The Truth About Cars » lawsuits The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Wed, 16 Apr 2014 19:53:57 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » lawsuits Lemon Law King Sues Tesla In Wisconsin Circuit Court Tue, 08 Apr 2014 13:15:57 +0000 tesla-model-s-09

Wisconsin lawyer and self-proclaimed “Lemon Law King” Vince Megna has filed a lawsuit in Milwaukee County Circuit Court against Tesla under the state’s lemon law.

Green Bay Press Gazette reports the lawsuit, filed on behalf of Robert Montgomery of Franklin, Wisc., takes the automaker to task for failing to refund Montgomery’s $99,515 after his 2013 Model S Performance was in the shop for various issues — including failure to start and inoperable door handles — for over 30 days; Wisconsin’s law requires manufacturers to either replace a defective product under warranty after four attempts in one year to fix a defect, or to refund the affected customer. The refund request was made in November 2013.

Megna told the newspaper that under the lemon law then-in affect when Montgomery purchased his Tesla, his client could receive double damages should the court side in their favor. The lawyer also posted a video on YouTube outlining the case and subsequent filing, with a cameo from a cardboard cutout of famed Tesla owner George Clooney.

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GM Recalls 1.3 Million Additional Vehicles As Barra Heads To D.C. Tue, 01 Apr 2014 10:07:19 +0000 GM

The Detroit News reports General Motors CEO Mary Barra boarded a commercial flight from Detroit to Washington, D.C. Sunday in order to prepare for two separate hearings before Congress regarding her company’s handling of the ongoing 2014 recall crisis. While in the nation’s capital, she also met with 25 family members whose relatives were killed in crashes linked to the ignition switch behind the recall.

CNN Money adds GM is about to reveal the names of the 13 people who lost their lives due to catastrophic failure linked to the defective part. The information will be made available to the public, with sensitive information — corporate secrets and personal data — redacted prior to publication. The information is part of a request by the National Highway Traffic Safety Administration due April 3.

As for what Barra and NHTSA acting administrator David Friedman plan to say before the House and Senate hearings, Automotive News reports Friedman is standing firm on his agency’s effort to “properly carry out its safety mission based on the data available to it and the process it followed” in prepared remarks to the House Energy and Commerce Committee, while Barra reiterates her position on the events leading up to the recall and subsequent actions moving forward:

When we have answers, we will be fully transparent with you, with our regulators and with our customers.

Automotive News also put forth four key issues Barra and Friedman will have to explain before Congress and the general public:

  • How GM’s multiple internal investigations failed to lead to a recall sooner
  • Why NHTSA failed to launch an investigation, despite signs that a faulty switch might be causing airbags not to deploy
  • Whether and how GM’s vehicle-safety protocols have changed
  • Whether GM’s internal processes were violated or laws were broken

Tying into the fourth issue, House Democrats have found and named the engineer behind the 2006 ignition redesign as Ray DeGiorgio, who denied in a 2013 court deposition having knowledge that the part was changed. They also penned a letter to Barra stating the redesigned switch still didn’t meet spec, based on information provided by supplier Delphi confirming the switches meant for 2008 – 2011 models tested poorly alongside the switch approved in 2002 now linked to 13 fatalities and 33 crashes.

Automotive News also posits the reason behind the NHTSA not pushing forward on a recall sooner was due to a heavy focus on child deaths linked to airbags. When GM introduced a smart airbag system in their vehicles in the 2000s, the agency focused on whether or not the airbags were doing their job to protect children placed in the front seat, with the goal of assessing “real world” performance while spotting “unusual circumstances” — such as the flawed ignition switch behind the recall — that would allow for “early identification of potential problems,” according to a 2004 statement by former agency boss Chip Chidester.

In new recall news, GM recalled 1.3 million vehicles made between 2004 and 2010 whose power steering could suddenly lose electric power, with the automaker aware of “some crashes and injuries” tied to the steering. Vehicles affected include: Chevrolet Malibu, Malibu Maxx, non-turbo HHR and Cobalt; Saturn Aura and Ion; and Pontiac G6.

As for reporting issues that could lead to a recall, GM leads the way in filing early-warning reports to the NHTSA with 6,493 reports between 2005 and 2007; Chrysler and Toyota filed around 1,300 in the same period, while Honda filed 290. However, the cause behind the numbers is in how each automaker follows the 2000 TREAD Act, with GM setting an extremely low threshold for reporting in comparison to other automakers.

Finally, a number of lawsuits are being aimed directly at dismantling the liability protection GM’s 2009 bankruptcy provided to “New GM.” The tactics range from securities fraud and loss of resale value, to wrongful death.

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GM Hits Social Media, As Part Number Debacle Adds Confusion Thu, 27 Mar 2014 13:32:08 +0000 2007 Chevrolet HHR 2LT Special Edition

The latest development in the GM ignition recall fiasc

Automotive News reports Barra recorded and released five short videos for GM’s YouTube channel in an ongoing attempt to minimize the damage to her company’s reputation in the court of public opinion. The overall message of the videos is that the public is the automaker’s compass, and GM will develop “a world class process” of vehicle safety evaluation so that nothing resembling the current crisis occurs in the future.

However, Bloomberg says this trial by fire is only the beginning for Barra’s tenure as GM’s CEO. Slow sales in the United States due to harsh winter weather at the start of the year, mitigating losses in Europe, restructuring of global operations in Australia and South Korea, and currency challenges in Russia and South America all have made their impact on GM’s stock value, falling 14 percent since Barra took the reins in mid-January 2014. She also must contend with Volkswagen — who knocked GM down to third in the Big Global Three trio last year — by maintaining or increasing pace in China against the Germans by as much as 10 percent.

Over in Washington, D.C., safety advocates have found the NHTSA lacks the resources needed to properly investigate provided data that could lead to a prompt recall, just as Congress has done all they could to strengthen the agency via the 2000 TREAD Act established in the wake of the 2000 Firestone-Ford recall case.

Currently, the NHTSA’s Office of Defect Investigations saw their numbers fall from 62 to 51 investigators over the years, and operates on an annual budget of $10 million since 2005. Meanwhile, the number of registered vehicles increased to 248 million in the same time, a number proving difficult to monitor — resulting in the recall crises experienced by Toyota and GM — as Advocates for Highway and Auto Safety president Jackie Gillan explains:

The idea of $10 million for an office that’s in charge of the safety of all these vehicles, undertaking investigations and doing the recalls, it’s just ridiculous. You look at the number of people working on this, you look at their inadequate funding, and you think to yourself, no wonder this is happening over and over again.

For their part, NHTSA spokesman Nathan Taylor defended his agency’s record, citing 929 recalls involving over 55 million vehicles in the last seven years as a result of their investigations. In addition, he says automakers paid a total of over $85 million in fines over delays, and notes fatalities related to defects are at an historic low. However, Taylor believes the process could be improved:

[The agency] pursues investigations and recalls wherever our data justifies doing so. NHTSA is constantly looking for ways to improve our process so we can better identify serious safety defects.

On the lawsuit front, Charles and Grace Silvas of Texas have asked U.S. District Judge Nelva Gonzales Ramos to force GM to issue a “park it now” warning to all affected owners not to drive their vehicles until the ignition switch is fixed. The possible class action suit — which could net up to $10 billion in damages — was filed not due to any fatalities experienced by the Silvas, but because the defect’s concealment led to lost resale value.

USA Today reports that Barclays analyst Brian Johnson is predicting that GM will create a settlement fund between $1 billion and $1.5 billion for affected customers, on top of banking $1 billion to pay the potentially sizable fine issued by the U.S. federal government when all is said and done. Johnson says the funds could be funneled through “Old GM,” which would maintain the wall protecting “New GM” from pre-bankruptcy liabilities.

Reuters and USA Today both warn of potential headaches dealerships and repair shops will likely experience as the recall crisis continues to unfold.

One major headache for dealers and independent parts stores will be sifting through the spare parts room to find which ignition is the improved part, and which one is the defective unit. The problem comes from both sharing the same part numbers — GM 10392423 and Delphi D14611 — a move that is considered to be counter to standard operating procedure when fixing a defective part.

For repair shops, this means the only way to tell which part is which — outside of possessing forensic engineering tools — is by disassembling every single ignition related to the recall.

The second issue: Finding enough loaner vehicles for every affected customer. Thus far, GM received 9,000 requests for such vehicles, but despite calling upon rental companies such as Enterprise and Hertz for backup, dealers are having a hard time placing customers in loaners, including Kolar Chevrolet general manager Dwayne Haapanen:

There’s been a bit of a struggle finding the cars. I burned up all my loaner fleet, and we’ve been renting from Enterprise — and now they are out of cars.

Consumers are also having a hard time obtaining a loaner, though quantity isn’t the only issue. GM’s hotline for recall questions and loaner requests has seen long waits for callers, as well as a lack of thorough training for those manning the phones, sometimes leading to request denials. The automaker is adding staffing and improving training to alleviate the problems.

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GM To Go Before Senate Panel, As Allegations Of Hardball Tactics Surface Wed, 26 Mar 2014 13:16:50 +0000 Chevrolet Cobalt Sedan

General Motors CEO Mary Barra and National Highway Traffic Safety Administration acting director David Friedman will testify before the United States Senate on April 2 about their respective parties’ handling of the ongoing GM ignition recall crisis just as two senators introduced a bill expanding public access to safety filings made by all automakers to the federal government.

Automotive News reports Barra and Friedman will take questions from the Senate Commerce Committee’s Consumer Protection panel. Their joint appearance follows their first before the U.S. House Energy and Commerce Committee the day prior. Both hearings are expected to seek answers to questions surrounding how both GM and the NHTSA responded in the move to recall the defective ignition switch found in a handful of 2003 – 2007 GM models.

Automotive News also says Senators Ed Markley of Massachusetts and Richard Blumenthal of Connecticut introduced a bill which would require automakers to submit the first document of a fatality involving one of their products to NHTSA, who would then make said document and subsequent documents available to the public through an easy-to-use database. The bill reinforces the 2000 TREAD Act’s requirement of early-warning reports to be submitted to the agency, and to make that information accessible to the public.

Meanwhile, The New York Times reviewed 19 of 23 reported fatalities linked to the defective ignition switch, and found that GM either dismissed their link to the fatalities in question, or settled out of court under the veil of confidentiality. In one case, threatened to sue for reimbursement of legal fees unless lawsuits were dropped

One of the suits in question, settled between Georgia lawyer Lance Cooper and GM in 2013 — is finding new life as part of a 12-way lawsuit filed in San Francisco against the automaker over allegations that not every car affected by the defective part has been recalled, according to Automotive News. At the time of the suit, Cooper obtained hundreds of documents related to the part, along with depositions from a handful of engineers responsible, some of which are now making a public appearance in the new suit for the first time.

Separately, USA Today reports Alabama resident Steve Smith and attorney Jere Beasley have filed a lawsuit on behalf of Smith’s daughter, Aubrey Wallace Williams. Williams lost her life late last year when her 2006 Cobalt’s ignition switched off, causing loss of control that led to her crossing in front of an 18-wheel log truck. The suit comes after the recall news prompted a new investigation into Williams’ accident.

Finally, Detroit Free Press reports Niharika Taskar Ramdev will become GM’s new treasurer, who will oversee the automaker’s capital market activities and investor relations. Ramdev will report to newly appointed CFO Chuck Stevens, who says her main focus will be on “maintaining [GM's] fortress balance sheet, achieving investment grade credit ratings and developing a sustainable capital allocation strategy.”

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Congressional Hearings Loom As Switch Swap Raises Questions At GM Tue, 25 Mar 2014 13:30:40 +0000 800px-Pontiac_G5_coupe

General Motors is facing two separate lawsuits related to failures of the ignition switch recalled last month, while also preparing to bring their case before the U.S. House Energy and Commerce Committee next month, led by a representative who honed his skills upon Firestone.

Meanwhile, reports of a quiet swap between the defective ignition switch and an improved switch in 2006 – a swap that may have violated internal protocols -may have serious repercussions for GM and now-bankrupt supplier Delphi.

Finally, a test drive gone wrong results in a GMC Yukon left to burn, whose prompt investigation is only the beginning of a long learning process in how GM handles safety in the future.

Reuters and Just-Auto report two lawsuits were filed against GM over the weekend in Minnesota and California. The former, filed in state court on behalf of three teenage girls severely injured or killed in a 2006 crash involving a 2005 Chevrolet Cobalt, is considered to be the first wrongful death lawsuit since the recall was issued.  Robert Hilliard of Hilliard Munoz Gonzales is seeking $50,000 for each of the families affected, and names “New GM” as defendant.

The second, filed in federal court as a national class action by Michaels Law Group, cites fraudulent behavior on GM’s part over the ignition switch and subsequent recall. Founding firm member Johnathan Michaels called the automaker’s actions “an unfortunate chapter” in United States history, and proclaimed GM “allowed products to be put in the stream of commerce, knowing that people would die.”

Reuters also reports U.S. Senator Richard Blumenthal of Connecticut, who is a member of the Senate Commerce Committee, penned a letter to Attorney General Eric Holder asking the Department of Justice to demand GM establish a fund “to fully compensate consumers who suffered injury, death or damage” as a result of the ignition switch. He also suggested said fund could be applied while the DOJ conducts their investigation into the recall, one of many being conducted by various federal parties, including the Commerce Committee and the House Energy and Commerce Committee.

Bloomberg says Representative Fred Upton of Michigan, one of 32 House Republicans to back the 2008 bailouts and former co-chair of the Congressional Automotive Congress, will be take part in hearings on April 1 when the committee meets with GM CEO Mary Barra and other executives in a hearing to discuss what happened with the recall. Fourteen years earlier, Upton took on Ford and Firestone over the Explorer’s defective tires, resulting in the Transportation Recall Enhancement, Accountability and Documentation Act of 2000 now affecting both General Motors and the National Highway Traffic Safety Administration.

Regarding the NHTSA, the Detroit Free Press reports Senator Dean Heller of Nevada sent a letter to agency acting head David Friedman asking for answers by the end of the month as to why the NHTSA’s Office of Defects Investigation “declined to forward in both 2007 and 2010 on any vehicle recall recommendation” despite receiving direct access to necessary information from GM. Heller also wants to know what if any threshold complaints need to cross before further investigation is taken.

Back home, GM’s knowledge of the defective component — and its subsequent silence — may also claim Delphi under the wave of red flags the automaker ignored at its peril. Automotive News says the litigation protection established for the supplier during its Chapter 11 bankruptcy process could fall if Delphi was found to have committed fraud by not disclosing their part in the ignition defect during proceedings.

Within the Renaissance Center, USA Today says GM learned in 2007 of a 2005 fatality when a Maryland teen, Amber Marie Rose, lost control of her Cobalt and crashed into a tree while intoxicated. The report noted the airbags had not gone off as intended, with the cause linked to the switch set to “accessory” instead of “on.”

Meanwhile, Automotive News reports the in-house-designed switch — the result of the automaker wanting to do more on its own amid rising warranty costs in the mid-1990s — didn’t meet the specs required of it until its redesign in 2006, nine years after engineers were asked to design the part. However, the improved part retained its old part number when former GM engineers claim it shouldn’t have, while GM remained quiet on the matter until 2013 when a wrongful death lawsuit from Georgia started the ball rolling on the issue.

In the wake of the ongoing maelstrom, GM appointed long-serving engineer Jeff Boyer to the newly created position of vice president of global safety. Boyer will report to Barra on all safety concerns and recall decisions. Automotive News says this is just the first in a series of moves the automaker is taking to show how it has changed since emerging from bankruptcy and government ownership over the past few years, but has a long road ahead in making substantial progress regarding its long-standing bureaucratic culture.

Finally, The Los Angeles Times reports a 2015 GMC Yukon taken for a test drive in Anaheim this weekend suffered from what Anaheim Police Department Lieutenant Tim Schmidt says was “some oil leak or some fluid leaking” during the drive, leading to a catastrophic fire once the driver pulled over upon losing control of the vehicle. Autoblog adds GM will be investigating the matter “very soon,” as per the words of spokesman Alan Adler. No one was hurt in the incident.

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GM Rallies Rentals, Braces For Further Investigation Mon, 24 Mar 2014 12:35:40 +0000 Saturn-Ion-RedLine

General Motors has issued a new recall for 355 vehicles, while also facing a possible lawsuit by an investor over “immorality”. GM may also face a new probe involving the automaker’s bankruptcy and its relation to the original recall that thrust GM into the headlines, just as the agency responsible for investigating the problem at GM faces an audit from the Department of Transportation.

The New York Times reports the Justice Department has added an additional probe into their ongoing investigation of the 2014 recall of 1.76 million vehicles over a defective ignition switch linked to 31 crashes and 12 deaths.

The probe questions whether GM knew everything about the problem going into the 2009 bankruptcy — the automaker said they were alerted as early as 2001 — and failed to disclose the defect in full to both the federal government and the public during bankruptcy proceedings. This separate probe is being handled by the same group of FBI agents and federal prosecutors in New York who also brought forth the fraud case against Toyota that ended in a $1.2 billion settlement last week.

Meanwhile, Automotive News reports Transportation Secretary Anthony Foxx has asked the Department of Transportation’s inspector general Calvin Scovel to conduct an audit of the National Highway Traffic Safety Administration as to whether or not the agency properly looked into the issues leading up to the February 2014 recall, in light of the aformentioned crashes and deaths. The audit, according to Foxx, is to ensure “that DOT and NHTSA have a full understanding of the facts regarding the GM recall and can take corrective actions to enhance NHTSA’s safety function to the extent necessary and appropriate.”

On the investor front, Bloomberg reports a GM investor has filed a lawsuit against both the automaker and current CEO Mary Barra over every recall issued since late February this year.

In filing his complaint with the U.S. District Court in Detroit, George Pio called the automaker’s lack of immediate action “illegal and immoral,” and that news of the recalls, investigations et al surrounding GM as of late “triggered a sharp decline in the company’s share price, wiping out billions in shareholder value.”

The suit is filed on behalf of any individual who purchased stock between November 17, 2010 and March 10, 2014; no money damages have been specified.

Adding fuel to the fire are two stories from Edmunds, with the first related to the original recall regarding free loaner vehicles to those affected while their own vehicles are serviced beginning next month.

GM has called upon Enterprise, Hertz, Avis and other rental companies to help the automaker assemble a fleet for affected owners to use until the ignition switch is replaced. Though the original policy states GM owners are placed into GM vehicles, the scope of the original recall means if no related loaners are available, owners will be placed into vehicles from Ford, Honda, Chrysler et al. Underinsured owners will see a temporary boost in coverage from the automaker, as well. One source in the rental world tells us that this has been a massive undertaking for GM – with so many owners of the affected cars being under 25 (the minimum rental age at many companies) arranging coverage for these owners has been an extraordinary task.

As for the second report, Edmunds says 355 vehicles will be recalled within the week due to a transmission shift cable adjuster defect that could lead to a handful of 2014 models rolling away from where they were parked. Affected models include the Buick Regal, LaCrosse, Verano and Enclave; Chevrolet Cruze, Malibu and Traverse; and the GMC Acadia. All affected have the issue in their automatic transmissions.

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GM Recalls 1.55 Million More, Investigations, Fence-Mending Ongoing Tue, 18 Mar 2014 14:00:49 +0000 Saturn Outlook

As the recall of 1.76 million General Motors vehicles over a faulty ignition switch — a recall possibly prompted by a Georgia lawyer’s own dealings — continues to hammer away at the automaker’s “new” image, and with dealers doing all they can to mend fences between GM and its customers, three separate recalls have been issued to a total of 1.55 million vehicles.

Automotive News and Bloomberg report CEO Mary Barra asked GM executives to bring forward and give more attention to any products under review at a faster clip. The result? A recall affecting the following in the United States market:

  • 303,000 2009 – 2014 Chevrolet Express/GMC Savana full-size vans, whose instrument panels will be “reworked” to meet current crash standards meant to protect unbelted passengers
  • 63,900 2013 – 2014 Cadillac XTS sedans, whose brake boosters may suffer from corrosion issues, leading to overheating; two fires thus far have been linked to the defect
  • 1.18 million 2008 – 2013 Buick Enclave/GMC Acadia/Chevrolet Traverse/Saturn Outlook crossovers, whose wiring harnesses for the seat-mounted side airbags may be pinched, leading to non-deployment

Meanwhile, dealers are preparing for next month, when customers whose vehicles fall under the ignition switch recall will begin arriving to have the issue fixed. Though the repair will take around 30 minutes to complete, customers will be offered loaner cars if needed, as well as towing services and, should the customer wish to replace the car rather than the switch, a $500 discount toward a new car.

In turn, dealers will be at the front line of mending the fence between “New GM” and customers affected by the recall. Sam Slaughter, owner of Detroit-based Sellers Buick-GMC, says dealers will need to place the ignition repairs at the top of their service schedules, as well as lend a sympathetic ear to customers feeling burned by the automaker.

Meanwhile, Virginia-based Chevrolet-Cadillac dealer Jim Stutzman worries the recall, as transparent as it has been as of late, is throwing a spanner into the works:

It seems like every time we start to move forward, another shoe drops that puts us right back into that world view that says “These guys are total screw-ups. They just can’t operate like Honda or Toyota.” It’s a shame.

That said, the recall may have been delayed longer, and affected fewer customers, had not Georgia lawyer Lance Cooper — who had filed a wrongful-death lawsuit against GM on behalf of the family of Brooke Melton, whose 2005 Chevrolet Cobalt lost power due the faulty switch, ultimately leading to her death — pushed U.S. government regulators into looking closer into the issue via a letter issued shortly after the first recall of 800,000 vehicles.

In the lawsuit, Cooper procured more than 32,000 pages of similar lawsuits and other documents, as well as gathered depositions and assessments from several engineers and dealers regarding the switch. The lawsuit was settled last September two months before the suit’s trial date for an undisclosed amount, though a related suit — focused on Thornton Chevrolet and their failure to correct the problem that led to Melton’s death — could still go to trial.

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Ignition Flaw Fallout Grows For GM Mon, 03 Mar 2014 15:00:24 +0000 Chevrolet Cobalt SS Supercharged Sedan

The years-long silence over a faulty ignition switch responsible for 13 deaths and a recall of 1.6 million vehicles made between 2003 and 2007 is about to take a greater toll on General Motors executives as federal investigations, lawsuits and penalties loom over the horizon.

Automotive News reports General Motors’ response to the flaw may be too little, too late for the automaker. Though GM North America president Alan Batey proclaimed last week that GM would take an “unflinching look… and apply lessons learned” from their internal investigation over the lack of action and resulting silence regarding the ignition switch, former National Highway Traffic Safety Administration administrator and former consumer group Public Citizen president Joan Claybrook said the apology was all for naught:

That was a desperate move on their part to avoid heavy penalties. Saying ‘we’re sorry’ is not enough.

NHTSA announced they would be investigating the issue and its handling, and could issue as much as $35 million in fines. Meanwhile, Atlanta attorney Lance Cooper believes GM may be trying to get out in front of a lawsuit related to the ignition flaw by issuing the recall last month. Cooper recently settled a related lawsuit on behalf of the estate of Brooke Melton — whose 2010 death in a 2005 Chevrolet Cobalt was the result of the switch cutting off engine power — for undisclosed terms:

I know a lot of good people at GM, and I know that GM is trying to turn itself around. But this is a black eye for the company, because of what they knew for so long and didn’t do anything about.

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Henrik Fisker & Fisker Directors Sued by Investor Tue, 31 Dec 2013 13:02:01 +0000 henrik-fisker-at-house-oversight-committee-hearing

Company founder Henrik Fisker and Fisker Automotive Inc.’s former directors have been sued in a Delaware court by an investor. Atlas Capital Management LP blames the defendants for over $2 million in losses it allegedly suffered when the now bankrupt hybrid car startup failed. According to the lawsuit filed Dec. 27 in U.S. District Court in Wilmington, Fisker allegedly misled investors by failing to disclose problems the company knew it was having with a government loan and by keeping a 2011 safety recall secret from potential investors.

In the filing, Atlas said that if it had known the truth about the situation, it “would not have purchased or otherwise acquired its Fisker securities, or, if it had purchased such securities, it would not have done so at the artificially inflated prices which it paid.”

Fisker Automotive filed for bankruptcy on Nov. 22, listing assets of as much as $500 million and debt of as much as $1 billion in papers filed in U.S. Bankruptcy Court in Delaware. Against those figures, $2 million seems like it’s not a big deal, but Atlas Capital is not the only investment firm that put money into Fisker. Fisker is in the process of selling its remaining assets to Hybrid Tech Holdings LLC.

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Overstating MPGs May Cost Hyundai & Kia $395 Million in Proposed Settlement Tue, 24 Dec 2013 15:48:42 +0000 shyster-lead

Hyundai Motor America and Kia Motors America have agreed to pay as much as $395 million to settle class action lawsuits filed after the Korean automakers overstated fuel economy ratings on about 900,000 vehicles sold in the U.S. Hyundai’s share will be as much as $210 million while Kia will have to pay up to $185 million, according to statements issued by the companies and reports by Automotive News. The settlements must still undergo court review, expected early next year.

The lawsuits were filed after the companies disclosed in November of 2012 that approximately 600,000 Hyundais and 300,000 Kias from the 2011, 2012 and 2013 model years were sold with EPA fuel economy ratings that weren’t accurate. The U.S. EPA relies on testing results provided by car companies. At the time of the announcement, Hyundai and Kia officials apologized blaming flawed internal testing procedures for the overstatements. Eight models were affected and most consumers say the combined MPG ratings of their cars fall by one or two miles per gallon.

Over 50 lawsuits have been consolidated into a single case being handled in federal court in Los Angeles and the dollar figures work out to an average lump sum payment of ~$353 to the affected Hyundai owners and ~$667 to each affected Kia consumer.

John Yoon, attorney for Kia Motors America, said in a statement: “Kia Motors is a responsible company, and the proposed settlement enhances our goal of making things right for our customers by providing new reimbursement options. Kia Motors is fully committed to taking care of its customers, and today’s settlement adds flexibility by adding lump-sum payment options to the transparent reimbursement program introduced last year.”

The actual amounts paid out will depend on how many owners choose to receive lump sum payments. The owners also have the option of continuing to participate in the existing reimbursement program Hyundai and Kia started back when their vehicles’ fuel economy ratings were restated. Current and past owners participating in the reimbursement program receive debit cards to compensate them for the extra gasoline that they’ve had to buy.

“Customers responded favorably to the original reimbursement program,” W. Gerald Flannery, general counsel for Hyundai Motor America, said in a statement. “Today’s settlement is designed to provide them with an option, again intended to make customers fully whole for Hyundai’s fuel economy ratings restatement.”

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Dealer Groups Sue Tesla, State Agencies Over EV Maker’s Ohio Retail License Fri, 20 Dec 2013 11:00:15 +0000 Tesla retail store in Columbus, Ohio

Tesla retail store in Columbus, Ohio

Car dealers trying to head off Tesla Motors’ attempts to set up factory-direct showrooms in Ohio lost a round last month when a dealership licensing amendment that would have blocked Tesla from selling vehicles direct to retail customers in the state wasn’t voted upon in the state legislature. Now the dealers are trying the litigation route, suing Tesla and state agencies to have Tesla’s retail license voided. The defendants are Tesla, the Ohio Department of Public Safety and the Ohio Bureau of Motor Vehicles. The plaintiffs include Midwestern Auto Group in Dublin, Ohio, and Ricart Automotive Group, of Groveport, Ohio.

Earlier this month Tesla opened up its first Ohio store in a mall in Columbus, along with a service center in the same city, presumably to service the cars sold at the mall. The EV company says it will open a second store in Cincinnati by the end of the year. To bolster it’s case with the Ohio public, Tesla announced that the expansions will mean another 26 jobs and “add an initial $7 million in direct economic activity.”

James Chen, Tesla’s VP for regulatory affairs and the automaker’s associate general counsel, called the dealers’ actions “bullying”, using a current buzzword. “This is the same kind of bullying from the dealers we’ve faced in other states. The dealers, when they’re defeated in the court of public opinion, in the media and in the legislature, they then go to the courts.”

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Panoz Sues Nissan, Claims BladeGlider Copies DeltaWing Tue, 03 Dec 2013 00:03:19 +0000 blade-glider

Nissan BladeGlider

Delta Wing Project 56, a company backed by racing and pharmaceuticals entrepreneur Don Panoz to develop the DeltaWing racecar, is suing Nissan, claiming that the recently revealed BladeGlider concept, which Nissan revealed at the Tokyo Motor Show, infringes on intellectual property related to the DeltaWing.

Nissan says that their delta shaped car is inspried by “the soaring, silent, panoramic freedom of a glider and the triangular shape of a high-performance ‘swept wing’ aircraft.” One of the members of the BladeGlider project is designer Ben Bowlby, who originated the concept of the DeltaWing and he’s named as a defendant along with Nissan and Darren Cox, director of Nissan’s global motorsports program.

Panoz’s suit, filed Nov. 22 in Superior Court in Jackson County, Ga., seeks a cease-and-desist order that would prevent Nissan from displaying, racing or selling cars with such a design. Nissan has said that the BladeGlider is not just a concept and that it will be the basis of a production car.

DeltaWing coupe

DeltaWing coupe

Bowlby came up with the DeltaWing concept while working for Chip Ganassi. Panoz later got behind the idea, arranged for Dan Gurney’s All American Racers shop to build the car and Highcroft racing to campaign it at LeMans and in American endurance racing with sponsorship from Nissan. Panoz says that he’s invested millions of dollars proving the concept and would like to license the idea to automakers to use on production cars.

Bowlby, after developing the DeltaWing, was hired by Nissan as “director of motorsport innovation” and proceeded to design Nissan’s ZEOD RC electric racer, which bears a close resemblance to the DeltaWing which has a narrow, arrow shaped front end carrying two relatively narrow tires close together, and a wide wheel track in the back. The ZEOD will be racing in an experimental class next year at LeMans, just as the DeltaWing did.

Panoz said last month that he has built two prototype production cars and is pitching the idea to automakers as a means of saving fuel. The DeltaWing is exceptionally aerodynamic. Panoz claims that if Nissan is able to race and sell similar cars without paying a royalty, the DeltaWing’s shape will effectively become public domain.

“Everybody else in the market would be open to that kind of design,” he said. “And what do automobile companies do? They see something that’s taking off and they want to mimic it, don’t they?”

A spokesman for Nissan North America in Nashville declined to comment on the lawsuit.

The unconventional DeltaWing has showed promise on the racetrack. It hasn’t racked up any wins yet but it did finish 5th out of 42 cars at the 2012 Petit Le Mans race outside of Atlanta. The 4th place finisher had 50% more horsepower than the 300 HP DeltaWing, with relies on low drag and low weight to achieve speed, not a big engine.

“In the very beginning with this car, because it was so new and such a departure from what race cars were, with their big front wheels and wide front ends, a lot of experts said, ‘The car won’t work. It will fly. It won’t corner,’” Panoz said. “The car does work. It doesn’t fly, and it does corner.

The lawsuit accuses Bowlby of misappropriating confidential information and seeks “damages and injunctive relief arising out of theft of confidential and proprietary information, misappropriation of trade secrets, breach of contracts, unjust enrichment, fraud, and negligent misrepresentation.”

One reason why both Nissan and Panoz see the concept finding the light of day as a production car is that the latest CAFE targets are based on a vehicle’s wheelbase, not weight or capacity. With it’s long wheelbase a production car based on the DeltaWing would have to meet a relatively low MPG target, which it could easily meet because of light weight and aero efficiency.

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California Jury Finds Toyota Not At Fault In Unintended Acceleration Wrongful Death Lawsuit Fri, 11 Oct 2013 15:48:13 +0000 Noriko-Uno-car-after-crash (1)

A Califonia jury ruled that Toyota Motor Corp was not at fault in a 2009 accident in which 66 year old Noriko Uno was killed when her 2006 Camry ran into a tree after being hit by another car. Uno’s survivors blamed the accident and her death on unintended acceleration and Toyota’s failure to incorporate a brake-override system in Uno’s car. This was the first wrongful death lawsuit over accusations that Toyota products could uncontrollably accelerate. The jury found that Uno’s Camry was not defective, instead placing full liability for her death on the driver of the car that hit Uno before she sped the wrong way down a one-way street and into the tree. Uno’s survivors were awarded $10 million.

The Uno case is seen as a bellwether for the outcomes of about 85 addition wrongful death and personal injury lawsuits filed in California state courts in the aftermath of millions of Toyotas in 2009 and 2010 to address reports of sudden unintended acceleration. Items addressed in those recalls included floor mats getting stuck under the gas pedal and possibly faulty pedal assemblies. 2006 Camrys, like the one Ms. Uno was driving, were not included in those recalls.

A Toyota spokesperson said that the company was pleased with the jury’s verdict. “We are gratified that the jury concluded the design of the 2006 Camry did not contribute to this unfortunate accident, affirming the same conclusion we reached after more than three years of careful investigation — that there was nothing wrong with the vehicle at issue in this case. We believe this verdict sets a significant benchmark by helping further confirm that Toyota vehicles are safe with or without brake override.”

Toyota has also won personal injury cases arising from the unintended acceleration issue in New York and in Pennsylvania. Another trial is underway in Oklahoma, and cases are set for trial in Michigan early next year and in federal district court next month in California, where about 200 wrongful death and personal injury suits against Toyota are pending.

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Federal Judge Rules Toyota Must Go to Trial in Camry Unexpected Acceleration Lawsuit Tue, 08 Oct 2013 18:52:03 +0000

Click here to view the embedded video.

Toyota won two out of four of his decisions, but U.S. District Judge James Selna ruled that Toyota still must go to trial for an unexpected-acceleration case filed in federal court, according to a report by Bloomberg.


Judge Selna threw out manufacturing defect and negligence claims but affirmed his earlier tentative decision to allow a claims based on alleged design defects and a failure by Toyota to warn Camry drivers about known dangers to proceed to trial. ”Plaintiff has raised triable issues of fact that would allow a reasonable jury to find in his favor,” the judge said in his written ruling. In 2009, Ida Starr St. John, then 83 years old, was hurt when her 2005 Camry crashed. St. John has since died and her family is pursuing the litigation. This is the first personal injury and wrongful death case to go to trail over Toyota’s supposed unintended acceleration of those cases already consolidated in federal court.

The lawsuits were sparked by Toyota recalls in 2009 and 2010 and the company has already settled economic loss claims with a ~$1.6 billion agreement. St. John’s ’05 Camry was not subject to any of those recalls.

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Toyota’s Jim Lentz Testifies in Unintended Acceleration Wrongful Death Suit Wed, 28 Aug 2013 16:09:49 +0000 37146460

After losing a motion to prevent him from appearing, Toyota Motor Corporation’s CEO for North America, Jim Lentz took the witness stand in a lawsuit filed by the survivors of a woman who was killed when her Camry allegedly sped out of control and hit a tree after it was hit by another car, whose driver is a co-defendant in the case. One issue in the court case is why Toyota did not equip Noriko Uno’s car with a brake override system that automatically closes the throttle when the brakes are applied.

Bloomberg reports that Lentz answered questions posed by the plaintiffs’ attorney in regard to how the company marketed the system when it did start making it available. Toyota branded the system as “smart stop”, apparently rejecting “safe stop”, according to internal Toyota documents plaintiffs obtained as part of the discovery process.

Lentz said that the reason why the company chose “smart” instead of “safe” was to avoid promising more than they could deliver. “I made clear to the marketing department that it had to be something that didn’t overpromise,” Lentz said. “Safe stop or sure stop was overpromising because it wouldn’t necessarily stop the acceleration in all cases.”

The Uno case is the first of about 85 personal-injury and wrongful-death lawsuits filed against Toyota in California courts regarding supposed unintended acceleration. The company has already settled an economic loss class action suit at a cost estimated to be $1.63 billion. That suit was about the value of used Toyotas declining due to the massive recalls the company initiated to address the issue.

Among other actions in the recall, Toyota installed brake override system software on the recalled models and started equipping all of its new production cars with the override system. The plaintiffs pointed out that Toyota had started installing the system on some of its European modes in the early 2000s and questioned Lentz on why it was not featured on its U.S. models. Lentz said that he only knew of one European Toyota that featured a brake override.

Also testifying Tuesday was an expert witness who testified that Uno was hospitalized for vomiting blood and being dizzy and light-headed on two separate occasions before her fatal accident. Toyota argues that Uno’s cognitive abilities were impaired by her diabetes and liver conditions. Before she hit the tree, following the initial collision with another car, she drove the wrong way down a one-way street.

Toyota has said Uno’s diabetes and liver conditions impaired her cognitive abilities and caused her to drive down a one-way residential street into oncoming traffic after being hit by another vehicle.

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First Toyota Unintended Acceleration Wrongful Death Trial Begins Fri, 09 Aug 2013 14:23:48 +0000 Noriko-Uno-car-after-crash

The first wrongful death lawsuit concerning the sudden acceleration of Toyota cars to go to trial has started with opening arguments. According to Bloomberg, the lawyer for Noriko Uno’s family said that Toyota knew that their gas pedals could get stuck and that the company was liable for her death because Uno’s 2006 Camry did not have a brake override system. The Toyota that Uno, 66 at the time of her death, was hit by a car that ran a stop sign. Her Toyota subsequently accelerated down the wrong side of the road for 30 seconds before hitting a tree, causing her death.

Last month Toyota agree to settle, for $1.63 billion, an economic loss class action lawsuit filed by owners of Toyotas who claimed their vehicles’ value had depreciated after Toyota recalled over 10 million cars to address the unintended acceleration issue. While the car company has settled out of court with some claimants, the Uno case is the first to actually make it to a courtroom. About 85 personal injury and wrongful death suits have been consolidated in Los Angeles Superior Court.

Noriko Uno

Noriko Uno

The Uno family is seeking $20 million in damages, claiming that Toyota should have installed a brake override system that forces the engine’s throttle to return to the idle position when both the brake and gas pedals are depressed. When Uno’s car was manufactured, Toyota had already implemented brake overrides on models sold in Europe.

Toyota’s lawyers insist that Uno was at fault because she stepped on the gas, not brake, pedal and that a brake override system wouldn’t have prevented her death, the automaker claims, because she never tried to use her brake. In his opening statement, Toyota lawyer Vince Galvin said, “This is not a stuck-pedal case, it’s an alleged stuck foot case.” The plaintiffs allege that Uno’s right foot got stuck between the gas and the brake pedals, causing her to accelerate as she tried to brake with her left foot, a claim that Toyota says is not possible.


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Toyota Unintentional Acceleration Wrongful Death Trial Begins Mon, 22 Jul 2013 20:16:59 +0000 52166200

Noriko Uno was killed in 2009 when her 2006 Toyota Camry sudenly accelerated to 100 MPH, resulting in her leaving the roadway and hitting a telephone pole and a tree in the median. Today, jury selection begins in a California lawsuit filed by her survivors.


The lack of a brake-override system on her Camry, a device that Toyota has since implemented, is expected to be a major issue raised by the plaintiffs. Brake-override systems deactivate the throttle when the brake pedal is pressed. While it is not clear if any car sold today has brakes that cannot stop the car even when the engine is at full throttle, car companies, government safety agencies and consumers have embraced brake-overrides to prevent unintended acceleration, or at least make consumers feel safer. The Uno is considered to be a bellwether as it is the first unintended acceleration case filed against Toyota to go to trial. A previous case, involving two fatalities in a 2008 Camry was settled out of court. Last week, Toyota agreed to a billion dollar settlement over economic losses to owners of Toyota cars, losses supposedly caused by the recalls Toyota initiated to address the unintended acceleration issue.

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Toyota, Lawyers, Court Agree on Settlement Over Depreciation Caused by Unintended Acceleration Recalls Mon, 22 Jul 2013 12:30:45 +0000 7bb2da11404638720115c97471157bd7 (1)

A U.S. District Court judge gave final approval of the settlement of a lawsuit filed against Toyota on behalf of owners of Toyota vehicles who claimed that the car maker’s recalls related to unintended acceleration caused their cars to depreciate in value.


Toyota recalled over 10 million vehicles around the world in 2009-2010 to check for sticky throttle pedals and out of position floor mats. The cash payout for Toyota to settle the economic-loss action will be close to a billion dollars, with individual payments ranging from $9.74 to $10,000, depending on what Toyota model, and whether it was bought, leased or rented, a total of $757 million. Plaintiff attorneys in the class action lawsuit will get another $227 million in fees and costs, and Toyota will retrofit, at no charge, some car models with brake override systems. The retrofit and other non-monetary benefits are valued at $875 million. In Tokyo, Toyota announced that the company will be taking a one-time $1.1 billion charge to cover the costs.

All of the lawyers involved seemed pleased with the settlement. U.S. District Judge James V. Selna, said during the final hearing, “I reaffirm my conclusion that this settlement is fair, adequate and reasonable. I find this settlement to be extraordinary because every single dollar in the cash fund will go to claimants.” That must mean that the plaintiff attorneys were paid from a different fund of cash.

One of those attorneys, Steve Berman, of the Hagens Berman firm which just last week filed a proposed class action suit in federal court against Ford over glitches in the MyFordTouch control and infotainment system, said that in regard to the Toyota suit, “Those people who submitted claims are getting 100 percent of their claims in this settlement.”

Toyota’s lawyer was happy as well. “This settlement is focused on getting the maximum amount to our customers,” John P. Hooper said. Though he said he was confident that Toyota would have won at trial, he said the company settled because it was “trying to find a resolution that would be of value to Toyota customers and put this litigation behind us.”

This lawsuit is unrelated to the property damage, personal injury and wrongful death lawsuits filed in connection with alleged sudden unintended acceleration by Toyota vehicles.

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Law Firm Proposes Class Action Suit Over MyFordTouch Wed, 17 Jul 2013 11:30:34 +0000

Click here to view the embedded video.

A proposed consumer protection class action lawsuit has been filed in U.S. District court in California over the MyFordTouch (and similar systems in Lincoln and Mercury vehicles) system.

The filing alleges that the system often freezes, won’t respond voice or even touch commands and won’t reliably connect to cellphones. Issues with the rear view camera, the nav system and HVAC controls are also cited. The filing was announced in a press release from the Hagens Berman law firm. It doesn’t say so in the press release, but it is presumed that they are seeking certification as a class with standing to sue. Lawyers and others among the Best & Brightest are welcome to add your informed opinions in the comments below.




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Junkyard Find: 1984 Audi 5000 S, With Voodoo Incantantion To Ward Off Unintended Acceleration Tue, 02 Oct 2012 13:00:54 +0000 The Audi “Unintended Acceleration” debacle of 1986, which whacked American Audi sales by about 75% within a few years, makes the 1982-86 Audi 5000 an historically significant Junkyard Find. The 60 Minutes piece about the 5000′s allegedly malevolent behavior turned the car’s image from masterpiece of aerodynamic science to bloody-clawed multiple murderer, with predictable effects on resale value for existing cars. This means that the 5000 of the Unintended Acceleration era that managed to stay on the good side of The Crusher until 2012 is a survivor of astonishing tenacity.
Plenty of cars had smooth lines like this by the early 1990s, so the ’84 5000 doesn’t really stand out from the crowd these days. Back in the early 1980s, however, this car looked double-take-inducing futuristic.
Everybody has flush glass now, but noisy and drag-inducing inset windows were the norm in the early 1980s. Here’s the car that introduced the flush-glass idea to the marketplace.
So, yeah, this car got a bum rap thanks to panic-mongering journalism. Ford managed to emerge comparatively unscathed from the infamous “Park-To-Reverse” controversy of a few years earlier, even though thousands of 1966-80 Fords really did suffer from a dangerous mechanical flaw.
Not that the 5000 was without its real-life weaknesses, of course; high complexity levels and glitchy electrical components kept cost-of-ownership fairly high for these things.
Note the recall-mandated decal applied to the shifter console. It’s too bad that Audi didn’t add a dash decal identifying the difference between the throttle and brake pedals.
I was impressed by how clean this car looked. Here’s why: 62,837 miles on the clock. Original owner who only drove to church on Sundays?

21 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 01 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 02 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 03 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 04 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 05 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 06 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 07 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 08 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 09 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 10 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 11 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 12 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 13 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 14 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 15 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 16 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 17 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 18 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 19 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin 20 - 1984 Audi 5000 S Down On The Junkyard - Picture courtesy of Murilee 'Unintended Acceleration' Martin Zemanta Related Posts Thumbnail ]]> 88
Automotive Lawsuit History Unearthed, Junkyard Style: The Ford Park-To-Reverse Warning Label Sat, 31 Mar 2012 13:15:32 +0000 For decades, I’ve been seeing Ford-family vehicles with ugly, pointless warning labels stuck to their instrument panels: Unexpected and possibly sudden vehicle movement may occur if these precautions are not taken. I’d always assumed that these were ex-rental cars, but after I mentioned the warning stickers in this week’s ’75 Ford Maverick Junkyard Find post, several readers pointed out that the stickers were the result of Malaise Era litigation. Of course!
It turns out that many Ford automatic transmissions of the 1966-1980 period developed a tendency to slip from Park to Reverse, on their own, leading to lots of unpleasantness (if we are to believe Ralph Nader’s Center For Auto Safety, this problem caused 6,000 accidents, 1,710 injuries, and 98 fatalities). Since we’re talking about something like 23 million vehicles here, Ford resisted launching the biggest recall in automotive-industry history; the DOT agreed in 1980 to have Ford send out warning labels to the 23 million affected owners. Some of them used the stickers, most didn’t, and we still see them from time to time in junked Fords, Lincolns, and Mercurys. So, another bit of junkyard-learned Malaise Era automotive history, a nice chaser to the story of the FLOOR TEMP warning light.

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Patriarch Piech Pursues Porsche For Personal Reasons Mon, 23 Jan 2012 16:39:24 +0000

The Porsche-Piëch clan, ca. 1942. Grandfather Ferdinand Porsche, brother Ernst Piëch, sister Louise Piëch and mother Louise Piëch-Porsche. Ferdinand Piëch (nicknamed "Burli") is sitting in the grass on the left.

Volkswagen does not own Porsche yet. For all intents and purposes, however, Porsche is part of Volkswagen. Volkswagen executives give orders from Porsche board seats. Porsche engineers need to consult Volkswagen Group R&D departments. Insular solutions at Porsche require a written permission from Wolfsburg.

“Actually, Piech and his minion, Volkswagen CEO Martin Winterkorn, could leave it at that. The integration of both enterprises has progressed so far, that is does not make a difference whether Porsche morphs into a Volkswagen division, or remains legally independent.


So says Der Spiegel, which says the urge to merge has personal reasons. 74 year old Porsche patriarch Piech wants to join the companies that were started by his grandfather and namesake, Ferdinand Porsche.

In the way are international funds which sued Porsche for billions. Porsche made an offer of a few hundred million Euro, but the funds denied. With the lawsuits ongoing, the risk of buying a company that may have to fork over billions is seen as too high.

Now, Volkswagen’s legal department has developed a solution: Volkswagen could buy the remaining 50.1 percent of the Porsche AG and leave the Porsche Holding behind. The operative business is in the AG. Porsche has a corporate structure that makes a Russian doll look like simplicity. As long as Volkswagen will own “all of Porsche,” nobody will ask which Porsche.

Except the suing investment funds, perhaps.



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Volkswagen And Porsche In A World Of Hurt Fri, 06 Jan 2012 16:26:52 +0000

Why are Volkswagen and Porsche living together, but are not married? Because VW is worried about the outstanding lawsuits brought against Porsche by irate investors. Now suddenly Volkswagen lost that protection. Lawsuits are piling up right in front of Volkswagen’s own doorstep. At the court in Braunchweig, 20 miles away from Wolfsburg, billion dollar lawsuits are snowballing at an alarming rate.

An hour ago, Reuters reported that claims against Porsche and Volkswagen filed at the Braunschweig court have reached 1.8 billion euros ($2.3 billion).

A few minutes ago, the German finance wire BoerseGo reported that another €2 billion ($2.55) billion lawsuit was filed in Stuttgart, also against Porsche and Volkswagen. The German magazine Witschaftswoche says that in the meantime, there are more than 70 litigants.

Adding a just amended lawsuit for another €351 million ($448 million,) BoerseGo now reports that the lawsuits are standing at “approximately €4 billion” (approximately €5.1 billion.) That as of this morning.

To make the matter even more juicier, arbitration proceedings have been initiated against Christian Wulff, President of Germany. The President (a figurehead in Germany, the power is with the Chancellor) was Premier of Lower Saxony while it happened, and as such he sat on the Supervisory Board of Volkswagen. He is also being sued for €1.89 billion. Which he does not have.

Here is what Reuters says about the grounds for the pricey lawsuits:

“Massive demands for damages have been brought by enraged investors who took wrong-way bets on a decline in VW shares in 2008. They claim they were misled by the sportscar maker about how many shares in VW it held at the time, leading to a “short squeeze” that turbo-charged VW shares.

When Porsche revealed it controlled 74.1 percent of VW’s voting stock in October 2008, shares of Volkswagen topped 1,000 euros apiece, having more than quadrupled within just days.

Incredulous investors who had bet on an imminent end to the surge saw VW briefly become the world’s biggest company by market value.”

Lawsuits in the U.S. that followed a similar line of reasoning so far failed. Bringing suit in Germany is the right venue, but it can be much riskier and costlier. In Germany, those who bring suit, have to front hefty court costs. Those who lose, pay the whole court costs, plus the other side’s legal expenses.  My calculator says that bringing a €4 million lawsuit can mean exposure of around half a million Euro. The calculator goes on strike at 4 billion.

Which may be €8 billion when the day ends. Someone is attaching big checks to legal papers.

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Toyota Asks For Sudden Deceleration Of Lawsuits Wed, 15 Sep 2010 13:34:39 +0000

Lawyers would have to do pro bono work, or subsist on doing divorces and writing wills, would it not be for Toyota. Toyota’s contribution to the world of jurisprudence is immeasurable. They are in a drawn-out lawsuit against their own (former) lawyer. And they are named in more than 300 federal and state lawsuits including proposed class actions over allegations that the vehicles suddenly accelerated and couldn’t be stopped. Toyota is trying to put the brakes on that.

Toyota asked a judge in Santa Ana, CA, to throw out lawsuits over sudden acceleration claims. According to Toyota, the suits are based on anecdotes and fail to identify any specific defects in the vehicles, says Bloomberg. A hearing on Toyota’s request to dismiss the lawsuits is scheduled for Nov. 19 in Santa Ana.

Lawyers also sue Toyota for losses, because the media circus has “caused defective vehicles’ values to plummet.” Defective vehicle’s values? What are they talking about?  Most Toyotas had taken a hit, says the Blue Book. Maybe consumers should sue the lawyers …

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