July 13, 2009

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By Amos Budde

Consumers won an important victory this past month, as General Motors agreed to assume legal responsibility for injuries drivers suffer from vehicle defects. Under the first plan to help the companies come out of U.S. bankruptcy protection, GM would not have been responsible for product-liability claims. But consumer organizations, victim’s groups, and state attorneys general all came together to successfully press the new government-owned GM to take responsibility for those claims.

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Credit goes to the Obama Administration as well for ensuring that consumers who had been injured and had liability claims against GM for defects in their vehicles – and those who may be injured in the future – will have their rights preserved. Under the original bankruptcy plan arrived at by GM and government negotiators, the auto maker would have been able to shed such liability after selling its assets to a new GM owned by the government.

But consumer groups and protested, as did victims of auto accidents who allege that defects in vehicles caused their injuries, and AGs from more than a dozen states, saying that this arrangement would block car accident victims from having their day in court. After several days of negotiations to address these concerns the parties arrived at an agreement. GM was quoted in the Wall Street Journal June 29 saying it would take on future product liability claims “to alleviate certain concerns that have been raised on behalf of consumers.”

A cornerstone of consumer protection is the right to hold companies accountable when their products have caused injury. It is essential for many reasons, including helping to ensure companies fix defects when they are discovered, for compensating injured consumers for their injuries, and preventing taxpayers from having to care for injured parties when a product – or vehicle defect – causes the injury. This outcome – with GM continuing to be held accountable to injured plaintiffs who can prove their case – is important to consumers and valuable precedent.

Amos Budde is a rising senior and Mathematics major at Brown University, also studying Economics and Public Policy. He is working as a policy intern with the National Consumers League. Contact him at amosb@nclnet.org.