Passenger List On The Deadly General Motors Ethics Train Wreck

"Oops! There goes G.M again!"

“Oops! There goes G.M again!”

That great, big, all-American motor car company that the Obama Administration took bows for saving five years ago has been revealed as a thoroughly corrupt, incompetent and deadly enterprise. As the full extent of the General Motors safety scandal unfolds—and it could get worse—this is a good time to take stock of the ethics lessons and miscreants involved, on the off chance that we are interested in learning something.

Did that sound bitter? It is. There is little in this terrible story of corporate ineptitude and corruption that wasn’t known and understood decades ago. Yet here we are again.

The manifest:

  • G.M. management. It pursued the policy of paying large settlements with confidentiality agreements to those injured by ignition switch defects in their cars, never fixing the defect itself. This is the old Pinto calculation, reasoning that if it is cheaper to pay for the deaths and injuries from a design defect than to fix the defect itself, then it makes good business sense to keep doing that, indefinitely. There are three problems with this logic, of course. First, it kills people. Second, it is stupid: eventually the facts will get out, and the whole company will be endangered. Third, it is wrong.
  • The plaintiffs’ attorneys. The trial lawyers association, way back when I worked for it two decades ago, adopted the unofficial position that the practice of accepting settlements from large corporations in product liability cases that included agreements not to reveal the damages and the defects involved to regulators, the news media, and endangered consumers was unethical. Members were urged to make a rejection of such terms a condition of agreeing to represent injured parties. Speeches were given, pledges were made. All agreed that the practice undermined the mission of the plaintiffs’ bar to make America safer through the civil justice system. What happened? Greed, that’s what. Just as every plaintiff has a price, so do many trial attorneys, who received up to 40% of those secret settlements. Every single one of the lawyers who guided their clients to accepting hush money in exchange for letting unsuspecting owners of G.M. cars risk their lives and those of their families were members of the American Association for Justice, which changed its name from the Association of Trial Lawyers of America because a survey showed the term “trial lawyers” was too negative. This is why the term is negative.

  • The secret settlement recipients. These were parties who had been injured by an automobile design defect, and knowingly accepted money to allow General Motors to continue selling potentially deadly cars to unsuspecting consumers just like them. Those with ethical lawyers had this explained to them, as well as why joining in a conspiracy to keep the defects secret was irresponsible, cruel, and wrong. Yet everybody took the money. You can list the rationalizations as easily as I can: “I have to think of my family,” “They would do the same if they were in my position,” “This isn’t my fault.” Garbage. Blood is on their hands.
  • Complicit judges. They agreed to seal G.M.’s secret settlements as a matter of course. They didn’t have to. They are supposed to act in the public’s interest, not the interests of venal plaintiffs and amoral companies. “Concealment can kill, and so can secret settlements,” said Senator Richard Blumenthal (D-Del), who is trying to get a law passed that would force judges to refuse requests to seal settlements like these. “By sealing court records of lawsuit settlements that show serious safety defects, judges are aiding and abetting more deaths, injuries and danger.” Correct. But we shouldn’t need a law to tell judges they shouldn’t help companies kill Americans for profit.
  • The American Bar Association. It has not only done nothing to stop confidentiality agreements, knowing full well the damage they do, it has lobbied to block legislation making secret settlements illegal. Why? See: 40% cut of settlement money referenced above. Of course, the official ABA line is that blocking such deals would make settlements harder to agree upon, thus over-burdening the court system.
  • Mary Barra, G.M.’s CEO. Her appointment as CEO at the beginning of 2014 was heralded far and wide as an epochal crash through the glass ceiling. She oversaw this mess. The defense offered by her supporters will be that she was too new to the job to be blamed for the scandal. Nonsense. She started working for General Motors at the age of 18, held a variety of engineering and administrative positions as she worked her way up the corporate ladder, and is steeped in G.M.’s flawed culture. In 2008 she became Vice President of Global Manufacturing Engineering’ in 2009, Vice President of Global Human Resources; in 2011, she advanced to become Executive Vice President of Global Product Development, which included responsibilities for design. Do you really think she had no idea what was going on?

G.M. has been using secret settlements for years. Barra knew the history, if she wasn’t directly complicit in them, and she well may have been. There was a scandal ten years ago when it was revealed that G.M. had been secretly settling cases involving exploding side-mounted gas tanks at the same time it was denying that those cars were unsafe. As Richard Painter points out at the Legal Ethics Forum, Barra, “as CEO of a company that stresses safety as a top priority has [an]obligation to ask thorough questions about such matters, not simply wait until others do or do not report problems to her.” He says she should resign or be fired. He’s correct.

  • G.M. General Counsel Michael P. Millikin. If he didn’t engineer the unethical settlements policy, or wasn’t actively involved in a cover-up, then he was negligent in learning what was going on in the company. Painter: “G.M.’s General Counsel had a duty to ask about — and find out about — both serious safety problems with G.M.’cars and litigation against G.M. over car safety.  There is no way he could have represented the company in its disclosure to shareholders, or in connection with car safety issues, without affirmatively seeking out this information.  He apparently did not do so. On top of this, we have now learned about millions of dollars of “secret settlements” that were so secret that the … General Counsel of GM did not even know about them.  That was probably because [he] did not want to know, or did not care whether they knew about such settlements … That alone is unacceptable.”
  • The Obama Administration. Steven Rattner, former head of Obama’s Automotive Task Force, now says that G.M.’s “nod and salute” culture was in evidence from the beginning…as in when the government was preparing to bail it out of problems of the company’s own making. There was a reason why General Motors was heading for bankruptcy, and the Obama administration defied basic market principles by artificially, at taxpayer expense, propping up an entity with a toxic culture that the market had already rejected. Good plan! Now innocent people are dead, taxpayers are out over ten billion dollars, and General Motors may be headed to bankruptcy anyway….and deserves it. But this fiasco saved a lot of Democrat-voting union members, so it all worked out for the best….or so MSNBC will soon explain to us.

More passengers are sure to be boarding soon. For example, even though their fiduciary duties obligate them to sack Barra, I doubt that the General Motors stockholders will have the integrity or courage to do so. After all, she’s a trailblazer! What a downer it would be for the women who finally grabbed one of corporate America’s great power posts to be officially deemed incompetent and corrupt, and have to be removed after less than a year on the job! War on women!

Why, it would be like impeaching the first black President for repeatedly and openly violating the Constitution, engaging in multiple cover-ups, killing U.S. citizens via drone without due process, lying to the American people, releasing terrorists without consulting Congress, and allowing the I.R.S. to target political opponents, as Richard Nixon did.

Everybody knows you can’t do that.

______________________________

Sources:Huffington Post, New York Times 1, 2, GM1, 2, KXLH, DeMoines Register, Legal Ethics Forum

20 thoughts on “Passenger List On The Deadly General Motors Ethics Train Wreck

  1. I would love to beat the Free Market drum some more, but that this point, if the Statists, State-Capitalists, Socialists, and other -ists based on wedding Government and Business, haven’t seen the glaring real world indictments on their centralizing and collectivizing systems, I don’t think any reasoned argument will.

  2. But we shouldn’t need a law to tell judges they shouldn’t help companies kill Americans for profit.

    Actually, I think we should. The job of a Judge is to make a ruling on the basis of the law, not some personal opinion of what the “right” outcome should be. If the law allows such settlements and both Plaintiff and Defendant agree to it, then the Judge should not be exercising some sort of “veto” power that he or she doesn’t really possess.

    Enacting a law that makes such settlement conditions illegal sounds like a FINE idea to me.

    Then again, I Am Not A Lawyer, so this could all be big load of hooey.

    –Dwayne

    • Court proceedings are public, and there is no reason why settlements shouldn’t be as well, if they are done under the auspices of the justice system. Whether to allow a seal is discretionary.

      • It depends on the jurisdiction. It is like the cell phone text liability case you blogged about a while ago. Holding a person liable for a text sent to a driver who then crashed and injured people maty be wrong as public policy, but judges are supposed to simply apply the law as written, not rewrite liability and tort law to achieve the right result.

  3. You have consistently spoken out for the ethical duty of lawyers to represent the interests of their clients, even at the expense of social good, as long as they stay within the limits of the law. Until now.

    The plaintiffs’ attorneys don’t represent society, and they don’t represent potential future accident victims. They represent their clients, and their clients will receive a better settlement if they take the hush money. Blame GM, blame the clients, blame the judges for going along, blame the legislators for allowing it, and blame the bar associations for lobbying for it, but by a principle you have stated over and over again — to the point of complaining about having to state it over and over again — the lawyers are not behaving unethically.

    Either the lawyers’ duty to represent clients is not as expansive as you have said in the past, or else I’d like to hear why you think this is an exception.

    • Let me clarify, Mark. (great question!)

      IF the attorney takes on a case, and the settlement agreement includes a requirement to keep the settlement secret, and, as a result, endanger others—

      1. The attorney is obligated to “abide” by the client’s decision to accept the terms (Rule 1.2) whether the lawyer likes them or not.
      2. A lawyer is not required to continue representing a client whose legal objectives become “repugnant” or seem “imprudent” to the lawyer. Thus a lawyer in such a case can and should say—“You may get a good offer that is constructed to help aid a cover up, meaning that other victims like you will be endangered. If you are inclined to accept such an offer, you need to find another lawyer, because I think those deals are reprehensible. However, if you are willing to go to trial, there is a good chance that you will be properly compensated without getting blood on your hands.”
      3. A lawyer is obligated to “render candid advice. In rendering advice, a lawyer may refer not only to law but to other considerations such as moral, economic, social and political factors, that may be relevant to the client’s situation.” (Rule 2.1). Therefore, it is appropriate and ethical for the lawyer to point out that the client may accept the money, but will have “blood on his hands” if it assists the company in not making needed safety fixes. In fact, the client needs to understand why the settlement is secret to make an informed decision, and it is completely legitimate for the lawyer to inveigh against such a settlement.

      This came up, in my direct experience, in Catholic priest sexual abuse cases. The Church wanted a confidentiality agreement, and the lawyer told the client—sure, you can accept this, but it probably means another child will be molested by this same priest. And, just so you know, If you do accept this, I’m out. Many plaintiffs, properly educated, are as interested in stopping future harm to others as they are getting money themselves. As one lawyer told me, “Your client deserves the opportunity to do the right thing.”

      There is a difference between legal ethics and ethics. Note that I did not say the lawyers were professionally unethical. But I know for a fact that the plaintiffs bar decades ago reached a consensus that such settlements were wrong, and many lawyers said at the time that flat out, they would not represent clients who would not agree up front to reject them. It is, indeed, the point at which legal ethics and ethics diverge violently.

      Thus the GM scenario shows me that many trial lawyers abandoned the principles they declared they believed in during meetings I attended personally.

      And there’s this: in many cases, the plaintiff would get more money at trial. But it would be more time and more risk for the attorney. In short, I believe that if the plaintiffs’ attorney followed 1.2 as they indicated they would behind closed doors, explained to clients why the confidentiality agreements were morally, ethically and practically wrong and even deadly, and properly prepared them for the choice that would be presented to them, there is no way a GM could pull off this kind of deception.

  4. If anyone is killed or severely injured due to these safety issues, can anyone in GM be held personally criminally liable and be sent to prison?
    If so would that be only in the state where the car is manufactured or any state where the car is sold?

      • Pretty much in agreement. Bill Clinton was a perjurer…ever charged? Nope. This President has lied, possibly abused his public office and been in general ignorant of the Constitution. Will he ever be charged with anything? In the words of James Michener, “Unlikely, that”.

    • Well, primarily because of a really poor cameraman. You see, that special, if it’s the one I’m thinking about, had to do with Silverado pick-ups bursting into flame when impacted from the side. Since NBC wasted several Silverado’s in side-impact crashes and got no fire, they decided to “help it along” by attaching a small hobby rocket motor to the gas tank and drill a hole in the tank. They set the rocket motor off at the exact time of the impact and…Voila!…instant vehicle fire. Only problem was that the cameraman caught the rocket motor going off just a split second before the truck was engulfed. OOPS! And, apparently, no one noticed this little detail until the “special” was aired. Not only OOPS! but incompetently OOPS!

        • I donno… is it? if the stats were demonstrating an unusually high number of explosions, and the studies of thru wrecks showed design flaws leading to those explosions, then I’d think what matters is how the demonstration was introduced.

          Did they say “this is a reenactment or example of what it would be like” in which case, I don’t necessarily see an issue with the mock up.

          Did they say “this is the 3rd truck we tested and see what happened as a result of the crash?” in which case, I would agree it is unethical.

          • Again, Tex, this was a while back and my memory is getting a little fuzzy in places, but I think is was the latter.

        • Pretty much. I don’t think anybody would argue that the pick-up was a totally unsafe vehicle, but NBC trying to dramatize the affair did not do them any good PR service.

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