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Consumer groups challenge Chrysler bankruptcy’s attempt to shed consumer protections

Consumers for Auto Reliability and Safety

Center for Auto Safety

Public Citizen


May 19, 2009

Consumer groups challenge Chrysler bankruptcy’s attempt to shed consumer protections

Seek to preserve rights for lemon owners and victims of defective autos

 Leading national consumer groups today filed objections in the federal bankruptcy court in New York that is overseeing the Chrysler bankruptcy proceeding, asking the court to preserve the rights of consumers who have suffered or will suffer injury or loss caused by defects in Chrysler vehicles to seek compensation from Chrysler. The groups do not aim to delay the bankruptcy, but to ensure that the new company that emerges does not leave customers who have been, or will be in the future, injured by Chrysler cars with no avenue for obtaining relief.

 Today’s objection was filed on behalf of the Center for Auto Safety, Consumer Action, Consumers for Auto Reliability and Safety (CARS), National Association of Consumer Advocates (NACA) and Public Citizen.

 “Consumers are the only ones who can save Chrysler,” said Rosemary Shahan, president of CARS, a non-profit consumer group based in Sacramento, Calif. “Preserving their rights should be the first priority, not the last.”

 “We want to ensure that consumers’ voices are heard in the bankruptcy proceeding,” said Adina H. Rosenbaum of Public Citizen, lead counsel for the consumer groups.

 Unless the groups succeed, the claims of families of victims who died due to unsafe Chrysler vehicles and people who suffered devastating and debilitating injuries will be wiped out. When the new Chrysler/Fiat company emerges from bankruptcy, owners of vehicles who seek refunds under state auto lemon laws will also be left without a remedy.

  “For consumers injured, burned and paralyzed by defects in Chrysler vehicles, wiping out Chrysler’s liability destroys any possibility for an independent life,” said Clarence Ditlow, director of the Center for Auto Safety. “Taxpayers are already paying for Chrysler’s bailout; they shouldn’t pay for injuries in crashes caused by Chrysler.”

   “As dealerships shut down in towns across the country, Consumer Action wants to ensure that consumers are not abandoned during the bankruptcy process,” said Linda Sherry, director of National Priorities at Consumer Action.

 The groups’ objection was filed jointly with three individuals who have cases pending against Chrysler for injuries and deaths caused by Chrysler vehicles. The individual objectors are represented by the law firms Lieff Cabraser Heimann & Bernstein in San Francisco, and Stichter, Riedel, Blain & Prosser in Tampa, Fla..