GM Wins Ignition-Switch Lawsuit Shield, Hides Behind Old GM

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As expected, it has happened. A U.S. Bankruptcy Judge has ruled the “new” General Motors isn’t liable for some of the ignition-switch defects that occurred prior to the bankruptcy. If you are following along that responsibility falls on the “old” General Motors. A shell company comprised of bad assets.

GM Wins Ignition-Switch Lawsuit Shield, Hides Behind Old GM

GM won a major court victory over the ignition switch debacle.

The ruling is quite simply a major boost to General Motors and terrible for the plaintiffs. However, all does not seem lost for those plaintiffs, as the U.S. Bankruptcy Judge Robert Gerber said those car owners can still sue over failure to warn of the defects.

Suing over the failure to notify is an interesting tactic and is pretty cool the Judge vocalized his opinion on it. It should also ring a bell, this is the same logic that the NHTSA used to fine Toyota $16 Million back in 2010 over the unintended acceleration case.

While the failure to notify is an opening, plantiffs aren’t happy with Gerber’s ruling and are planning an appeal. Understandably, they realize the “pot of gold” just got taken away from them and they will likely get far less money from lawsuits.

General Motors was quite pleased with the decision.

“Judge Gerber properly concluded that claims based on Old GM’s conduct are barred, and that the Sale Order and Injunction will be enforced for such purposes,” GM said in a statement. “With respect to any claims that were not expressly barred, Judge Gerber’s decision doesn’t establish any liability against GM and the plaintiffs still must prove the merits of their claims in the [multi-district litigation] proceeding.”

Overall, nearly 200 lawsuits have been brought against GM and these suits have been consolidated in New York federal court. The Plantiffs are seeking an estimated $7 billion to $10 billion in lost vehicle value.

This case is far from being decided and we will keep track of the news as it unfolds.

Find more details on the story.

Filed Under: Auto News


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  1. Mario says:

    This is why I vow to never buy a GM product. Let them fail once again, lousy company!

  2. Brian J says:

    Not counting injuries (and this article cites none), $7-10 billion in lost vehicle value is ridiculous. If there are 200 lawsuits, then let’s assume 200 vehicles. 200 vehicles for a high average of $50,000 per vehicle is only $10 million. Where are they getting a billion dollar figure from? This is why I detest the legal system at times. Everybody wants to sue for a big payout looking for an early retirement. How about you get the injuries/medical bills paid for, the vehicle paid for, and if there is lost income get that reimbursed. But 7-10 billion?

    • Tim Esterdahl says:

      Brian J,

      Good point. I hadn’t done the math on that. I’m not sure where they are getting that number.


  3. Randy says:

    The complete GM corporate structure and method of doing business is based entirely on fraud.

    It was designed that way by our government AND the IPO stated “exactly” that fact(s). “No One” is allowed to sue GM for fraud. The special law provisions that were set up exclusively for GM combined with the 2002 Sarbanes-Oxley laws mean that there is “no” independent “attest” function of a financial audit.

    So in GM’s unique and special law provisions the SEC is the final “auditor” (in other words the very same government that owns them); thus no independence-no attest. And the “chief auditor” final authority of the SEC is the POTUS as defined by law. There is absolutely zero independence in the financial statements that GM provides.

    Here is a summary article of essentially the same thing:

    Now for everyone that reads IPOs, we know you cannot sue GM for financial fraud; but now the courts (are we really surprised) have expanded those definitions the product liability as well.

    Simple terms: If a corporation kills you due to well-known and documented defect(s) your family has no recourse. By law GM is not liable for those defects.

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