DETROIT — The General Motors Co. recall saga is triggering a new reality for automakers and the supply base. Automotive manufacturers must — because they can't afford not to — protect themselves from liability in every aspect of production.
Attorneys around metro Detroit have been in overdrive since the GM recall scandal broke in January, either assisting the automaker or working with suppliers as recalls spike across the industry.
Companies are feverishly working to correct potentially harmful language in documents, identify legal liabilities and prepare for the possibility of increased regulation.
“Everyone is running scared because they don't want to take any chances,” said Dan Sharkey, partner at Birmingham-based Brooks Wilkins Sharkey & Turco PLLC. “I've dealt with more client calls about recalls in the last few months than I've dealt with in the 10 years prior.”
As of June 18, GM alone had issued a record 44 recalls of 18 million cars in the U.S., although some of those were counted more than once because they are being called back for multiple fixes. GM has set aside $1.7 billion to cover recall-related expenses this year.
It's the legal ramifications for GM that has the industry scrambling. The Detroit-based automaker has already been slapped with a $35 million fine by the U.S. Department of Transportation, is under a criminal investigation that could lead to fines and several civil lawsuits related to the faulty ignition switches linked to at least 13 deaths.
The civil suits have already dragged in suppliers Delphi Automotive plc, maker of the ignition switch, and Continental AG, which supplied airbags to the defective cars. The lawsuits allege Continental and Delphi knew of the issue and didn't fulfill a duty of reporting them to the National Highway Traffic Safety Administration.
“The fear of liability is growing,” said Tom Manganello, partner and co-leader of the automotive industry group at Warner Norcross & Judd LLP in Southfield. “A lot of suppliers think they are covered if they notify the OEM, but NHTSA may be taking a closer look at the participants in the reporting system.”