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UNITED STATES v. GMC

June 13, 1974

UNITED STATES of America, Plaintiff,
v.
GENERAL MOTORS CORPORATION, Defendant


Gasch, District Judge.


The opinion of the court was delivered by: GASCH

This matter is before the Court on plaintiff's motion for summary judgment and defendant's opposition thereto. *fn1" Plaintiff's complaint, filed on November 6, 1970, is the first action of its kind brought pursuant to the National Traffic and Motor Vehicle Safety Act of 1966, as amended (Act of September 9, 1966, 80 Stat. 718 et seq., 15 U.S.C. § 1381 et seq.) (hereinafter referred to as the Act). Specifically, plaintiff seeks a judgment declaring that defendant has violated Section 108(a)(4) (15 U.S.C. § 1397(a)(4)) of Title I of the Act by failing to issue safety defect notifications in regard to 15 X 5.50 Kelsey-Hayes disc wheels (hereinafter referred to as WHEELS). *fn2"

 It was the determination of the Director of the National Highway Safety Bureau *fn3" (hereinafter referred to as the Director), acting pursuant to Section 113(e)(2) (15 U.S.C. § 1402(e)(2)), that the WHEELS contain a "defect which relates to motor vehicle safety." Accordingly, by letter dated November 4, 1970, the Director notified the defendant of his determination and directed General Motors to furnish the notification specified in Section 113(c) of the Act (15 U.S.C. § 1402(c)).

 Defendant counterclaims for judicial review of this determination by the Director and asks this Court to declare the November 4, 1970, determination and direction unlawful and void. Further, defendant seeks an injunction restraining the enforcement of the Director's order. *fn4"

 I. FACTUAL BACKGROUND.

 Defendant is a corporation organized under the laws of Delaware and a "manufacturer" within the meaning of Section 102 of the Act (15 U.S.C. § 1391). During the years 1960 through 1965, defendant manufactured approximately 321,743 three-quarter ton GMC and Chevrolet pickup trucks (hereinafter referred to as TRUCKS). It is estimated that approximately 200,000 of these TRUCKS *fn5" were equipped with the WHEEL which was optional equipment. *fn6"

 This action has its origin in 1968 when the National Highway Safety Bureau (NHSB) (now the National Highway Traffic Safety Administration), following up on reports of failures of these WHEELS, requested information from the defendant in connection with vehicles equipped with the WHEEL. As a result of this preliminary investigation, NHSB issued an Investigation Report (Part I) on April 2, 1969. At this time, the report noted that failures had been reported to both NHSB and General Motors and attention was focused on alleged "flaws" or "cracks" in the gutter that might be a cause of the failure of the WHEEL. The defendant, by letter of April 19, 1969, argued that there was no manufacturing defect and further that the number of failures, admitted by General Motors to be "significant" could be solely attributed to owner abuse through overloading. *fn7"

 A. Initial Administrative Actions.

 1. The Letters and the "Settlement."

 Notwithstanding defendant's contention then, and its contention now, that owner abuse through overloading was the cause of the WHEEL failures, General Motors saw fit to inform owners of the TRUCKS, in a letter of May 28, 1969, that there existed "a serious safety risk in certain 15 X 5.50 three-piece disc wheels." Furthermore, in this letter defendant noted that

 
The problem is serious under conditions of heavy loading, such as when the truck is equipped with an over-the-cab type camper. Specifically, if one of these trucks is overloaded and the tires are overinflated, these wheels are subject to sudden fracturing and breaking apart during use. Such occurrences result in immediate loss of air from the tire, which can come off the wheel, possible loss of control of the vehicle, and substantial risks of serious harm to persons and property in the vicinity . . . .
 
In view of the potential safety hazard arising from the continued use of three-piece wheels if you have an over-cab camper or other heavy special body on your truck, or may attach one in the future, we urge that you replace the wheels as soon as possible. Also, if your truck was purchased as a used vehicle and you are unable to determine that it was equipped with a camper or other special body or not overloaded by owners prior to your purchase, a prudent course of action would be to replace the wheels . . . .

 This May 28 letter was mailed to 280,000 TRUCK owners. Upon further investigation, however, the Acting Federal Highway Administrator, *fn8" by letter of August 25, 1969, notified defendant that a preliminary determination had been made that a defect relating to motor vehicle safety existed with respect to the TRUCKS equipped with the WHEELS.

 Defendant was offered an opportunity to respond to the allegations as provided by Section 113(e) (15 U.S.C. § 1402(e)). Taking advantage of this opportunity, defendant, by letter of September 11, 1969, while denying the existence of a defect and again asserting owner abuse as the cause of the failures, made the candid admission that

 
"[A] brief period of excess loading can cause a crack to occur in a wheel. Thereafter, such a crack may develop to the point of wheel failure with further use of the wheel even under proper load." *fn9"

 Prior to the final determination by the government, the defendant made a settlement offer which would include the replacement, at defendant's expense, of the WHEELS on all TRUCKS equipped with campers or other special bodies. This settlement was agreed upon and the Section 113 proceeding was properly closed. However, the agency reserved its right to take further action "if it becomes necessary in the interests of safety." *fn10"

 Commencing October 7, 1969, the defendant mailed a second letter to TRUCK owners offering to replace the WHEELS in accordance with the terms of the settlement. In carrying out this agreement, defendant gave the owners the option of selecting as a replacement a 15 X 5.50 two-piece wheel which General Motors described as "having an increased safety factor over the three-piece 15 inch wheel," *fn11" or a 16 X 6.00 two-piece wheel. It is noteworthy that the 15-inch replacement wheel had exactly the same tire-wheel combination load carrying capacity as the Kelsey-Hayes three-piece disc wheel.

 The termination of the Section 113 proceeding was announced on October 9, 1969. The defendant, pursuant to government request, stated that as of February 23, 1970, it had replaced 22,452 WHEELS in accordance with the October 7, 1969, offer. As of the present, it has been reported by General Motors that 62,229 WHEELS have been replaced.

 2. The Nader Suit and the Reopening of the Proceedings.

 On March 31, 1970, Mr. Ralph Nader commenced an action in this Court styled Nader v. Volpe, Civ. No. 960-70, seeking to have this Court set aside the October, 1969, settlement and compelling the Secretary of Transportation and others to reconsider whether there was a defect in Kelsey-Hayes WHEELS on TRUCKS without special bodies or campers.

 The Nader suit was grounded upon a misstatement respecting the findings of the National Highway Safety Bureau engineers contained in the October 9, 1969, termination announcement. In that announcement it was erroneously reported that the government engineers had discovered no safety hazards in TRUCKS equipped with the WHEELS but not equipped with camper or special bodies. In fact, the conclusion of the engineers was to the contrary, i.e., that all trucks equipped with the WHEELS presented a safety hazard. *fn12"

 Judge Waddy of this Court, upon consideration of the arguments of counsel, ordered the case remanded to the agency with directions that it complete its investigation of the TRUCKS not equipped with campers or other special bodies (hereinafter referred to as PLAIN TRUCKS). *fn13" The agency did report back on September 14, 1970, and it concluded that a defect did exist as to the PLAIN TRUCKS. *fn14"

 B. Further Agency Action.

 As a consequence of this finding of September 14, 1970, the agency on that date informed defendant of its initial finding of a defect in regard to the PLAIN TRUCKS and defendant ...


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