Thursday, April 24, 2014

GM has hired Kenneth Feinberg to discuss possibility of handling a compensation fund for victims of injuries due to defective cars

GM has retained Kenneth Feinberg, the lawyer who has overseen compensation funds for victims of many high-profile cases to explore the possibility of establishing a fund to compensate victims of injuries due to defective cars. The Chicago Tribune has more.

Not too long ago, Feinberg was severely criticized for his handling of the BP oil spill fund.  In fact, at one point a federal judge ruled that it was misleading for Feinberg to call himself "neutral" or "independent" in administering BP's oil spill victim compensation fund.  Go here, here, here and here for comments and links to the debate on Feinberg's work.    

It is, of course, not surprising that GM is contemplating creating a compensation fund.  This type of arrangement is very advantageous for companies that cause mass injuries.  By creating a fund and providing an aggressive policy to distribute compensation the company can get claimants to waive their right to sue and give up the chance to pursue punitive damages, thus minimizing its exposure.

The move to create a compensation fund, however, is only one part of GM's "one-two punch" approach to the crisis.  The other punch is its attempt to be declared immune from liability for injuries that happened before some time in 2009, when the current GM came out of bankruptcy.

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