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Rights of Future Victims to Sue Over Defective GM Vehicles Protected Under Amended Bankruptcy Sale
On June 19, 2009, Public Citizen and leading national consumer organizations filed an objection in the federal bankruptcy court in New York that is overseeing the GM bankruptcy proceeding, asking the court not to eliminate the rights of consumers who have suffered or will suffer injury or loss caused by defects in GM vehicles to seek compensation from New GM. The groups argued that, under the Bankruptcy Code, GM could not be sold free and clear of product liability claims, and that eliminating the future claims of people who have not yet been injured violates the Constitution.
In its response to the bankruptcy objections, GM announced that the New GM would assume liability for product liability claims for death, personal injury, or injury to property caused by accidents that occur after the bankruptcy closing date and arise from the operation of GM vehicles. The sale documents, however, would still release New GM from liability for claims of consumers who have already been hurt.
To read statements by Public Citizen attorney Adina H. Rosenbaum, who represents the Center for Auto Safety, Consumer Action, Consumers for Auto Reliability and Safety, National Association of Consumer Advocates and Public Citizen in the GM bankruptcy case, and by Clarence Ditlow, Executive Director, Center for Auto Safety, click here.
To read the consumer organizations objection, click here.
Public Citizen Litigation Group Successfully Defends Constitutionality of Fair Credit Reporting Act
Group Gains Reversal of Ruling that Would Have Made Consumers More Vulnerable to Identity Theft and Credit-Reporting Errors
The federal Fair Credit Reporting Act (FCRA) contains important provisions for protecting consumer privacy, ensuring the accuracy of credit reports, and discouraging identity theft. When a business violates those provisions, the FCRA makes them liable for between $100 and $1000 for each violation. The point of this "statutory damages" provision is to deter violations by businesses by making them costly. In Harris v. Mexican Specialty Foods and Grimes v. Rave Motion Pictures, the corporate defendants argued that these "statutory damages" provisions were unconstitutional under the Due Process Clause because they were vague and imposed excessive penalties. And a federal trial court in Alabama agreed.
At that point, Public Citizen Litigation Group was asked to take over the appeals in both cases. We argued to the U.S. Court of Appeals for the Eleventh Circuit that statutory damages up to $1000 were well within Congress's prerogative to protect consumers, and we noted that the district court's reasoning would render a large range of consumer protection laws unconstitutional because they, too, contain statutory damages provisions.
On April 9, 2009, the Court of Appeals agreed with Public Citizen and emphatically upheld FCRA's statutory damages provision, rejecting the trial court's reasoning in every respect. "The court's decision recognized Congress's authority to impose reasonable statutory damages to protect consumers. We are gratified by the Court's decision, which upholds an important tool for fighting identity theft and cleaning up the credit-reporting system," said Deepak Gupta, the Public Citizen lawyer who argued the case.
The court's decision can be read here. To read the briefs and other materials in the case, go here.
Public Citizen Litigation Group is the litigating arm of Public Citizen. The Group specializes in cases involving health and safety regulation, consumer rights, access to the courts, open government, and the First Amendment, including Internet free speech.
We litigate cases at all levels of the federal and state judiciaries and have a substantial practice before federal regulatory agencies. Our efforts are also pursued through programs such as the Alan Morrison Supreme Court Assistance Project and the Freedom of Information Clearinghouse.
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