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Product liability plaintiffs’ lawyers are  irate over the elimination of rights  by Chrysler owners to pursue product liability claims involving about 10 million vehicles currently on the road.

With the sale of Chrysler to Fiat completed this morning, consumer groups and plaintiffs’ lawyers are irate over a provision in the Chrysler bankruptcy sale that eliminates tort claims by Chrysler owners who purchased a vehicle prior to when Fiat assumes control of the company.

The Supreme Court late yesterday lifted a temporary stay after declining to hear a challenge by three Indiana state funds and several consumer groups. Click here to read a related article.

“If I buy a Chrysler today because they’re cheap, and my neighbor buys one when Fiat takes control, and there’s a problem with the car that leads to death or injury, I would have no claim, but my neighbor would,” said Sean Kane, head of Safety Research & Strategies, a Rehoboth, Ma. research firm that works with personal injury attorneys.

Fiat has agreed to replace damaged parts and honor lemon law liabilities. But the bankruptcy plan does not provide recourse for anyone injured or killed because of a defect in a Chrysler vehicle now on the road.

GM has indicated it intends to seek a similar provision.

“We’re going to have victims who have no way of getting compensation for injuries that are extraordinarily costly,” Kane said. “So, the states are going to have to pay for this.”

Suing the dealers

Steve Jakubowski, a bankruptcy lawyer at The Coleman Law Firm in Chicago, said in a post on his Bankruptcy Litigation Blog, that what bothers him most about the Chrysler sale decision by U.S. Bankruptcy Judge Arthur Gonzalez is “the sale’s treatment of tort claimants, both present and future, and Judge Gonzalez’s cursory justification for such treatment.”

“I just don’t think the [bankruptcy] court has the jurisdiction over the parties to be able to enjoin a third-party claim against a non-debtor, and that’s what’s happening here,” Jakubowski said in a telephone interview.

“If the state law says they have a successor liability claim, I don’t think the bankruptcy court has the authority to cut it off,” he added.

Circuit courts are split on the issue, he noted.

Christine Spagnoli, a personal injury lawyer and partner at Greene, Broillet & Wheeler in Santa Monica, Calif., said both the Chrysler and GM bankruptcies should establish a way to compensate injury victims with pending and future claims for existing vehicles, such as a trust fund.

A case involving one of her clients has already been swept up into GM’s bankruptcy. Spagnoli is representing Joy Wolf, the widow of ABC cameraman Ralph Binder, who was killed in December 2007 when the GM Suburban he was traveling in hit a patch of ice in Oklahoma and rolled over.

Mediation had been scheduled for last month. But GM attorneys cancelled it shortly before the company filed for bankruptcy June 1.

Spagnoli said it’s unclear what will happen with the case.

James Lowe, a product liability attorney at Lowe, Eklund, Wakefield and Mulvihill in Cleveland, Ohio, said Ohio is one of 15 states he is aware of that allows claimants to sue dealerships in the event of a car manufacturer’s insolvency.

He has already filed a suit against a Chrysler dealer in Ohio for selling a defective vehicle.

“The fact that I can go after a dealer is no comfort. It’s a horrible injustice to the dealer who has nothing to do with the design,” Lowe said. “But obviously, in my client’s best interest, I have to go after the dealer.

“It’s a huge mess,” he said.

Questions or comments can be directed to the writer at: nora.tooher@lawyersusaonline.com

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