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James Bryant

Recalls Send AutoMaker Liability Concerns into Overdrive

by James Bryant | Dun & Bradstreet Editor

July 1, 2014 | No Comments »

law booksBIZMOLOGY — Amid a spate of recent automotive recalls by GM, Toyota, and others, attorneys have been hard at work with automakers and their suppliers to make changes to corporate policies in order to limit manufacturer liability. Companies are also working to remove potentially harmful language from documents, identify legal liabilities, and brace for possible increased regulation.

As of this writing, GM has issued a record 54 recalls so far in 2014 involving about 29 million cars globally; among the most serious is an ignition switch recall that has been linked to at least 13 deaths. As a result of the ignition switch recall, the US Department of Transportation fined GM $35 million, and the company is facing a criminal investigation and several civil lawsuits.

Some car companies are retraining employees from all levels on legal issues, how to handle recall reporting, and inter- and intracompany communications. Last month GM’s list of 69 “banned words” surfaced and shed light on the industry’s efforts to avoid language that could lead to liability issues down the road. On the list of words engineers and others should avoid in internal communications were such terms as “asphyxiating,” “deathtrap,” “grenade-like,” and “powder keg.” But other more seemingly innocuous words were also discouraged. “Defect” is discouraged in favor of “does not perform to design,” and “condition” became the preferred nomenclature over “problem.” And GM isn’t the only one scrambling to use language to downplay potential safety issues. When Ford recalled the diesel-powered 2008 Ford F-150 Super Duty pickup because flames could come out the exhaust, Ford referred to the issue as “thermal events.”

While all of the nitpicking over word choice seems a bit silly, it’s anything but to the attorneys who are working to minimize risk and potential liability at the major carmakers and their suppliers.

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