2014 was a record year for the automotive industry in terms of the number of recalls and the amount of penalties that the federal government has assessed on automakers. See, e.g., Wilson Andrews & Gregor Aisch, “A Record Year for Auto Recalls,” The New York Times, Dec. 30, 2014. However, 2015 promises to be an even more momentous year for the industry, with the federal government having recently levied the highest penalty yet on an auto manufacturer, some $105 million, along with strict terms that have been unheard of to date. Bill Vlasic, “Fiat Chrysler Gets Record $105 Million Fine for Safety Issues,” The New York Times, Jun. 26, 2015. This article discusses the recent government crackdown on the industry and the legal implications, both in terms of civil litigation and automotive expert witnesses.
The National Highway Traffic Safety Administration (NHTSA) recently penalized an automaker with terms and conditions that were the strictest penalties in the agency’s history. See id. Until the recent set of penalties, the NHTSA was under pressure from Congress for being too lenient with automakers, particularly in cases where Congress felt that auto manufacturers had been negligent in failing to cure certain product defects (over long periods of time) that posed serious safety threats to drivers and passengers. See id.
In response to congressional calls for harsher penalties and safer vehicles, the NHTSA implemented a fine and oversight program with a large automotive manufacturer for its failure to complete safety recalls on over 11 million vehicles. See id. As one commentator explained, “The civil penalty is the largest ever imposed by the National Highway Traffic Safety Administration on an automaker for recall violations, surpassing the $70 million fine imposed in January…for under-reporting hundreds of death and injury claims. It also represents an escalation of the agency’s efforts to investigate and punish automakers that do not adequately recall and fix defective models. ‘This civil penalty puts manufacturers on notice that the department will act when they do not take their obligations to repair safety defects seriously,’ said the secretary of transportation, Anthony Foxx.” Id.
The NHSTA’s recent decision was unique in certain respects, which should be of note to legal practitioners and experts. Not only did it contain the largest fine in industry history, but several other elements of the agreement were unique. See id. In addition to the outright penalties, the government has ordered the manufacturer to buy problematic vehicles back from customers, with a generous credit (which is above the market’s established value) towards purchasing a new vehicle. Id. Moreover, the government will retain oversight over the manufacturer for a lengthy period via an “independent monitor approved by the highway safety agency,” who “will ‘assess, track and report the company’s recall performance’ during that period.” Id.
The NHTSA’s new attitude of strictness will clearly implicate both the industry and those involved in the legal profession who practice civil litigation in this area. Attorneys should be on notice to advise any automotive clients of the NHTSA’s new policies so that defects can be cured in a timely fashion and litigation may be avoided or minimized. In addition, expert witnesses will be of increasing value to the automotive field, as they can play several critical roles in both the prevention and mitigation of costly litigation and penalties. For example, attorneys and auto-makers should consult experts as early as possible and at every stage, from the beginning stages of determining engineering designs, to establishing safety features, to the end of the assembly line. Once these experts have given their full input, auto-makers should follow through by utilizing experts in the automotive industry to assess the safety of their vehicles post-production and implementing ideas for how to quickly and effectively handle product recalls and potential defects.
Expert witnesses will be vital even after such steps are taken, as attorneys will wish to retain and consult the best automotive experts to discuss litigation strategies as well.
According to the NHTSA, its recent decision represents a change in policy and a commitment to a more aggressive role in regulating automotive defects and safety issues. See id. Accordingly, experts will play an indispensable role on all sides, and they should be consulted early and often. Attorneys who represent automotive clients should advise their clients of the new government policies and attempt to respond to a new regulatory regime as affordably and effectively as possible.
By: Kat S. Hatziavramidis, Attorney-at-Law