What About Product Liability Claimants in Automaker Bankruptcies?

I’ve linked to Steve Jakubowski’s bankruptcy litigation blog several times during the auto company Chapter 11 proceedings. I think he has done an admirable job of explaining the ins and outs of the process and the peculiar considerations surrounding the auto company actions.

Now, he’s taken an activist interest in a certain issue that should concern anyone with an ounce of compassion. Specifically, the manner in which product liablilty claimants in the Chrysler bankruptcy were totally disenfranchised and the plans to do the same in the GM (GMGMQ.PK) proceeding. Here is a part of his recent post on the matter:

Well, Howard’s rant is what a lot of panicked plaintiffs’ lawyers involved in cases against GM are screaming these days as they watch years of toil on behalf of people seriously injured by defective GM products (like crushed roofs, exploding “side saddle” gas tanks, and collapsing seat backs) potentially go for naught as GM makes its grandest attempt ever to crush an entire class of former customers and existing and future products liability claimants in a sale that many plaintiffs lawyers of record only received written notice of in the past couple of days.

Those following this blog know my rising concern (even anger) over how products liability claimants were completely stiffed in Chrysler, so much so that Howard’s famous rant came to mind!

So, I decided to do something about it, and officially stepped into the fray by filing this Objection to the GM Sale and this Memorandum in Support jointly with counsel for the Center for Auto Safety, Consumer Action, Consumers for Auto Reliability and Safety, National Association of Consumer Advocates, and Public Citizen.

We should win; whether we do is a “horse of a different color.”

I am not a supporter of much of what the tort bar puts forth. In my opinion they have turned the practice of law into the business of law and in some cases contorted it into a racket. That being said, there are cases in which manufacturers produce deficient products that injure people. When that occurs those individuals are entitled to a hearing and they should not ever be disenfranchised either by the judiciary or the legislative branches of government.

I am frankly astounded that the Obama administration is a party to this. Not only are they stiffing one of their strongest constituencies but their action gainsays their commitment to the middle class. Apparently there is a slight robber baron pulse beating within their populist body.

I tip my hat to Mr. Jakubowski for his concern and efforts.

Comments

[sethmcs:]

If the bankrupcy code is to provide a fresh start then lawsuits are to be dismissed or "if" a judgement has been entered then reduced to unsecured creditor position. I think the ones complaining the loudest are for the voices of lawsuits yet to be filed. This is a joke. If its a Chevy or Dodge involved in an accident you better chase another ambulance.

Jun 22 05:10 PM

[notsosmart:]

who cares if somebody really got hurt? did an ass warmer explode? the lawyer gets a 1/3 of the award. does he care for the victim or the size of his payout? the automakers could not care less. they figured it was easier to pay than fix the problem.missing from their car plans for years-ethics & pride.they should be gone.

Jun 22 05:17 PM

[SouthernCEO:]

Kind if ironic. A bunch of lawyers cut another bunch of lawyers off at the knees. I'm sure that there are a few legitimate lawsuits that got thrown out but how many more were just frivolous junk and should have never been heard? I have no sympathy for the lawyers who took this stuff on a contingency. You rolled the dice and lost.

Jun 22 05:22 PM

[Mister Jimmy:]

You 'experts' on Seeking Alpha were advocating a GM bankruptcy filing for months. Now that it's happened, and the underside is exposed, you're beating your chests for the 'disenfranchised'. Remarkable. You didn't consider this sort of fall-out? Next time, think about the full range of consequences for before you publish a string of articles advocating a course of action.

Jun 23 07:26 AM

[User 158164:]

The lawsuit industry has nothing to do with "victims" or compassion, it is a parasite on the a$$ of industry. Poor Clarence Ditlow, maybe now he will have to find real work, if anyone would hire him.

Good job mentioning side saddle gas tanks, the poster child for tort reform. A whole "issue" generated through fraud, the problem could never be duplicated in crash tests, the liars had to add explosive devices to get them to burn. Know what else came out - the Pinto was another case of their fraud! The fact is, there were far fewer fires in those trucks than comparable models, and way far fewer than in most car crashes. You were much safer in the trucks than most cars. But with media liars like you on the job, noone hears that.

Plaintiff lawyers like John Edwards are money grubbing liars and blood suckers who feed off of lies and people's pain. Thank goodness he did that chick and kept him away from the White House.

Jun 23 02:05 PM