Lawyers accuse GM of violating DOJ consent agreement

David Shepardson
Detroit News Washington Bureau

Washington — Three law firms on Thursday wrote federal prosecutors in New York arguing that General Motors Co. is in violation of its deferred prosecution agreement.

In mid-September, GM agreed to pay a $900 million fine to resolve the 18-month investigation into GM’s delayed recall of 2.6 million vehicles for ignition switch defects linked to at least 124 deaths and 275 injuries by the U.S. Attorney’s Office in Manhattan. As part of the plea agreement, GM was charged with two felonies and will face three years of oversight by a federal monitor.

It’s the latest sign of the scrutiny the Detroit automaker will face under the agreement. A monitor is expected to be announced by the end of the month.

GM was also required to admit to a statement of facts surrounding the ignition switch recall and is not allowed to dispute those. GM, the agreement says, “shall not, through its attorneys, agents, or employees, make any statement, in litigation or otherwise, contradicting the statement of facts or its representations.”

For the second time in recent weeks, lawyers have written U.S. Attorney Preet Bharara arguing that GM is in violation of the agreement.

Lawyers Steve W. Berman of Seattle, Elizabeth J. Cabraser of San Francisco and Bob Hilliard of Corpus Christi, Texas, argue that GM in recent legal briefs argued that the lawyers suing had referenced the company’s civil consent order with the National Highway Traffic Safety Administration in May 2014.

The letter to Bharara from the plaintiffs attorneys said GM wrote “this civil violation was neither a crime, nor fraud, nor an intentional tort, and thus cannot meet the threshold showing required to invoke the exception.” The lawyers wrote those statements contradicting GM’s “consent to be charged criminally with ‘engaging in a scheme to conceal a deadly defect from its U.S. regulator ‘and committing wire fraud.”

GM spokesman Jim Cain said the letter was misleading. The legal documents were filed before GM signed the consent agreement.

“The letter sent by the plaintiffs to the U.S. Attorney’s office and leaked to the media is misleading because it ignored several important facts. First, GM has said on several occasions that we fully stand by the statement of facts. Second, the briefs at issue were completed well before we entered into the deferred prosecution agreement,” Cain said. He noted that a federal court “has already set a briefing schedule to resolve any open issues arising from the plaintiffs’ letter.”

The letter from the plaintiffs lawyers also noted that “GM argues that its delay in reporting the ignition switch defect to NHTSA was a mere ‘violation of certain timing provisions,’ and did not reflect intentional conduct,” the letter to Bharara said.

The statements contradict GM’s “admissions that it intentionally misled NHTSA and consumers and/or delayed the recall despite its knowledge of the ignition switch safety,” they wrote. They also argue that GM should not have argued that its lawyers did not know, years before the recall, that there was an ignition switch safety defect.

Earlier this month, GM withdrew a legal motion that was seeking to dismiss an ignition switch case and requesting sanctions after Hilliard wrote Bharara saying it was in violation of GM’s deferred prosecution agreement.

GM had said that a black box in a Saturn Ion had information that could have been crucial to determining what happened in a crash. But the black boxes in Ion vehicles didn’t record whether the air bag deployed — as they did with Cobalt and other vehicles in the recall. That admission was part of the agreement.

“The ink is barely dry on the deal with the Department of Justice and GM was already ignoring the direct promises it made, and the terms it agreed to abide by. It took me sending a letter to the U.S. attorney to have GM behave and abide by the terms it agreed to in its Deferred Prosecution Agreement,” Hilliard said earlier this month. “GM needs to understand this is not a game. People died. Children were killed in these defective vehicles. You can’t cut a deal with the government, promise to behave, and then immediately go into civil litigation and intentionally break your word.”

GM said at the time it takes the agreement seriously, “including the commitment not to contradict the statement of facts, and we remain committed to cooperating fully and completely with the US Attorney’s Office.”

Earlier this month, GM said it planned to refile the motion. On Friday, GM said it no longer plans to refile the motion, but didn’t immediately explain why.