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Judge Sides With Chrysler on Liability Issue

The New York Times

June 2, 2009

In approving the sale of most of Chrysler's assets to a new company run by Fiat over the weekend, Judge Arthur J. Gonzalez also granted the automaker's request that the new company not be held liable for future product-liability problems involving current owners. That means people who own a Chrysler, Dodge or Jeep have lost their right to sue if they are injured by a safety defect.

In court filings, Fiat had argued it was unfair to burden it with financial obligations springing from the "old" Chrysler. And during the bankruptcy hearing, Robert L. Nardelli, Chrysler's chief executive, testified that the idea of not allowing current owners to sue came up during the discussions between the Treasury and Fiat. Consumer groups, including Public Citizen, the Center for Auto Safety and Consumers for Auto Reliability and Safety, have formally objected, arguing that Chrysler's request would deprive consumers of their rights.

But Judge Gonzalez dismissed those objections. "Every single person who owns a Chrysler vehicle now has nobody standing behind them if this order is confirmed by the appellate court," said Scott P. Nealey, a San Francisco lawyer with the firm Lieff Cabraser Heimann & Bernstein, LLP, who worked with the consumer groups to oppose that provision. Mr. Nealey said the groups planned to appeal.

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