GM seeks U.S. court protection against ignition lawsuits

Tue Apr 22, 2014 7:42pm EDT

An engineer shows the ignition assembly which has a faulty 2005 ignition switch in a file photo.

An engineer shows the ignition assembly which has a faulty 2005 ignition switch in a file photo.

(Reuters) - General Motors Co (GM.N) filed a motion in a U.S. court to enforce a bar on lawsuits stemming from ignition defects in cars sold before its 2009 bankruptcy as it fights proposed class action litigation that seeks to set aside the restriction.

Plaintiffs suing the company also filed a proposed class action lawsuit in Manhattan bankruptcy court on Monday, seeking an order declaring that GM cannot use the bankruptcy protection to absolve itself from liabilities.

The faulty ignition switch has been linked to at least 13 deaths and the recall of 2.6 million GM vehicles.

GM emerged from bankruptcy protection in 2009 as a different legal entity from the so-called old GM. Under those terms, the "new GM" shed liability for incidents predating its exit from bankruptcy, and any lawsuit involving pre-bankruptcy issues must be brought against what remains of old GM.

"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," the company said in a filing on Monday in the Bankruptcy Court for the Southern District of New York.

The motion did not address claims stemming from accidents, including personal injury and wrongful death. GM has said it is committed to replacing the defective switches in cars.

"GM has taken responsibility for its actions and will keep doing so," spokesman Jim Cain said in an emailed statement.

The company recognizes its "civil and legal obligations relating to injuries" tied to the recall cars, Cain said, adding that GM has retained lawyer Kenneth Feinberg to advise it of its legal options.

Feinberg is known for his work in administering special payment funds for high-profile catastrophes like the September 11, 2001, attacks and the BP Plc (BP.L) oil spill.

Late on Tuesday, U.S. Bankruptcy Judge Robert Gerber in New York issued an order setting a procedural conference for May 2 to determine how the case should move forward, saying that "no substantive matters will be decided."

Also on Tuesday, GM said it was restructuring its engineering operations to improve the quality and safety of its vehicles.

Since it began to recall vehicles in February, GM has been hit by dozens of lawsuits on behalf of individuals injured or killed in crashes involving recalled cars, as well as customers who said their vehicles had lost value as a result of the company's actions.

The plaintiffs have said they bought or leased vehicles that had the defective ignition switch and accused GM of fraudulently concealing its knowledge of the defect. As a result, they said, the company was not entitled to protection from liability.

"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 said in their lawsuit.

In its filing, GM asked the court to direct the plaintiffs to stop suing new GM for claims that are barred by the bankruptcy sale order and the injunction, and to dismiss the earlier claims.

Lawyers for the plaintiffs declined to comment.

Last week, GM sought a stay on lawsuits involving the ignition claims until a judicial panel on multidistrict litigation decides on a motion to consolidate the case with others and the bankruptcy court rules on whether the claims violate GM's 2009 bankruptcy sale order.

(Reporting by Supriya Kurane and Arnab Sen in Bangalore; Additional reporting by Jessica Dye in New York; Editing by Lisa Von Ahn, Gopakumar Warrier, Saumyadeb Chakrabarty and Bernard Orr)

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Comments (9)
breezinthru wrote:
Instead of going after GM’s money, we should go after the highest ranking person who made the bad, but “cost effective” decision and put them in prison for manslaughter.

Apr 22, 2014 6:36am EDT  --  Report as abuse
gravity357 wrote:
The management that covered this up should be prosecuted.

Apr 22, 2014 7:58am EDT  --  Report as abuse
Bobo9 wrote:
GM’s had a culture for many, many years of driving suppliers to take another penny out of their cost, then another, on & on.
Let’s hope they allow these families to sue GM big time.

Apr 22, 2014 8:46am EDT  --  Report as abuse
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