NHTSA’s Message to the Defense: Call Us Before We Call You

This week, while heads were rolling out the doors of the RenCen (GM headquarters) in downtown Detroit, the Chief Counsel of the National Highway Traffic Safety Administration was laying down the law for defense lawyers at a Chicago legal conference.

Amid the presentations at the American Conference Institute’s 7th Annual Summit on Defending & Managing Automotive Product Liability Litigation devoted to defeating class-actions, the liability of autonomous cars and one of our personal faves –tire aging (with a shout-out to SRS’ Sean Kane!), was a warning from the government.

First, Chief Counsel O. Kevin Vincent lulled them with a feel-good “rah-rah-ree” paean to industry. And then, he made the hair on the back of their necks rise: A manufacturer’s obligation to report a defect within five days of its discovery is the law, and after a long hiatus from doing its job, NHTSA intended to take “an aggressive stance” in enforcing it.

The first offense line in the discovery of a defect was not the Office of Defects Investigation, Vincent said. It was the manufacturers themselves.

“We don’t have analysts, but your clients do. You all have ability to find these defects,” he said.

A manufacturer cannot delay a defect finding, while a safety problem meanders through an internal process involving multiple committees. It cannot hide its knowledge behind a wall of attorney work product and attorney-client privilege. It cannot wait until it’s gotten the supply chain ready to implement the recall.

And it better not wait until after it settles a plaintiff’s case for big bucks. The TREAD Act obligated NHTSA to “follow up on civil litigation that sends up red flags,” he said.  And they’d be looking for signs of foot-dragging in large civil litigation settlements. Not right away, certainly. Civil actions take years, he said. (This gives the safety problem plenty of time to fester.) How much of a settlement was enough to catch NHTSA’s attention? Vincent wouldn’t name a figure.

The GM Hearings – Our Take

Missouri Senator Claire McCaskill opened the second day of hearings into the General Motors ignition switch defect and the National Highway Traffic Safety Administration’s response to the issue by forging the strongest ties yet between the revelations that GM had hidden the defect for years and the civil litigation system.

McCaskill repeatedly (along with other U.S. senators and representatives yesterday and today) acknowledged the public debt to Lance Cooper, the Marietta, Georgia lawyer who represents the family of Brooke Melton, the 29-year-old woman who died in 2010 when the ignition module of her 2005 Cobalt slipped into the accessory position as she drove along Highway 92 in Paulding County, Ga. Melton’s Cobalt skidded into another vehicle, and Melton died of her injuries in the crash. Cooper’s dogged pursuit of GM materials through the discovery process showed that GM knew about the problems for years before launching a recall that only covered some of the affected models.

The ensuing avalanche of press led to a larger recall, and a government probe, and the April hearings.

But before the crush began, Cooper formally requested that NHTSA open a Timeliness Query, based on everything he had learned. And, it’s a good thing that McCaskill gave Cooper some credit, because to this day, NHTSA has not acknowledged his letter in any way. Not a phone call, not an email, not a letter. The bubble.

Don’t Settle, NHTSA

Yesterday, the agency sent General Motors an extraordinary 27-page Special Order compelling the automaker to answer 107 questions about an ignition defect in the 2005-2007 Chevy Cobalt and six other models that claimed at least 13 lives and injured at least 31.

Retired NHTSA senior enforcement lawyer Alan Kam said that he’d never seen anything like it.

We are encouraged by NHTSA’s aggressive and swift action, and we are hoping and wishing and praying for actual enforcement follow-through that benefits and protects consumers, rather than merely burnishes the agency’s image.

We all know – including GM – that a big, fat fine is in their future for failing to launch a recall within five days of discovering a defect, as Marietta, Ga. attorney Lance Cooper found out. Cooper obtained internal documents during the discovery phase of a lawsuit on behalf of the family of the late Brooke Melton, showing that GM engineers discovered in 2004 that the ignition of the 2005 Cobalt could wander from the run to off or accessory position while the vehicle is underway. 

Why Civil Litigation Matters to Safety: GM Edition

If you want to know why civil litigation matters to safety, take these links over to USA Today and read James Healey’s fine coverage of General Motor’s crappy, nine-years-too late 2005 Cobalt and Pontiac G5 recall, and attorney Lance Cooper’s request to the National Highway Traffic Safety Administration for a Timeliness Query investigation. (6 Killed in GM Cars with Faulty Ignition Switch; Lawsuit: GM Knew of Cobalt Ignition Problem; and Lawyer Asks Feds to Explain Recall Timing)  

After settling a lawsuit in which a 29-year-old woman died in crash caused by a defect known within GM since 2004, the automaker announced that it would recall a subset of vehicles plagued by ignition switches that wander from the run to the accessory or off position. These shifts  create an emergency situation while the vehicle is underway, disabling the airbags while cutting off the engine power, power brakes and power steering. The defect, which GM engineers discovered in 2004, before they began selling the 2005 Cobalt, was the central issue in Melton v General Motors.

Brooke Melton, 29, died in 2010 when the ignition switch in her 2005 Cobalt slipped into the accessory position as she drove along Highway 92 in Paulding County, Ga. Melton’s Cobalt skidded into another vehicle; she died of her injuries in the crash.

The incident was initially attributed to Melton simply losing control of her car on a rainy night. But the Melton family sought the counsel of attorney Lance Cooper, after facing a legal claim from the driver in the other vehicle. Cooper, a veteran of motor vehicle defect litigation, saw something that many lawyers would have overlooked and filed suit against GM.  The records he pried out of GM’s hands after 18 months of requests for production and a court order compelling the automaker to produce what it knew about the defect, revealed a long, sorry history. GM engineers had discovered the ignition switch problem during the Cobalt’s production stage, but the company sold them anyway. GM began to receive complaints about the problem almost immediately, and tried to make them go away with an October 2005 TSB covering the 2005 Cobalt and with a later TSB involving later model years of the Cobalt, the Pontiac G5, along with 2006-2007 Chevrolet HHR, the 2005-2006 Pontiac Pursuit in Canada; the 2006-2007 Pontiac Solstice; 2003-2007 Saturn Ion; and 2007 Saturn Sky. This “fix” – an ignition key cover that changed the design from a slot to a key hole – did not solve the problem.

NHTSA’s “Tough” Stance on Ford Recall – Eight Years Too Late

Well, the agency’s done it again. No longer can reporters call a $17.3 million civil penalty against a manufacturer the “largest fine in agency history.” Nope, now it’s the new normal. This time it was Ford who got rapped with NHTSA’s multi-million dollar automaker swatter, over failing to recall 2001-2004 Ford Escape and Mazda Tribute vehicles to correct an earlier recall repair to the accelerator cable that actually exacerbated the original problem.

Did you follow that? If, not, don’t worry. We’re gonna lay it out in all of its glorious detail.

Like just about everything NHTSA does these days, the path to the fine follows a long roundabout route that reaches its crescendo in a high-profile death. In this case it was Saige Bloom, the 17-year-old driver of a 2002 Escape who died in an unintended acceleration crash in Payson, Arizona on January 27, 2012. Bloom was driving her new used car home, with her mother following in another car, after they purchased the Escape. Bloom lost control of the vehicle, which rolled over. Bloom died of her injuries in the hospital.

Clarence Ditlow, executive director of the Center for Auto Safety, which petitioned the agency to open a Recall Query after Bloom’s death, says that the monetary penalty didn’t go far enough.

“To me, if there was ever a case for a criminal penalty this was it. It meets the requirements of the TREAD act – there was a death,” Ditlow said “In fact, there have been at least three deaths. Who knows how many there are, in reality? There’s an 8-year gap between the first recall and the fine.”

But, as these things tend to go, there won’t be anything as shocking as a criminal prosecution, just a blip on the bottom line. Ford denied any responsibility in the settlement agreement. To quote:

Betsy Spills Toyota’s Beans

To steal a line from Bogie: “Of all the publications in all the websites in all the world, she walks into Corporate Counsel.” She – being Betsy Benjaminson, a freelance translator from Israel who was tasked with translating from Japanese into English documents regarding Toyota Unintended Acceleration. Corporate Counsel -- being the self-described “leading digital destination for in-house counsel to find breaking news and practical information.” And this bit of breaking news? When you lie to the world about an automotive electronics problem that has the potential to result in fatal crashes, don’t expect every underling to keep your secrets.

The story, entitled Is Toyota Telling the Truth About Sudden Acceleration? (Spoiler alert: the answer is: No.) is a fascinating behind-the-scenes look at a company in disarray with a technically challenging problem that its technicians weren’t looking too hard to solve, while its legal and public relations gears clicked into place to drive the denial machine forward. Our favorite:

“Hagiwara and Chris Tinto, a V.P. for technical and regulatory affairs and safety, had been talking about the U.S. investigation and an earlier one in Europe that also involved unintended acceleration (UA).

‘Tinto is extremely pessimistic,’ Hagiwara wrote, ‘and is saying (public hearings, someone will go to jail, I can't completely take care of the pedal problem, etc.).’ Tinto's primary concerns (according to Hagiwara): ‘For NHTSA, we said that our investigations in Europe found that the pedal return is a little slow at a slightly open position, and that there were no accidents, but this is not true. Last year's situation in Europe (many reports of sticking pedals and accidents, and a TI TS9-161 was filed on October 1, 2009) was not reported to NHTSA.’ That failure, Tinto said, ‘may be a violation of the TREAD Act’—the federal law that requires car manufacturers that conduct recalls in foreign countries to report these to U.S. regulators.”

A Defect Remedy Delayed?

Well, we guess that the Christmas bonuses at Toyota are going to be a wee bit smaller this year, since the National Highway Traffic Safety Administration pocketed about 12 hours of profit from the automotive giant for failing to launch a timely recall for flying floor mats in the 2010 Lexus RX 350.

Yesterday, Toyota agreed to settle the government’s claim that it failed to file a Part 573 report to the government within the mandatory five days after discovering a defect requiring a recall for $17.35 million. According to the settlement agreement, Toyota admitted to NHTSA that it knew of 63 alleged incidents of possible floor mat pedal entrapment in Model Year 2010 Lexus RX models since 2009.

That brings the Total Timeliness Simoleans (TTS) Toyota has paid to NHTSA in two years to more than $66 million. Now, Toyota may be setting all kinds of NHTSA civil penalty records, but when one considers that the company reportedly posted a $3.2 billion profit in just the third quarter, one realizes, that by any-pain-in-the-pocketbook standard, this fine ain’t nothing.

In a statement dripping with gravitas, NHTSA Administrator David Strickland said: “Every moment of delay has the potential to lead to deaths or injuries on our nation's highways.”

This fine stems from a NHTSA-influenced floor mat interference recall last summer involving 2010 Lexus RX350 vehicles. In May 2012, the agency’s Office of Defects Investigation asked Toyota to review nine Vehicle Owner Questionnaires that indicated a floor mat entrapment problem for the 2010 RX. Toyota then reviewed its records for “additional reports that could indicate circumstances that may be consistent with potential floor mat entrapment.” On June 22, the automaker presented to ODI cases in which “potential floor mat entrapment was possible or alleged to have occurred in the subject,” including a timeline when each of the reports was received,” according to Toyota. On June 29, Toyota announced its 11th recall related to unintended acceleration, for alleged pedal entrapment by the All-Weather Floor Mat, involving the 2010 Lexus RX350 2010 and RX450 H vehicles.

Toyota Power Window Fires and Excessive Lubrication: A Worldwide Epidemic

Question for the lads and lassies over at the Office of Defects Investigation: Are you going to penalize Toyota for waiting three years to recall a variety of models in the U.S. for power window switch fires, after it launched recalls for 770,540 substantially similar vehicles of the same model years in China, New Zealand and Japan in August and October of 2009?

The power window door fire issue got our attention February, when NHTSA opened Preliminary Evaluations into power window switch fires in the General Motors 2006-2007 Chevy Trailblazers and several 2007 Toyota models, including the Camry, the RAV4, the Highlander Hyrbrid and the Yaris. Consumers were reporting spontaneous burn incidents emanating from the power window switch area, starting –  but not always ending – with smoke and noxious odors. Few injuries; but many of the incidents happened while the vehicle was underway, and let’s face it, interior compartment fires are very distracting while driving.

It was NHTSA’s preliminary theory that perhaps the two automakers shared a common window switch supplier that would explain the defect trend.  And, both investigations proceeded together closely in parallel – like VPA1 and VPA2 circuits on the Accelerator Pedal Position Sensor in some early model Toyota Camrys. (Sorry, we can’t resist a little Unintended Acceleration humor.)  In mid-June, ODI bumped both PEs up to Engineering Analyses, and it turned out that GM and Toyota did not share suppliers.

GM was the first to concede the need for a recall. On August 17, GM recalled 249,260 2006 Chevrolet Trailblazer EXT and GMC Envoy XL, 2006-07 Chevrolet Trailblazer; GMC Envoy; Buick Rainer; SAAB 9-7x; and lsuzu Ascender s in a slew of states because fluid could seep into the door module, causing corrosion and a short that could render the power window or door locks inoperable, and in some cases, ignite.

Double Ding for Toyota

Toyota closes out 2010 by shelling out another $32.4 million to the government for tardiness. The two fines – for failing to recall its floor mats and defective relay rods within five days of determining a defect – were disclosed yesterday.

Three record fines in one year ain’t beanbag. In all three cases – the relay rods, the accelerator pedal and the floor mats – Toyota had recalled the affected vehicles overseas months before it got around to recalling those components here. It’s refreshing to see the agency enforce the law. But penalizing a manufacturer for failing to file a timely defect report only requires counting to five. The agency will greet 2011 with the much more complicated issue of unintended acceleration hanging in the balance. We’ll address that in a future post.

In the meantime, back to the fines. The details were MIA. NHTSA did not say when it thought Toyota had a duty to recall those components. Toyota didn’t admit it did anything wrong. Since the agency hasn’t made its case for the penalty to the public, the Safety Record Blog will do it for them.

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