CAS Statement on NHTSA $105 Million Fine of Fiat Chrysler for Violations of Federal Recall Laws

July 27, 2015

Fiat Chrysler Record Fine is Poster Child of Inadequate Enforcement Authority

Try hard as it could, NHTSA could not match the $150 million verdict in Walden v Chrysler much less the $1.2 billion Justice Department fine against Toyota. The $105 million fine is even less than the $185 million SEC fine against Daimler AG for bribing foreign officials over car sales. Without criminal penalties, uncapped civil penalties, eminent hazard enforcement authority and repeal of the 10-year statute on repair for free on recalls, NHTSA’s hands are tied behind its back.

NHTSA handed Fiat Chrysler a gift on Jeeps with defective fuel tanks that explode in rear impacts by not requiring a buyback as it did with Dodge Rams with defective tie rods and axle pinion nuts. NHTSA found 75 rear impact fire deaths in Jeeps when it closed its investigation while the Center found 187 fire deaths in all Jeeps under investigation by NHTSA. There were only two injuries in the three recalls for which NHTSA seeks buybacks.

In the worst part of the NHTSA-Fiat Chrysler consent agreement, Jeep owners get a $1,000 coupon to buy a new Jeep that costs $35-40,000. Very few 1993-98 Jeep Grand Cherokee owners can afford to buy a new Jeep. In 1995, the US Court of Appeals for the 3rd Circuit in In Re General Motors Corporation Pick-up Truck Fuel Tank Products Liability Litigation, overturned a class action settlement where GM offered owners a $1,000 coupon to buy a new GM pickup because it was illusory relief that few owners would use. The classic case showing the “we’ve got a coupon if you have a safety lemon” strategy doesn’t work is the Ford Explorer rollover class action where only 148 out of 1 million Explorers redeemed their $1,000 coupons on a new Ford vehicle. To suggest Jeeps are being bought back under this settlement is patently false. People will die in these unremedied, recalled Jeeps like Kayla White, Skyler Anderson, and the DiGiovanni’s did after the recall if they are not bought back or repaired.

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