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Thursday, 24 April 2014

GM owners claim bankruptcy fraud to keep recall suits alive

In the latest of many twists in the American ignition switch scandal, Automotive News reports (subscription required to read more than the headline) that 'GM's request for court protection from 50 car-owner lawsuits seeking compensation for millions of recalled autos with defective ignition switches [has been] attacked as legally “unsupportable.”' Reuters explains in greater detail, if you feel the need to know more.

The short version is that GM has filed a motion in the Bankruptcy Court for the Southern District of New York (where it seems plaintiffs have also filed a class action claim to forestall this tactic: I am not sure which came first, and it doesn't seem to matter very much for the purpose of this posting), seeking protection against claims that date from before its 2009 bankruptcy and eventual re-emergence as 'new GM'. In other words, they argue that the plaintiffs' claims are against the defunct old company not the new one. That certainly has logic to it, but it doesn't strike me as an attractive argument. Still, when did lawyers ever worry about the aesthetics of the cases they plead?

Friday, 11 April 2014

Honda Motor Europe Ltd & Anor v Powell & Anor [2014] EWCA Civ 437 (11 April 2014)

Honda Motor Europe Ltd & Anor v Powell & Anor [2014] EWCA Civ 437 (11 April 2014) is noteworthy because it has a pretty obvious motor industry angle. Apart from the obvious, though, it's about Honda's group pension scheme, which until
Honda of the UK Manufacturing Ltd ("HUM")
 appeared on the scene had only one company member. The case concerned the interpretation of the manufacturing company's  Deed of Adherence dated 6 October 1986 by which it became a participating employer in the scheme and membership of the scheme was opened to its employees. The question for the Court was whether the Deed of Adherence conferred scale benefits on the HUM members which differed from (and were much less generous than) those in the existing scheme, or whether further documentation was required to produce that result. This turned on the meaning of the provision in clause 1 of the Deed of Adherence which stated that:

"[HME] … hereby extends the benefits of the Scheme to all eligible employees and directors of [HUM] with effect from [1 August 1986]"
The judge at first instance held that it did not confer those scale benefits, and on appeal the Court of Appeal agreed, dismissing the appeal. Important, certainly (£47 million at stake) and interesting if pension schemes are your thing - but not really the sort of subject we need to cover in depth here.

GM puts two engineers in recall probe on paid leave

I have deliberately not been posting about the GM recall affair in the US. Only so much news of what is going on over there is really of interest to British and other European readers, and we don't have Chevrolet Cobalts over here (although we do have Astras and Zafiras, built on the same platform - but presumably with different ignition switches - and soon we won't have more than a handful of Chevrolet cars anyway, which is another story altogether). That affair, though, is probably worth coming back to one day. For now, I just want to comment on the story that GM has sent two of its engineers on paid leave.

According to Just Auto, GM sent the two home after an interim report from the former US attorney who is conducting an independent investigation into the matter. The allegation is that GM knew about the problem with the switches, which can fail in use and deprive the car of braking and steering systems among other things: 13 fatalities are attributed to the problem. What GM did, or didn't do, about it is what everyone wants to try to work out. The two engineers are presumably involved in what happened back in the early 2000s: their identities have been mentioned in the media, but it adds nothing to this story to speculate on who they are.

The reason I considered this interesting enough to write up is this: if you wish to be able to deal with an employee in this way, and there are many reasons why you might so wish, you have to rely on the contract of employment. You have a duty to provide your employees with work, not just to pay them, and however generous it might seem to pay an employee for not working - in the classic case, paying them to tend their garden instead - you can only do this with their agreement, and that agreement is best obtained in advance, when they sign their contract. Most contracts of employment I have seen in recent years address this point, but there might be some 'legacy' contracts floating around, as old as if not older than a Chevrolet Cobalt, which don't have it.

SMMT warns Type Approval could hamper heavy CV market

According to my former, long-time-ago, employers, new Type Approval rules could hamper the heavy CV market.  The new rules come into operation in October, and the bodybuilding industry will have to get its skittles in a row by then otherwise many heavy vehicles will be forced through the individual approval process, which will cause delays in registering them: so say the SMMT, anyway.

Chevy dealership in Missouri sues customer for libel over disputed repair bill

Automotive News reports how a dealer in Missouri has taken the rare step, for any dealer anywhere, of suing a customer. It's not the best way to win friends and influence people - well, certainly not a good way to win friends. Even in the litigation-prone United States. But what else could the dealer do, faced with a YouTube video claiming to show that the customer had been overcharged for a repair?

Although the clip is only 17 minutes long, so it isn't in real time, and not all of it is workshop footage, the timings are shown on it. (You can find it here: I would embed it, but that facility is disabled.) The dispute is what happened before what the camera shows - like, I suppose, all dashboard cameras, and (as the world knows) black-box cockpit voice recorders, it constantly records over itself. The dealer says that there was a lot of diagnostic time the day before, and if (as the stories on AN and here in the St Louis Post-Dispatch say) the problem was a fuse that wasn't in the car when it was made you can imagine why a considerable amount of time might have been lost looking for the problem. A consequence of the replacement by electronics of the mechanic's instinct, perhaps.

While a dealer suing a customer, and evidently a long-standing one at that, is newsworthy, the big legal issue here is less interesting for non-US readers. The dealer obtained an injunction - a temporary restraining order requiring the video to be removed from YouTube. Then a few days later the judge changed her mind. As one of the lawyers acting for the customer, Paul Alan Levy of the Public Citizen Litigation Group, wrote on the Consumer Law and Policy blog, the point is that TROs should never be granted in defamation cases, not in Missouri or many other states (and I think would be highly unusual in the defamation action capital of the world, London). It's a constitutional, freedom-of-speech, matter. That's why the judge dissolved the order, leaving the facts to be argued about another day. When that happens, it will be of much more direct interest to the industry, given the ease with which consumers are now able to monitor the work carried out on their cars and make public the results of that monitoring.

But if this shows a threat that dealers are going to have to learn to live with, YouTube also provides a channel for the dealer to respond. I could embed the video here but I imagine they want viewings to be recorded, and viewings are currently 4,300 against 90,000 in favour of the customer (you must watch them both!) so here is a link. That's also fairer.

Thursday, 10 April 2014

General Court reduces fine for car glass cartel

The General Court has reduced the fine imposed on the Saint-Gobain group for the car glass cartel from €880 million to €715 million.