GM Defective Ignition Fund Falls Short of Full Justice

Ken Feinburg announced GM’s compensation fund on June 30. The fund set up by GM to compensate victims of its defective ignition switch falls far short of providing complete justice for the automaker’s hundreds of victims. While the American Public and all involved appreciate the hard work of the plan administrator and acknowledge the compensation fund is on the right track in two areas:

• It will pay pre-bankruptcy matters, and
• Feinberg intends to pay those who previously settled cases with GM before the ignition switch defect came to light.

But there are some substantive and well-founded concerns about the plan. For example, we do not believe the compensation fund is fair for the vast majority of GM’s victims. The Feinberg plan falls far short of the requirements for an adequate compensation plan. Some objections to the plan include:

• The plan fails to address all of the vehicles that have been recalled for ignition switch defects. GM has limited the scope of eligible vehicles. Therefore, the plan – as proposed by Feinberg – would not compensate all of GM’s victims. GM is calling the shots on eligibility and appears to have tied Feinberg’s hands.
• There are legitimate claims against GM involving defective ignition switches where the air bags did deploy. Even the death of Brooke Melton would not be covered by the proposed plan. That is totally unacceptable.
• The proposed plan gives Ken Feinberg unbridled control over claims. He would have the sole discretion to accept or reject claims.
• The plan does not take into consideration the element of punitive damages, which must be factored in. GM’s conduct, based on the incompetence and gross negligence found by the Valukas investigation, deserves punishment. It is totally unfair to allow GM to escape being punished for its wrongful conduct over a period of 11 years.
• In spite of GM’s acknowledgement that its ignition switch is defective, the plan places a greater burden on claimants to prove their cases. There is no presumption that GM’s ignition switch caused one’s injuries. Specifically, the administrator – who is paid by GM – is given the latitude to reject any and all claims. It is unclear from the plan how the evidence will be viewed by the administrator.
• There are some good features of the plan: paying pre-bankruptcy claims, and paying thoseclaims that were settled before the truth came out about GM’s covering up a known defect that had killed and injured hundreds for more than a decade.
• Finally, this is a voluntary plan. Unless GM changes its litigation strategy, which is contrary to the automaker’s public claims to do “right” by persons with pre-bankruptcy claims and by those persons who had settled their claims before GM’s ignition switch defect and cover-up came to light, this fund won’t work. It’s contrary to “doing right” to force those claimants into the Feinberg plan.

Ms. Barra has made several statements that indicate the threat of the bankruptcy court order will be used to force victims’ families into the compensation fund. That shouldn’t be allowed to happen.