GM Seeks Court Protection From Faulty Ignition Switch Lawsuits

General Motors Co. has filed a motion in a U.S. federal bankruptcy court to bar lawsuits originating from ignition switch defects in vehicles it sold prior to its 2009 bankruptcy. This is GM’s move against class-action litigation, which aims to hold the automaker liable for actions prior to its filing bankruptcy a few years ago.

There are more than 50 lawsuits filed against GM, seeking damages related to the faulty ignition switch. The ignition switch problem has promoted the carmaker to recall 2.6 million vehicles, linked to 13 fatalities.

GM asks for protection, more specifically against class-action litigations not involving incidents that resulted in property damage, personal injury or loss of life. Most of the liability lawsuits, (unrelated to accidents) filed by GM owners, claim that their vehicles depreciated as a result of GM’s slow response to the ignition problem.

In 2009, GM came out of bankruptcy protection known as “Old GM” referring to pre-bankruptcy, while “New GM” refers to post-bankruptcy.  Due to this protection, the ‘New GM’ is without liability for actions performed by ‘Old GM.’ Lawsuits involving pre-bankruptcy matters (‘Old GM’) must be brought against what is left of ‘Old GM’ and not ‘New GM.’

GM stressed that the ‘New GM’ is free of economic responsibility for all vehicles and parts sold by the ‘Old GM’ in its filing:  “New GM’s recall covenant does not create a basis for the plaintiffs to sue new GM for economic damages relating to a vehicle or part sold by old GM.”

GM has requested the Bankruptcy Court for the Southern District of New York “to rule on whether the growing number of lawsuits alleging purely economic damages resulting from the ignition switch recall may proceed.”

The hearing for the motion is scheduled for May 29th. The judge will determine if non-injury lawsuits against GM should or should not be dismissed.

Many lawsuits have been filed against GM since the automaker began its massive recall in February. Plaintiffs said that they have leased or purchased vehicles with the defective part and claimed that GM tried to conceal its knowledge of the problem for more than a decade.

Plaintiffs say that because of the alleged fraud, GM should not be protected from liability. Plaintiffs filed a proposed class-action lawsuit seeking to lift the protection and make the automaker responsible for all liabilities.

“GM’s argument suggests that the U.S. government would have agreed to extend $40 billion of taxpayer money for GM’s restructuring, and supported shielding it from liability through the sale order, had it known of GM’s intentional misconduct,” the plaintiffs indicated in the lawsuit.

GM responded by requesting the court to instruct plaintiffs to stop suing ‘New GM’ for claims blocked by the bankruptcy sale order and the injunction and to dismiss previous claims.

Regarding incidents that involve injury or death, GM will continue to help victims and/or their families.

“General Motors has taken responsibility for its actions and will keep doing so. GM has also acknowledged that it has civic and legal obligations relating to injuries that may relate to recalled vehicles, and it has retained Kenneth Feinberg to advise the company what options may be available to deal with those obligations,” the automaker said in a statement.

As we reported earlier, it would have cost GM under $1 per ignition to replace switches with a safer model, but they concealed the defect for more than a decade, resulting in many injuries and deaths. Feel free to comment on this blog post.  For more information, contact one of our Gacovino Lake attorneys at 1-800-246-HURT (4878).

Related Posts