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GM hit by $4.9B verdict
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July 9, 1999: 5:54 p.m. ET
Jury gives huge damage award to burn victims disfigured in accident
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LOS ANGELES (CNNfn) - A jury awarded $4.9 billion Friday to six burn victims who were permanently disfigured when the General Motors car they were riding in on Christmas Eve 1993 burst into flames after being hit in a rear-end collision.
The award, believed to the biggest on record in a personal injury case, includes $107 million in compensatory damages and $4.8 billion in punitive damages. The trial took 10 weeks.
The car hit in the crash was a 1979 Chevrolet Malibu. The jury found that the automaker chose to use a less expensive and less safe fuel tank design in the 1970s instead of more costly tanks that would have survived crashes at speeds as high as 70 mph.
Plaintiff attorney Brian Panish hailed the decision as a way for the courts to protect consumers from dangerous products and corporate greed.
"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," Panish said in a statement.
GM (GM) safety spokesman Terry Rhadigan said 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 in the 1979 Malibu. The car was struck from behind by a drunk driver, causing a fiery explosion.
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."
The award, also one of the largest against an automaker, is likely to be reduced by the judge in the case or on appeal, analysts told CNNfn.
"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.
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.
Still, GM stock sank 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.
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