Chrysler recall rescinded by D.C. Circuit Court.

A federal appeals court overturned a court-ordered recall of 91,000 Dodge Stratus and Chrysler Cirrus passenger cars that resulted from allegedly improper testing of seat belt anchors.

Products liability attorneys said the decision by the U.S. Circuit Court of Appeals for the District of Columbia is a narrow one. The circuit court ruled October 30 that the National Highway Traffic Safety Administration (NHTSA) must give notice of safety standard requirements before seeking sanctions, such as a product recall, against a noncomplying manufacturer. (U.S. v. Chrysler Corp., No. 98-5047, 1998 WL 754389 (D.C. Cir. Oct. 30, 1998).)

Reversing a February 1998 lower court decision, Chief Judge Harry Edwards wrote, "[A]t least where there is no safety defect at issue, ... a manufacturer cannot be found to be out of compliance with a standard if la federal regulatory agency] has failed to give fair notice of what is required by the standard. And absent notice, there can be no recall based solely on noncompliance."

NHTSA sued Chrysler Corp. in 1996 seeking a recall of the 1995 Cirrus and Stratus models. The agency argued government testing indicated the cars did not comply with Federal Motor Vehicle Safety Standard 210, which regulates how seat belts are anchored to cars. Chrysler countered that it had followed permissible test procedures and satisfied the requirements of the safety standard. The company claimed the government's contrary finding was based on test instrument positioning that was not specified in the standard.

The district court noted that NHTSA's interpretation of the standard was confusing, yet it found that a recall could be ordered without regard to whether Chrysler had reasonable notice of the standard.

Relying on a 1995 D.C. Circuit case involving federal Environmental Protection Agency regulations, the appeals court found that Chrysler cannot be penalized for failing to comply with regulations when it lacked fair warning of NHTSA's interpretation of those regulations.

"This decision is very narrow to the case, but it does have interest to plaintiff lawyers," said Robert Palmer, a Springfield, Missouri, plaintiff attorney who handles auto litigation. Other automakers could follow Chrysler's lead to avoid court-ordered recalls, and Palmer said NHTSA has a responsibility to close off that avenue.

For NHTSA's part, Administrator Ricardo Martinez said the agency would "strengthen our standards to make sure this loophole can't be used again." (U.S. Court Overturns NHTSA Recall Order of Chrysler Vehicles, Wall St. J., Nov. 2, 1998, at A25.)

"If NHTSA feels that this test needs to be done a certain way, it has to say it up front," Palmer said. "The agency needs to specifically set forth the testing standard. The 210 standard was vague. There are many different ways to interpret the test. Even Chrysler admitted that [the seat belt anchors] would not meet the standard if it were interpreted the way NHTSA interpreted it."

Safety was not at issue in the case. The interpretation of regulations was the sole basis for the suit.