Lawsuit kicks off class action claims against GM

NEW YORK Fri Mar 14, 2014 8:49pm EDT

General Motors Co's new chief executive Mary Barra addresses the media during a roundtable meeting with journalists in Detroit, Michigan January 23, 2014. REUTERS/Carlos Osorio/Pool

General Motors Co's new chief executive Mary Barra addresses the media during a roundtable meeting with journalists in Detroit, Michigan January 23, 2014.

Credit: Reuters/Carlos Osorio/Pool

NEW YORK (Reuters) - General Motors was hit on Friday with what appeared to be the first lawsuit related to the recall of 1.6 million cars, as customers claimed their vehicles lost value because of ignition problems blamed for a series of fatal crashes.

The proposed class action, filed in federal court in Texas, said GM knew about the problem since 2004, but failed to fix it, creating "unreasonably dangerous" conditions for drivers of the affected models.

"GM's mishandling of the ignition switch defect....has adversely affected the company's reputation as a manufacturer of safe, reliable vehicles with high resale value," the lawsuit said.

The recall has led to government criminal and civil investigations, an internal probe by GM, and preparations for hearings by Congress. All ask why GM took so long to address a problem it has said first came to its attention in 2001.

A GM spokesman, Greg Martin, said the company has apologized for how it handled the recall and that taking care of customers was its first priority. He did not comment on the lawsuit.

The plaintiffs are seeking damages from GM that include compensation for loss of the use of their vehicles and repairs and diminished resale value. They are not claiming they were injured in accidents stemming from ignition problems.

The lawsuit is reminiscent of claims faced by Toyota Motor Corp, which recalled more than 10 million vehicles starting in 2009. Toyota last year received approval for a settlement valued at $1.6 billion to resolve economic loss claims and is currently negotiating the settlement of hundreds of personal-injury lawsuits.

GM announced the recall in February, despite learning of problems with the ignition switch in 2001 and issuing related service bulletins to dealers with suggested remedies in 2005.

GM said that when the ignition switch was jostled, a key could turn off the car's engine and disable airbags, sometimes while traveling at high speed. GM has said it received reports of 12 deaths and 34 crashes in the recalled cars.

The Center for Auto Safety, a watchdog group, on Thursday said that data from the National Highway Traffic Safety Administration showed 303 deaths occurred when airbags failed to deploy in two of the models GM recalled. GM called the report "pure speculation" and the Insurance Institute for Highway Safety and the National Center for Trauma and EMS at the University of Maryland said the figure did not take into account whether airbags would be expected to deploy in some crashes.

The plaintiffs in Friday's lawsuit, Daryl and Maria Brandt, said they own a 2007 Chevy Cobalt, which was one of several models recalled by GM. They said that they have driven their car less than they otherwise would because they feared being in an accident stemming from the ignition issues, according to the complaint.

Carl Tobias, a professor at the University of Richmond School of Law who specializes in products liability, said he did not expect GM would have to pay as much as Toyota did if it seeks to resolve the economic loss claims.

The GM recall applied to older models and was significantly smaller than the Toyota recall, although that could change as the investigations against GM continue, he said.

GM also has offered owners of recalled vehicles $500 toward the purchase of a new GM vehicle, a factor that could mitigate any liability, he said.

(Reporting by Jessica Dye, additional reporting by Ben Klayman.; Editing by Andre Grenon, Noeleen Walder, Leslie Adler and Peter Henderson)

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Comments (7)
Kahnie wrote:
I bought and kept a 1998 Lumina. Kept it for 12 years. 200,000 miles. Loved it. Great touring car. That being said, I will NEVER buy a GM product again as a result of this unholy mess that they, the heads of this company, have created. They, the Management, cannot be trusted with putting quality products on the road. Their interest is the bottom line, and making cars that don’t cause accidents and/or fail in many situations is only, at best, an afterthought.

Mar 14, 2014 11:34pm EDT  --  Report as abuse
Kahnie wrote:
Can’t have a key chain with more than one key in the ignition? Why buy it? Unsafe air bags? A death trap waiting to happen. Swept under the rug by top management? Criminal action causing deaths. But, Made in America. I’m embarrassed and ashamed. My wife and I run a small company. We stamp made in America on everything we send. Don’t like it? Send it back. No questions asked. Full refund. GM is an embarrassment to those of us who are trying to make American Made Goods worthy of the name, America.

Mar 14, 2014 11:38pm EDT  --  Report as abuse
Swisswatch wrote:
So they have known of the problem for a good number of years?
And people have been dying?
And Gm continues to produce these products and selling them for money?

Isn’t time for the courts to examine the concept of killing for money?

And the CEO apologizes. “Uhh sorry that your kid got killed. Here is some money that must be applied to further purchase of our products and possibly getting your other kid killed.”

Mar 15, 2014 3:59am EDT  --  Report as abuse
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