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 mean more and more people will die.