Rul­ing stops 100 anti-GM cases

Au­tomaker is shielded from claims over deaths oc­cur­ring be­fore ’09 bank­ruptcy.

Los Angeles Times - - COMPANY TOWN - By Jerry Hirsch and Lau­ren Raab jerry.hirsch@la­ lau­ren.raab@la­ Twit­ter: @LATimesJerry

Gen­eral Mo­tors is shielded from claims over deaths and other dam­ages that oc­curred in crashes be­fore the au­tomaker’s 2009 re­struc­tur­ing in Bank­ruptcy Court, a fed­eral judge ruled Wed­nes­day, stop­ping more than 100 cases that cen­ter on faulty ig­ni­tion switches and other claims.

But peo­ple in­jured in a ve­hi­cle built be­fore the bank­ruptcy but in a crash af­ter the new GM was es­tab­lished can still file a law­suit against the com­pany, the rul­ing by Judge Robert Ger­ber says.

Those killed or hurt be- fore the re­struc­tur­ing can­not claim dam­ages from the cur­rent com­pany.

“This rul­ing pad­locks the court­house doors,” Bob Hil­liard, a Texas at­tor­ney rep­re­sent­ing ig­ni­tion-switch vic­tims and their fam­i­lies, said in a state­ment. “Hun­dreds of vic­tims and their fam­i­lies will go to bed tonight for­ever de­prived of jus­tice. GM, bathing in bil­lions, may now turn its back on the dead and in­jured, worry free.”

At­tor­neys rep­re­sent­ing peo­ple who were in­jured had ar­gued that the au­tomaker’s fail­ure to promptly re­call ve­hi­cles with a de­fec­tive ig­ni­tion switch rep­re­sented a fraud­u­lent ac­tion that war­ranted the Bank­ruptcy Court al­low­ing law­suits to pro­ceed against the sur­viv­ing com­pany.

“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.

The rul­ing also blocked law­suits from peo­ple who hoped to claim eco­nomic losses by, es­sen­tially, ar­gu­ing that the re­call scan­dal had dam­aged the value of their GM cars.

Wed­nes­day’s rul­ing determined whether GM re­tained the li­a­bil­ity for crashes oc­cur­ring in 2.6 mil­lion ve­hi­cles re­called for ig­ni­tion switch fail­ures.

In those cases, the faulty switch can sud­denly shut down the ve­hi­cle, turn­ing off cru­cial func­tions such as the power steer­ing and air bags. GM waited un­til last year to re­call the ve­hi­cles even though the au­tomaker knew about the prob­lem for at least a decade.

The de­fect is re­spon­si­ble for at least 84 deaths and 157 in­juries, ac­cord­ing to Ken­neth Fein­berg, a vic­tims’ com­pen­sa­tion con­sul­tant hired by GM.

The ques­tion of li­a­bil­ity hangs on a spe­cific date: June 1, 2009, the day GM filed for bank­ruptcy.

With the judge’s rul­ing Wed­nes­day, the cur­rent GM is off the hook for law­suits based on crashes be­fore that date.

The au­tomaker could face mil­lions of dol­lars in civil judg­ments in­volv­ing crashes af­ter that date.

To ad­dress that li­a­bil­ity, GM cre­ated a spe­cial com­pen­sa­tion fund for vic­tims in crashes caused by the faulty ig­ni­tion switches.

The pro­gram is ad­min­is­tered by Fein­berg. It is of­fer­ing pay­ments rang­ing from a few thou­sand to sev­eral mil­lion dol­lars to crash vic­tims or their heirs.

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