(Adds details from lawsuit, background)
By Jessica Dye
NEW YORK, March 19 General Motors Co was
hit with a lawsuit on Wednesday demanding that the company be
held liable for allegedly concealing ignition problems before
its 2009 bankruptcy.
The ignition switch problems led to the recall of 1.6
million vehicles last month.
GM is a different legal entity than the one that filed the
2009 bankruptcy that shook the U.S. economy. The so-called new
GM is not responsible under the terms of its bankruptcy exit for
legal claims relating to incidents that took place before July
2009. Those claims must be brought against what remains of the
"old" or pre-bankruptcy GM.
But the proposed class action, filed in federal court in
California, said plaintiffs should be allowed to sue over the
pre-bankruptcy actions, "because of the active concealment by
Old GM and GM."
The lawsuit also said that GM was responsible for reporting
to the federal government any safety-related problems for cars
made before its bankruptcy.
A spokesman for the automaker declined to comment
specifically on the lawsuit, saying the company has apologized
for the recall and that taking care of customers was its top
GM announced the recall in February, despite learning of
problems with the ignition switch in 2001. GM has 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
Wednesday's lawsuit is one of several filed by car owners
who claim the recent recall caused their vehicles to lose value.
It appears to be the first to raise the issue of "successor
liability," meaning that GM could be liable for actions of the
company before it emerged from bankruptcy.
The named plaintiff is Katie McConnell, the owner of a 2007
Saturn Ion Coupe. The lawsuit is seeking at least $350 million
in damages, according to the lawyer that filed the lawsuit,
Steve Berman of Hagens Berman Sobol Shapiro.
The lawsuit said the "old" GM knew about the ignition
problems as early as 2001, but continued to make and market
defective vehicles until 2007. The new GM continued the
deception, the lawsuit alleged.
As a result, the new GM should be liable "for the deceptive
and unfair acts and omissions" of the old GM, the lawsuit said.
It also said the court should waive the statute of limitations
for older claims because of GM's actions.
"While civil in nature, we believe it is a step toward
holding G.M. accountable for its inaction," Berman said in a
The recall over the ignition problem, which has been linked
to at least 12 deaths, 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.
(Reporting by Jessica Dye; editing by Andrew Hay, Noeleen
Walder and Tom Brown)