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GM hit by $4.9B verdict
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July 9, 1999: 8:12 p.m. ET
Jury gives huge damage award to burn victims disfigured in accident
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LOS ANGELES (CNNfn) - In the largest personal injury award in U.S. history, a jury ordered General Motors to pay $4.9 billion Friday to six burn victims who were permanently disfigured when their car burst into flames after being hit in a rear-end collision.
Lawyers for the plaintiffs hailed the award as a victory against a corporate giant which, they claimed, chose to ignore a potential safety problem because it was cheaper to settle lawsuits than to pay for a recall.
But GM blamed the crash on a drunk driver and said it would appeal.
Legal experts predicted the award is not likely to stand up on appeal.
"The jury has exhibited tremendous sympathy with the family in what is clearly a tragic case, but the verdict is just so out of proportion," said Linda Svitak, a partner in product liability law at Faegre & Benson, a Minneapolis law firm.
"I think it is very possible that this ... could be reduced," she said.
The award includes $107 million in compensatory damages and $4.8 billion in punitive damages -- roughly equal to a week and a half's worth of revenues for the world's largest automaker.
Jurors say GM should pay
The car hit in the crash was a 1979 Chevrolet Malibu. GM sold the Malibu from the 1960's to the 1980's before the nameplate was retired. The current Malibu, which returned to the showroom in 1997, is based on an entirely different design than the model involved in the lawsuit.
The key piece of evidence presented in the 10-week trial at Los Angeles Superior Court was a 1973 memo prepared by GM engineer Ed Ivey that determined deaths from fires cost GM only $2.40 a car, and fixing the tank in the Malibu would cost GM as much as $4 to $12 per car.
The plaintiffs' lawyers said the gas tank was placed too close to the rear bumper and that a better design would have placed it over the axle or incorporated a shield.
"Without the risk of juries holding companies accountable for their reprehensible conduct, GM and other automobile manufacturers would have little reason to put passengers' safety first,'' plaintiff's lawyer Brian Panish said.
Jury foreman Coleman Thornton said jurors decided GM should be held financially accountable for exhibiting disregard for the safety of its customers. [159K WAV or 159K AIFF]
Jurors found that GM could have built the 1979 Malibu with a safer fuel tank
GM (GM) safety spokesman Terry Rhadigan vowed the automaker will appeal.
"Our sympathies go out to the people who were injured in the tragic crash, especially the small children who were burned as a result. But this crash was not GM's fault and we are disappointed the conduct of this trial did not let the jury fairly evaluate the claims. We intend to appeal," he said in a statement.
The 1993 holiday accident occurred when Patricia Anderson, her four children and a family friend were driving home from church on Christmas Eve. The car was struck from behind by a drunk driver, causing a fiery explosion.
The driver was later found to have a blood alcohol level of 0.2 percent. The legal limit in California is 0.08 percent.
At the afternoon news conference, Anderson expressed thanks to the jury and to God.
"I just thank God that me and my kids survived," she said. "I just thank him for allowing me to be an example to the public to put a stop and end to this."
Alisha Anderson, Patricia's 11-year-old daughter, has been through some 60 surgeries, but her skin was left horribly scarred, her face disfigured and some fingers amputated.
"It's been tough and we're doing the best we can to deal with it,'' Alisha said at the news conference, where members of the jury stood side by side with the plaintiffs as they fielded questions.
A record award
David Garrity, auto industry analyst at Dresdner Kleinwort, said the award would be equal to about $8.50 a share if GM had to pay it out today. But he said the size of the award could very well be lowered.
"The company on appeal has been successful in reducing these damage awards," said Garrity, who has a "hold" rating on GM stock. "It's not a positive piece of news (for GM) but it may not be all that significant," he added.
Friday's $4.9 billion award is the latest in a series of product liability verdicts to go against the automaker in the last few years.
In 1998, a Florida jury ordered GM to pay $33 million in damages to a family that sued the auto maker over the death of its 13-year-old son in a 1991 accident. GM is appealing the decision.
In 1993, a Georgia jury returned a $105 million verdict against GM for a fire that killed a teenager in a 1985 Chevrolet C/K pickup equipped with side-mounted fuel tanks. The verdict was overturned and the case settled out of court.
The record damage verdict against an auto maker came in October 1997 when a federal jury in Charleston, S.C. ordered Chrysler Corp. to pay $262.5 million in damages for a crash involving the controversial rear-door latches on the company's older minivans. Although Chrysler agreed to replace the latches on 4.5 million 1984-95 minivans, it has appealed the verdict.
The largest known jury verdict against an auto maker involving vehicle fires was $125 million in damages against Ford Motor Co. in the early 1980s for design defects in the Ford Pinto that made it prone to fires in rear-end crashes.
GM stock dropped on news of the verdict, falling as low as 66-1/8 in after-hours trading from 68-3/8 in New York Stock Exchange trading. The verdict came just as the Big Board was closing.
-- from staff and wire reports
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