GM's Attempt To Snuff Out Smoking-Gun Memos Breeds Its Own Smoking-Gun Memo

May 17 2014, 8:48am CDT | by

Talk about can’t-win scenarios. After being hoisted innumerable times by the petard of sloppily worded memos from low-level drones, GM management instructed its employees to write precisely about product-safety issues.

And then that memo blew up beneath the carmaker as well. Apparently it’s hiding the truth to avoid terms like “rolling sarcophagus,” “horrific,” “Kervorkianesque,” and “you’re toast” in official company correspondence. Under the terms of GM’s $35 million consent agreement with the government, the company will re-retrain employees to “encourage discussion of safety issues,” “and such training will expressly disavow statements diluting the safety message” as detailed in the now-infamous memo urging employees to avoid phrases “this is a lawsuit waiting to happen.”

The New York Times featured the memo prominently in its coverage of the GM settlement today, but even a Times writer knows what’s really going on here. GM wrote a completely sensible memo to its employees reminding them what happens when incautiously written statements end up in the hands of trial lawyers.They play sensationally with the jury.

Take one of the examples GM provided in its now-disavowed memo in which GM urged its employees to “state only facts.” Trial lawyers  had introduced a memo by Antonius Brenders, an official in DaimlerChrysler’s vehicle safety office, urging caution before conducting a survey urged by the National Highway Transportation Safety Agency into transmission problems. One downside of such a survey, Brenders wrote, is it could lend “product liability credence to a hypothesis we have long ignored.”

That choice of words helped lawyers at Lieff Cabraser to win a $54 million verdict against DaimlerChrysler, believed to be one of the largest single-person victories against a car manufacturer. (Since Chrysler was by then bankrupt, the family of the accident victim had to settle for $24 million.)

Left unsaid in this memo is why Chrysler might have ignored the hypothesis. Perhaps because it is nonsensical, the creation of the same sort of expert witnesses who dreamed up the Toyota sudden-acceleration scare (which faded, as if on cue, as soon as Toyota entered settlement negotiations with the lawyers). Could it be that “product liability credence” leads to insane verdicts like the $240 million in punitive damages a Montana jury ordered Hyundai to pay parents of two boys killed in a head-on collision? Plaintiff lawyers blamed a faulty knuckle joint in the car’s steering system, while Hyundai presented eyewitness testimony and physical evidence that the 19-year-old driver was distracted by the fireworks his cousin was blowing off in the car. Neither occupant was wearing seat belts, and the driver of the car their Hyundai rammed into also was killed.

The smoking-gun memo at GM also urges drivers of company cars to avoid generating smoking-gun memos when they describe the cars they are using. Since 34% of such reports contained subjective comments and opinions, GM urged writers to only include “information that could be helpful to a problem solver.” Instead of the phrase “lawsuit waiting to happen,” GM told employees to be specific: “Windshield wipers would not work properly.” Apparently the government prefers the first term, which may lack in detail but more than makes up for it in jury-convincing oomph.

The government’s solution to all this skullduggery is more intense government oversight. GM safety officials are to meet with NHTSA representatives monthly to go over safety issues and provide a complete list of every model that is under consideration for a potential recall. GM will also turn over all relevant records to the government, providing a convenient paper trail for plaintiff lawyers to follow should they want to sue the new, bankruptcy free GM.

The whole approach would be comforting for consumers except for the fact the government isn’t the best entity for enforcing safety and compliance. The space shuttle Challenger disaster was brought to you by government bureaucrats operating under strict guidelines and tight oversight. The Veterans Administration is enduring Congressional hearings over patient-queuing practices that are themselves the result of previous government directives mandating maximum wait times for specialist consultations. When bureaucrats dictate rules that are difficult or impossible to comply with, the standard response is to figure out a way to make it look like you’re complying instead of fixing the underlying problem.

In a competitive car market, automakers who make crappy products should be driven out of business. Bringing in the helpful oversight of the government, and urging employees to take flight with the prose in their internal memos, isn’t going to make GM a better company. It might make for some more spectacular jury verdicts in the future, though.

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

IPad Air Giveaway 2014 is Online
IPad Air Giveaway 2014 is Online
Our sister site I4U News is giving away a brand new iPad Air or if you can wait an iPad Air 2. This is an $499 value.
 
 
Your Parent Or Kid Moved In: Are You Covered?
A record 57 million Americans now live in multigenerational family households — double the number in 1980, according to a new Pew Research Center study. And I bet many of them have the wrong homeowner’s or renters...
 
 
Pandora Looks to Challenge Terrestrial Radio's Dominance in Cars
Pandora Media is one of the largest Internet radio providers in the U.S. with more than 75 million active users. While the company’s active user count has increased at a robust pace historically, it is likely to slow...
 
 
Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?
Are General Manager Salaries About To Skyrocket? Will There Be A Front Office Salary Cap?
It’s January 2026. New York Yankees owner Hal Steinbrenner gets out of his driverless car and triumphantly marches before the gathered press to introduce his prized new free agent. It’s a record-breaking contract—over...
 
 
 

Latest from the Network

Iranian hardliners form 'chastity patrols'
Tehran, Sep 19 (IANS/EFE) "Chastity patrols", created by an Iranian paramilitary group, are patrolling the streets of Iran to force women to go "well covered" in public. At the beginning of summer, trendy Iranian...
Read more on Politics Balla
 
Sophia Loren celebrates 80th birthday with an exhibition
Los Angeles, Sep 19 (IANS) Italian actress Sophia Loren, who will turn 80 Saturday, will celebrate her birthday with an exhibition displaying her most prized possessions in Mexico. The Oscar winner's belongings,...
Read more on Celebrity Balla
 
Liam Neeson scared of heights
New York, Sep 19 (IANS) Actor Liam Neeson may be known as a action star, but there is one thing that terrifies him: Heights. The 62-year-old actor admits he suffers from acrophobia and can't even manage to stand on a...
Read more on Celebrity Balla
 
Jeptoo targets history in Chicago Marathon
Nairobi, Sep 19 (IANS) History will be beckoning for Boston Marathon champion Rita Jeptoo of Kenya when she lines up at the Chicago City course for the 42km race Oct 12. Jeptoo is chasing her maiden win in the World...
Read more on Sport Balla
 
UN urges diplomatic accord on Iran's n-programme
United Nations, Sep 19 (IANS) UN Secretary-General Ban Ki-moon has urged a comprehensive agreement on Iran's nuclear programme at an early date. Ban made the appeal at a meeting Thursday with visiting Iranian Foreign...
Read more on Politics Balla
 
Bieber, Gomez moving in together?
Los Angeles, Sep 19 (IANS) Singer Justin Bieber has reportedly asked his girlfriend Selena Gomez to move into his house here. As per a report in hollywoodlife.com, Bieber, who rekindled his romance with Gomez recently...
Read more on Celebrity Balla
 
Smoking causes urological diseases
Vienna, Sep 19 (IANS) Smoking leads to a number of urological diseases, experts said. Reduced fertility, impotence, and bladder carcinoma are problems caused by smoking, the Association of Austrian Urologists (BVU)...
Read more on Business Balla
 
Lily Allen shares tips for applying eyeliner
London, Sep 19 (IANS) Singer Lily Allen may have popular make-up artists taking care of her looks, but she knows it takes practise to perfect the art of applying eyeliner. In an interview with Now magazine, she said "...
Read more on Celebrity Balla
 
Baek readies himself for Asia-Pacific Golf Championship
Tokyo, Sep 19 (IANS) Korea's Baek Seuk-hyun is relishing the prospect of teeing up against some of the best players from the Asian Tour and Japan at next week's Asia-Pacific Open Golf Championship Diamond Cup....
Read more on Sport Balla
 
'No losers, only partners with Afghan unity government'
United Nations, Sep 19 (IANS) Head of the UN Assistance Mission in Afghanistan (UNAMA), Jan Kubis said there is "no better way forward" other than a unity government in the crisis-torn country. "There is no better way...
Read more on Politics Balla