US: massive jury awards last year could spell trouble for automakers image

After huge jury awards against companies made a comeback last year due to rising instances when fatal defects were found in their products, automakers should consider themselves warned if they continue without fixing defective parts.

Last year billion-dollar verdicts in product-defect lawsuits showed their face again after a decade-long absence: $23.6 billion was awarded to a family after their smoking member died at 36 and $9 billion was awarded to a New Yorker who had his bladder cancer induced by diabetes medication. These massive verdicts could spell trouble for carmakers after the auto industry last year posted a record recall tally of more than 63 million vehicles. That would be more than twice the figure accounted in 2004 and came primarily on the back of massive scandals – surrounding GM and Japan’s Takata Corp. “Jurors now come in expecting to hear a story of corporate wrong-doing and are being very receptive to these stories,” comments Erik Gordon, a law and business professor at the University of Michigan in Ann Arbor.

Amid all the anti-company sentiment, GM has opted to quickly settle multiple death and injury claims connected to its 2014 ignition switch recall of 2.6 million older cars mostly via the ignition switch victims’ compensation fund led by outside attorney Kenneth Feinberg. The company still ahs pending federal investigations, including one criminal probe from the US Justice Department and numerous lawsuits from accident victims that link to product defects outside Feinberg’s process as well as from customers who allege they lost the resale value of the cars.

Via Bloomberg