Product Liability

GM shielded from ignition-switch lawsuits, bankruptcy judge rules

GM recall GM shielded from ignition switch lawsuits, bankruptcy judge rulesGeneral Motors (GM) won’t have to face lawsuits over its fatal ignition switch defect in vehicles manufactured by the “Old GM,” federal bankruptcy court Judge Robert Gerber ruled Wednesday, upholding a shield imposed in 2009 that allows the “New GM” to escape the liabilities of the pre-bankruptcy company.

The ruling means that anyone injured or killed as a result of an ignition switch malfunction in vehicles made prior to GM’s bankruptcy filing on June 1, 2009 won’t have legal recourse against the company because technically their complaints are with the “Old GM,” which legally no longer exists. The decision also means that GM will save billions of dollars in damages it otherwise would have had to pay to plaintiffs harmed or killed by the ignition switch defect.

Economic-loss complaints are also effectively barred by the ruling, so most plaintiffs seeking compensation for a drop in car value because of the ignition switch defect will not be allowed to pursue their claims.

The decision leaves a door open for some ignition-switch lawsuits to proceed if plaintiffs can prove their complaints are tied to actions or conduct by the New GM, “so long as those plaintiffs’ claims do not in any way rely on any acts or conduct by the old GM,” the Judge’s decision states. Some lawsuits occurring after the 2009 bankruptcy will also be allowed to move ahead.

GM’s faulty ignition switches affect about 27 million vehicles made over a decade’s time. The problem can allow keys to jostle the switch to the “off” or “accessory” mode, resulting in a sudden loss of power steering, anti-lock brakes, and airbag protection while the vehicle is in motion. The defective ignition switches have been linked to at least 84 deaths and hundreds of injuries.

“Judge Gerber properly concluded that claims based on Old GM’s conduct are barred,” the automaker said in a statement, contradicting statements GM chief Mary Barra has made vowing the company would “do the right thing” in helping those injured by GM’s actions.

Beasley Allen Principal & Founder Jere Beasley said that while Judge Gerber’s order won’t affect his firm’s post-bankruptcy claims, “it does hurt hundreds of families who lost loved ones in accidents that occurred before the … bankruptcy order.

“It is unconscionable that GM would be relieved of responsibility for taking care of these folks, when it is evident that the automaker knew for more than 10 years – well before they filed for bankruptcy – that the ignition switch was defective,” Mr. Beasley said, adding that “GM engaged in a cover-up of massive proportions.”

Sources:

Law360
Beasley Allen
CNN Money