Faculty

Published on July 9, 2009 | by LawNews

Prof. Norman Silber Comments in AP, Businessweek Stories on GM’s Bankruptcy and Liability Claims

Professor Norman I. Silber was quoted in the following Associated Press article that was published in Businessweek as well as media outlets nationwide.

Meltdown 101: GM’s bankruptcy and liability claims
By VINNEE TONG
Associated Press
July 6, 2009

EXCERPT:
Norman Silber, a professor of consumer law at Hofstra University, said there are two approaches to determining fault when it comes to consumer liability claims.

“The courts are divided, and academic scholars are divided, about whether they should care more about what the consumer could reasonably expect or what the company should reasonably do,” said Silber, who is also a member of the Consumers Union board.

Q: What is at stake in GM’s case?

A: Silber cites GM regulatory filings that show product liability payments of $1.1 billion in 2007 and $960 million in 2008.

“We’re talking about a lot of damages that GM was compelled to pay,” Silber said. “That means the courts either decided GM actually bore the responsibility or else GM settled and decided it was worth settling those cases.”

The fact that those amounts are the actual payments means the total value of claims is likely much higher — the dollar figures probably came down in court decisions or when the company settled with plaintiffs. And there are potentially more claims that never got settled or paid.

Q: Do people worry that product safety rules could be in danger?

A: Yes, some people are concerned.

“If it becomes apparent that we can avoid — or a company can avoid — major product liability claims and you give bankruptcy courts the power to simply forget about product injuries that occur subsequent to new companies taking over, this has the potential to be quite corrosive of basic consumer protection law,” Silber said.

Sean Kane, president of Safety Research & Strategies of Rehoboth, Mass., said it is “unconscionable” to cut off old or existing claims and assign them to a less valuable entity in bankruptcy.

“It’s unfortunate that those filed before June 1 are kicked to the curb,” Kane said. “Consumer rights shouldn’t be dependent on some arbitrary date on the calendar, and that’s ultimately what happened.”

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