Supreme Court rejects GM bid
Firm sought to block ignition switch cases by arguing that it was shielded from liability.
The Supreme Court on Monday turned away an appeal from General Motors Co. seeking to block dozens of lawsuits over faulty ignition switches that one plaintiffs’ attorney said could expose the company to billions of dollars in additional claims.
The justices without comment left in place a lower-court ruling that said the automaker’s 2009 bankruptcy did not shield it from liability in the cases. An attorney representing hundreds of plaintiffs suing the company said it exposes GM to around 1,000 additional lawsuits and $5 billion to $10 billion in liabilities. GM said the cases will have to be tried on individual merits.
A federal appeals court ruled last year that GM remains responsible for ignition-switch injuries and deaths that occurred prebankruptcy because the company knew about the problem for more than a decade but kept it secret from the bankruptcy court and owners of cars with the faulty switches. The decision also opens GM to claims that any of those cars sold by the company prior to bankruptcy lost value because of the ignition-switch scandal.
The company had argued that well-established bankruptcy law allowed the newly reorganized GM to obtain the old company’s assets “free and clear” of liabilities.
GM recalled 2.6 million small cars worldwide in 2014 to replace defective switches that played a role in at least 124 deaths and 275 injuries, according to a victims’ fund set up by GM and administered by attorney Kenneth Feinberg. The switches could unexpectedly switch from the “run” position to “off ” or “accessory,” shutting off the engine and knocking out air bags and the powerassisted steering and power brakes.
The automaker has paid nearly $875 million to settle death and injury claims related to the switches. That includes $600 million from Feinberg’s fund and $275 million to settle 1,385 separate claims. It also has paid $300 million to settle shareholder lawsuits.
After it emerged from the government-funded bankruptcy, the company referred to as New GM was indemnified against most claims made against the pre-bankruptcy company, known as Old GM. A bankruptcy court sided with the company in 2015, ruling that most claims against Old GM could not be pursued against the new company.
But the appeals court in Manhattan overturned most of that decision and said hundreds of pre-bankruptcy claims could go forward.