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...Read More »
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