When corporate profits come up against product recalls – especially
for defects that prove deadly – why are so many companies choosing
to let people die? In its ongoing scandal, executives with GM chose not to fix a
deadly defect in its ignition switches. They’ve done it before.
In 1973, a cost-benefit analysis by GM concluded it was cheaper to pay
jury awards than to eliminate fuel-fed fires. Then, GM hid the analysis
from judges, juries, and the public.
Decades later, a Fort Lauderdale jury finally saw the cost analysis and
ordered GM to pay $60 million. With verdicts like that, why are GM and
so many other companies still doing it? Testimony by a GM engineer in
the trial revealed that GM saved almost $1 billion by not adding a safety
device to just the cars he worked on. It was cheaper to pay verdicts than
to fix the cause of the fires.
The Constitution used to provide a solution by ensuring trials with juries
were free to impose punitive fines for such behavior. Things have changed.
Corporations now use a legal strategy pioneered by Big Tobacco, taking
advantage of the court system to drag out cases and insulate themselves
from accountability. More importantly, U.S. Supreme Court decisions now
limit punitive fines in civil lawsuits to a small multiplier of the compensation
to the victim. At least this prevents juries from making it more expensive
to let people die.
These corporate scandals show that many companies choose not to fix defects
even if it means people die as a result. They do it because it increases
profits. As long as juries and judges are prohibited from punitive fines
big enough to change the math, nothing will change. Even $60 million didn’t
change the math when billions of dollars were saved. That’s the
new reality. Limits on punitive fines means more and more people will die.