Huge Award? GMs Been Down This Road Before

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The jury giveth and the judge taketh away. That oft-repeated scenario is what many legal and business analysts believe will happen to last weeks record-busting $4.9 billion jury verdict awarded against General Motors in Los Angeles. After a 10-week trial, a 12-member panel ordered the company to pay the sum $107 million in compensatory damages and $4.8 billion in punitive damages to six people who were severely burned when the fuel tank in their Chevrolet Malibu exploded during a rear-end collision. The plaintiffs claimed the car should have been designed with a fuel tank further removed from the rear bumper.

"Anytime children are involved in a horrible accident such as this one," says TIME Detroit bureau chief Nichole Christian, "theres an emotional connection that tends to drive the price up." But in the end, it is hardball negotiations that usually fix the final price tag, she says. This is precisely what happened in GMs last major product-liability setback. In February 1993, a Georgia jury slapped General Motors with a $105 million verdict for having designed its C/K pickup trucks with sidesaddle gas tanks, which the plaintiffs claimed made the vehicles prone to explode during side crashes. The Georgia verdict was overturned by an appellate court on a technicality, and shortly before the retrial, the parties reached a settlement for an undisclosed amount. GM has let it be know that it plans to aggressively appeal last weeks verdict, and, says Christian, "most observers would be amazed if some undisclosed settlement did not finally occur in this case too."