Chrysler Wins Appeal Over U.S. Recall Order

Chrysler Corp. won an important battle with U.S. auto safety regulators Friday when a federal court ruled that it does not need to complete a 91,000-car recall because it wasn’t told of stricter test procedures.

The court said the National Highway Transportation Safety Administration should have told the auto maker it was using stricter procedures before ordering the recall in 1996 after rear seat-belt anchors flunked a stress test.

Chrysler had argued that the recall of 1995 Chrysler Cirrus and Dodge Stratus was unwarranted because the vehicles had passed an earlier test by the agency.

The ruling by the Court of Appeals for the District of Columbia also raises questions about an $800,000 fine imposed by a lower court--the largest penalty imposed on an auto maker for violating the safety law. Chrysler, which is appealing the fine to the same tribunal, said it believes the fine is academic in light of the court’s ruling.

“Auto makers cannot be forced to guess what the rules require and then be sanctioned for not guessing correctly,” said Lew Goldfarb, Chrysler’s associate general counsel.

Chrysler said it was halfway through the recalls when it challenged the lower court order. The company will complete the recall because “it’s hard to recall the recall once it starts,” company spokesman Mike Aberlich said.

Ricardo Martinez, head of the NHTSA, said, “‘Chrysler pursued this on a technicality, so we’ll strengthen our standards to make sure this loophole can’t be used again.”

Chrysler is the only company ever to fight in court a recall based on a car’s failure to meet a safety test standard.

Shares of Highland Park, Mich.-based Chrysler rose $1.75 to close at $48.13 on the New York Stock Exchange.