August 20, 2015, Trial News
Fiat Chrysler hit with large fine and verdict
Alyssa E. Lambert
Following a year of record-breaking recalls and fines for General Motors and Honda, Fiat Chrysler Automobiles now finds itself in a similar situation. The National Highway Traffic Safety Administration has ordered the automaker to pay $70 million—the highest penalty the agency has ever levied—for failing to issue 23 recalls for 11 million vehicles with defective suspensions and fire-prone fuel tanks.
Following a year of record-breaking recalls and fines for General Motors and Honda, Fiat Chrysler Automobiles now finds itself in a similar situation. The National Highway Traffic Safety Administration (NHTSA) has ordered the automaker to pay $70 million—the highest penalty the agency has ever levied—for failing to issue 23 recalls for 11 million vehicles with defective suspensions and fire-prone fuel tanks. Fiat Chrysler must buy back some of those vehicles and comply with other requirements, or face additional penalties.
The $70 million fine was issued in response to a NHTSA public hearing and Fiat Chrysler’s admission that it violated the Motor Vehicle Safety Act by failing to execute recall remedies and notify vehicle owners, dealers, and NHTSA of recalls. In addition to the fine, Fiat Chrysler must spend at least $20 million to satisfy performance requirements as part of a consent order, including buying back 578,000 vehicles with defective suspensions that can cause drivers to lose control. It is the largest buyback order NHTSA has issued in recent history.
Although about 1.56 million Jeeps have been recalled for rear-mounted gas tanks that can ignite in collisions, Fiat Chrysler is not required to buy back those vehicles; rather, it must offer $1,000 bonuses to car owners who choose to trade in their Jeeps and $100 gift cards to owners who participate in the automaker’s recall.
An independent monitor will oversee Fiat Chrysler’s safety operations for at least three years, and Fiat Chrysler must fund educational programs on vehicle recalls for consumers, suppliers, and other automakers. The independent monitor can impose an additional $15 million in fines if it discovers more safety violations, increasing the total out-of-pocket cost to $105 million.
Fiat is facing an ongoing legal battle too: A Georgia court recently upheld a verdict against the automaker, which was found liable in the wrongful death of four-year-old Remington Walden. In 2012, Walden was riding in a 1999 Jeep Grand Cherokee when it was rear-ended by a pickup truck, causing the Jeep’s fuel tank to rupture and ignite. Walden suffered fatal burns, and his parents sued, arguing the fuel tank’s rear placement posed a deadly hazard. NHTSA has linked more than 50 deaths to this defect.
In April, a jury found Fiat Chrysler 99 percent liable for knowing about the defect for years and acting with reckless disregard for human life in designing and selling the vehicle. It awarded $150 million: $120 million in compensatory damages and $30 million for pain and suffering. The court slashed the verdict to $40 million, but refused to overturn it, calling the evidence against the automaker “overwhelming.” Fiat Chrysler is appealing. (Walden v. Chrysler Grp. LLC, No. 12-CV-472 (Ga. Super. Ct. Decatur Cnty. July 28, 2015).)