Case # 30-2014-00731038-CU-BT-CXC
Date: October 27, 2017
OCDA OBTAINS $13.9 MILLION SETTLEMENT FROM LAWSUIT ALLEGING GENERAL MOTORS DECEIVED BUYERS BY CONCEALING DEFECTS AND SELLING UNSAFE AND UNRELIABLE VEHICLES
SANTA ANA, Calif. – Orange County District Attorney (OCDA) Tony Rackauckas obtained a $13.9 million settlement in a civil lawsuit against General Motors LLC (GM) alleging GM endangered motorists and the public by intentionally concealing serious safety defects in GM vehicles to avoid the cost of a recall or replacing defective parts. The settlement was filed in Orange County Superior Court on Oct. 24, 2017, and was signed today by The Honorable Kim Dunning. The 2014 complaint stated that GM endangered the public through deception regarding vehicle safety and reliability and gained advantage over its competitors by engaging in unfair business practices. At least 124 people died, and 275 were injured, as a result of these failures. On behalf of the State of California, the California Attorney General settled a separate multistate lawsuit and received $7 million earlier in October 2017.
“In Orange County and California, our cars we drive must be safe; even if we are not driving a GM car, we rely on the safety of other cars on the road. Second to our homes, our cars must carry precious cargo and hold value for resale,” stated District Attorney Tony Rackauckas. “We must protect our consumers from businesses that put profits over people by keeping cars on roads safe and avoiding preventable accidents. We must also encourage all businesses to be fair and live up to safety standards, and must not allow those engaging in unfair practices to punish those businesses that don’t cut corners by compromising safety. All businesses should be held to competing fairly.”
The OCDA asserted in its lawsuit that:
- GM failed to disclose and/or concealed known defects in millions of GM vehicles. The safety defects include power steering, airbag, and brake-related problems. By knowingly hiding the existence of defects and marketing their vehicles as safe and reliable, GM enticed consumers under false pretenses to purchase GM vehicles.
- GM continued to sell and lease its vehicles while knowingly concealing and suppressing information about the defects from California consumers. GM valued cost-cutting over safety, and intentionally falsely represented to the public that GM-manufactured vehicles were safe and reliable, despite its knowledge of the defects, to avoid the cost and negative attention of a recall. As a result of the defective vehicles and failure by GM to disclose defects to consumers prior to lease or purchase, victims have been injured and killed, owners and lessees of GM vehicles have suffered property damage, economic damage, and many are unable to sell or trade their cars.
The OCDA asserted in its lawsuit that:
- GM engaged in fraudulent, unfair and unlawful business practices, which put an emphasis on profits over safety. To avoid the attention of regulators and cost of a recall, GM trained its personnel to never use the words “defect,” “stall,” or other words suggesting that any GM-branded vehicles are defective. They routinely chose the cheapest part supplier without regard for safety and discouraging employees from acting to address safety issues.
- Under the Transportation Recall Enhancement, Accountability and Documentation Act and other consumer protection laws, when a manufacturer learns that a vehicle contains a safety defect, the manufacturer must promptly disclose the defect. Despite failure to adhere to the law for many years, GM was required to recall 17 million vehicles in 33 recalls covering various defects during the five months of 2014.
The OCDA filed a Complaint for Violations of the Unfair Competition Law (California Business and Professions Code § 17200) and the False Advertising Law (California Business and Professions Code § 17500) in the Superior Court of the State of California in Orange County on June 27, 2014. Civil actions under the Unfair Competition Law and the False Advertising Law may be brought in the name of the People of the State of California by the District Attorney. These laws “are the basic tools of the Attorney General and the district attorneys in combating consumer fraud.”… “District attorneys have an independent role in the enforcement of this state’s false advertising laws.” Lavie v. Procter & Gamble Co. (2003) 105 Cal. App. 4th 496, 503.
The OCDA sought the civil penalties which will be used for the enforcement of California consumer protection laws and economic crimes, and the information technology to support these operations. A portion of the settlement is also allocated to the Orange County Gang Reduction Intervention Partnership.