Corporations Get A Lot More Cooperative With Claims After Getting Caught In Lies
One of the law-related blogs that I regularly read is called Torts Blog, published by Professor Alberto Bernabe of the John Marshall Law School in Chicago. If you haven’t ever checked it out, and you are interested in the field of personal injury claims and litigation, you should.
Recently, Professor Bernabe posted a series of blog posts (here and here) about how General Motors has decided to set up a compensation fund for victims and the families of victims injured or killed as a result of GM’s defective vehicles. Professor Bernabe reviewed the basics of compensation fund (to be administered by Ken Feinberg of 9/11 and BP oil spill claim fame): $1 million for each death, payment of verifiable lifetime earnings, and $300,000 to each surviving spouse or dependent. In exchange for participating in the compensation fund process, families would have to agree not to pursue claims through the court systems. As Professor Bernabe pointed out in an earlier post, the arrangement seems rationale and reasonable, but with huge corporations, one must always look for a catch.
Although our current Supreme Court seems hellbent on looking at corporations as people and giving them commensurate rights, for-profit corporations generally exist for one reason — to increase shareholder value by earning a profit. Unlike human being who can — and often do — demonstrate sympathy and empathy for the plight of others, it is extremely rare that a corporation will do the “right thing” or demonstrate “generosity of spirit” unless doing so helps expand or protect the company’s bottom-line.
Professor Bernabe made a great pick-up when he came across a story from Bloomberg news that quoted a United States Bankruptcy Judge who had presided over GM’s bankruptcy proceedings in 2009. At the time, GM officials were seeking bankruptcy protection to shield them from the effects of bad decisions and poor economic conditions. At the time, GM officials testified to the challenges facing the company, including the the specter of potential claims or lawsuits. At the time, GM officials knew that one of their engineers had discovered that many thousands of GM vehicles had been outfitted with faulty ignitions switches that could be (and were) causing fatal crashes. Nevertheless, GM elected not to recall the defective vehicles. Similarly, GM officials — under oath — elected not to alert the Bankruptcy Court about the defects, or the potential for claims. GM was thus allowed to declare bankruptcy, and to wipe away millions of dollars in debt, and to reorganize.
When news of GM’s prior knowledge of the potential ignition switch problems, and subsequently, the potential for claims became public, U.S. Bankruptcy Judge Robert Gerber’s ears perked up. He indicated that, under the circumstances, he might consider the 2009 testimony of GM officials as fraud on the Court. This is a serious crime, and can have very serious consequences. It goes without saying that a finding of fraud on the court by GM executives would probably wreak havoc on GM’s share price, and consequently on the career prospects (and possibly, the personal freedom) of GM’s executive leadership.
So a little closer look behind the possible motives for this compensation fund suggests that GM’s offer to resolve claims on terms allowing claims to be resolved outside of litigation might be EXTREMELY helpful to GM and its executives. Oh, and also, GM’s compensation would protect it from potential punitive damages, that might punish GM for keeping defective cars that they knew were actually dangerous on the roads for so many years.
As a Florida personal injury lawyer, I’ve seen first hand what happens when a corporate defendant is caught in a lie. For example, in cases where companies insist that a slip and fall never happened, it is amazing what happens to settlement offers when store surveillance video is unearthed. Or in cases where trucking companies have insisted that our clients have caused accidents, it is startling how settlement offers change when an independent eyewitness comes forward. In my experience doing this kind of work. Defendants simply don’t voluntarily do the “right thing” and make reasonable offers — unless they are caught and HAVE to. Kudos to Professor Bernabe to raising this point in his excellent blog.
If you have been injured in an accident or by a dangerous product in Florida, and have questions or need help, call Winter Park personal injury attorneys Kim Cullen and Robert Hemphill at 407-254-4901, or visit http://cullen-hemphill.com.