soon after purchasing Bard ran into problems where the car would stall for no reason. Every time, the car would lose power-assisted steering and the key was moved from the “run” position. Bard reports that it would take all her strength just to be able to move the car out of harm’s way. Even after repeat visits to the dealership’s service department and supposed fixes, the Ion would keep stalling.
Bard recounts a near-miss on a freeway entrance ramp. Luckily the driver behind her was able to steer clear of her vehicle but this would not be the last time she had a very close call. As she was making a left turn a safe distance in front of an oncoming bus, the Ion stalled.
“I thought I was going to get T-boned by the bus. I refused to drive the car again until I felt like it was safe,” she said.
General Motors has admitted knowing for at least a decade that the switches were defective. Yet GM didn’t start recalling 2.6 million Cobalts, Ions and other small cars worldwide until February. CEO Marry Barra has said GM’s safety processes were lacking, and she has brought in an outside attorney to review them.
In 2005, GM notified dealers that the cars could still stall because of the ignition switches. However, GM still didn’t issue a recall for the cars theorizing that even in a stall, people could steer and brake without power systems. This “theory” proved unreliable.
Of the 29 reported fatalities, 15 were under the age of 25 and 18 were women. That is not surprising since small economy cars with good safety ratings particularly appeal to young women and their parents who help them buy cars. In a situation where power steering and power brakes are not functioning safety experts say inexperience drivers are more likely to panic and be overwhelmed by the effort needed to control the car. Safety experts also say women are less likely to have the upper body strength to move a stalled car to safety.
Most driver education classes cover loss of power steering, said Bill Van Tassel, manager of driver education for the American Automobile Association. While some instructors have students practice in the vehicle, many just cover what to do in case it happens in the classroom without any application.
I would like to see GM do well and prosper, though not at the expense of a decade long cover up of an easily remedied and potentially fatal defect. GM will surely have to pay for much of the damage done by this 57 cent defect. Whether state “little FTC act” statutes like Georgia’s can be employed to raise the ante remains to be seen.
Ken Shigley is a past president of the State Bar of Georgia, which includes all lawyers and judges licenses in the state. He has had an “AV preeminent” peer rating from Martindale-Hubbell Law Directory for 25 years, board certification as a civil trial lawyer from the National Board of Trial Advocacy for 19 years, and for 10 years has been rated as a Georgia “Super Lawyer” (Atlanta Magazine) and among Georgia’s “Legal Elite” (Georgia Trend). He is lead author of Georgia Law of Torts: Trial Practice and Preparation (Thomas Reuters West, 2010-14). His practices focuses on catastrophic personal injury and wrongful death cases in Georgia.