California Prosecutor Sues GM Over Sprawling Recall

By
Courtesy of the Associated Press

c.2014 New York Times News Service

A California prosecutor Monday charged General Motors with unfair business practices and deceptive marketing for concealing ignition-related and other defects to boost its bottom line.

The lawsuit, filed by District Attorney Tony Rackauckas of Orange County, accuses GM of “half-truths and omissions.” It says that had the company’s ad campaigns “disclosed that millions of GM-branded vehicles contained serious safety defects and that GM did not value safety, consumers would not have purchased new GM vehicles” in recent years.

Rackauckas, as a county prosecutor, may be an unusual figure to bring a case against a giant corporation. But he brought similar civil charges against Toyota after its sudden-acceleration scandal. That case settled for $16 million last year.

In an interview late Monday, he said that his office began investigating GM shortly after the ignition-switch issue came to light and that he remained skeptical of the company’s recently released internal investigation, which focused primarily on the actions of midlevel engineers. Rackauckas said he hoped to uncover more details of who knew what and when.

“I suspect the people in charge knew about this and continued to cover it up so they wouldn’t have to pay for the fix,” he said.

“Not surprisingly, nobody higher up the chain was implicated” by GM’s internal report, he added, and said, “So we’re going to start from there and move upwards.”

Under California law, county prosecutors can file such cases on behalf of all affected consumers in the state. With civil fines of up to $5,000 for each affected car sold in California, it could end up costing GM millions of dollars.

Rackauckas claims he is more interested in holding GM executives accountable and forcing the company to take steps to ensure it builds safer cars than in a possible payoff.

“I’m not bringing a case to settle and grab some money,” he said. “I’d like to see a trial. I’d like to see a public airing of these issues, so people can judge for themselves what happened here.”

A GM spokesman declined to comment Monday.

The California lawsuit specifically refers to GM’s actions “on or after July 10, 2009” – the date the company emerged from bankruptcy, after which it was split in two: “Old GM” took on the automaker’s liabilities, and “New GM,” the current company, was supposedly free from them. By focusing on actions taken after the bankruptcy, the lawsuit aims to avoid entangling itself with issues of bankruptcy protection.

Rackauckas said that GM had “taken some admirable steps” but that he intended to use the California courts to enforce his own brand of oversight.

“It appears GM is going a long way in that regard, but through the discovery process we can ensure that things are properly done,” he said.