Supreme Court: General Motors Can’t Use Bankruptcy To Avoid Lawsuits Over Deadly Ignition Defect

The Supreme Court has denied General Motors’ legal efforts to use its 2009 bankruptcy to block lawsuits over injuries and financial losses related to the carmaker’s long-ignored ignition switch defect.

When GM, with more than a little help from taxpayers, clawed its way out of bankruptcy in 2009, it did so with an understanding that the “New GM” had purchased all the old assets of pre-bankruptcy “Old GM,” under the condition that the new company would be “free and clear” from liability for claims against the old company.

So the massive ignition recall presented a difficult question, in terms of which GM should be blamed. Some people at the car company knew of the defect — which could result in a vehicle being suddenly turned off, rendering it very difficult to control — as far back as 2001, before the affected cars even went into production.

Internal memos unearthed during a Congressional investigation showed that the problem was brought to the attention of some executives in 2005, but no recall occurred until early 2014, five years after the creation of New GM.

In 2015, a federal bankruptcy court sided with GM [PDF], ruling that lawsuits could be brought against New GM, but only ones that involve actions of the post-bankruptcy company.

Last summer, the Second Circuit Court of Appeals upended that decision [PDF], ruling that buyers of affected used GM cars were wrongly barred from suing by the bankruptcy court. Additionally, the appellate panel held that GM failed to properly notify the other class plaintiffs of the defect — which it knew of, but had not recalled — or of the carmaker’s bankruptcy.

GM had argued that the generic public notice of its bankruptcy was adequate, and that the owners of affected vehicles were an unknown factor at that point. The court was not convinced.

When Old GM was going through the bankruptcy process, there was no reason it could not have done more to notify affected vehicle owners, said the Second Circuit. Federal law requires that carmakers keep records of the first owners of their vehicles, and by the time of 2009 sale to New GM, Old GM was already aware of multiple incidents and fatalities linked to the defective ignition switches. In fact, by that point the company had already stopped using these switches and quietly revised the design to address the defect.

“In the face of all the reports and complaints of faulty ignition switches, moving stalls, airbag non‐deployments, and, indeed, serious accidents, and in light of the conclusions of its own personnel, Old GM had an obligation to take steps to acquire full or exact knowledge of the nature and extent of the defect,” wrote the court. “At minimum, Old GM knew about moving stalls and airbag non‐deployments in certain models, and should have revealed those facts in bankruptcy.”

GM had also argued that there was no way it could have notified these people during the expedited 40-day bankruptcy process that resulted in New GM. Again, the court was not won over.

“While the desire to move through bankruptcy as expeditiously as possible was laudable, Old GMʹs precarious situation and the need for speed did not obviate basic constitutional principles,” wrote the Second Circuit. “Due process applies even in a companyʹs moment of crisis.”

In a nutshell, “[I]f a debtor does not reveal claims that it is aware of, then bankruptcy law cannot protect it” from those claims, explained the court. It agreed that the bankruptcy code does allow for “free and clear” asset sales to give companies the “opportunity for a completely unencumbered new beginning,” but noted that this intended only for the “honest but unfortunate debtor.”

GM appealed the Second Circuit ruling to the Supreme Court, but this morning SCOTUS denied that petition without comment, meaning the appeals court ruling will stand, and the various lawsuits against GM can move forward.

Neither the SCOTUS denial nor the Second Circuit ruling say anything about the actual merits of those lawsuits, and the carmaker believes that it will ultimately be vindicated in court.

“The plaintiffs must still establish their right to assert successor liability claims,” reads a statement from GM. “From there, (they) still have to prove those claims have merit.”

“GM can hide no more,” said Robert Hilliard, an attorney representing plaintiffs against the car company. “These cases are factually some of the most tragic stories, and also some of the strongest in terms of clear liability of GM’s intentional misconduct. Each case will soon be sent back to its local venue and each one will be tried to a verdict.”

The automaker has already paid out nearly $600 million in claims through an independent fund. The company has acknowledged that the ignition defect is linked to at least 124 fatalities and hundreds of injuries.

Amazon Now Working On Self-Driving Vehicles For Deliveries

Between drones, leased planes, and its own fleet of Flex drivers, Amazon has a decent foothold in the transportation-and-delivery market. But now the company apparently has an eye on the future, and it involves driverless vehicles. 

The Wall Street Journal, citing people familiar with the case, reports that Amazon created a team last year tasked with figuring out how the e-commerce giant can use autonomous vehicles to deliver goods in the future.

The in-house think tank, as it’s described, will focus on determining how the company can quickly and efficiently deliver packages for less.

Amazon declined to provide comment to the WSJ on the program.

Sources tell the WSJ that the autonomous vehicle initiative could include trucks, forklifts, and drones, as well as sedans that would close the gap on so-called last-mile delivery.

By using autonomous vehicles, the WSJ notes Amazon could avoid some aspects of delivery that slow down the process. For instance, while people have a 10-hour limit when driving, a self-driving truck could continue uninterrupted.

With driverless vehicles, a several-day trip could be done in a fraction of the time.

Using autonomous vehicles is just the latest in Amazon’s attempts to streamline the delivery process. The company signed a 50-year-lease on an air cargo hub in Kentucky back in February, presumably to house the company’s 40 Prime Air cargo jets.

The company has also spent a considerable amount of time exploring the use of drones as a quick method of delivery.

In March, the company’s Prime Air Drone dropped of sunscreen in its first U.S. demo; the company’s UK division completed it first drop delivery in Dec. 2016.

Of course, drones won’t be filling our skies with packages just yet: FAA regulations don’t allow commercial drones to fly over any humans not involved in operating them, and requires them to stay within line of sight of their pilots at all times.

Lay’s, Miss Vickie’s Kettle Cooked Jalapeno Chips Recalled Over Salmonella Concerns

Chip lovers looking for a little kick from their bags of Lay’s or Miss Vickie’s jalapeño-flavored kettle chips could get more than they bargained for if they don’t check the package, as Frito-Lay has recalled several sized packages of the chips over concerns they could be contaminated with Salmonella

Frito-Lay announced the voluntary recall of the jalapeño-flavored kettle cooked chips after learning of the possible presence of salmonella in the chips’ seasoning.

According to a notice posted with the Food and Drug Administration, it learned of the possible contamination from a supplier who recently recalled a seasoning blend that included jalapeño powder.

While the company says that no salmonella has been found in the seasoning supplied to Frito-Lay, the company has decided to recall the products “out of an abundance of caution.”

So far there have been no reported illnesses related to the recalled products.

Affected products were distributed to retail stores and vending machines across the U.S.

Specifically, the recall covers all sizes of Jalapeño Flavored Lay’s Kettle Cooked potato chips and Jalapeño Flavored Miss Vickie’s Kettle Cooked with a “guaranteed fresh” date of JUL 4.

The recall also covers multipack bags of chips that have a “use by” date of JUN 20 or prior printed on the multipack package, and a “guaranteed fresh” date of JUL 4 or prior printed on the front panel of the individual bags.

These products include:
• 12 count Lay’s Kettle Cooked Multipack Sack
• 20 count Frito-Lay Bold Mix Sack
• 30 count Miss Vickie’s Multipack Tray
• 30 count Lay’s Kettle Cooked Multipack Tray
• 32 count Miss Vickie’s Multipack Box

Frito-Lay notes that other flavors contained in the multipacks, as well as Jalapeño Cheddar Flavored Lay’s Kettle Cooked 40% Less Fat potato chips, are not affected by the recall.

Consumers who have purchased the recalled chips are advised not to eat them. For product reimbursement, purchasers can visit wwww.jalapenochiprecall.com.

Why Do Larger Clothes For Women Often Fit So Badly?

Anyone who’s ever bought clothing they’ve seen a model or a mannequin wearing has probably had that moment, when you get the item in your non-mannequin size, put it on, and… it just doesn’t fit well, now that it’s on a real person. Why does this happen?

Of course, there’s the simple reason that not every woman has the exact same proportions, but Quartz explains that the way brands take their designs from one size and scale it to create those same garments in other sizes can contribute to overly boxy blouses and ill-fitting jeans.

Brands use fit models to size their clothing up or down, choosing people with bodies that have ideal proportions for a standard size 6, for example. These models can help designers see how clothes look on an actual person when they’re walking or moving, and the human mannequins can offer helpful direct feedback as well, like, “This clings weirdly when I sit down.”

Clothing makers then use a process called grading to scale the dimensions of each item up or down, adding an inch to the bust of shirt here or more length to a pair of jeans there. The process isn’t uniform across the industry, of course.

This works okay when the sizes are closer to that of the fit model’s, but can lend a “distorted” or “stretched” factor in larger sizes, one fashion insider explained to Quartz. After all, human bodies don’t scale up uniformly in nature.

So what can brands do to fix this? For a start, hire larger fit models, instead of just using one model for every item the label offers, as many clothing makers do.

“Fit regularly on a professional fit model who is a size 18 or the size most sold by the brand, and conduct wear tests and/or size sets, Dale Noelle, the founder and president of True Model Management, a modeling agency that works with a large number of fit models, told Quartz.

This isn’t as easy as it sounds, however, as it costs time and money to use separate fit models for each garment of clothing. Some labels likely either don’t want to spend that dough, however, or don’t realize that there’s a reason to: If brands can’t sell badly fitting clothing in larger sizes, perhaps they decide they don’t have customers who want larger sizes, so they don’t design new products with them in mind

This is a problem for many shoppers, as Quartz notes that the average American woman is around a size 16 or 18 today. What does this mean? Brands could be missing out on a lot of sales, sales they could make if they invested in their fitting process.

One analyst for research firm NPD Group estimates that sales of plus-sized clothing — usually size 16 and up — are only half what they could be if there were only more options out there for shoppers.