10 of the Largest Car Company Settlements in History
Class action lawsuits unite large groups of people with similar complaints and experiences to sue large corporations. In this case we’ll be talking about car companies. A continuing theme seems to be prioritizing profits at the cost of buyer safety. The industry actually has systems in place to analyze the probable costs of these decisions. Ralph Nader’s 1965 book, Unsafe at Any Speed, helped establish federal oversight of motor vehicles and defined car company settlements.
Historically, auto safety regulators are committed to holding companies responsible either by forcing vehicle recalls, demanding large cash settlements, or a combination of the two actions. Below you’ll find a list of 10 of the most significant car settlements in U.S. history.
Chevrolet Corvair
Chevrolet Corvair was the catalyst for Nader’s book and thus became one of the first major exposures of a car company’s neglect. General Motors (GM) was accused of not making the swing-axle rear suspension more stable and designing a dangerous single-piece steering column. After more cost-cutting and unscrupulous behavior by GM was exposed, Nader sued the company and used part of his settlement to establish the Center for Auto Safety.
Volkswagen EPA settlement
This year Volkswagen Group has agreed to pay an astounding amount, $14.7 billion to consumers as compensation for the company’s use of a device that fabricated emission readings. This is a result of a major class action suit overseen by the federal district court in San Francisco. The Environmental Protection Agency’s investigation determined that this maneuver masked the fact that the cars were producing particles and smog-causing oxides that were up to 40 times higher than the United States requires. Over 475,000 Volkswagen and Audi diesel vehicles were involved.
Volkswagen’s agreement with federal prosecutors and regulators consists of three parts. Vehicle buy backs and owner compensation plans will cost as much as $10 billion. A $2.7 billion environmental remediation provision will help offset the higher emissions in all 50 states and some Indian tribes. Older, flawed vehicles and equipment will be replaced with newer, safer technology. Another $2 billion will be spent on a campaign to restore trust in the brand. This agreement addresses 2.0-liter diesel engine problems, a suit to compensate 50,000 owners of cars with 3.0-liter is still being negotiated.
Additionally, Volkswagen must contend with individual lawsuits, dealers whose businesses were hurt by the drop in sales, and possible criminal charges against current and former company executives.
Toyota acceleration in 2014
Toyota Motor Corporation’s $1.2 billion settlement in 2014 was due to unintended sudden acceleration in over 10 million vehicles. The settlement was reached after a four year criminal investigation. The federal court found that the company was negligent in informing consumers about the safety issues, fixing the problems, and was not forthcoming about the problem and its scope. Toyota’s violations also include misleading regulators and Congress.
The acceleration problem led to multiple accidents and fatalities. The catalyst was the deaths of a California highway patrol officer and his family reportedly as a result of the sudden acceleration of his Lexus. In 2009 Toyota issued recalls for other issues with their vehicles such as faulty brakes and gas pedals. Between 2010 and 2012 the company paid more than $66 billion in fines for delays in reporting the unintended-acceleration problems.
General Motors and Switchgate
General Motors’ (GM) Switchgate controversy alleged that the manufacturer knew for nearly 10 years that 30 million of its cars worldwide were possibly operating with faulty ignitions. Failure to disclose that information lead to over 100 fatalities, due to engine shut downs, disabled power steering features and brakes, and air bags that did not function properly. The United States government agreed to accept a $900 million settlement and appointed an independent monitor at the company.
Attorney Lance Cooper, who is also president of a vehicle safety research firm, requested documents from the company in 2011. The plaintiff lawyer was representing the family of a woman who died in a crash. A review of thousands of documents led to disclosure that GM was aware of the issue since 2001.
Honda defective rear suspension
American Honda Motor Company was accused of knowingly selling Civic and Civic Hybrid (2006 to 2008) models with defective rear suspensions and control arms. A nationwide class action was shut down with a settlement of $460 million in 2013. The company agreed to replace parts, prematurely worn tires, and reimburse owners who have already paid out of pocket. The suit alleges that Honda knew about the faulty suspension during the pre-release testing phase and did not notify consumers until 2008.
Ford Explorer rollover accident
Ford Motors’ pre-2002 model Explorer rollover accident cases have been settled by the company to the tune of over $1 billion over the past two decades. In 2002 Ford issued a recall of 6.5 million Firestone tires, stating that was the cause of one in every 2,700 Explorers built between 1990 and 2001 was involved in a fatal accident. When the fatalities continued, Ford began designing the SUV with independent rear suspension, electronic stability control and other safety modifications.
Ford Pinto deadly fires
Ford’s Pinto was also tried and convicted in the 1970’s. Design and manufacturing cost-cutting lead to rear in collisions caused deadly fires in the compact cars. Ford was acquitted of negligent homicide charges in the deaths of two teenagers.
Hyundai and Kia inflated mileage ratings
Hyundai and Kia agreed to pay 900,000 vehicle owners for inflated mileage ratings in 2013. The Environmental Protection Agency (EPA) investigated complaints by owners of 2011-2013 models and confirmed there was a discrepancy. The total settlement was $395 million and offered pay out options ranging from lump sum to credit toward a new Hyundia or Kia. Kia Motors also settled a defective brakes lawsuit in 2008 for $5.6 million involving its 1990s Kia Sephia sedan.
Mitsubishi Auto Parts litigation
Mitsubishi’s in re Automotive Parts Litigation (Auto Parts) was resolved for over $288 million. The company supplies parts to Chrysler, General Motors, Ford, Subaru, Honda, and Nissan. The suit addressed price-fixing, bid-rigging, and market allocation as to certain parts. Consumers and businesses that purchased or leased new vehicles were End-Payor plaintiffs in this action.
Fiat Chrysler defective steering parts
Fiat Chrysler paid $105 million for failing to disclose defective steering parts in its top-selling Ram pick-up trucks. Previous repairs to the problem, which causes drivers to lose control, have been unsuccessful. To settle the resulting legal problems, in 2015 the company will offer to buy back over 500,000 Ram trucks and other vehicles. Additionally, more than one million owners of older Jeep models with vulnerable rear-mounted gas tanks will have the option to trade them in or have the repairs paid for by Chrysler.
