Can Ken Feinberg Handle Pricing GM Suits? | News | HMG LLP

He’s allocated money to victims of 9/11 and the BP oil spill. Can Ken Feinberg handle GM?

August 31, 2017


Kenneth R. Feinberg has carved out a unique, if exceedingly difficult, niche during his long and distinguished legal career: putting a price on unspeakable tragedy.

He decided how to allocate more than $7 billion among victims of the Sept. 11, 2011 terrorist attacks. He parceled out donations given to the victims of the Virginia Tech massacre. He vetted more than a half million claims and doled out billions of dollars to business people who suffered economically as a result of the massive BP oil spill in the Gulf of Mexico. And he divided and dispersed the donations given to victims of the mass shooting in Aurora, Colo. and the Boston Marathon bombing.

On Monday, he is scheduled to announce guidelines for compensating the families of those killed and those injured as a result of an ignition switch defect in 2.6 million General Motors small cars. GM has said he could begin processing claims by Aug. 1. It could turn out to be one of Feinberg's toughest jobs yet.

For one, Feinberg will have to determine just who is a victim. The faulty switches were at risk to inadvertently slip into accessory position, causing engines to cut off, steering and brakes to stiffen and air bags not to deploy. GM has linked the defect to 54 accidents and 13 deaths. Lawmakers investigating the issue and plaintiff attorneys say the true number of victims is undoubtedly much higher. But determining which accidents were a result of the defect will be tricky. Many of the cars involved in the accidents--and the event data recorders or "black boxes" that contain critical data that can help explain how a collision unfolded--are gone. Black boxes record critical data, such as whether a car was still running, how fast it was going, and whether brakes were engaged in the critical moments before impact--which are pivotal to knowing whether the faulty ignition switch played a role in an accident.

Even trickier for Feinberg is that he will have to demonstrate to claimants that he is impartial. That task is made more difficult by the hefty fee he no doubt is commanding from GM. While Feinberg has donated his services in some cases, his firm earned $1.25 million a month for most of its two years working for BP. So far, GM has not disclosed Feinberg's fee. At the same time, Feinberg is under pressure to produce what GM's chief executive Mary T. Barra has said the company is paying for--getting compensation fairly and quickly to the loved ones of those killed and those seriously injured because of the defect.

While working on the BP payouts, Feinberg butted heads with local officials and plaintiffs lawyers who accused him of not move quickly enough and pressuring claimants to accept inadequate settlements. But in the end, a Justice Department-commissioned audit found that while Feinberg's work was not perfect, he effectively vetted 574,000 claims, either paying them or properly denying them 98 percent of them. Still, BP ended up battling many claims in court, which could well be GM 's fate given the growing docket of legal action confronting the automaker.

"My hope is that Ken Feinberg's marching orders from GM are to err on the side of liberal awards, given the fact pattern here," said Robert C. Hilliard, a Texas lawyer who represents families of 80 accident victims he believes died because of the defect and 590 others who he says were injured.

By fact pattern, Hilliard means that GM knew about the ignition switch problem for more than a decade before executives connected the dots and began recalling Chevrolet Cobalts and other small cars equipped with the faulty switch earlier this year. An internal GM investigation overseen by former U.S. attorney Anton R. Valukas found that the long delay was due to incompetence and neglect, rather than a deliberate corporate conspiracy.

"This is going to be interesting, because it is really the first time Feinberg has been asked to address something that has been covered up so long and so much of the evidence is gone," Hilliard added.

It is a tall order, but others who have worked with Feinberg through the years say the blunt-talking Brockton, Mass. native is up to it. "I think what Ken is going to do is say, 'Look, I have an open checkbook. The amount of money I give away does not affect my compensation. I do not have to make GM happy," said Michael Barasch, a plaintiff's lawyer who worked with Feinberg while representing 9/11 victims. "The hardest job he faces is overcoming the justifiable anger that many people will feel toward GM. But his track record speaks for itself. He has such built- in credibility that he better than anyone can calm people in that situation."

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