Fiat Chrysler Accused of Covering Up Facts About Defective Products
Fiat Chrysler’s legal issues have became more serious after the National Highway Traffic Safety Administration (NHTSA) accused the automaker of not accurately reporting deaths related to accidents caused by defective vehicles they manufactured.
The discrepancy came to light about 60 days after Fiat Chrysler agreed to a $105 million fine and to repair the defective vehicles in question, which include Dodge SUVs and Ram pickup trucks. The fine represents 23 recalls involving a total of 11 million vehicles.
Mark Rosekind, an NHTSA administrator, said the discrepancy is significant and promised to take further action if necessary during the course of the investigation. He also warned Fiat Chrysler that further punishment is possible if more issues are discovered. The automaker responded by saying it takes the matter very seriously and has been cooperative with the NHTSA. Rosekind added the under-reporting issue is a problem with Fiat Chrysler’s data-gathering and reporting system.
Another wrinkle for the automaker is the filing of a class-action lawsuit against the company by a group of its investors who claim they were deceived about vehicle safety and computer problems in an attempt to keep the stock price from plummeting.
The suit was filed in Manhattan Federal Court on September 11 and also accuses Fiat Chrysler executives Richard Palmer and Sergio Marchionne of making untrue statements and refusing to disclose data that could have had a negative financial effect on the company.
The lawsuit states that when the companies merged in summer 2014, investors were kept in the dark regarding flaws in security, supply, manufacturing and quality control that made over three million vehicles unsafe. The resulting lowered stock price caused investors significant monetary losses.
In addition, the lawsuit claims that investors were not aware of Chrysler’s slow action in regard to recalls, customer notification, addressing safety problems and handling dealers that were operating improperly. All of these issues became the focus of federal scrutiny in 2015.
A number of safety recalls were mentioned in the suit, namely a 2015 recall of Dodge Durangos and Jeep Grand Cherokees regarding defective suspension components that caused instability and breakage, and the 1.4 million vehicles that were susceptible to hacking due to a flaw with the Uconnect infotainment feature. The former issue was pending at the time the companies merged, although investors were not informed. Finally, Fiat Chrysler was hit with the $105 million fine. Despite this, the company continued to struggle with safety problems, according to the suit, which asks for an unspecified amount in damages and for the payment of attorney’s fees in the case.
It is the second time Fiat Chrysler has been sued in the last two months. In August 2015, a group of Jeep Cherokee owners sued the automaker and Harman International, which manufactures the Uconnect system. That suit claims negligence, fraud, unjust enrichment and a breach of warranty due to the hacking flaw.