Letter to GM on Feinberg Contracts

Thursday, July 17, 2014

Mary T. Barra
Chief Executive Officer
General Motors Company
PO Box 33170
Detroit MI 48232

Dear Ms. Barra:

We are contacting you today regarding issues raised about the lack of transparency and conflicts of interest related to the ignition switch compensation fund, which will be administered by Kenneth R. Feinberg of the firm Feinberg Rozen.  We are requesting the public release of all documents detailing the financial arrangements between GM and Mr. Feinberg, his firm Feinberg Rozen and any subcontracted firms, including any given responsibility for creating compensation models or deciding claims.

When Mr. Feinberg worked for BP while running the Gulf Coast Claims Facility, his firm’s substantial duties and responsibilities toward BP were described in an extensive contract that remained secret for months and was only disclosed during the parallel oil spill litigation.  According to that contract, for example, all information gathered from claimants was turned over to BP, with no restrictions as to its use.  After examining that contract, Judge Carl Barbier, the judge in the litigation, found Mr. Feinberg to be an agent of BP.  The judge said that it was misleading for Mr. Feinberg to call himself “neutral” or “independent,” as he had repeatedly claimed.  In recent weeks, GM has publicly described Mr. Feinberg’s role as BP erroneously did. The victims, and the public, should be able to verify whether the description is accurate in this case. 

Unfortunately, the ignition switch compensation process, which is the only option for GM victims of pre-bankruptcy crashes, has already been called into question by several issues, making transparency all the more crucial.  The compensation protocol, which was developed privately, will likely keep many deserving victims from getting anything.  Clarence Ditlow of the Center for Auto Safety, who has been critical of this protocol, has noted that the documentation and evidence GM and Mr. Feinberg will require of victims to prove a claim will be impossible to obtain due to the length of time GM covered up the switch defect.  Lance Cooper, Brooke Melton’s family’s attorney, who is responsible for uncovering the massive faulty ignition switch defect, estimates that the fund will exclude victims involved in crashes involving “over a million of the vehicles GM recalled to replace defective ignition switches.”

There are other concerns as well.  For example, with regard to prior funds that he has managed, Mr. Feinberg has hired subcontractors to determine victim compensation.  In the BP case, subcontractors’ bills were not covered by Feinberg Rozen’s nearly million-dollar monthly flat fee, but rather were passed through, dollar for dollar, to BP.  This included BP defense firms, whom Mr. Feinberg hired to directly advise unrepresented claimants.  Which subcontractors will GM be paying?  What are their responsibilities and their legal and financial arrangements with Mr. Feinberg and GM? 

Notably, Mr. Feinberg has in the past hired ARPC, which takes credit for developing the highly controversial compensation “models” for BP, http://www.arpc.com/clients-casestudy-arpc-hired-gccf-provide-damage-estimates-and-compensation-models-historic-bp-oil-spill.html.  ARPC has also worked for GM.  In an apparent effort to hide this connection, ARPC recently removed GM’s listing as a “representative client” from its website*.  This is troubling because it suggests ARPC now does not want this connection to be publicly known.  At the same time, ARPC boasts about its work helping other auto companies fight serious safety issues and recalls, like unintended acceleration, http://www.arpc.com/clients-casestudy-defense-unintended-acceleration-automobile.html.  If ARPC is to be tasked with determining ignition switch victim compensation, this history creates, at the very least, the appearance of a conflict of interest if not an actual conflict. 

Apparently GM and Mr. Feinberg have decided that, as with BP, all claims recipients will have to release GM from any and all legal responsibility.  We do not yet know how broad this release will be.  In BP’s case, claimants were required to sign away all legal rights not only for themselves, but for their spouse, their children, their parents and all of their heirs.  Moreover, they were required to assign to BP all their rights against other tortfeasors. With regard to GM, there might be substantial valid claims against various suppliers and others, so a similarly sweeping release would be highly improper.  Indeed, that any release would be required by an attorney representing and compensated by GM who directly engages victims outside of the presence of their own counsel is ethically and morally problematic.  This would be particularly true for victims of post-bankruptcy crashes, whose full legal rights to sue would otherwise be very much intact. 

We are concerned about how these legal and ethical issues will impact the integrity of the process for GM victims as this fund moves forward.  GM can help address these concerns by making fully public all contracts, documents and communications related to the financial arrangements between GM, Mr. Feinberg, Feinberg Rozen and the subcontracted firms. 

We thank you for your time and attention to this matter.


Very sincerely,

Center for Justice & Democracy
Consumers for Auto Reliability and Safety
National Association of Consumer Advocates
Public Citizen
Texas Watch



*Current page: http://www.arpc.com/clients-representative.html
Cached page: http://webcache.googleusercontent.com/search?q=cache:dxEM7tiZe-QJ:www.arpc.com/clients-representative.html+&cd=5&hl=en&ct=clnk&gl=us




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