General Motors Settles Certain Civil Litigation Related to its Ignition Switches - Engine Builder Magazine

General Motors Settles Certain Civil Litigation Related to its Ignition Switches

Last week, General Motors had been ordered to pay a $900 million settlement for criminal charges related to a flawed ignition switch that has been tied to at least 124 deaths. GM has settled certain civil actions against the company related to 2014 product recalls, including the ignition switch recall.

GM CEO Mary Barra
GM CEO Mary Barra

Last week, General Motors had been ordered to pay a $900 million settlement for criminal charges related to a flawed ignition switch that has been tied to at least 124 deaths.

GM has settled certain civil actions against the company related to 2014 product recalls, including the ignition switch recall.

The first settlement resolves a shareholder class action filed in the United States District Court for the Eastern District of Michigan. In addition, the company has reached a memorandum of understanding potentially covering approximately 1,380 individual death and personal injury claimants. They include more than half of the personal injury plaintiffs who have lawsuits pending in the Multi-District Litigation (MDL) in the United States District Court for the Southern District of New York.

“The parties to these agreements have resolved difficult claims without the burden, expense and uncertainty of litigation,” said Craig Glidden, GM executive vice president and general counsel.

As a result of these settlements, the company will record a charge of $575 million in the third quarter.

General Motors CEO Mary Barra addressed employees in a Town Hall Meeting on Thursday at the GM Vehicle Engineering Center. Her prepared remarks are below.

“Good afternoon. Thank you for coming. I have important news to discuss today, so let’s get going.

As many of you know, the Justice Department… through the U.S. Attorney’s office for the Southern District of New York… has been looking into whether GM violated any laws in connection with the ignition switch issues that led us to recall 2.6 million vehicles last year.

Today, the government is announcing an agreement that resolves that investigation, and I felt it was important that we have an all employee meeting to discuss what’s happening – just as we did 15 months ago, when I shared the findings of the Valukas Report.

Before I talk about the settlement agreement, let’s pause for a moment and remember that people were hurt and people died in our cars.  That’s why we’re here.

I have said many times how sorry I am for what happened. On behalf of all of us, I have apologized to the families who lost love ones and to those who were injured. I do so again today.

We let these customer down in this situation.

We didn’t do our jobs.

As part of our apology to the victims, we promised to take responsibility for our actions.

So we accept the penalties being announced today because they are part of being held accountable.

But apologies and accountability don’t amount to much if you don’t change your behavior.  We have.  And that’s what I want to focus on in our time together.

First, let’s talk briefly about the agreement.  The centerpiece is what’s called a Deferred Prosecution Agreement.  It means that the government agrees to defer prosecution of charges against GM related to the ignition switch for three years.

After three years, if we meet all of the terms and conditions set by the government, federal prosecutors will seek to dismiss of the charges and the matter will be completely closed.

Among our obligations:

  • The Agreement requires us to continue cooperating with the federal government and obey all laws;
  • We are to work with the government to establish an independent monitor to review and assess our policies and procedures in specific areas relating to safety issues and recalls;
  • And we must pay a $900 million financial penalty.

This is a tough agreement. It further highlights the mistakes that were made by certain people in GM, and it imposes significant penalties and obligations. Make no mistake: we are committed to honor the obligations.

As you recall, in our meeting about the Valukas Report last year, I made the point that I never wanted anyone at GM to forget what happened.

I said I want to keep this tragedy fresh in our minds because I never want to see it repeated.  I feel the same about this agreement: we should not forget about the consequences of our actions.

I’ve talked often about behaviors, and how they define our culture.

Facing our problems head on is a behavior that drives us – it’s how we will fulfill our mission to become the world’s most valued automotive company.

Today’s news is difficult for all of us at GM, but the way we responded to the recall is a testament to who we really are – and to the strength of our core values – the customer, relationships and excellence.

With respect to excellence, let’s remember we are committed to act with integrity… we are committed to have the courage to do and say what’s difficult… and to take accountability for results.

We have talked about our values often over the last year because they’re so important to our long-term success.  And you can see how they shaped each step we have taken over the last 15 months.

We conducted a swift and robust internal investigation…

We provided timely and meaningful cooperation to the government’s investigators…

We furnished the government with information and a continuous flow of unvarnished facts…

We voluntarily provided various confidential documents and information…

We held people accountable for their actions or inaction…

And we established a full and independent victims’ compensation program that is expected to pay out more than $600 million in awards.

We lived our values… and it made a huge difference.

The specific steps we took to do the right thing at every turn persuaded the Justice Department to defer prosecution. They acknowledged as much in their announcement and it was an important validation.

Knowing GM as I do, I knew you would turn this crisis into a catalyst for meaningful change. And you have. You have made GM a fundamentally better company – and the changes have benefited every one of our customers and the industry as a whole.

Mark Reuss will talk more about this in just a few minutes. Before he does, I’d like to leave you with a few final thoughts.

[Short pause]

The ignition switch problem has brought us intense scrutiny. It has been humbling and deeply disappointing. But we have faced our issues with integrity, dignity and clear determination to do the right thing both in the short and long term.

With the resolution of this government investigation, we close one important chapter of this story. To everyone who worked so hard to fulfill our commitment of cooperation, I express my gratitude and appreciation.

I also commend the U.S. Attorney’s Office for the professional manner in which it conducted the investigation.

I have said many times I wish I could turn back the clock. If I could, I would do so in a heartbeat. But I can’t. What we can do is make sure we respond the right way. We have done that… and we will continue to do so.

I concluded my remarks on the Valukas Report by saying I believe in GM and I believe in you. This past year has only strengthened my confidence in you and the company.

Thank you.”

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