565 F.2d 754

UNITED STATES of America v. GENERAL MOTORS CORPORATION, Appellant. GENERAL MOTORS CORPORATION, Appellant, v. Brock ADAMS, Secretary of Transportation, et al.

Nos. 76-1744 and 76-1745.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 16, 1977.

Decided Oct. 14, 1977.

*755James Robertson, Washington, D. C., with whom John H. Pickering and A. Stephen Hut, Jr., Washington, D. C., were on the brief, for appellant.

Neil H. Koslowe, Atty., Dept, of Justice, Washington, D. C., with whom Earl J. Sil-bert, U. S. Atty., Barbara Allen Babcock, Acting Asst. Atty. Gen., and William Ranter, Atty., Dept, of Justice, Washington, D. C., were on the brief, for appellees.

Before WRIGHT, ROBINSON, and MacRINNON, Circuit Judges.

Opinion for the court filed by J. SRELLY WRIGHT, Circuit Judge.

J. SKELLY WRIGHT, Circuit Judge.

On December 19, 1974 the Administrator of the National Highway Traffic Safety Administration (NHTSA), acting pursuant to his authority under the National Traffic and Motor Vehicle Safety Act, determined that Rochester Quadrajet carburetors installed in 1965 Chevrolets and 1966 Chevrolets and Buicks contained a “defect which relates to motor vehicle safety” *756and that the manufacturer was therefore required to notify owners of the potential danger. See 15 U.S.C. §§ 1391, 1397, 1402 (1970).1 General Motors did not comply with the notice order; instead, it filed suit to have the order declared null and void. At the same time the Administrator brought suit to enforce the order and to impose a civil penalty on General Motors for its refusal to comply. The two cases were consolidated and, after substantial discovery, the District Court granted the Government’s motion for summary judgment and fined General Motors $400,000— the maximum statutory penalty.2 This appeal followed. It is our conclusion that the grant of summary judgment was appropriate, but that the penalty should not have been imposed absent briefs or argument on point, or any form of hearing. We therefore remand this case to the District Court for further consideration of the penalty question.

I

Under the National Traffic and Motor Vehicle Safety Act (Safety Act), manufacturers are required to notify purchasers of motor vehicles containing “a defect which relates to motor vehicle safety,” 15 U.S.C. § 1402(e) (1970), as determined by the Administrator of NHTSA. General Motors has conceded, both in the District Court and in this appeal, that the Government successfully established the existence of a “defect” in the Rochester Quadrajet carburetors. When these carburetors were manufactured holes were drilled into them; these holes were later sealed by inserting metal plugs. One of the holes, in the fuel inlet portion of the carburetor, was sealed by a plug known as the “fuel inlet plug.” If this plug becomes dislodged gasoline can spill directly into the engine, resulting in a fire under the hood. According to the affidavit of one of General Motors’ own employees, a number of these fuel inlet plugs were improperly inserted during the assembly process.3 While only figures maintained in General Motors’ central — as opposed to its regional — offices have been available in this litigation, and while all incidents of carburetor failures clearly may not be reported, the record discloses at least 665 reported incidents of engine compartment fires in vehicles equipped with the Rochester Quadrajet carburetor.4 As General Motors recognized, under prior case law this evidence clearly establishes as a matter of law that the vehicles in question contain a “defect” within the meaning of the Act.5

General Motors, however, argues that summary judgment was inappropriate be*757cause material questions of fact exist as to whether this defect “relates to motor vehicle safety.” “Motor vehicle safety” is defined in the Act to mean

the performance of motor vehicles or motor vehicle equipment in such a manner that the public is protected against unreasonable risk of accidents occurring as a result of the design, construction or performance of motor vehicles and is also protected against unreasonable risk of death or injury to persons in the event accidents do occur, and includes nonoperational safety of such vehicles.

15 U.S.C. § 1391(1) (1970). According to General Motors, the defect in the Rochester Quadrajet carburetor does not — or at least may not — pose an “unreasonable risk” of accidents or injuries.

In United States v. General Motors Corp. (Wheels), 171 U.S.App.D.C. 27, 518 F.2d 420, 435 (1975), we held that a “commonsense” approach must be adopted in construing the Safety Act and, particularly, the term “unreasonable.”6 Applying such an approach, we can see no question but that engine fires, which may occur on thoroughfares where pulling over and standing outside the car is difficult or dangerous, or which may take the driver by surprise and quickly spread to the passenger compartment, are extremely dangerous for all involved and should be considered an unreasonable risk to safety. Indeed, this conclusion appears to be mandated by our recent decision in United States v. General Motors Corp. (Pitman Arm), 183 U.S.App.D.C. 30, 561 F.2d 923 (Nos. 75-1751 & 75-1752, decided June 28, 1977), where we held summary judgment to be appropriate where the evidence, as in this case, was uncontradicted as to the critical facts: that failures in the vehicles’ steering pitman arms occurred in the past while the vehicles were being driven and that such failures cause the driver to lose control of the car.7

In appealing the summary judgment in this case, General Motors seeks to call into question this commonsense conclusion as to what is an unreasonable risk by relying on affidavits of two of its employees presenting predictions as to the likely number of carburetor failures and resulting injuries in the future. The party opposing a motion for summary judgment is, of course, entitled to all favorable inferences in determining whether a genuine issue of material fact has been raised. United States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); United States v. General Motors Corp. (Wheels), supra, 518 F.2d at 441. Therefore, we do not consider the credibility of the affidavits or the general trustworthiness of predictions offered by General Motors. Our affirmance of the District Court’s summary judgment order rests on the fact that, even if the numbers contained in these affidavits were established to be accurate predictions, *758this would not relieve General Motors of its obligation to inform the vehicle owners in question of the admitted defect in the cars they are operating.

General Motors’ first affidavit seeks to predict the number of injuries likely to be suffered in the future as a result of dislodgment of fuel inlet plugs in 1965 Chevrolets and 1966 Chevrolets and Buicks. Taking into account the number of such vehicles still on the road, and assuming 665 prior fires and between one and 15 prior injuries as a result of these fires, General Motors’ manager of Analysis and Product Assurance predicts between less than one and three injuries in the future.8 The second affidavit is addressed not to the likely number of injuries, but rather to predictions of instances of future plug failure. In this affidavit a General Motors Staff Analysis Engineer concludes that dislodgment of the fuel inlet plugs is due in part to a process of thermal expansion known as “creep” and that, given the age of the cars in question, “virtually all creep to which they were theoretically subject has already occurred.” Thus it is his view “that the number of future plug failures will be negligible.” 9

Apparently General Motors’ position is that since, given the passage of time and the reduction in the number of vehicles on the road, many or most of the failures and injuries resulting from this defective carburetor have already occurred, it is no longer required to take any action to protect against those failures that it admits will occur in the future. Significantly, General Motors does not even suggest that all “creep” has ceased or that all failures that will occur have already occurred. Rather, it argues only that these failures should somehow be viewed as “negligible” — as capable of being ignored — and that the risk posed by the certain occurrence of at least some engine fires in the future should therefore be considered not “unreasonable.” We disagree.

The basic purpose of the Safety Act is to reduce motor vehicle accidents, injuries, and property damage.10 In adopting the notification provisions of the Act the Senate Commerce Committee found that “[d]efi-ciencies in past industry practices relating to the notification and curing of manufacturing defects necessitate the imposition of mandatory procedures to insure such notification of purchasers and correction of all safety-related defects.” S. Rep. No. 1301, 89th Cong., 2d Sess. 4 (1966), U.S.Code Cong. & Admin.News 1966, p. 2712 (emphasis added). In our view, where a defect — a term used in the sense of an “error or mistake”11 — has been established in a motor vehicle, and where this defect results in hazards as potentially dangerous as a sudden engine fire, and where there is no dispute that at least some such hazards, in this case fires, can definitely be expected to occur in the future, then the defect must be viewed as one “related to motor vehicle safety,”12 and the Act’s basic purpose of protecting the public requires that notification be provided.

*759In this case it is clear, with the gift of hindsight, that this purpose would have been best served had a notification order been issued some seven years ago. At that time NHTSA, relying substantially on information provided by General Motors predicting a substantial decrease in future carburetor failures, decided not to require notification. General Motors’ predictions later proved wholly inaccurate, and the order was finally issued in 1974.13 Our purpose in noting this is not to assign any fault for this unfortunate delay, or to cast doubt upon the trustworthiness of General Motors’ instant predictions on the basis of their past record of inaccuracy. Rather, it is only to point out that if the consumer safety would have been best served by'an order in the first instance, it would be most ill served by extending this delay based on new predictions that the number of injuries caused by the defect will diminish.

The fact remains that some of these cars continue to be driven and that, according to General Motors, some “negligible” number of them will burst into flames in the future. Thus General Motors’ own affidavits clearly establish that some drivers of 1965 Chevro-lets and 1966 Chevrolets and Buicks face not simply an unreasonable risk of carburetor failures — but a virtual certainty. Nor does General Motors dispute that this is a result of improper assembly of the carburetors. To be sure, General Motors does argue, based on instances of injuries reported to it in the past, that the risk of injuries resulting from these “negligible” failures will be “exceedingly small.” See General Motors brief at 22. In the context of this case, however, even an “exceedingly small” number of injuries from this admittedly defective and clearly dangerous carburetor appears to us “unreasonably large.” Moreover, the fact that in past reported cases good luck and swift reactions have prevented many serious injuries does not mean that luck will continue to work in favor of passengers of burning cars. As a matter of statistics their chances may well, as General Motors suggests, appear quite favorable. The purpose of the Safety Act, however, is not to protect individuals from the risks associated with defective vehicles only after serious injuries have already occurred; it is to prevent serious injuries stemming from established defects before they occur. To now hold that General Motors, having managed to avoid issuance of an order in 1970, was not required to notify those operators who remain subject to risk since most of the failures have already occurred would be to leave this purpose permanently unfulfilled and to establish a system which encourages manufacturers to delay proceedings whenever possible — at the expense of those endangered by defective vehicles.

This conclusion is in no way undercut, as General Motors suggests, by our view of the “ ‘commonsense’ balancing of safety benefits and economic cost” articulated in Wheels, supra, 518 F.2d at 435. In Wheels we stated:

The commonsense limitation reflects an awareness that costs must be considered in determining what safety measures are required by the Act. While some margin of safety must be built-in [s/c ] to protect against failures during day-to-day operation, manufacturers are not required to design vehicles or components that never fail. It would appear economically, if not technologically, infeasible for manufacturers to use tires that do not wear out, lights that never burn out, and brakes that do not need adjusting or relining. Such parts cannot reasonably be termed defective if they fail because of age and wear.

Id. at 436. Here we do not deal with a part which is subject to failure because of age and wear, or a part which drivers reasonably expect to have to check and replace *760because of the particular problem involved. Nor is there involved any question of requiring General Motors to produce perfect, accident-free vehicles at any expense. Rather, we are merely requiring General Motors to notify owners as to a carburetor which did not, from the beginning, meet the manufacturer’s own standards for proper assembly and which, absent notification, will in the future cause at least some operators and passengers to be confronted with the clear dangers attending a sudden fire in the engine.

II

Under the Safety Act a manufacturer may be liable for a maximum civil penalty of $400,000 for failure to comply with a notification order issued by the Administrator.14 While no civil penalty can attach if the manufacturer is successful in defending an enforcement action, a manufacturer who chooses not to comply with an order when issued — and who does not secure a stay of the Administrator’s order or an injunction against its enforcement pendente lite —may be penalized if the Administrator’s order is upheld.15 In this case the District Court, after granting the Government’s motion for summary judgment, imposed the maximum civil penalty on General Motors for its failure to comply with the Administrator’s order.

General Motors challenges this penalty on two grounds. First, it argues that the penalty scheme of the Act is unconstitutional. This argument we reject. The penalty provision of the Safety Act serves to encourage manufacturers promptly to obey valid orders of the Administrator, rather than to delay compliance until after judicial review at the potential risk to the' public safety.16 While this legitimate purpose could not constitutionally be furthered by a penalty system which effectively blocked judicial review of reasonable claims, the penalty system of the Safety Act does not operate to do so, and its constitutionality has been recognized in the past.17 A manufacturer in General Motors’ position may secure preliminary injunctive relief against enforcement of the Administrator’s order if its claim is a substantial and meritorious one. If such relief is not available to General Motors, as it asserts, because it could not have demonstrated sufficient injury to secure injunctive relief, see General Motors brief at 27, then that alone would seem to establish that, given General Motors’ position, a potential penalty of up to $400,000 does not present a very serious obstacle to judicial review. As Justice Cardozo noted in Life & Casualty Ins. Co. v. McCray, 291 U.S. 566, 574-575, 54 S.Ct. 482, 486, 78 L.Ed. 987 (1934):

One who refuses to pay when the law requires that he shall, acts at his peril, in the sense that he must be held to the acceptance of any lawful consequences attached to the refusal. It is no answer in such circumstances that he has acted in *761good faith. “The law is full of instances where a man’s fate depends on his estimating rightly, that is, as the jury subsequently estimates it, some matter of degree.” Nash v. United States, 229 U.S. 373, 377, [33 S.Ct. 780, 57 L.Ed. 1232], * * * It is all “a question of more or less.” Sexton v. Kessler & Co.[,] 225 U.S. 90, 98 [32 S.Ct. 657, 56 L.Ed. 995]. The price of error may be so heavy as to erect an unfair barrier against the endeavor of an honest litigant to obtain the judgment of a court. In that event, the Constitution intervenes and keeps the court room open. * * * On the other hand, the penalty may be no more than the fair price of the adventure. * * * In that event, the litigant must pay for his experience, like others who have tried and lost.

General Motors also argues that the penalty in this case was imposed precipitously, absent argument or briefing on the Government’s request for the maximum penalty. The Safety Act provides: “In determining the amount of such penalty * * the appropriateness of such penalty to the size of the business of the person charged and the gravity of the violation shall be considered.” 15 U.S.C. § 1398(b) (1970). As General Motors concedes, there was certainly no need for any hearing or argument in this case with respect to the “size of the business” criterion. Moreover, as Part I of this opinion makes clear, we see little question as to the gravity of the danger posed by General Motors’ failure to notify owners about the defect in their carburetors. In Ford Motor Co. v. Coleman, 402 F.Supp. 475, 489 (D. D.C. 1975) (three-judge court), aff’d, 425 U.S. 927, 96 S.Ct. 1656, 48 L.Ed.2d 170 (1976), however, the court, in upholding the similar penalty provisions of the amended Act against constitutional challenge, found that “the reasonableness and good faith of the manufacturer’s noncompliance may properly be considered in mitigation of the statutory maximum.”

This case was one of the first enforcement actions relating to defect notifications filed in this circuit, see Wheels, supra, 518 F.2d at 425 n.1, and at that time there was some uncertainty as to the proper application of the Act. Indeed, as General Motors points out, shortly before this case was filed the Government had been denied summary judgment in the Pitman Arm case — a decision recently reversed by this court. See United States v. General Motors Corp. (Pitman Arm), supra. As a result there may— although we do not decide — be some basis for imposing less than the maximum fine upon General Motors on the ground that its decision to challenge the directive through the courts was a reasonable one.18 At the very least, we feel, General Motors ought to be heard on this issue. While there is some dispute as to whether it was afforded an opportunity to speak on the penalty question earlier and chose not to — as opposed to whether no opportunity was offered at all19 —we believe the best course at this time is to remand this case to the District Court for *762the purpose of considering argument by the parties as to the appropriate penalty.

So ordered.

United States v. General Motors Corp.
565 F.2d 754

Case Details

Name
United States v. General Motors Corp.
Decision Date
Oct 14, 1977
Citations

565 F.2d 754

Jurisdiction
United States

References

Referencing

Nothing yet... Still searching!

Referenced By

Nothing yet... Still searching!