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New recall could bring General Motors more business litigation

| Apr 2, 2014 | Business Litigation |

As if General Motors wasn’t facing enough problems due to the recall, lawsuits and government investigations resulting from the faulty ignition switch on some of its compact cars, the Detroit automaker has just expanded the recall. GM announced on March 28 that it is recalling close to one million cars additional cars because some of them may also have defective switches.

GM says it sold 95,000 of the faulty ignition switches to parts wholesalers and dealers. The problem is that it does not know what happened to 5,000 of them. There is a possibility that mechanics installed them as part of a repair to vehicles newer than the 1.62 million previously recalled. Those vehicles were manufactured in 2007 or earlier.

Rather than attempt to locate every newer vehicle that may have had a faulty switch installed, GM chose to recall all vehicles (about 971,000) in which a new ignition switch may have been replaced with an old one. The company will officially notify those impacted by this expanded recall later in April and will replace the switches in those cars at no charge. In a statement about the expanded recall, GM Chief Executive Officer Mary Barra says they “are taking no chances with safety” this time.

The defective switch, as most everyone knows by now, can cause the engine to shut off if it is weighed down by objects on a keychain or is jostled in some way. This has resulted in the failure of airbags to deploy in some instances. GM has reported that 13 deaths can be traced to the defective switches. That number, according to some, is too low because it only counts deaths resulting from failed airbags.

Barra will hear directly from lawmakers when she testifies in the upcoming days before members of Congress. One topic of questioning is likely to be news reports on March 30 regarding the maker of the switch, Delphi Automotive. According to CNBC, representatives of the company told congressional investigators that GM approved these switches even though they did not comply with the automaker’s own specifications.

GM’s experience is a cautionary tale to other companies. Businesses can save themselves costly business litigation expenses and help preserve their good reputation by working with the legal advisors to deal with a product issue quickly, completely and openly.

Source: The New York Times, “G.M. Expands Ignition Switch Recall to Later Models” Bill Vlasic and Matthew L. Waldmarch, Mar. 28, 2014

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