Product Liability

Chrysler, GM bankruptcy deals strip victims of legal recourse

Dozens of accident victims and their lawyers made their way to Washington, DC, and the halls of Capitol Hill last week, urging lawmakers and the Obama administration to protect their ability to pursue medical claims against Chrysler and General Motors.

In a May 31 ruling, U.S. Bankruptcy Court Judge Arthur Gonzalez overruled objections lodged by the Ad Hoc Committee of Consumer-Victims of Chrysler LLC and other consumer groups when he approved the sale of Chrysler to Italy’s Fiat, free and clear of outstanding legal claims against the U.S. car manufacturer. Gonzalez effectively ruled that only liabilities that promote Fiat’s commercial interests would be transferred.

The Consumer-Victims group sought a $300-million fund or retroactive insurance policy that would cover the millions of dollars that Chrysler pays in medical settlements to victims every year. Customers with claims currently pending against Chrysler and GM will no have no legal recourse if the ruling stands and the transfer proceeds. About 300 GM customers and 160 Chrysler customers have pending claims that will likely be wiped out in the transfer to Fiat.

The situation is especially angering to many of the victims in light of the government bailout, which used $60 billion of taxpayer money to float the auto manufacturers.

“Our tax dollars are now being used to take away our right for compensation,” Jeremy Warriner of Indianapolis told the Washington Times. Warriner lost both of his legs when his vehicle’s plastic brake fluid reservoir ruptured and caused a fire after an accident in 2005. He was scheduled to go into mediation with Chrysler in May.

Tom Kline, whose wife Susan died after an accident in her Jeep Grand Cherokee, told Philadelphia’s Inquirer that the victims and their families should be given priority, not cast aside.

“He knows Chrysler’s collapse has harmed millions of others, including workers, dealers, and investors. But he said most of those losses pale beside the severe injuries and deaths suffered by defect victims,” the Inquirer said.

Susan Kline was traveling on Interstate 287 in Morris County, N.J. when she was struck from behind by another vehicle. The vehicle’s ill-placed gas tank ruptured, turning what should have been a relatively minor accident into a fatal blaze that quickly consumed the Grand Cherokee as Kline tried unsuccessfully to escape. By the time rescuers opened the vehicle, almost nothing was left of Kline’s body.

The Inquirer cited Paul Sheridan, a former Chrysler product manager who was to testify in Kline’s case, as saying that federal auto safety standards “are not adequate for the real world, and the industry knows it.”

“With that vehicle, just backing up into a high curb can split the tank open,” Sheridan told the Inquirer. “It has a plastic, unshielded tank that was known to be defective the moment it left the factory,” he said.

“How many fires have there been? Sheridan cannot say, in part because automakers know how to work the system. He said they agreed to settle cases, but only if the details are kept private – and from other car owners,” the Inquirer reported.

Kline echoes the thoughts of other victims who suffered injuries or lost loved ones because of poorly designed and unsafe Chrysler and GM automobiles.

“I’m a little aggravated that they’re using taxpayer money to bail out companies that are essentially shirking any and all responsibilities to those people who lost the most,” Kline told the Inquirer.

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