There is a famous line in the movie Fight Club where the narrator describes how his employer, a major auto manufacturer, makes the decision to issue recalls for defective car parts. “Take the number of vehicles in the field, A, multiply by the probable rate of failure, B, multiply by the average out-of-court settlement, C. A times B times C equals X. If X is less than the cost of the recall, we don’t do one.” The movie’s famous quote was not based on fiction. There are cases where auto manufacturers have applied the “Fight Club formula” to save money.
The Ford Pinto is classic example of an automaker using the Fight Club formula. In the late 1960s, Ford rushed production of the Pinto to compete with automakers overseas. Ford became aware of a defect with the fuel tank while crash-testing the vehicle. Fuel tanks could rupture during rear-end collisions, posing a significant fire hazard to motorists. Ford estimated it would be cheaper to settle with injured victims and their families than to fix the defect.
The Ford Pinto killed an estimated 27 to 180 people, and survivors suffered disfigurement from third-degree burns. Ford became aware of the problem during production in 1970. A recall was not issued until 1978.
Automakers who used Takata airbag inflators might be a good example of companies who applied the Fight Club formula. Time will tell. This defect caused the airbag inflators to explode with excessive force. Shrapnel would fly into the cabins of vehicles, causing deaths and injuries to occupants.
Lawsuits filed against Honda, Nissan, BMW, Ford, Mazda and Toyota suggest the automakers knew Takata airbag inflators were dangerous but used them because they were cheaper than other brands. In addition, it would have cost the automakers an estimated $7.6 billion to replace the defective inflators. Defective Takata airbags were used for years before automakers began issuing recalls.
These are only two well-known examples. General Motors knew its ignition switch was defective in 2001. Engineers at General Motors found a solution to fix the defect in 2005, but deemed it was too expensive. Recalls did not start until 2014.
Can We Fight Back Against the Fight Club Formula with Lawsuits?
As you can see, there are many instances of automakers hiding defects. The Fight Club formula has been used by automakers for decades. Lifesaving recalls are put off for cost-saving purposes, and victims and their families pay the price for this selfishness. At the end of the day, lawsuits do help hold these companies accountable, and may prevent further harm to others.