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Fiat Chrysler Fined a Record $105 Million by NHTSA for Recall Violations
Practical Law Legal Update 0-617-7342 (Approx. 4 pages)
Fiat Chrysler Fined a Record $105 Million by NHTSA for Recall Violations
by Practical Law Commercial
| Published on 28 Jul 2015 • USA (National/Federal) |
The US Department of Transportation's National Highway Traffic Safety Administration (NHTSA) recently announced that Fiat Chrysler Automobiles (FCA) has agreed to the terms of a consent order for recall-related violations of the Motor Vehicle Safety Act. As part of the consent order, FCA must pay the NHTSA a $105 million civil penalty, which is the largest fine the agency has ever imposed.
On July 26, 2015, the US Department of Transportation's National Highway Traffic Safety Administration (NHTSA) announced that Fiat Chrysler Automobiles (FCA) has agreed to the terms of a consent order for recall-related violations of the Motor Vehicle Safety Act (Act). Under the terms of the consent order, FCA must, among other things, pay a $105 million civil penalty, which is the largest fine the agency has ever imposed. (.)
By agreeing to the consent order, FCA acknowledged that it violated the Act with respect to 23 vehicle recalls by failing to:
- Remedy defective vehicles adequately and within a reasonable time (49 U.S.C. §§ 30120(a), 30120(c)).
- Notify vehicle owners of vehicle recalls in a timely manner and to provide the NHTSA with copies of owner and dealer notifications (49 U.S.C. §§ 30118(c), 30119(c)(2) and 49 C.F.R. §§ 577.5, 577.7(a)(1)).
- Provide timely, accurate and complete notice to the NHTSA about vehicle defects and recalls (49 U.S.C. § 30118(c) and 49 C.F.R. § 573.6).
In addition to paying the $105 million civil penalty, the terms of the consent order require FCA to comply with significant and continual oversight measures, which include:
- Retaining an Independent Monitor to, among other things, assess FCA's compliance with the terms of the consent order. The Independent Monitor will file a written report every four months with the NHTSA, regarding:
- the Independent Monitor's activities;
- whether FCA is complying with the terms of the consent order;
- FCA's efforts to execute its performance obligations under the consent order; and
- any changes that are necessary to ensure FCA complies with the Act and its regulations.
- Publicly committing to lead best practices in safety, including industry education and outreach.
- Developing new, written procedures for:
- comprehensive reporting to the NHTSA;
- making safety-related defect determinations and notifying the NHTSA of such safety-related defects; and
- notifying dealers, owners and purchasers of defects.
- Offering eligible owners a refund of the purchase price paid by the first purchaser of the vehicle, as an alternative to remedying the defect.
- Ensuring that employees associated with complying with the Act are allocated sufficient time during their working hours to thoroughly and effectively perform compliance actions.
- Retaining a third-party consultant to, among other things, advise and assist FCA in developing the new written procedures and employee practices.
- Preparing a report that includes a plan and procedures for addressing its obligations under the consent order to:
- improve its practices for mitigating harm; and
- publicly commit to lead best practices in safety.
For general information on vehicle recalls, including a discussion of NHTSA investigations and recalls, see Practice Note, Product Recalls: Motor Vehicles and Motor Vehicle Equipment.