Chrysler Bankruptcy Harms Injured Plaintiffs Who Want to Sue for Deserved Punitive Damages

June 28th, 2018

By Dean I Weitzman, Esq.


Imagine being in a car or SUV accident in an older Chrysler vehicle in which a manufacturing defect contributed to your serious injuries, but you learn that you can’t sue the company for punitive damages because such damages are not possible since Chrysler filed for bankruptcy and reorganized in 2009?

That’s the situation being discovered by many potential plaintiffs, according to stories in The Wall Street Journal.  You can still file for compensatory damages – money to repay you for actual losses – but damages over and above that to punish the company for egregious behavior is not allowed under the bankruptcy.

And now General Motors (GM) is also apparently attempting to pressure potential plaintiffs from filing lawsuits for punitive damages relating to defects in its older vehicles built before that company’s 2009 government rescue – even though similar language barring such suits doesn’t exist in the GM court documents, according to The Wall Street Journal stories.

5 19 12 serious car crash no punitive damages by Svenler iStock 000014061964XSmall

Plaintiffs injured in serious vehicle crashes are banned from seeking punitive damages from Chrysler under the company's 2009 bankruptcy agreement. Image credit: ©

For anyone injured in vehicle accidents where defects from cars, SUVs and trucks contributed to the crashes, it is bad news, and it’s not fair to injured parties.

The Chrysler bailout included the stipulation so that the company wouldn’t have to be responsible for damages from vehicles built by the “old Chrysler” that existed before the bankruptcy. That way, the company would be able to reorganize, rebuild, get back on its feet and survive. It made sense for the company, but only at the expense of customers who bought and drove vehicles that sometimes have manufacturing defects that can cause serious injuries.

“Chrysler is immune from new punitive-damage claims from any alleged manufacturing defects in vehicles sold before the auto maker’s 2009 government-brokered restructuring,” the Journal reported. “Chrysler’s legal exemption, approved by a bankruptcy judge, is the product of rules embedded in the federal bankruptcy law. These rules allow sick companies at times to abandon product liability or other risks, overruling state laws that give consumers the right to seek damages. Specifically, the company’s immunity—which no other car maker has—stems from a clause Chrysler crafted in its 2009 bankruptcy sale to Italy’s Fiat SpA. The exemption applies to more than 28 million cars and trucks.”

One University of Virginia law professor and punitive damages expert, Douglas Laycock, told the paper that “the legal protection afforded Chrysler, now profitable for the first time in six years, allows the Auburn Hills, Mich., company to ‘essentially get a free pass on some of their most egregious past mistakes.'”

That’s unfortunate for plaintiffs because punitive damages are “intended to punish corporations and others for reckless or intentional wrongdoing, such as selling products despite knowledge of their dangerous defects,” according to the Journal story. “These damages are assessed as monetary penalties against a company, with the proceeds going to plaintiffs. They sometimes exceed actual losses and aim to deter future wrongdoing by the defendant or others in a position to engage in similar conduct.”

In another story this week, the Journal reported that a GM attorney recently told the widow of a vehicle crash victim that she couldn’t seek punitive damages from the new GM for an older vehicle, even though GM’s bailout didn’t include such a provision.

Once the letter was received, her attorney dropped plans to seek punitive damages because the company’s stance would cause legal headaches, the story reported.

“Around 71 million vehicles sold before GM’s bankruptcy proceedings remain on the road, according to Experian Automotive, more than twice the number of comparable Chrysler cars and trucks,” the Journal reported. “Owners of those vehicles can still sue GM for compensatory, or actual, damages in lawsuits arising from those vehicles, and the auto maker’s new cars and trucks aren’t affected.”

So what do you do if you are seriously injured due to a manufacturing defect in an older Chrysler or GM built before the bailouts?

Obviously, you need to talk with an experienced, knowledgeable and compassionate plaintiff’s attorney who can investigate your case and help you get every dollar that you deserve to compensate you for your injuries and pain and suffering.

The automakers are not making it easy for you to get what you deserve so you have to have the best legal advocates on your side. We here at MyPhillyLawyer stand ready to help you, answer your questions and represent you every step of the way to pursue your case and help you receive the compensation you require for your injuries.

When Winning Matters Most, call MyPhillyLawyer.

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