Product Liability

GM retains former BP oil spill fund administrator Kenneth Feinberg to help with ignition switch crisis

GM logo GM retains former BP oil spill fund administrator Kenneth Feinberg to help with ignition switch crisisGeneral Motors Chief Executive Mary Barra said her company has retained former BP oil spill administrator Kenneth Feinberg to shepherd the company through its options amid its ignition switch crisis.

In her opening remarks to the House Energy and Commerce subcommittee Tuesday, Ms. Barra divulged GM’s selection of Mr. Feinberg to help the company explore its options. GM faces mounting litigation, civil fines, and possible criminal penalties over its failure to recall a defective ignition switch that has been blamed for multiple deaths. Resolving the crisis with complainants and the government could end up costing the automaker billions of dollars.

“We have not made any decisions. We have just started this process with Mr. Feinberg,” Ms. Barra told lawmakers.

Ms. Barra answered several of the committee members’ pointed questions with cautiously crafted general statements. When asked whether GM would claim itself immune from liability for crashes that occurred before its 2009 bankruptcy and subsequent reorganization, Ms. Barra responded that “This is an extraordinary situation.”

GM received legal immunity in the government-supported bankruptcy, which fashioned a “new” GM out of the bankrupt “old” GM, potentially shielding the new company from liability for deaths and injuries involving crashes that occurred before the company was reborn.

Ms. Barra acknowledged that GM has “moral obligations” but said it could take up to two months to figure out a course of action.

Mr. Feinberg was booted as the administrator of a multi-billion dollar fund set up by BP to settle claims with victims of the 2010 Deepwater Horizon oil spill. Reasons he was replaced included conflicts of interest and his close affiliation with BP, which led him to allegedly underserve those harmed by the spill. Mr. Feinberg also administrated the September 11 Victims Compensation Fund as well as funds established for the Boston Marathon bombing and Virginia Tech shooting.

“Mr. Feinberg is highly qualified, and is very experienced in the handling of matters such as this,” Ms. Barra said. “He brings expertise and objectivity to this effort, and will help us evaluate the situation and recommend the best path forward.”

GM says the ignition switch defect is responsible for 31 crashes and 13 deaths in Chevrolet Cobalts and five other models from the 2003 to 2007 model years. However, a report commissioned by the consumer watchdog Center for Auto Safety says the defect could be to blame for 303 deaths.

Sources:

Detroit Free Press
New York Times