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UNITED STATES v. CHRYSLER CORP.

August 14, 1998

UNITED STATES OF AMERICA, Plaintiff,
v.
CHRYSLER CORPORATION, Defendant.



The opinion of the court was delivered by: SULLIVAN

ORDER

 Before the Court is plaintiff's request for the imposition of a civil penalty against defendant Chrysler Corporation. Upon consideration of the pleadings in support of plaintiffs' request, the opposition thereto, and the arguments of counsel, the request of plaintiff for the imposition of a civil penalty is GRANTED ; the Court shall impose a civil penalty against Chrysler Corporation in the amount of Eight Hundred Thousand Dollars ($ 800,000).

 Background

 In July 1995, NHTSA contracted with General Testing Laboratories ("GTL") to test the seat belts of several vehicles, including the MY 1995 Chrysler Cirrus passenger car. On July 10, 1995, GTL performed a FMVSS No. 210 compliance test on a MY 1995 Chrysler Cirrus *fn1" passenger car and the anchorage for the driver's-side rear seat lap belt pulled completely out of the floor after approximately 24 seconds, when the force on the lap belt was 2,829 pounds. FMVSS No. 210 requires that the anchorage maintain a force of 3,000 pounds for 10 seconds. NHTSA subsequently notified Chrysler of the test failure. In August 1995, NHTSA requested that Chrysler acknowledge noncompliance and recall the MY 1995 Cirrus cars, but Chrysler declined to find the cars in noncompliance or recall them.

 On January 22, 1996, NHTSA notified Chrysler of its initial decision that MY 1995 Chrysler Cirrus and Dodge Stratus passenger cars manufactured before May 15, 1995, did not comply with FMVSS No. 210. On February 23, 1996, NHTSA held a public meeting, pursuant to 49 U.S.C. § 30118(b), to allow Chrysler and other interested persons the opportunity to present information, views and arguments on NHTSA's initial decision of noncompliance. On June 4, 1996, NHTSA issued a final decision, pursuant to 49 U.S.C § 30118(b), that the cars in question did not comply with FMVSS No. 210. Pursuant to 49 U.S.C. § 30118(b)(2), the NHTSA Administrator ordered Chrysler to notify owners, purchasers, and dealers of the noncompliance no later than July 8, 1996, and to provide a remedy without charge. Because Chrysler had previously informed NHTSA that it would not recall the vehicles unless ordered to do so by a court, on June 4, 1996, the same day of the NHTSA Administrator's order, the government filed this present action pursuant to 49 U.S.C. § 30163(a), to force Chrysler to comply with the order of the NHTSA Administrator.

 In its Memorandum Opinion and Order issued on February 4, 1998, this Court held that the 91,000 Chrysler Cirrus and Dodge Stratus passenger cars failed to comply with a safety standard as interpreted by the National Highway Transportation Safety Administration (NHTSA), and ordered Chrysler to notify all owners, purchasers, and dealers of the noncompliance and provide a remedy without charge. United States v. Chrysler Corp., 995 F. Supp. 150, 164 (D.D.C. 1998).

 The Court now grants the government's request for the imposition of a statutory civil penalty against Chrysler, as provided by 49 U.S.C. § 30165(a), in view of Chrysler's failure to provide appropriate notice to owners, purchasers, and dealers after it had reason to believe the vehicles did not comply with the safety standard, in violation of §§ 30118(c)(2) and 30119(c)(2), and for failure to comply with the order of the NHTSA Administrator, in violation of §§ 30119(c)(1).

 Request for Civil Fines

 In support of its request for the imposition of a civil penalty under 49 U.S.C. § 30121(b)(1), the government argues that Chrysler violated two separate statutory duties by failing to recall the 91,000 vehicles prior to the February 4, 1998 Order of this Court. First, the government argues Chrysler violated a duty to notify owners under 49 U.S.C. §§ 30118(c)(2) and 30119(c)(2) after Chrysler itself should have in good faith determined that the subject vehicles did not comply with the safety standard. Second, the government argues Chrysler violated a duty to comply with an order of NHTSA Administrator under 49 U.S.C. §§ 30118(b)(2) and 30119(c)(1).

 Chrysler, on the other hand, argues that no penalties should be imposed in this case because it did not have notice of the government's interpretation and furthermore, because this is a case of first impression. Chrysler maintains that the agency's interpretive rule could not have the force of law until this Court accepted it in its February 4, 1998 decision. See National Latino Media Coalition v. FCC, 259 U.S. App. D.C. 481, 816 F.2d 785, 788 (D.C. Cir. 1987). Accordingly, Chrysler contends that a violation of the statute did not and could not exist before this Court issued its decision, and consequently, Chrysler cannot be subject to civil penalties.

 The government, however, notes that it is not seeking penalties based on Chrysler's actions at the time the vehicles were certified. Rather, the government argues for the imposition of civil penalties against Chrysler in view of Chrysler's inaction once it had actual notice that under the agency's interpretation, the vehicles did not comply with FMVSS No. 210.

 Chrysler relies on General Electric Co. v. EPA, 311 U.S. App. D.C. 360, 53 F.3d 1324 (D.C. Cir. 1995) for its argument that a party may not be penalized if at the time of the act at issue, the party lacked adequate notice of an agency rule or interpretation. Id. 53 F.3d at 1328-29. In this case, however, Chrysler was on actual notice that under the agency's interpretation, the vehicles did not comply with FMVSS No. 210. Moreover, Chrysler does not dispute that the subject vehicles do not meet the strength requirements of FMVSS No. 210 as interpreted by NHTSA. Indeed, in the fall of 1995, Chrysler replicated the failing test and obtained the same results. Thus, the Court concludes that a penalty can appropriately be premised on Chrysler's failure to comply with the June 4, 1996 order of the Administrator, in violation of 30119(c)(1), as Chrysler had, by that point, if not earlier, actual notice of the agency's interpretation.

 Amount of Civil Penalty

 In order to determine the amount of the civil penalty to be imposed, the Court is to consider "the size of the business of the person charged and the ...


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