Product Liability

Liability immunity may fail to shield “new” GM from ignition switch lawsuits

GM logo Liability immunity may fail to shield “new” GM from ignition switch lawsuitsGeneral Motors Co. (GM) is facing the first in a likely wave of personal-injury, wrongful-death, and product liability claims as evidence emerges that the company knew ignition switches in some of its models were defective but failed to warn drivers about the potentially deadly hazard and recall the affected vehicles in a timely manner – a move that could have saved many lives.

Until now, those scarred by crashes involving the affected cars have had no legal recourse against GM, not just because they had no knowledge of the defect, but because GM received legal immunity when it was reorganized in a government-supported bankruptcy in 2009.

That reorganization, which fashioned a “new” GM out of the bankrupt “old” GM, shielded the new company from deaths and injuries involving crashes that occurred before the company was reborn under a government-sponsored bailout in 2009.

But new evidence has emerged, and lawyers representing plaintiffs harmed by these preventable crashes are confident that they have a solid case against GM despite the immunity.

One bankruptcy lawyer told the Detroit Free Press that, in the paper’s words, “there is no iron-clad immunity” and that GM could probably be exposed if it didn’t specifically list the ignition switch problem as a potential liability.

“Full disclosure is the price of fresh start in bankruptcy,” the lawyer told the Detroit Free Press.

Another lawyer representing the parents of teenage girls who were killed in 2006 when the ‘05 Chevrolet Cobalt they were riding in crashed, agreed.

“That shield will be shattered by their active fraud over 10 years,” the lawyer told the Detroit Free Press. “There’s some pretty black-letter bankruptcy law that says you can’t fail to disclose information that might result in future liability.”

GM recalled about 780,000 2005-07 Chevrolet Cobalt and Pontiac G5 vehicles on February 13. Twelve days later, it expanded the recall to include an additional 590,000 model-year 2003-07 Saturn Ion, Chevy HHR, Pontiac Solstice, and Saturn Sky vehicles.

Court documents and other evidence show that GM knew about the ignition switch problem as early as 2001. The company says it has linked 31 crashes and 12 deaths to the faulty switch, but a new study commissioned by the Center for Auto Safety indicates the death toll could be as high as 303.

The recall addresses an ignition switch problem that can allow the key to unintentionally slip from its “run” position to the “accessory” position when the car hits a bump or if the keychain is too heavy, causing the engine to shut down and resulting in a loss of power steering, brakes, and safety systems, including the vehicle’s airbags and anti-lock brakes.


Detroit Free Press