The largest personal injury verdict award in history, $4.9 billion, was given to a group of six litigants, Patricia Anderson and her four children along with family friend Jo Tigner. They were the victims of a fiery crash in a 1993 accident in Los Angeles that caused permanent scarring and injury to the passengers of the family’s 1979 Chevrolet Malibu. The cause of the fire and resulting injuries came from a flawed design of the vehicle’s gas tank, which was placed in a vulnerable area near the rear bumper, making it susceptible to a rear end collision that would either explode or start a fire.

The company found, in an internal study, that the cost of litigating claims for accidental deaths t that resulted from rear end damage was much lower than repairing the known defect ($2.40 per vehicle sold to litigate claims versus $8.59 per vehicle to fix the problem). The internal study, when released in court, provided the bombshell that turned the case in the favor of the plaintiffs. Although the total amount awarded was significantly reduced on appeal and through settlement negotiations, when General Motors filed bankruptcy on June 1, 2009, the outstanding amount due the Anderson plaintiffs was reorganized to payments worth 12 cents on the dollar for all outstanding claims related to the case.

 The Case

The plaintiff, Patricia Anderson, was driving home from her Los Angeles area church after a Christmas Eve service, December 24, 1993, with her five passengers when she slowed to observe a red light signal. A drunk driver traveling at a high rate of speed (between 50 to 70 miles per hour) plowed into the rear end of the Anderson vehicle. The car exploded into flames as a result of the collision and the children suffered major burns.  Ms. Anderson’s five year old daughter Alisha, who was one of the passengers, suffered horrible disfigurement of her face and body and lost her right hand as a result of the accident.

 The Issue

General Motors had been made aware of the problem related to the placement of the gas tank close to the rear bumper and the potential for a fire hazard. In the 1979 model year Chevrolet Malibu, the gas tank was placed a mere 11 inches from the rear bumper although in earlier models, the tank was mounted 20 inches from the rear bumper. The near ten inch difference in the placement of the gas tank meant that the rear of the 1979 Chevrolet Malibu was at a much greater risk exposure to fire than the older model vehicles. Attorneys for the company rationalized that if a death or personal injury were to occur as a result of the gas tank catching fire or exploding, the company can save money by litigating claims as oppose to making the investment in recalling the cars and fixing the problem.

 The Trial

The lawsuit filed by the Andersons was heard in the Los Angeles Superior Court, Judge Ernest G. Williams presiding. At trial, the attorney for the Plaintiffs, Brian Panish, stated in reaction to the jury verdict that the message was sent to companies like General Motors to put people ahead of profits. The lynchpin for the verdict was a 1973 internal memo sent to General Motors management from an engineer with the Oldsmobile division, Edward Ivey, which gave the estimate for litigation of accidents involving the gas tank and setting that figure at $2.40 per vehicle.

General Motors was surprised by the jury award and felt that the gas tank design met and exceeded Federal mandates for safety. Richard Shapiro, who served as one of the attorneys representing General Motors went further to insist that the fault for the accident and subsequent disfigurement of the Anderson children and other occupants of the 1970 Chevrolet Malibu lay with the drunk driver, who was arrested and imprisoned. General Motors also felt that the trial judge refused to allow safety records and other information related to the vehicle that would have influenced the outcome of the jury’s verdict.

 The Aftermath

The amount awarded in the Anderson versus General Motors case set a record for a jury award, which stands to this day. Ultimately the $4.9 billion that was awarded by the jury, which represented $107 million in compensatory damages and $4.8 billion in punitive damages levied against General Motors was reduced and negotiated to a lower amount, due in part to the fact that General Motors annual revenues at the time were $3 billion. Any attempt by the plaintiffs to collect that actual award amount, if it had been upheld, would have bankrupted the company.

This is a guest post by Wruck Paupore Law Firm