Gasch, District Judge.
This May 28 letter was mailed to 280,000 TRUCK owners. Upon further investigation, however, the Acting Federal Highway Administrator,
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
There is strong support for the plaintiff's argument when these two sections are read in conjunction. As this Court reads the statute, Congress did indeed intend to have the manufacturer issue such notifications not only when there was a cognizable defect in design or manufacture but also when the evidence reveals a large number of failures of components or materials, i.e., failures in performance, regardless of the cause.
Admittedly, this interpretation of the statute also reflects a Congressional intent to go beyond the common law theories of negligence, strict liability, and warranties which provide that misuse of the product is a defense to liability for damages caused by the failure of a product.
However, this is not a case in which it is sought to hold the defendant liable for the damages caused by the failure of a product. This statute is designed specifically to warn a consumer before an accident occurs and a defect in performance, such as a "large number of failures," exposes the consumers to dangers of which they should promptly be notified.
It thus becomes clear that allusions to concepts of negligence law and the law of strict liability are inapposite to the statute's stated purpose. As noted by the Court in Larsen v. General Motors Corporation, 391 F.2d 495, 506 (8th Cir. 1968):
Calvert Cliffs' Coordinating Committee v. United States Atomic Energy Commission, 146 U.S.App.D.C. 33, 51, 449 F.2d 1109, 1127 (1971).
Although defendant might assert that the language of the Act is not as clear and unambiguous as the language of the National Environmental Policy Act, it appears to this Court that one very clear way that a "defect in performance" can be indicated is by looking to the number of failures. Inasmuch as the overriding purpose of the Act is uniform and prompt notification of defects,
it is beyond peradventure that plaintiff's "large number of failures" theory supports that Congressional purpose. The construction of the Act advocated by the agency appears to be the more closely attuned to accomplishing the intent of Congress. It is axiomatic
B. The Law to be Applied as to Summary Judgment.
Preliminary to examining the facts which plaintiff urges support its motion for summary judgment, it is necessary briefly to set forth the rules to be applied in connection with this motion.
First, all parties are agreed that defendant has the right to de novo review of the agency decision -- this is not a case of review of an administrative record. Thus, if this Court found that a genuine issue of material fact existed, this case would go to trial. In that regard, this Court will not use the summary procedure in lieu of a trial. The case of Pen-Ken Gas & Oil Corp. v. Warfield, 137 F.2d 871, 877 (6th Cir. 1943), succinctly sets forth the parameters in which courts should operate in considering summary judgment motions:
Accordingly, the examination of facts upon which plaintiff bases its summary judgment motion, infra, will be directed at discovering whether plaintiff has shown that no genuine issue of material fact exists as to the occurrence of a "large number of failures" and if so, whether defendant has a ground of defense which raises a genuine issue of material fact which must be tried.
C. The Facts Supporting Plaintiff's Motion for Summary Judgment and General Motors' Defense.
After a careful review of this voluminous record, it is the Court's conclusion that plaintiff has made a prima facie case that a "large number of failures" do exist thus establishing, under this Court's test, a safety-related defect.
The primary undisputed facts that lead the Court to this conclusion are the following. First, it is undisputed that General Motors received 2,361 reports of failures.
Perhaps more importantly, the defendant states in its pleadings that "General Motors has never denied that a significant number of wheels failed."
Additionally, the government has conducted a stratified random sampling of a population constructed from the 1,319 owners of TRUCKS identified by General Motors as having reported WHEEL failures. That study conducted by Dr. G. Koch had as its goal the collection of affidavits from sample owners detailing whether or not WHEEL failures had actually occurred on any TRUCK owned by a person in the sample population. Further, once such affidavits were obtained that information was utilized to draw inferences as to the overall population.
Dr. Koch and the government did succeed in gathering 154 affidavits which revealed 393
actual WHEEL failures. Moreover, based on the random sampling and the use of 95 per cent confidence intervals, Dr. Koch concluded that: (1) there would be at least 670 owners taken from the list of those who reported WHEEL failures to General Motors who would be willing to furnish affidavits regarding the failure of WHEELS on TRUCKS if they had been contacted for that purpose; this group would have reported 1,400 failures; and (2) based upon the list of owners who had reported WHEEL failures to the agency combined with the list furnished by General Motors, 707 owners on the combined list, if asked, would have furnished affidavits detailing some 1,503 WHEEL failures.
The 160 affidavits that are attached to the government's motion report 436 WHEEL failures. The most crucial factor in determining that summary judgment should be granted to plaintiff is that defendant has not disputed in any significant respect the authenticity of these affidavits. In fact, Ralph Morrison, Manager of General Motors Field Campaigns Service Department, has admitted through deposition that based upon the over 2,300 reported failures, it is more likely than not that 700 TRUCK owners would have had failures.
The Court concludes that the facts outlined above, and a review of the entire record herein, establishes a prima facie case that a "large number of failures" were in fact suffered, thus establishing a safety-related defect.
The next question that the Court must address is whether the defendant has raised a genuine issue of material fact as to the aforementioned considerations.
The defendant did file an affidavit by a Dr. Joskow, a statistician, who concluded, based on information and belief, that the owner affidavits, attached to the government's motion, might be inaccurate because the owners might not recall what it was they experienced and, additionally, because the government personnel assisting in the accumulation of affidavits might be biased thus tainting the information. The Court is unable to conclude that Dr. Joskow's affidavit raises any genuine issue of material fact. Dr. Joskow does not question the methods used to make Dr. Koch's projections, only the possible inaccuracies that might have arisen due to the methods of accumulating the affidavits. Nowhere in the record is there a hint of any factual information indicating that the government affidavits were incorrect or otherwise contained false statements.
The second theory strongly urged by defendant in opposition is that the government has not proven a prima facie case as to a "large number of failures" on PLAIN TRUCKS. Such proof must be established, defendant contends, since General Motors has already sent out a valid notification with respect to TRUCKS with campers or special bodies.
Although the Court appreciates the effort on the part of defendant in sending out the 1969 letters, the Court is constrained to accept plaintiff's argument that it need not prove a "large number of failures" of WHEELS on PLAIN TRUCKS. It is true that the settlement agreement included a provision that the case could be reopened
if it becomes necessary in the interests of safety, based on further information, such as information as to wheel failures involving trucks on which no camper or special body is attached under clear non-overload conditions.
Defendant contends that this agreement has the effect of limiting plaintiff's proof in any subsequent notification enforcement proceeding to failures on PLAIN TRUCKS.
The Court views the effect of the 1969 letters and the settlement in a different light. The settlement limited the grounds for reopening the case -- this is not questioned. However, once it became apparent upon further investigation
that there was cause for reopening, the plaintiff was then free to use all available evidence in proving a safety-related defect. In view of the statutory scheme, as this Court interprets the Act, plaintiff was free to show a "large number of failures" by any available means, including a "large number of failures" on all TRUCKS on which failures were evident.
This holding is not unfair to the defendant. The defendant sent out the 1969 letters prior to any formal finding that there was a defect in performance as to all TRUCKS. Once this determination was finalized, defendant was required only to send notifications to owners of TRUCKS not equipped with special bodies or campers and to those TRUCK owners contemplated by the terms of the October 8, 1969, settlement agreement that did not have their WHEELS replaced in response to the offer.
The facts do establish that there is a safety-related defect in performance. While the settlement agreement was in the public interest and the sending of the letters salutary, those actions cannot be interpreted by this Court to deprive plaintiff of all the proof indicating a safety-related defect on TRUCKS that might have been equipped with special bodies or campers.
It is the opinion of the Court, therefore, that the uncontradicted evidence establishes that the WHEEL fails unpredictably and catastrophically in large numbers. The affidavits demonstrate the existence of this danger and this danger exists regardless of whether the cause of the failures has been found. It is admitted that the WHEELS fail even following a short period of overloading and it is unnecessary, under this Court's view of the statute, for the government to detail the loading history of each TRUCK and WHEEL.
Therefore, the Court holds that plaintiff has established de novo as a matter of law that the WHEELS contain a defect which relates to motor vehicle safety, within the meaning of the Act, in that the WHEELS are subject to sudden and catastrophic failure resulting in accidents and injuries to persons using the highways.
Defendant has presented no evidence negating this proof or sufficient to raise a genuine issue as to there being a large number of failures.
Accordingly, the Secretary of Transportation was warranted in finding, and did not abuse his discretion in so doing, that the WHEELS contain a defect which relates to motor vehicle safety. The Secretary was likewise correct in holding that purchasers of the TRUCKS equipped with the WHEELS are entitled to the notification provided by the Act pursuant to the November 4, 1970, letter.
It appearing to the Court that defendant was directed by the Secretary to furnish the statutory notification, and defendant has failed in compliance, this Court must conclude that plaintiff is entitled, as a matter of law, to summary judgment in this case.
Upon consideration of plaintiff's motion for summary judgment, defendant's opposition thereto, and the entire record herein, and the Court having determined therefrom that the three-quarter ton model year 1960-65 Chevrolet and GMC pickup trucks equipped with three-piece 15 X 5.50 Kelsey-Hayes disc wheels are subject to sudden and catastrophic failure and constitute a safety-related defect within the meaning of Section 113 of the National Traffic and Motor Vehicle Safety Act of 1966 (15 U.S.C. § 1402); and that defendant has violated Sections 113(e)(2) (15 U.S.C. § 1402(e)(2)) and 108(a)(4) (15 U.S.C. § 1397(a)(4)) of that Act by failing and refusing to furnish the notifications specified in Section 113(c) of the Act (15 U.S.C. § 1402(c)) to the purchasers of the aforesaid trucks still equipped with the three piece 15 X 5.50 Kelsey-Hayes disc wheels as provided in Sections 113(a) and (b) thereof (15 U.S.C. § 1402(a) and (b)); and that there is no genuine issue of material fact and, therefore, plaintiff is entitled to a judgment as a matter of law, it is by the Court this 13th day of June, 1974,
Ordered that defendant, its officers, agents, servants, employees, and attorneys, and those persons in active concert or participation with them who receive actual notice of this order by personal service or otherwise, are permanently restrained and enjoined from engaging in further violation of Sections 113(e)(2) (15 U.S.C. § 1402(e)(2)) and 108(a)(4) (15 U.S.C. § 1397(a)(4)) of the Traffic Safety Act by failing and refusing to furnish the notifications specified in Section 113(c) of the Act (15 U.S.C. § 1402(c)) to the purchasers of the three-quarter ton 1960-65 model year Chevrolet and GMC pickup trucks presently equipped with the three-piece 15 X 5.50 Kelsey-Hayes disc wheels as provided in Section 113(a) and (b) of the Act (15 U.S.C. § 1402(a) and (b)) and as outlined in the accompanying Opinion; and it is further
Ordered that defendant's counterclaim be, and the same hereby is, dismissed; and it is further
Ordered that any determination as to defendant's liability for a civil penalty of $400,000 be held in abeyance until the parties have had the opportunity to submit memoranda in this regard, plaintiff's memoranda to be submitted within 14 days of the issuance of this Order and defendant's memoranda 14 days thereafter.