Up To Standards
- Author: Mike Weinberg
- Subject Matter: Our litigious society
- Issues: How to protect yourself
Take steps to protect your business
We live in the most wonderful country in the world. Nowhere else on earth can the average guy have more freedom and more opportunity to succeed. Freedom isn’t free, and it must constantly be protected from external threats as well as those created internally. For the past 50 years I have watched our society sink deeper and deeper into the hands of people who would regulate us into submission.
The societal changes include an ever-increasing chance that you, at some point in your life in business and as a private citizen, will be sued for something. Just looking at the past 18 months of the political election mess, you can see how much money was spent hiring attorneys to address a myriad of grievances. Since World War II, we have become the most litigious nation on earth. Personal responsibility has gone the way of the dinosaur, everything is someone else’s fault, and there will be a lawyer happy to charge you to solve the problem. Never mind how ridiculous the claim, some lawyer will take the case and some judge (also a lawyer) will hear it. Whether you win or lose, both sides will pay attorney’s fees and court costs.
Congress does not make many new laws every year, but unelected bureaucrats write millions of rules, regulating us into a nightmare that costs billions in time and money. Consider our 74,000-page tax code, which even the IRS cannot understand and you get the message.
In business, it is very difficult and costly to operate in this regulatory minefield. It is also necessary to school yourself in operating a business properly to avoid litigation whenever possible. You are working on cars and trucks. The driver’s and passengers’ lives and well-being are in your hands. Any mistakes in repair procedures or defective parts can come back to haunt you and can become extremely expensive and time consuming to settle. You hear every day about automotive recalls that cost the manufacturers billions of dollars, such as defective airbags and faulty ignition switches that result in death and injury. The following are some tales from the past that may give you a better perspective on how to fine-tune your operations to avoid such disasters.
I have been engaged as an expert witness in many automotive lawsuits involving driveline issues and vehicle dynamics by vehicle manufacturers. Most of the cases could have been prevented, and some were created by disgruntled customers whose actions resulted in bad outcomes and were looking for compensation they did not deserve. Right or wrong, it got very expensive for both sides and the lawyers always got paid.
Sad tale No. 1: Liability
The first case to speak about started with a phone call from Bob Chernay, who worked for years as the technical director of ATRA then left to start his own company, ATSG, to continue technical information to the transmission rebuilder. “Can a car flip over if the transmission locked up?” was the first sentence. I replied that speed was a factor, but normally on flat pavement, if the car did not trip on a curb, it would usually do a few 360s. He said I have an expert witness deal with an automaker that involves a $90 million wrongful death suit; do you wish to work on this with me?
In a suit of this nature the courts will generally limit the amount of dollars based on the injured party’s ability to earn that amount of money. I was informed that the deceased was an oil and cattle baron from Texas who was worth about $500 million and the suit was by his estate against the automaker and everyone else who had any contact with the vehicle. Next, UPS delivered to me about 20 large boxes of depositions for me to study regarding the case. In short, the rancher had his transmission repaired at the authorized new car dealership some weeks before under warranty, and while driving on a rutted, hillside dirt road on his property, the trans had locked up, pitching the car into the side of the ruts where it turned over and rolled down the hillside. The driver was not wearing a seat belt, was ejected from the car, which proceeded to roll over him, resulting in his death.
The car was impounded in Houston awaiting inspection by involved parties for the lawsuit. The estate was suing the automaker, the dealer, the guy who put gas in it that morning, the carwash it had gone through, etc. Off to Houston we go to inspect the vehicle. There were more suits in that garage than you can imagine as all involved parties had lawyers and experts present. The vehicle was thoroughly inspected, placed on a lift and a certified automaker tech pulled out the trans and tore it down with multiple video cameras rolling and tons of flash photos documenting every step of the process. It was obvious that the low gear planet had failed and locked up the unit, causing the death of this man. The automaker guys were unhappy with this outcome, but we told them to relax, we were in the early stages of our process.
The automaker had redesigned the transmission to increase the thickness of the thrust bearing, as there had been failures. There was a change in the height of the step on the planet carrier to accommodate the thicker bearing, and the parts were sold as a kit with a revised sun gear, thrust bearing, and other parts. The planet that had failed was a first-design planet. We broke for lunch, and during the break, Bob and I asked for the copy of the warranty repair order that the dealer had charged the automaker for the previous repair three months prior to the accident.
In the repair order, the dealer had included a second design low planet kit and the automaker had paid for it, but it was not installed in the transmission. The kit was expensive and maybe it got ordered and sold out the back door, but it wasn’t in the trans. The parts department obviously did not have good procedures in place where the tech would have to turn in the old parts to get new ones, or the service writer padded the bill to the automaker. We explained all of this to the attorneys, and they got the automaker separated from the case as the issue was created by the dealer.
The dealer had $3 million in liability insurance. His insurance company wrote that check and said goodbye, and the dealer was on the hook for $87 million left in the suit. The lesson learned here is that make sure that whatever you charge for actually goes into the repair, and make sure your liability insurance is enough. Your garage liability policy will have a reasonable amount before it gets expensive, but speak with your agent and get an “umbrella” over that for $5 million or more, which is very cheap to buy. Think about this in real world terms, you put transmissions in ambulances, school buses, and other forms of multiple-person vehicles. If the trans fails and the patient dies due to the delay in getting them care, how big do you think the lawsuit will be?
Sad tale No. 2: Credibility
A man leases a 7 series BMW, doesn’t like how the trans shifts and sues BMW to get out of the lease. His complaint is that at 85-90 mph the trans gets funky and he wants out of the deal. I get hired by the New Jersey Supreme Court in Newark, N.J., to act as an expert witness for the court, because you cannot offer into evidence illegal behavior and driving at 85-90 mph is illegal.
I arrange to take this car to Lime Rock Park racetrack in Connecticut to test its operation. The customer brings the car to my shop where we do a thorough diagnostic on the entire car. It is a low-mileage vehicle, in excellent condition, and we confirm that everything down to tire pressures and alignment are correct and in specification. I drive to the track, which is 90 minutes away, with the customer and the car is flawless. At the track I suit up and get my helmet on and the car owner says that he has to go with me. I said to him, “I am willing to die if I make a mistake. Are you willing to die if I make a mistake?” He says his attorney told him he had to be present all the way. I asked why he didn’t have the attorney come and do this. He shrugs, and I borrow a helmet for him.
I did a couple of warm-up laps and then did two hot laps so we would have some brakes left to go home with. Again, there was no problem with the car. He says he can make it happen every time if he plays with the gas pedal. I told him to show me on the way home, and following his instructions by lifting my foot at the wrong time, I can start the converter clutch to chug. I said that this was not a proper driving mode, and he says that’s what he likes to do, and his Lexus doesn’t do it.
I submitted my report to the court, and a few weeks later the case went to trial. The owner’s attorney had hired the owner of a transmission franchise as an expert witness. He testified that there were definite problems with the transmission, in that the fluid was not the normal red ATF color and that the trans would not go into overdrive until at least 5-10 minutes of driving. An engineer from ZF testified next and explained that the correct factory fill was not the normal ATF color and that the computer would not permit the transmission to go into overdrive until certain operating temperature were reached.
The judge took me aside, and I explained it all in laymen’s terms. She then asked their expert more questions that he could not answer correctly.
BMW won the case due to lack of a credible expert witness for the plaintiff. The lesson here is that if you are asked to appear in court as an expert witness, make sure you are technically proficient in the case details. You will be asked to fill out an expert witness statement that documents your credentials for the right to testify as an expert. Do not cook your books or exaggerate as the penalties for perjury are stiff.
Sad tale No. 3: Perjury
Perhaps some of you are old enough to remember the Audi 5000 models, which had a large number of complaints for unintended acceleration. Audi, perhaps due to cultural differences, did nothing and stuck their heads in the sand. The TV show “60 Minutes” brought on an “expert” who had modified a valve body, removing all the safety features and said that it could happen. This was a big blow to Audi. They wound up rebranding the 5000 model at great expense.
I was called by the producer of the show to check on their “expert’s” statements. I explained to them that there was no unintended acceleration and that the problem was in the ergonomics of where they placed gas and brake pedals and that people were stepping on the gas when they thought they were braking. I was asked if I would appear on the show and I replied only if you give me editorial power over the content of my statements. They refused and I did not appear as they could edit out any of my statements to fit their agenda. The media no longer cares about the facts and the truth, they sensationalize anything to sell more ad space. Audi was now subject to a number of class-action suits and almost lost the entire U.S. market.
Some weeks later a woman came into our shop with an Audi 5000 complaining of transmission problems. I test drove the car with her and there was definite damage to the trans. In conversation she told me that she was the head of the class-action suit for Audi owners in New York state. She also told me that she knew that there was NO unintended acceleration and that she had stepped on the gas instead of the brake, driving through her garage door.
She was counting on a big payday from Audi, and when she testified in federal court, the lawyers tripped her up and she was fined $75,000 for perjury.
She did not engage us to fix her vehicle and I was just as happy to see her go down the road. Listen to your customer, ask the right questions, do not talk over them or above their comprehension level. Make sure that you thoroughly understand what their problems and concerns are and that you clearly describe to them your plans to fix their issues.
We live in a society where people want to take little responsibility for their actions and look to have their day in court. There are any number of flesh-eating cannibals out there willing to represent these people, no matter how ridiculous the facts of the case are, as it is a payday for them either way.
Make sure your operating procedures are designed to protect your business:
- Work with your insurance agency to obtain the proper coverage to insure you against unintended consequences.
- Save the old parts to show the customer, and document everything you do properly and on paper.
- Make sure you have a bulletproof warranty that describes in detail what is and what is NOT warranted.
The devil is in the details and, like the referee says to the boxers before the match, “Protect yourself at all times.”
