Fiat Chrysler Recall
2015 might just easily earn the dubious distinction as the Year of the Historic Recalls. We started off the year with news about the GM ignition recalls and the early months led to a great deal of hand-wringing over the massive Honda/Takata airbag recall. Now, the public is hit with news about the massive Fiat Chrysler recall. Given our firm’s long history of auto products liability cases, we continue to get requests to look at cases involving serious injuries resulting stemming from these recall issues.
Earlier this week, federal regulators slapped a $105 million penalty against Fiat Chrysler Automobiles for its failure to complete 23 safety recalls that included over 11 million vehicles. If you’re wondering whether this is the highest civil penalty imposed yet by NHTSA on an automaker for recall violations, then you are right.
This recall also demonstrates an escalation of the agency’s efforts to investigate and punish automakers that do not adequately recall and fix defective models.
“This civil penalty puts manufacturers on notice that the department will act when they do not take their obligations to repair safety defects seriously,” said the secretary of transportation, Anthony Foxx.
In a statement, the automaker acknowledged the safety violations and agreed to the record penalties.
“We also accept the resulting consequences with renewed resolve to improve our handling of recalls and re-establish the trust our customers place in us,” the company said.
The agency said the civil penalty was broken down into a cash penalty of $70 million, and an agreement that Fiat Chrysler would spend at least $20 million on meeting performance requirements detailed in the consent order. An additional penalty of $15 million will be assessed on the company if an independent monitor, who has yet to be announced, discovers further violations of safety laws or the consent order.
Under the order, Fiat Chrysler is required to buy back as many as 500,000 vehicles with defective suspensions that can cause drivers to lose control. Also, owners of more than one million Jeeps with rear-mounted gas tanks that are prone to fires will be given an opportunity to trade in their vehicles at rates above market value.
Mark R. Rosekind, who took over as the administrator of the highway safety agency last December, said the heavy fine was a direct result of Fiat Chrysler’s prolonged failures to fix recalled models.
“Fiat Chrysler’s pattern of poor performance put millions of its customers, and the driving public, at risk,” he said.
The agency is authorized to impose a maximum fine of $35 million for an individual recall that is not completed in a timely manner.
The government’s action is the latest in a series of moves by Mr. Rosekind to put more pressure on automakers to fix defective vehicles.
“We need a proactive safety culture in this country,” he told reporters at a recent briefing in Detroit.
In Fiat Chrysler’s case, this month the government took the unusual step of holding a public hearing to focus on 23 separate recalls that date back to 2009. At the hearing, federal officials said the company had repeatedly failed to notify consumers of recalls and to complete repairs in a timely fashion.
The company’s top safety executive, Scott Kunselman, admitted the automaker had made “mistakes and missteps” in conducting recalls. “The agency has raised some legitimate questions,” he said at the hearing on July 2.
The automaker has started several new recalls since the hearing, including one on July 24, 2015 (this past Friday) that covered 1.4 million vehicles vulnerable to computer hackers.“The $105 million fine shows the need for an uncapped penalty,” said Clarence Ditlow, an official of the Center for Auto Safety who first petitioned the government to investigate the rear-mounted fuel tanks in Jeeps.
Fiat Chrysler is currently recalling 1.59 million Jeeps equipped with the rear-mounted gas tanks, which can catch on fire in high-speed collisions.
The company is installing trailer hitches on the affected Jeeps to soften the impact of rear-end collisions. But the rate of repairs in that recall has been slow, government investigators say.
Under the consent order, Jeep owners will have the option to trade in a vehicle for above market value or receive an unspecified payment from Fiat Chrysler to install a trailer hitch.