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Engineer’s Memo Returns to Haunt GM

TIMES STAFF WRITER

How much should General Motors Corp. spend to keep people from burning to death in fiery crashes? In a memo nearly 30 years ago, a young GM engineer, Edward C. Ivey, suggested that the answer was: Not much.

With a couple of simple calculations, Ivey estimated that these fiery deaths were costing GM only about $2 per vehicle--the implication being that it was not enough to justify the expense of changing the vehicles’ design.

Ivey didn’t know it at the time, but he was planting a legal time bomb.

In the years that followed, a platoon of GM lawyers fought successfully to exclude the Ivey memo from scores of vehicle-fire lawsuits. They did it by convincing judges the document was merely the idle musings of a novice engineer. There was contradictory evidence, but they kept it locked tight.

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Now the memo and GM’s stealth tactics have been revealed in court, and from the furious response of judges and juries, GM may have brought more grief on itself by not producing it in the first place. A Georgia judge berated GM for scheming “to defraud and mislead several courts, to thwart and obstruct justice and to enjoy the ill-gotten gains of likely perjury.” And in a Los Angeles case that drew heavily on the Ivey affair, GM in 1999 suffered a then-record verdict of $4.9 billion (later reduced and now on appeal).

GM says it has behaved properly at all times. “I don’t believe anybody has ever misled a court or even misled opposing counsel,” said Richard W. Shapiro of Snell & Wilmer, one of the firms representing GM.

In the world of civil litigation, the Ivey memo has attained the status of a “smoking gun” due as much to GM’s unceasing efforts to suppress it as for what it actually says.

The Ivey saga illustrates the extraordinary lengths to which big companies may go to keep damaging documents away from juries and the public, behavior which also has been seen in litigation involving cigarette makers, drug manufacturers and defense contractors. But the strategy can backfire if the documents and the companies’ deceptions eventually come to light.

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The Ivey story also reflects the potential conflict between a lawyer’s most basic obligations: to win for the client, and to avoid using deceptive means to mislead judges and legal adversaries.

In seeking to avoid giving opponents valuable ammunition, many attorneys, including from the most prominent firms, increasingly seem to resort to tactics that “might once have been seen as absolutely forbidden,” said Stephen Gillers, a New York University law professor. If there is even a feeble excuse for withholding information, “we’re going to do it and take that risk,” the thinking goes, because “that’s what clients expect.”

Legal warfare over the Ivey memo has all but overshadowed some of the most emotionally wrenching of all personal injury cases--involving people who were maimed or burned alive in crashes they might have survived, or even walked away from, but for fires fed by leaking gasoline. For auto makers, the danger of such cases is extreme, because juries that put the blame on unsafe designs are quick to send a message.

“The American public says it’s worse to die from being burned to death than being crushed to death,” said Brian O’Neill, president of the Insurance Institute for Highway Safety. If a person burns to death in an otherwise survivable crash, “that’s a prescription for a very large award.”

Ivey Said Price Can’t Be Placed on a Life

Ed Ivey, 54, who declined to be interviewed, is GM’s director of chassis engineering. He signed on after high school, training first at the General Motors Institute and going on to the University of Michigan. In 1972, two years after earning his master’s in engineering, Ivey was assigned to the advance design group at GM’s Oldsmobile division, which took the lead on fuel system design.

For one of his assignments, Ivey prowled through a junkyard, examining wrecked cars to see which fuel systems held up best. And in June 1973, he wrote his combustible memo.

Dominating the dry, page-and-a-half analysis were two calculations leading to the same bottom line: The financial rewards of designing safer fuel systems would be minimal for GM. In the first computation, Ivey estimated that burn fatalities were costing GM about $2.40 per car. In the second, he found that avoiding future deaths would be worth $2.20 to GM for each new model.

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In his computations, Ivey used $200,000 for the value of a human life--a figure that easily could anger jurors, but that actually came from a government study.

The memo offered no recommendations. And it closed by acknowledging the crassness of the exercise. “It is really impossible to put a value on human life,” Ivey wrote. “This analysis tried to do so in an objective manner but a human fatality is really beyond value, subjectively.”

James E. Butler Jr., a Georgia plaintiffs attorney, has described the document as a “let ‘em burn” memo. Others--including some GM foes--see it as more nuanced, or as just plain confusing. Another plaintiffs lawyer said the Ivey report would have “melted into history” but for GM’s ferocious battle to suppress it.

The Ivey memo is “a meaningless document,” said GM attorney Shapiro. It “has been blown so out of proportion by plaintiffs lawyers, it’s absurd.”

Why, then, did GM treat it as radioactive?

The company had seen what similar documents had done to rival Ford.

During the late 1970s, Ford suffered a series of eye-popping verdicts involving fire-prone Pinto compacts, as juries reacted to documents showing Ford had placed profit over safety.

At GM, the Ivey memo began triggering alarms in 1981, when the firm launched a massive effort to collect and analyze records it might have to disclose in fuel-fire cases.

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In November of that year, GM lawyers called in Ivey to talk about his memo. If he had prepared it on his own, and it went no further than his desk, GM could argue it had no probative value and should be excluded from evidence.

But Ivey’s statements, as summarized by one of the lawyers, Don Howard, were not completely helpful. Eight years had passed, and although Ivey was no longer certain who had given the assignment, he remembered doing it “for Oldsmobile management,” with the idea of seeing “how much Olds could spend on fuel systems.”

And although Ivey was not sure about the distribution list, he named several key engineers he believed had gotten copies.

“Obviously,” Howard wrote, “Ivey is not an individual whom we would ever, in any conceivable situation, want to be identified to the Plaintiffs, . . . and the documents he generated are undoubtedly some of the potentially most harmful and most damaging were they ever to be produced.”

Ivey was debriefed a second time by GM lawyers in 1983. William Kemp, one of the lawyers, took handwritten notes, which included the phrase: “Purpose: how much money could we spend on each car to prevent it.” And more ominously: “Did not do it on his own.”

This interview came at a crucial stage, as the Ivey memo for the first time had been produced to a plaintiff. By accident or on purpose, it was included in a box of documents sent to Darrel Peters, the lawyer for Thomas Swanic, who had suffered 3rd-degree burns and lost an arm in a fiery crash.

When GM lawyers interviewed Ivey that August, he was a month from having his deposition taken in the Swanic case. Then, before he had to testify, a settlement was reached.

Despite the resolution of the Swanic case, Peters was intrigued by the Ivey memo. But like other GM documents, it was covered by a protective order that barred him from sharing it with others.

So Peters did what he thought was the next best thing. Over beers at a legal conference in Washington, he tipped off a handful of plaintiffs lawyers handling fuel-fire cases. He told of a hot document, and how to identify it specifically enough that GM would have to produce it.

In no time, GM realized that the word was out, and quickly identified Peters as the source. GM hauled Peters before the Michigan judge who had presided in the Swanic case, and the judge ordered him to pay about $8,500 in sanctions for violating the protective order.

“I have always worn that as a badge of honor, frankly,” Peters said recently.

David J. Bennion, a San Jose lawyer for Cheryl Burton, who had been seriously burned in the crash of a Chevette, was the first to benefit from Peters’ actions. GM balked at Bennion’s request for the memo, but eventually had to turn it over. And in September 1984, Ivey had his deposition taken in the Burton case, the first of many times he would be forced to testify.

But Ivey’s memory was nearly a blank. In his interviews with GM lawyers, he seemed to recall many things. Now he remembered almost nothing.

“I don’t know why I prepared” the analysis, Ivey testified. He could not recall anyone telling him to do it, and believed no one had. He could not recall who read it, and thought probably no one had.

Beginning with the Burton case in ’84, the forgetful Ivey has testified at least 20 times. Each time, the who, what and why of his memo have been lost down a memory hole.

For 15 years, Ivey’s recollections for the GM lawyers would remain a well-kept secret. And with no other evidence on the record, GM lawyers had an easy time using Ivey’s testimonies to persuade judges that the memo should be excluded.

“Mr. Ivey has testified that he did not disseminate the document to anyone,” according to one GM motion, nearly identical to dozens of others it would file. “It was rather, simply an individual intellectual exercise performed on his own. . . . Thus, the document has no relevance in this case.”

Shapiro, the GM lawyer, recently told The Times he saw no inconsistency between the sworn testimonies of Ivey and his prior statements to company lawyers. In the ’81 interview with Howard, Ivey merely had “offered a few speculations. ‘I may have done this,’ or ‘I may have done that,’ ” Shapiro said. When witnesses “have to go on the record, they’re more careful,” he said. “They’re not prone to speculate or guess.”

From 1983, when Darrel Peters first obtained the Ivey memo, until 1998, plaintiffs had to settle or try their cases without it. In the meantime, they kept chipping at the wall.

In December 1992, a Georgia judge, weary of obstructive tactics by GM, ordered it to produce a host of records--including “any and all documents discussing, mentioning, referring to, or otherwise dealing with” the Ivey memo.

GM produced plenty of records, but the Ivey-related documents weren’t among them. Company lawyers told the court they had turned over all records “kept in the ordinary course of business.”

James Butler, the plaintiffs lawyer, told the judge that GM was using weasel-words to defy his order. “We’re back to the same old Mickey Mouse gamesmanship,” Butler said at a hearing. “It’s the use of semantics to continue hiding evidence.”

GM lawyer Philip E. Holladay Jr., from the big Atlanta firm of King & Spalding, assured the court it wasn’t so. “Judge, there’s not a single document that has been withheld,” Holladay said. “In fact, General Motors has produced everything they’ve got in response to the court order.”

The Georgia case had been filed by the parents of Shannon Moseley, 17, who died in the flaming wreck of a GM pickup. GM’s stonewalling did not prove fatal to the Moseleys’ case: In February 1993, the jury awarded them $105 million (the verdict was overturned on appeal, and the case eventually settled).

Plaintiffs nearly breached the wall a few months later, in Cameron vs. GM. For the first time, GM acknowledged that some Ivey-related papers did exist. But these documents were privileged, GM said, because they involved confidential attorney-client communications. With a series of delaying tactics GM succeeded in keeping the documents hidden until the case was settled and the matter dropped.

The Ivey-related documents would not be pried loose for another four years.

Judge Asked GM to Produce Documents

The pivotal showdown came in a Florida case involving 13-year-old Shane McGee, who died of burns suffered in a fire in his family’s ’83 Olds wagon.

In 1997, the McGees asked GM to produce all Ivey-related documents. GM lawyers twice replied that there were none. Later, they amended their answer to state that they were “not aware of any documents which specifically pertain to” the Ivey memo.

The McGee lawyers informed the judge, Arthur J. Franza, that GM previously had acknowledged the existence of such documents in the Cameron case. In December 1997, with the McGee trial in progress, Franza ordered GM to produce the documents for his inspection. In response to the order, a GM attorney appeared in court but without the documents, claiming GM officials had refused to give them to him.

Franza was irate. GM, he thundered, wasn’t “big enough to thumb its nose at the court,” or “to obstruct justice or conceal evidence.” Produce the documents or face severe sanctions, he warned.

GM then produced the papers, including the Howard and Kemp documents, for Franza’s review. The judge ruled that the documents, and the Ivey memo, could be placed before the jury.

Several weeks later, the McGee jury ordered GM to pay $33 million in damages.

For GM, things soon would get worse. A Georgia judge, Gino Brogdon, unleashed a scalding attack on GM and its lawyers for their “recklessly inaccurate misstatements and misrepresentations.”

For Brogdon, the last straw was GM’s defiant response to his order to turn over 81 boxes of records. GM produced 71 boxes, saying the difference was that it had repacked the papers in sturdier boxes.

But GM failed to mention that it had eliminated 2,300 pages, making “a unilateral decision to remove documents and conceal its decision to violate the order.”

Brogdon’s ruling came in a wrongful death case that ultimately was settled. But in another ruling before the settlement, Brogdon reviewed the tangled history of the Ivey affair.

GM Is Appealing the Verdicts in Latest Cases

Ivey’s memory loss, he declared, was “bizarre, disturbing and likely in violation of his oath.” And GM--by concealing Ivey’s original recollections--"did obstruct and impede the due administration of justice.”

But Brogdon found no proof of a “criminal nexus” between Ivey’s memory loss and the conduct of GM lawyers. “The record is simply void of any evidence that GM or its lawyers took some specific action” to induce Ivey to forget, Brogdon wrote. “Only Ivey knows what in fact caused him to scarlet his story.”

The fallout intensified in Los Angeles in 1999, when jurors in Anderson vs. GM ordered the company to pay $4.9 billion in damages to six burn victims, whose Chevy Malibu caught on fire when a drunk driver plowed into it, causing the fuel tank to explode.

The plaintiffs argued that the fuel system of the Malibu was defectively designed. And they used the Ivey memo and the Howard and Kemp documents to portray GM as callous and deceitful.

GM has appealed the McGee and Anderson verdicts, claiming, among other things, that the judges erred in allowing the Ivey-related documents.

GM foes say if the verdicts are upheld, that still won’t even the score. Over the years, they say, GM was able to cut the cost of settlements and judgments by deceiving the courts about Ivey.

“Casting all ethics aside for the moment,” GM lawyers “have managed it superbly,” said Butler, the plaintiffs lawyer. “They’ve saved General Motors hundreds of millions of dollars.”

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To read Part I in this two-part series, go to www.latimes.com/gm


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