Noticing Safety Issues in Vehicle Manufacturing?  You Could Obtain a Financial Reward for Coming Forward

February 14, 2024
Sarah E. Nesbitt

In the spring of 2023, the United States District Court for the Eastern District of Michigan certified a class of plaintiffs across several states in a lawsuit on behalf of drivers of certain trucks, which may unpredictably stall and lose power, causing extraordinary safety concerns and costly fixes.  Chapman et al. v. General Motors LLC, 2023 WL 2746780 (E.D. Mich. Mar. 31, 2023).  The lawsuit alleges that the heart of the issue is a defectively manufactured integrated car part called the CP4 fuel pump, which serves important engine functions.  This lawsuit—and other motor vehicle product liability cases like it—aims to publicize dangerous manufacturing defects and hold the manufacturers accountable, ultimately increasing road safety.  But what if problems like these, which lead to senseless traffic deaths and consumer expense, could be stopped further upstream?  Whistleblowers in the vehicle manufacturing industry may hold the key to doing just that—and a little-known law provides financial incentives for doing so.

The Motor Vehicle Safety Whistleblower Act

The Motor Vehicle Safety Whistleblower Act (the “Act”), 49 U.S.C. § 30172, which we discussed  in early 2022, incentivizes employees of the motor vehicle industry to provide information about vehicle safety issues to the National Highway Traffic Safety Administration (“NHTSA” or the “Agency”).  Those whistleblowers whose tips lead to an Agency enforcement action against the offending company can recover sizable monetary awards for coming forward.

Passed in 2015 with bipartisan support, the Act was proposed in response to several high-profile motor vehicle recalls after a spate of tragic accidents involving defective airbags and ignition switches.  Hundreds of deaths and many more injuries due to these defects might have been prevented had someone with insider knowledge reported the issues to regulators before the defective parts flooded the market.  Congress enacted this whistleblower award program to motivate those in the motor vehicle manufacturing industry to do just that.

The Act’s whistleblower program is broad in its scope, both geographically and substantively.  Whistleblowers need not live or work in the United States to file a tip or recover on an enforcement action; all that the Act requires is that the whistleblower be a current or former employee or contractor of a motor vehicle manufacturer, part supplier, or dealership.  Regarding the substance of the tip, whistleblowers may allege violations of the Vehicle Safety Act, noncompliance with a Federal Motor Vehicle Safety Standard, or any other motor vehicle safety defect.  Moreover, any whistleblower who faces retaliation for reporting motor vehicle defects, noncompliance, or violations of requirements enforced by the Agency may file a retaliation complaint with the Occupational Health and Safety Administration.

While the Agency has reported many enforcement actions arising from its whistleblower program since its launch, only one has resulted in monetary recovery by a whistleblower through counsel.  This may be due in part to employees’ uncertainty about what constitutes a good tip, as the Agency has failed to adopt regulations explaining the process in the nine years since the Act’s passage.  In April 2023, however, the Agency promulgated proposed regulations detailing the path whistleblowers should follow to submit a successful tip that will best position them to receive an award in the event of an enforcement action.  Implementing the Whistleblower Provisions of the Vehicle Safety Act, 88 Fed. Reg. 23,305, (proposed April 14, 2023) (to be codified at 49 C.F.R. pt. 513).  While the regulations are not final and are subject to change, they provide a glimpse into the Agency’s expectations for tips received in the interim.

The Proposed Regulations

The regulations proceed in three parts: first, delineating who and what information is eligible for the program; second, laying out the procedures for submitting a tip; and third, explaining the process of making a claim for an award after a successful enforcement action.

NHTSA will accept information from any current or former employee of a motor vehicle manufacturer, part supplier, or dealership.  88 Fed. Reg. at 23,305.  To be eligible for an award, the whistleblower’s information must be “original”—in other words, “derived from the independent knowledge or analysis of [the] individual,” not otherwise known by the Agency (except via the whistleblower), and “not exclusively derived from an allegation made in a judicial or an administrative action” or governmental publication or proceeding (unless the whistleblower was also the original source of that information).  Id. at 23,305-06.  The information provided must be “sufficiently specific, credible, and timely,” though the proposed regulations do not define the contours of those thresholds.

For a whistleblower to be eligible for an award, her original information must relate to “any motor vehicle defect, noncompliance, or any violation or alleged violation of any notification or reporting requirement of 49 U.S.C. chapter 301”—or the regulations growing out of that chapter of the code—“which is likely to cause unreasonable risk of death or serious physical injury” on the road.  Id. at 23,306.  Critically, a whistleblower will be rendered ineligible for award recovery if she relies solely on information subject to the attorney-client privilege or work product doctrine, id. at 23,305, is convicted of a criminal violation related to the information submitted, “deliberately causes or substantially contributes to the alleged violation,” or has failed to report the information through the company’s internal reporting mechanism, if one exists.  Id. at 23,307.  If the whistleblower reasonably believed a) that an internal report would have resulted in retaliation, b) that the information had already been internally reported, or c) that the information was otherwise already known to the company, this requirement may be waived.

To simplify the tip submission process, the regulations provide an information form that should be submitted with the tip.  That form requires the whistleblower to declare under penalty of perjury that the information in the tip is true and correct to the best of the potential whistleblower’s knowledge and belief at the time of submission.  Id. at 23,306.  In the event a whistleblower opts to proceed anonymously and submit through legal counsel, counsel must make a similar assertion under penalty of perjury in the whistleblower’s stead.  Id.

Finally, the regulations explain the process of claiming an award after a whistleblower’s original information has led to an enforcement action involving a greater-than-one-million-dollar fine.  The Agency will publish on its website a “Notice of Covered Action” after the Agency has reached a final judgment, order, or agreement.  Id. at 23,307.  The whistleblower then has ninety days from the date of the Notice of Covered Action to file a claim for an award based on that action.  The Agency provides an award form to be used for such a claim.  Id.  Any award made to the whistleblower will fall between 10% and 30% of the value of the enforcement action.  Id. at 23,308.

Securing an Attorney

In short, the proposed regulations, while helpful in clarifying the process, provide a multi-step path to recovering an award.  Any misstep along the way could jeopardize a whistleblower’s recovery.  We encourage those working in the motor vehicle industry who may have important safety related information to share with the Agency to consult an attorney, who can help distill what is often highly technical information into a digestible tip that meets the Agency’s requirements and is most useful and interesting to regulators.  If you are a qualifying employee or contractor and have information that may expose vehicle safety concerns, contact the experienced whistleblower attorneys of Katz Banks Kumin for an intake interview.

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