each defect notification it failed to send in contravention of the order of the Administrator of the National Highway Traffic Safety Administration [NHTSA]. It is conceded that if these failures to send are cumulated, General Motors would certainly have to pay more than the $400,000 maximum amount allowed in § 1398(a). Accordingly, this Court cannot assess more than $400,000 in penalties against General Motors. The remaining question is, however, whether upon consideration of the gravity of the offense and the size of the business, 15 U.S.C. § 1398(b), $400,000 is an appropriate penalty. For the following reasons, the Court finds certain factors tend to mitigate General Motors' refusal to comply with the defect-notification order.
First, as noted in the June 13th Opinion in this case, General Motors has sent a letter to all owners of trucks using the WHEEL [hereinafter Trucks], informing the owner of a serious safety problem if the Truck is overloaded.
At the further urging of NHTSA, a second letter was sent offering to replace the WHEELS on all Trucks equipped with campers or special bodies.
This Court has found that General Motors should have informed the Truck owners that there existed a safety-related defect as to all WHEELS. Nevertheless, General Motors did take this action which lessened the gravity of the violation. Some 62,229 WHEELS have been replaced pursuant to the October 7, 1969, letter. If this letter had not been sent, many more WHEELS may have failed causing injury.
The Court wants to make it abundantly clear that it does not condone in any manner the refusal of General Motors to send a further notification letter after the November 4, 1970, order of NHTSA. Moreover, it is apparent that General Motors knew there was some problem with these WHEELS between 1965 and the time the 1969 letters were sent. For that reason, General Motors should be penalized pursuant to the Congressional direction of § 1398. But again, the gravity of the violation can only be determined by viewing all the surrounding circumstances. The sending of the 1969 letters is a factor which must be considered in determining an appropriate penalty.
A second factor which the Court feels must be considered is that this is a case of first impression and the law on this subject had not heretofore been interpreted by the courts during the course of the WHEELS controversy. In the future, after the Act is subject to further definition by the courts, General Motors or any other manufacturer may be subject to a higher degree of care in challenging an order under the Act. At this time, however, General Motors was not acting in blatant disregard of a well-defined area of the law. Each judge, in setting a penalty, may well determine that the law at issue was sufficiently clear on its face that no mitigation of the penalty is warranted. Within the circumstances of this case, however, it is appropriate to consider the novelty of the questions at issue in determining the appropriate amount to be assessed as a penalty.
On the other side of the coin, as noted supra, is the fact that for at least four years General Motors knew of some problems with the WHEELS but took no remedial actions whatsoever. Furthermore, it was not until this litigation was underway that the government learned, through discovery from General Motors, that there were 2,361 reported failures of the WHEELS. Taking these factors into account, as well as the well-known fact that General Motors is one of the largest corporations in the world, the Court finds that One Hundred Thousand Dollars ($100,000.00) is an appropriate penalty.
IV. DUE PROCESS.
It is the contention of General Motors that any award of civil penalties in this case would violate the corporation's constitutional right to due process. The foundation for this argument is that the government cannot assess heavy penalties against a party for challenging in court what the party considers an unlawful administrative order. General Motors maintains that if an automobile manufacturer is automatically liable for $400,000 in civil penalties every time it is necessary to challenge a possibly unlawful defect-notification order, then the manufacturer may find it more beneficial as a matter of economy to relent and send the notification notwithstanding the unlawful character of the order. Such a statutory scheme, it is argued, unconstitutionally inhibits judicial review, thus depriving the automobile manufacturer of due process.
There are several problems with General Motors' constitutional argument. First, no penalty can be assessed by this Court until after a de novo review of the validity of the notification order. It is the view of this Court that no penalty can be assessed until a court finds that General Motors' position was incorrect and the Secretary right in ordering the sending of the safety-defect notices. Secondly, the possible penalties under § 1398 are not automatic. As in this case, a court may find mitigating factors which militate against the assessment of the full $400,000 maximum penalty. Under the criteria set forth in § 1398(b) an automobile manufacturer may altogether escape assessment of any penalty depending upon the facts of each individual case. Finally, the Court, after examining the cases cited by General Motors,
finds that the crux of these cases is that one cannot impose such a burdensome penalty for challenging possibly unlawful governmental action that the challenging party would for all intents and purposes be robbed of the right to judicial review. That is not the situation in the case at bar. In contrast, it is hardly reasonable to argue that General Motors, one of the largest corporations in the world, would forego judicial review simply because there is a possibility that if it loses it may be assessed anywhere from one dollar to four-hundred thousand dollars. It follows, therefore, that the assessment of penalties under this statute will neither unduly inhibit General Motors from seeking judicial review nor in any other manner violate due process.
The policy of the Act with regard to civil penalties is clearly to discourage noncompliance with safety-defect orders except where the manufacturer is so certain of the correctness of its position that it is willing to risk civil penalties if it loses in court. Such a policy is clearly in the public interest in that it promotes prompt and uniform notification of safety-hazards in all but the few cases where the manufacturer is sure its position in not sending the notifications is valid. Congress in taking this course to assure the safety of highway users was well within constitutional bounds as long as the NHTSA order is subject to judicial review.
As noted by Justice Cardozo in Life & Casualty Insurance Co. of Tennessee v. McCray, 291 U.S. 566, 574, 78 L. Ed. 987, 54 S. Ct. 482 (1934), penalties can be assessed to carry out a valid public interest without violating constitutional rights of due process if that penalty does not present an insurmountable barrier to judicial review:
"Penalty" is a term of varying and uncertain meaning. There are penalties recoverable in vindication of the public justice of the state. There are other penalties designed as reparation to sufferers from wrongs. Huntington v. Attrill, 146 U.S. 657, 668, 36 L. Ed. 1123, 13 S. Ct. 224; Brady v. Daly, 175 U.S. 148, 154, 157, 44 L. Ed. 109, 20 S. Ct. 62; St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 66, 64 L. Ed. 139, 40 S. Ct. 71; Loucks v. Standard Oil Co., 224 N.Y. 99, 103, 120 N.E. 198. 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 good 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, 57 L. Ed. 1232, 33 S. Ct. 780. Reparation may still be due, for all his good intentions, yet reparation within bounds. It is all "a question of more or less." Sexton v. Kessler & Co. 225 U.S. 90, 98, 56 L. Ed. 995, 32 S. Ct. 657. 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. Ex parte Young, 209 U.S. 123, 52 L. Ed. 714, 28 S. Ct. 441; Wadley Southern Ry. Co. v. Georgia, 235 U.S. 651, 661, 662, 59 L. Ed. 405, 35 S. Ct. 214. On the other hand, the penalty may be no more than the fair price of the adventure. St. Louis, I.M. & S. Ry. Co. v. Williams, supra, p. 66. In that event, the litigant must pay for his experience, like others who have tried and lost. (Footnote omitted.)
Since there is no insurmountable barrier to review in this case, $100,000.00, in the words of Justice Cardozo, is the fair price General Motors must pay for this adventure.
Accordingly, it is by the Court this 30th day of July, 1974,
ORDERED that defendant pay to plaintiff as civil penalties pursuant to 15 U.S.C. § 1398, One Hundred Thousand Dollars ($100,000.00), together with the costs of this action; and it is further
ORDERED that the payment of these penalties be, and it hereby is, stayed until decision by the Court of Appeals as to the correctness of this Court's ruling of June 13, 1974.