Center for Auto Safety, Inc. v. Lewis, 81-2270

• Decision Date: 10 August 1982
• Docket Number: No. 81-2270,81-2270
• Citation: 685 F.2d 656
• Parties: CENTER FOR AUTO SAFETY, INC., et al., Appellants, v. Drew LEWIS, Secretary, Department of Transportation, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 656

685 F.2d 656

222 U.S.App.D.C. 206

CENTER FOR AUTO SAFETY, INC., et al., Appellants, v. Drew LEWIS, Secretary, Department of Transportation, et al.

No. 81-2270.

United States Court of Appeals District of Columbia Circuit.

Argued March 23, 1982.

Decided Aug. 10, 1982.

Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 81-00550).

Barbara L. Bezdek, Washington, D. C., for appellants.

Enid Rubenstein, Attorney, National Highway Traffic Safety Administration, Washington, D. C., with whom Frank A. Berndt, Chief Counsel, David W. Allen, Asst. Chief Counsel, Bruce C. Buckheit and Eileen T. Leahy, Attorneys, National Highway Traffic Safety Administration, Washington, D. C., were on the brief for appellees.

Before EDWARDS, Circuit Judge, ROBB, Senior Circuit Judge and JAMES F. GORDON, ^* United States District Judge for the Western District of Kentucky.

ROBB, Senior Circuit Judge:

In this case in the District Court The Center for Auto Safety and others, all of whom we shall refer to collectively as the "Center", challenged the settlement by the Secretary of Transportation of a safety defect investigation concerning some 23 million Ford vehicles. The investigation was conducted by the National Highway Traffic Safety Administration pursuant to the National Traffic and Motor Vehicle Safety Act of 1966. 15 U.S.C. § 1381 et seq. ¹ It was prompted by reports that the automatic transmissions in the Ford cars caused many accidents by failing to hold or engage in Park and slipping into Reverse gear, commonly when the driver was outside the vehicle and thus unable to control the unexpected movement. Without making a final determination that a defect existed, the Secretary settled the case by requiring Ford to send warnings to the owners of the relevant vehicles, together with cautionary stickers to be attached to the dashboards of their automobiles. The Center maintained that the Secretary lacked authority to settle defect investigations except in return for the remedies specified in 15 U.S.C. § 1414. Referring to those remedies, the Center sought an order from the District Court requiring the Ford Motor Company, pursuant to 15 U.S.C. § 1414(a)(2)(A), to repair or replace without charge the allegedly defective vehicles, some ten million in number, or refund the price paid for them. In the alternative the Center argued that the Secretary acted arbitrarily in making the settlement. The District Court granted the defendant's motion for summary judgment, upon the ground that the Secretary's decision to settle with Ford was a reasonable exercise of his discretion. The Center appeals. We hold that in the circumstances presented here the Secretary's settlement did not violate 15 U.S.C. § 1414 and did not constitute arbitrary agency action. Accordingly we affirm the judgment of the District Court.

The purpose of the National Traffic and Motor Vehicle Safety Act, as declared by Congress, is "to reduce traffic accidents and deaths and injuries ... resulting from traffic accidents." 15 U.S.C. § 1381. Among the means chosen by Congress to accomplish this purpose is the requirement that motor vehicles be recalled if it is determined by the Secretary of Transportation or by the vehicle manufacturer that they contain a defect which relates to motor vehicle safety.

The Act defines defect to include "any defect in performance, construction, components, or materials" in motor vehicles or motor vehicle equipment. 15 U.S.C. § 1391(11). Motor vehicle safety is defined as

the performance of motor vehicles ... in such a manner that the public is protected against unreasonable risk of accidents occurring as a result of the design, construction or performance of motor vehicles, and is also protected against unreasonable risk of death or injury to persons in the event accidents do occur....

15 U.S.C. § 1391(1).

The Act, 15 U.S.C. § 1412, provides for two stages in the conduct of investigations of alleged defects. ² Section 1412(a) governs the first stage, generally referred to as the "initial determination", see 49 C.F.R. § 554.10. It provides that "(i)f through testing, inspection, investigation ... or otherwise, the Secretary determines that any motor vehicle ... contains a defect which relates to motor vehicle safety," the Secretary shall immediately notify the manufacturer and publish notice of the determination in the Federal Register. The notification to the manufacturer "shall include all information upon which the determination of the Secretary is based." Section 1412(a) requires that the Secretary then afford the manufacturer "an opportunity to present data, views, and arguments to establish that there is no defect ...." Section 1412(b) governs the second stage of the investigative process, generally referred to as the "final determination", see 49 C.F.R. § 554.11. It provides:

If, after such presentations by the manufacturer and interested persons, the Secretary determines that such vehicle ... contains a defect ... the Secretary shall order the manufacturer (1) to furnish notification ... to owners, purchasers and dealers in accordance with section 1413 of this title, and (2) to remedy such defect ... in accordance with section 1414 of this title.

15 U.S.C. § 1412(b).

As indicated in the last clause of section 1412(b), section 1414 focuses on remedies. Section 1414(a)(1) provides, "If notification is required ... by an order under section 1412(b) ... then the manufacturer ... shall cause such defect to be remedied without charge." ³ Section 1414(a)(2)(A) provides that when a vehicle is presented for remedy pursuant to notification, the manufacturer shall cause the vehicle to be remedied by whichever of the following means he elects:

(i) By repairing such vehicle.

(ii) By replacing such motor vehicle without charge, with an identical or reasonably equivalent vehicle.

(iii) By refunding the purchase price of such motor vehicle in full, less a reasonable allowance for depreciation.

The Secretary has delegated to the National Highway Traffic Safety Administrator the authority to "(c)arry out the National Traffic and Motor Vehicle Safety Act, as amended." 49 C.F.R. § 1.50(a). For convenience we shall refer to the statute as the "Motor Vehicle Safety Act" or the "Act".

Following the procedures set out in the Act the National Highway Traffic Safety Administration (NHTSA) made an investigation of reports of "inadvertent rearward movement" of Ford vehicles. The investigation began in October 1977, lasted over two and one-half years, and culminated in June 1980 in an "Investigative Report, Phase I" by the Office of Defects Investigation ("ODI Phase I Report"). In the course of its investigation the NHTSA staff inspected vehicles that had failed, and sponsored testing programs conducted by outside contractors, to measure and compare the physical differences of Ford, General Motors and Chrysler park mechanisms. Ford's own internal analyses and reports concerning the transmissions' performance were examined by NHTSA's technical staff. NHTSA also obtained and reviewed the analyses of General Motors' and Chrysler's automatic transmissions' park characteristics, and GM's and Chrysler's engineering analyses of the Ford transmissions. Outside transmission experts' analyses were also obtained and reviewed by NHTSA. NHTSA's staff examined the proposed and actual design changes devised by Ford engineers for the 1980 model year. In addition to investigation of possible mechanical and design flaws, NHTSA's staff studied the effect of "driver interaction" with the vehicle.

The ODI Phase I Report stated:

The NHTSA has received reports of over twenty-three thousand failures from Ford Motor Company, and from consumers, either directly or through state and private consumer groups, regarding problems of inadvertent vehicle movement on Ford built vehicles.

(J.A. 51)

The investigation dealt with 23 million vehicles, dating back to 1970, equipped with five major types of automatic transmissions, and over twenty types of transmission control systems, depending on the type of vehicle, size of the engine and options ordered with the vehicle. The vehicles comprise nearly 20 percent of all passenger vehicles on the highways. (Appellee's Br. at 7); ODI Phase I Report at 98. NHTSA amassed over 382 cubic feet of documents relating to the investigation, including reports of park-to-reverse accidents, blueprints of the transmissions, and engineering evaluations of various types of transmissions; and conducted examinations of state accident records, human factors studies and a number of tests aimed at providing some understanding of the cause of the accidents which were being reported to NHTSA.

The investigation also revealed reports of similar accidents occurring in vehicles with automatic transmissions manufactured by General Motors Corporation, Chrysler Corporation and others. ODI Phase I Report at 13, 15. Examination of Ford vehicles reported to have been involved in a "park-to-reverse" incident revealed that following the reported incident, the park system appeared to function normally in most instances. Id. at 11, 27.

The Report conceded that a number of reports of failure had been received with respect to vehicles manufactured by competitors of Ford, and that these failures were the result of poor adjustment, worn or deteriorated parts, manufacturing errors, or in some cases, the failure of the vehicle operator to place the selector in the full Park position, and that some Ford failures must also be attributed to these same causes. However, the NHTSA concluded that the failure rate in Ford vehicles was much greater than the rate in other vehicles, and that the large difference was the result of unique Ford characteristics. Accordingly, on June 19, 1980 NHTSA made its "initial determination" under 15 U.S.C. § 1412 that a safety-related defect existed in the Ford vehicles. 45 Fed.Reg. 41,564 (June...